During the past year, nearly half a dozen times I have been tempted to write this blog post article about overpriced houses for sale in Dickinson, North Dakota. I was even thinking about writing a weekly or bi-weekly article titled, “This Week’s Award For The Most Overpriced House In Dickinson”.
What got me going, was that there was a 5br/3ba house for sale in Dickinson that was listed for $600K. I thought, $600K? $600K for a house in Dickinson? Who are these people, where do they think they are, and what are they thinking? Did the real estate agent talk them into this?
Before I go any further, I need to explain to readers who live outside of this area, that Dickinson experienced the North Dakota oil boom from 2007-2015. During the first several years of this oil boom, housing prices and rents doubled. But by 2011, housing prices and rents had quadrupled.
When the price of oil went from over $100 per barrel in 2014, down to less than $50 per barrel in 2015, that killed the North Dakota oil boom. Oil companies began to shut down oil wells that were producing, and cease drilling operations because they could not make any profit on oil when the price was below $60 per barrel.
Initially in 2015-2016 there many oil field workers and even many non-oilfield workers who were let go from their employment. Many of these workers left, because these people could not see that there was any work for them in this area. This exit migration of people at the end of the North Dakota oil boom created an instant surplus of housing for sale and for rent.
Beyond 2017, it became more and more clear every day that the oil boom was not coming back to North Dakota. More people continued to move away from this area, which caused the local economy to shrink a little more.
In this area of western North Dakota, it is sparsely populated, with barren vacant grasslands where the wind sometimes exceeds 100 mph, and the temperature in Winter falls below -50 degrees Fahrenheit. This is not a desirable place to live for most people. In North Dakota, there is no beach, professional sports teams, car racing, motorcycle racing, horse racing, or hardly any kind of entertainment or place to go.
With the exodus of people from the Dickinson area after the end of the oil boom, the surplus of housing, most of the high paying jobs being eliminated, no one wanting to live here or move here in the first place, how could someone try to get $600K for their 5br/3ba home, that was not even very nice?
I was going to mock and ridicule this homeowner and the real estate agent who listed this home for $600K, but I wanted to look into this situation a little more to find out what was going on. I am glad that I did look into this more closely, because what I found was that this wasn’t just a matter of these people being stupid, it was also a matter of the homeowner being desperate.
I used the address of this home for sale, to find out who the owners were. Once I found out who the owners were, I looked them up on the internet, including the North Dakota court repository. Unfortunately, when there is a divorce/child custody/child support court case that gets contested and moves through the court of appeals, many of the details get reported in the public record. This was the case here.
I was able to find out that a young, newly married husband and wife in their mid to late twenties purchased this home early in the North Dakota oil boom, around 2009-2010 I think it was. The husband had an unusually good job for someone his age, with an oil company here in Dickinson. I believe he was earning about $125K per year.
Off the top of my head, I think that this couple separated and filed for divorce in about 2014, just before the end of the oil boom, that no one knew was coming. His child support assessment was something like $30K per year. Then in 2015, due to the price collapse of oil, he lost his job, and the oil company the he had been working for filed for bankruptcy.
This ex-husband who was now in his early 30s, who had lost his job with an oil company, he was not able to find another job. He began the process of legally appealing his child support determination, because he had very little money, no income, and probably a large amount of legal fees.
I was glad that I found out who these home owners were, so that I didn’t mock and ridicule them in a blog post article. Their circumstances required them to try to get as much as possible from the sale of their home. However, still, what the fuck were they and their real estate agent thinking? Who in Dickinson has that much money? Maybe a medical doctor, but why would a medical doctor want to spend $600K on a house in Dickinson that isn’t even very nice?
What this particular real estate listing did at that time, was immediately inspire some other dumb-ass in Dickinson to list their rather ordinary unappealing older home for $600K. Some people in Dickinson thought that this was a “thing” now.
I would kind of like for homeowners and real estate agents in Dickinson to paint a picture for me of the imaginary buyer they have in their heads that is going to race from Los Angeles straight to Dickinson with $600K in cash. Why Dickinson?, in North Dakota?
Some time has passed since I became discombobulated by the $600K house “thing” in Dickinson. Until today, when I looked up a house that just went for sale around the corner from where I live. Where I live, a year ago I was able to buy a small, plain, one hundred year old house on a double lot for $50K. The larger house that I had looked at a few blocks away was $85K. A few months ago, a very nice 4br/2ba home one block away from me, the asking price was dropped to $80K. So I wanted to know, how much was the house that was just listed for sale near me?…….Over $400K! What!
Why does this matter to me? I have asked myself why this matters to me, why does this bother me, and I have realized four of five reasons. My first reason, is that I have seen this kind of thing before where everyone begins to believe that their house is worth double, which mostly just results in first-time home buyers needlessly being excluded from buying a home. It doesn’t result in everyone being able to sell their house for double, it results in very few people being able to sell their house, and first-time buyers not being able to afford any house.
Reason number two, between the 1940s to the early 1980s, single-family homes in blue-collar neighborhoods cost on average, twice the annual family income. Once real estate investors and real estate agents began to normalize grabbing up and trying to profit off of normal human beings trying to live in a home, not only did they cause the single-family home to cost on average three-four times the annual family income, mom had to begin working full-time, then by the 1990s both mom & dad had to work overtime in order to afford a single-family home.
Reason number three, real estate agents are not the smartest people in the World, they are often so greedy that they can’t even think normally or rationally. If a real estate agent really thought this situation through, where there is a nice 4br/2ba home a couple of blocks away for $80K that hasn’t sold in the past several months, several other nice 4br/2ba homes nearby at less than $150K that have not sold, and a couple of huge, 2-story, nice looking, recently updated homes at $400K that haven’t sold in over a year, why would a real estate agent think that there is a demand in this area, buyers in this area, or buyers with money in this area?
Reason four, I can’t understand why a home owner would go through the effort of listing and trying to sell their home, and create a situation where a sale is almost impossible. If the home owner wants to move away and start a new life somewhere else, needs the proceeds from this house sale to pay for a new house somewhere else, or needs to sell this house to pay off debt, why would they sabotage themselves by setting the price so high to make a sale impossible?
Lastly, I wonder what goes on in other people’s minds. What is their understanding and perception of reality? Do they know and understand that the oil boom is over? Do they know that very, very few people in this area earn over $100K per year? Can they look around and see the houses that surround them, that almost all of the houses that surround them are less than $200K houses? Even if there was a medical doctor who could afford over $400K for a house and was looking, why would this doctor purchase a house in this blue-collar neighborhood where the houses range from $50K-$200K?