When I first came to western North Dakota in 2011 to find work during the Oil Boom, the housing prices had quadrupled during the previous four years. This was caused more by greed, than purely a supply/demand relationship. To illustrate this, it came to the point that local people were charging $750 per month to rent a small tent in their backyard. Perform this self-check, could you look out your back window, see someone living in a small tent, and feel good about charging this person $750 per month to live like this?
In 2011, I stayed in my $500, 1975 truck bed camper on company property where I worked. In 2013, I stayed in my 7’x14′ enclosed utility trailer at various locations that were not campgrounds. 2014-2016 I was room mates with a homeowner in his 3br/2ba home where I paid about $450 per month rent.
The North Dakota Oil Boom ended in 2015 due to the price of oil dropping below $80 per barrel. As thousands of out-of-state workers and their families began leaving to return home, it created a large number of housing vacancies. By 2017, I was able to rent a large 2br/1ba apartment in downtown Dickinson for about $400 per month. Back during the Oil Boom years 2007-2015, this same apartment rented for about $1,500 per month.
Because of the North Dakota Oil Boom, still to this day, there are homeowners in Dickinson who believe that their 1960s, 3br/2ba, 1,400 sq. ft. house, on a small city lot is worth $150K-$200K. And for a recently built, similar house, on a small lot, $250K-$300K. I am not going to stop and explain why this pricing is off, you will probably begin to understand this for yourself as I continue with my story below.
Dickinson is the largest town in southwest North Dakota, with a population of about 24,000 people, a commercial airport, two hospitals, four new car dealerships, Walmart, etcetera. Outside of Dickinson, within a 50 mile radius, there are at least ten small towns, with populations 40-1,000 people. In these smaller towns, there are quite a few houses for sale in the $50K-$150K price range. Sometimes, there are surprisingly underpriced houses in these smaller towns, that are decent size, good condition, and nice looking.
In 2020 I was able to buy a small house occupying two city lots, in a small town 25 miles from Dickinson, for $50K. I was very happy with this. Remember what I wrote, in 2011 I stayed in my truck bed camper, in 2013 I stayed in my 7’x14′ enclosed utility trailer, and 2014-2016 I was room mates in someone else’s home.
The house that I bought was built in 1920. It was well-built and sturdy, although it was not impressive looking at all, nor pretty. I want to point out, that in many places in the U.S. right now, the average home price is about 4-5 times the average person’s annual income, whereas in the town where I bought, the average home price is 1-3 times a local person’s income. It is much less stressful to own a home in this small North Dakota town, compared to elsewhere in the U.S.
The total population of the state of North Dakota is less than 800,000 people. Yesterday I read a newspaper article that said the population of North Dakota actually dropped by several thousand people in 2021. It is usually very cold here from November-April, at least six months of being cold. The cold, wind, barren grasslands, sparse population, lack of things to do, make North Dakota unappealing to many people.
To me, besides Wyoming, or Alaska, I don’t know of anywhere else that I could move to, to get away from people. People have a variety of qualities and characteristics, which one can like or not like, but for me, the best and most comfortable circumstance to be in, is to not have too many people around in the first place, this in itself solves all kinds of problems.
Maybe because of greed, maybe because I don’t like people, especially noisy obnoxious trashy people, for over a year I have thought about how nice it would be to buy the house next door to me. To have that much more of a buffer zone to keep people away from me. There was an elderly widowed lady living next door to me, who was nice and quiet, a good neighbor, but still I coveted her house. It was a two-story house, larger than mine, with a large attached garage.
It was an unpleasant surprise when the elderly woman living next door to me, went into a nursing home about eight months ago. I didn’t think that her health was that bad. From time-to-time I heard news that her health was declining. Several months ago her grown children in their 50s, mentioned to me that her house would probably have to be sold soon.
Even though I wanted to own this house next door to mine, I didn’t think that I could afford it, because it was larger than my house. Keep in mind, I wasn’t going to sell my house, I wanted to keep my house on two city lots, plus obtain the next 1-1/2 city lots next door with this two-story house on them. I wasn’t planning on renting out the house next door if I bought it, because of the “CDC Rent Moratorium” where renters think that they don’t have to pay rent once they move in.
Last week, the adult children of my elderly neighbor said that they would be willing to accept a cash offer from me, and each of my other neighbors, to give each of us a chance to buy the house. They did not want to go through a lengthy, time consuming, tiring process of appraisals, inspections, house showings, and bullshit offers from people who didn’t have money.
I explained that I wanted the house, but I did not think that I could afford it. I asked what was the ballpark price that they were looking for? It was very close to what I paid for my house. I felt that it was less than what the house was actually worth. I was greedy for the opportunity to buy something for less than it was worth, and to have the house next door so that no one else could move in to it and begin bothering me.
In my mind, I knew that I actually had enough money at that moment to pay their cash asking price, but I wasn’t about to spend all of this money, because of the possibility of unforeseen emergencies like becoming sick, injured, or losing my job. I said that I would go to the bank tomorrow to see about getting a personal loan, I was short about $12K-$20K from their asking price.
I added up all of my assets, and the personal loan that I wanted was less than 5% of my assets. I have good credit, the personal loan monthly payment would be less than 8% of my monthly income, so I believed that there was no way I would get denied a personal loan. That night, I completed an online personal loan application with one bank, although I used a personal loan calculator with two different banks.
The following day, I received a message from the bank to call them regarding my personal loan application. The manager of this bank, who I like, she said that the longest loan period they would allow was 36 months. I was angry, I wanted to have loan payments that were like $240 per month for ten years, not something like $750 per month for three years.
I calculated the property taxes on the house to be $110/month, insurance $60/month, electric $60/month, water&sewer $70/month, so that’s $300 per month. I didn’t want to pay another $750 per month for this personal loan. I asked the bank manager lady for any suggestions, she didn’t have any good ones.
I was angry, I dreaded this would happen, once you start getting a bank, a realtor, an inspector, an appraiser involved, something is bound to go wrong and ruin everything. This is why the sellers wanted a CASH offer, so that nothing and no one could get in the way. Just even being short a little bit of money, ruins everything. I thought about using a no-questions-asked credit card check for $12K just to say “fuck you” to the bank, even though the credit card company interest rate would be twice as much.
I sent an email to the seller, explaining the amount of cash that I was willing to pay, the personal loan amount that I had sought to meet their asking price, but that I didn’t want to repay the personal loan over the short period of three years, so unless they had any suggestions, I was out. They replied that they were not willing to do a contract-for-deed, but I didn’t want that either.
For the next week, off and on I had panic attacks about a contract-for-deed going wrong, where I imagined being in the hospital for two months, or jail for two months, or bank auto-pay didn’t work for two months, or the sellers pretended they didn’t get the last two checks in the mail, and I lost $40K because I failed to make two monthly payments. What homeowner wouldn’t want to keep $40K in payments, AND get their house back?
Besides the panic attacks about contract-for-deed gone wrong and imagining monthly credit card payments of $1,000 per month, I realized that what I should have done, was get a personal loan from the other bank for a five-year loan for something like $17K, where the monthly loan payment would about $350. Even if I didn’t like the five-year personal loan, just get the house bought, THEN get a longer-term home-equity loan.
A local person who owns several other houses, bought the house for cash, for less than the asking price that I was trying to meet. Do you see how much of an advantage wealthy people have? Any kind of entanglement with a bank, realtor, home appraiser, or home inspector can knock every non-cash buyer out of competition for a house. California refugees who sell their houses are in this advantageous position against local buyers as well.