This is going to be a quick blog post about suspicious behavior of bank lending in Dickinson, North Dakota. Actually, it’s about banks not lending money.
I own a home that is paid for in Idaho, and I would like to be able to return and live there. In the past seven years, I have worked some in Utah and Texas, but for about five of these years I have worked in North Dakota.
After the oil boom went away in North Dakota in 2015, since then about 70% to 80% of the oil field jobs went away. Consequently, 70% to 80% of the out-of-state oil field workers returned to the states where they came from.
By 2017, the occupancy rates at the newly completed apartment buildings and the old apartment buildings in Dickinson became 50% or less. Apartment rent, home rent, and home sale prices began to decrease throughout Dickinson.
In the summer of 2017, I got a very good deal on an apartment in downtown Dickinson. However, I soon came to find that the crime in this area of downtown Dickinson was very bad primarily due to drug dealing, people being on drugs, and people stealing to get money for drugs.
In the Spring of 2018, mostly because I was tired of the drug dealing and drug activity at the apartment building where I live in downtown Dickinson, I began looking for a very cheap home to purchase. I found a manufactured home on its own property for sale in Belfield for $25,000.
This 3br/1ba manufactured home in Belfield on its owned 75 ft x 140 ft lot would have been good for me. I went and looked at it with the realtor, and it was fine with me. So far, neither myself or about thirty other prospective buyers, have been able to get a loan from any bank in North Dakota for this manufactured home.
For myself and all of the other prospective buyers who looked at this $25,000 manufactured home, the combined payments for the loan, home insurance, and property tax, would have been less than rent payments anywhere in western North Dakota.
The four or five banks that I spoke to or went to in Dickinson, they each had their reasons for not wanting to loan money on a manufactured home at this time. It wasn’t a matter of credit history or income, the local banks in Dickinson didn’t even want to initiate a loan application for a manufactured home, even on owned land.
For this particular case, I got the impression that each of the local banks in Dickinson that I went to, that someone much higher up, the bank owners, were scared to death of being stuck owning manufactured homes.
From 2009 through 2014 during the oil boom, the rent on this 3br/1ba manufactured home would have been about $2,000 per month. Back then, just one year of rent would have been $24,000. Now, the rent on this manufactured home would be about $500 per month, or $6,000 per year. So why are the banks so scared of loaning money on something like this, on a 75 ft. x 140 ft. lot?
As a second example, one of my neighbors who lives in the same apartment building as me in downtown Dickinson, this couple wanted to buy a house not far from here, in order to get away from the drug dealing and drug activity in this building. Even though this man has had a good paying job for the past four years with the same company in Dickinson, he was turned downed for his home loan.
As a third example, another one of my neighbors, who owes about $19,000 on his current small home in downtown Dickinson, he wanted to buy another nearby home that was larger. He wanted to move into the larger home, and rent out his smaller home that was nearly paid for. He has had a fairly good paying job with the same company in Dickinson for the past eight years, and he was turned down for his home loan.
For the past twenty years in the United States, banks have routinely lent money to people to buy homes that they could not afford. These loans were called “liar loans”, because the borrower could not demonstrate their ability to pay without lying about their income, sources of income, money in savings, assets, and debts.
In the three examples that I gave up above about myself and my neighbors attempting to borrow money from a bank in Dickinson, North Dakota to buy a home, it wasn’t that the borrower did not have the income to make the mortgage payments, or the income history.
It seems like the banks are just scared to loan money for a home purchase in Dickinson at this time, in any case. To me, this signifies two beliefs by the local bank owners. One, that they expect many people to lose their jobs in Dickinson in the near future and be unable to make their mortgage payments. And two, that the bank owners don’t want to be stuck owning homes in Dickinson when people default on their home loans, because homes will be worth less and less, with no one wanting them or being able to buy them.
In other words, I think that this shows that the owners of the banks in Dickinson, think that Dickinson is going to fail and collapse. Actions speak louder than words, watch what a person does, not what he says.