Tag Archives: buying a home in Dickinson North Dakota

Banks Don’t Want To Lend, Or Own Property In Dickinson, And It Is Causing Real Estate Prices To Fall

Banks in Dickinson, North Dakota do not want to loan money on property, and end up owning property in Dickinson, and it is causing real estate prices to fall.  No matter what people in Dickinson say or think about the economy in Dickinson remaining steady or improving, the Banks think the opposite, as demonstrated by their current lending practices.

The Banks don’t want to loan money on property in Dickinson because of the following doubts about Dickinson:

  • The Banks believe that real estate prices in Dickinson will continue to fall.
  • The Banks do not want to have loans on properties that are depreciating, which people would walk away from when they owe the Bank more money than their home is worth.
  • The Banks believe that the economy in Dickinson will continue to decline, with fewer jobs, lay-offs, businesses closing, and wage rates continually decreasing.
  • The Banks do not want to loan money based on people’s income history in Dickinson, because they believe that many people will lose their job, be unable to find another job, and their wage rates will continually decrease.
  • The Banks believe that people in Dickinson will default on their home loans, because they will get laid-off, be unable to find another job, their wage rates will drop, or they will find out that they owe more money on their home than it is worth as its value depreciates.
  • The Banks believe that they will likely end up owning many properties in Dickinson because of people defaulting on their mortgages.  The Banks believe that these properties will be depreciating in value greatly, they will be unable to find qualified replacement buyers, and the Bank will be responsible for paying insurance and high property taxes on these properties for many years.

In order to not have problems, the Banks are trying to not lend money on houses in Dickinson, because they don’t want to end up owning many, many houses in Dickinson.

The Banks don’t care, that the depreciation of home values that they are so worried about, they are perhaps the primary cause of this right now.

I will give two quick examples of home buyers who were willing to pay the seller’s asking price, but the Banks would not loan money to any of the buyers, so the home price dropped 10% to 20% in less than one year.

A friend of mine who has lived in Dickinson for 35 years, currently owns a home with $20,000 remaining on his mortgage.  I believe his current mortgage payments are $300 per month or less.  He is single, and a couple of years ago he no longer had to make child support payments of $700 per month or more on his two children, as they are now grown.  He has worked at the same company for over eight years, and his take home pay after all taxes is at least $3,000 per month. He owns several vehicles, which are paid for.

He agreed to purchase a neighboring house for $134,000, which was less than the current appraised value.  He thought that he would have no problem getting a mortgage for this house, based on his income, his employment history, his large equity in his current home, and having no car payments, credit card debt, or other debt.  But the Banks in Dickinson denied him a home loan.

If you use an on-line mortgage payment calculator, the mortgage payment for the $134,000 house would be less than $900 per month, plus his current mortgage payment is $300 per month.  For a single male with $3,000 per month income after all taxes, with no other debts, why couldn’t he afford $1,200 per month total for home payments?

The Banks did not want to make a home loan to him with payments of less than $900 per month, but for twelve years on his income he had paid nearly this much every month in child support.

Within less than one year, the seller’s asking price for this home that he agreed to buy for $134,000 had dropped to $120,000.

This second story is about my experience.  I own a home in Idaho which is paid for, but I have been working in Dickinson for almost six years.  For about three years, I was a roommate of a home owner in Dickinson, where I paid about $480 per month.  Once the Oil Boom ended, and so many out of state workers returned to where they came from, apartment rents in Dickinson decreased greatly, and I rented an apartment for less than $400 per month.  However, I wanted to get out of this apartment, because I had some bad neighbors.  I saw a very inexpensive manufactured home for sale in Belfield, on its owned land, so this was something that I was interested in buying:

A trucking company in Idaho, that was doing business in North Dakota, wanted to buy housing for three of its truck drivers, so this trucking company purchased a 3-bedroom single-wide manufactured home in Belfield on its owned triple lot, for nearly $50,000 in about 2014.  This trucking company completely furnished this manufactured home with everything from furniture, to appliances, beds, bed linens, cookware, and utensils.

This trucking company in Idaho, no longer does business in North Dakota, so they wanted to get rid of this manufactured home, just like it is, with all of the furnishings.  Six months ago, they were asking $25,000.  I went and looked at it, and it was fine with me.  The property taxes were only about $100 per year.  The mortgage payments, would be much less than I had been paying in rent for the past six years in Dickinson.

I went to or spoke to four or five Banks in Dickinson, and they each had their own excuse for not wanting to lend any money for this manufactured home, such as “We have been instructed to not lend money on any manufactured home whatsoever, no matter how new it is, or how much land is involved.” or “We can not lend money because the land is zoned commercial.”

I thought that this was ridiculous, I have very good credit, this was less money than a new vehicle costs, and the Bank could place a lien against my paid for home in Idaho if they ever needed to collect their money.  I was seriously considering putting this home purchase on my credit card, which has a credit limit of $35,000.

Many other people looked at this manufactured home in Belfield, and tried to buy it, but none of them could get a loan from a Bank.  A few days ago, the real estate agent sent me a text message, stating that the seller’s asking price is now down to $20,000.  This is a 20% price drop in six months.  I would have been happy to pay $25,000 with a home loan from a Bank.

I know one other person in Dickinson now, whose take home pay after taxes is at least $3,000 per month.  He is single, in his forties, and he has been employed with the same company for several years.  He recently applied for a home loan with a Bank in Dickinson, for a home owned by a relative of his who is willing to sell it to him for less than $200,000, even though the appraised value would be closer to $250,000.

This Bank informed him that they would approve him for a mortgage of up to $70,000.  Which means they don’t trust him to be able to make monthly payments of more than $400 per month.  If a single person’s take home pay after taxes is $3,000 per month, why wouldn’t this person be able to afford mortgage payments closer to $1,000 per month, and a mortgage of up to $180,000?

What I am explaining, is that Banks in Dickinson right now are being very restrictive on home loans, because for one thing, they expect home values to decrease.  The funny thing is, these Banks’ lending policies are the primary cause right now for why home values are decreasing.  They won’t loan money even when buyers are willing to pay the sellers’ asking prices.

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Banks’ Role In The Coming Real Estate Collapse In Dickinson, North Dakota

In this blog post, I am going to explain the Banks’ role in the coming real estate collapse in Dickinson, North Dakota.  I believe that the Banks will be 20% of the cause for the coming real estate collapse in Dickinson.

The price of oil dropping from over $100 per barrel down to $40 per barrel in late 2014 and early 2015 is what caused the oil boom to come to an end in North Dakota.  The oil companies did not want to pump oil out of the ground, perform exploration, and drill new oil wells if they could not make a profit.  The number of operating oil drill rigs in North Dakota went from over 250, down to less than 50.

About 70% to 80% of the oil field jobs went away in North Dakota after the end of the oil boom in 2015.  70% to 80% of the out-of-state workers returned to the states where they came from.  I believe that the end of the oil boom in North Dakota will be 30% of the cause of the real estate collapse in Dickinson, North Dakota.

What North Dakotans should realize, is that 20% of the cause of the coming real estate collapse in Dickinson, is how local people treated the out-of-state workers.  There are some things that North Dakotans never understood.  From 2007 through 2014, many areas in the United States were in a recession.  It wasn’t the prospering people with jobs who came to North Dakota during the oil boom, it was the people who were having financial difficulty or were completely broke.

The majority of people who came to North Dakota during the oil boom, they didn’t have very much money or any money, that is why they came in the first place.  When they got here, old one bedroom apartments that had recently been $300 per month, were now $1,500 per month.  Many people slept in their vehicles at Wal-Mart, Tiger Truck Stop, and Patterson Lake.  Many people slept in the bushes, under bridges, along the railroad right-of-way, and on canal banks in Dickinson.  There was no homeless shelter in Dickinson.

Stark County residents, politicians, business owners, and property owners did not want Man-Camps, temporary oil field housing, in Stark County, so they were not permitted.  These temporary portable housing units, could have been set up in a matter of months to alleviate the housing shortage in Dickinson.  It appeared that the end goal of the local people, was to force the out-of-state workers to have to rent, lease, or purchase the existing locally owned housing, or new housing that they would build.

The new apartments that were built in Dickinson, they rented for $2,000 to $3,000 per month.  That’s $24,000 to $36,000 per year in rent, that wasn’t even for something they would own, that money was just gone.  All of the out-of-state workers felt like they were being gouged.  The cost of rent, and the way that the out-of-state workers were treated by the local people, the local company owners, the local co-workers, the local Police, made the out-of-state workers make up their minds that they would leave North Dakota, and always think badly of North Dakota.

Another way to put it, is like this, thousands of out-of-state workers who left where they came from because they were making little or no money, would have willingly made North Dakota their permanent home, if they would not have been gouged so bad on housing, and been treated with hostility by local people.  The funny thing is, the desire of the property owners to make a killing in a hurry, is one of the primary reasons why there is going to be a real estate collapse in Dickinson, they drove everyone away.

Something else that is funny, is that because Stark County did not permit Man-Camps, temporary oil field housing units, and instead wanted there to be construction of new apartment buildings, town homes, and houses, the occupancy rates at the new apartment buildings and old apartment buildings is now about 50%.

If Stark County would have permitted temporary Man-Camps to operate for three years, and then not renewed their permits when the oil boom was over, the occupancy rates at apartment buildings in Dickinson might now be at 80%, with higher rents, and a higher demand for houses.  I am going to put 20% of the cause of the coming real estate collapse in Dickson on the refusal to permit temporary Man-Camps in Stark County, which has led to an over supply of apartments, town homes, and houses in Dickinson.

So far, I have listed the causes of the coming real estate collapse in Dickinson as:  30% end of oil boom;  20% gouging and mistreatment of out-of-state workers which drove them out of North Dakota;  20% denial of temporary Man-Camps which resulted in an over supply of apartments, town homes, and houses.

I began this blog post by stating that 20% of the cause of the coming real estate collapse in Dickinson will be the Banks.  The Bank owners know that the oil boom has ended, that 70% to 80% of the oil field jobs have gone away, that 70% to 80% of the out-of-state workers have returned to the states where they came from, that there is an over supply of housing in Dickinson, and that the occupancy rates at the new apartment buildings, and the old apartment buildings is now at about 50%.

Despite what the Chambers of Commerce, politicians, business owners, real estate agents, real estate developers, property owners, and other spokespeople say, or what newspapers, trade journals, and magazines write about the oil boom coming back, or the local economy growing, the Bank owners have a different view, which they aren’t openly sharing.

In my previous blog post, I wrote about my recent experience, and my two neighbors’ recent experience in trying to obtain a home loan with local banks in Dickinson.  Even though my two neighbors could demonstrate the required income level, income history, and a stable job history in Dickinson, they were still turned down for a home loan.

In other parts of the country, myself and my two neighbors would have been given a home loan based on income level, credit history, and purchase price of the home.  What is different about Dickinson, is that there is an over supply of housing, and Dickinson is just coming down from an oil boom.

The owners of the local banks in Dickinson, in my case for instance, where several local banks told me that they were instructed to not loan money on any manufactured home no matter how much land was involved, no matter what, indicates to me that the local bank owners expect to be facing a great deal of home loan foreclosures.

Getting to the point, if you don’t already see it for yourself, is that if the local bank owners in Dickinson don’t want to grant many or any home loans, what do you think that this will do to the real estate market?  Who is going to be able to sell their $100k, $200k, $300k, $400k home in Dickinson, if no bank will grant a home loan to a buyer?

Will it matter if your home is appraised at $200k or $300k, if no one can buy it?

End of oil boom, 70% to 80% of out-of-state workers leaving, over supply of housing and occupancy rates of 50%, and Bank owners not wanting to grant home loans, what do you think is going to happen to the price of housing in Dickinson?

Nice Lower Middle Class Neighborhoods In Dickinson, North Dakota

I moved from north of Dickinson to downtown Dickinson about two months ago.  Throughout the several city block area in my neighborhood, there are a few houses and yards that are a mess, but the majority of the houses and yards are so well kept, that overall the neighborhood is pleasant and attractive.  And my neighborhood is probably a bad neighborhood in comparison to the adjacent neighborhoods.

I often criticize the local Dickinson residents for being uneducated, ignorant, hostile, hateful, unfriendly, not helpful, and uncooperative.  I am not going to take any of that back.  However, it does amaze me that these local people living in the lower middle class neighborhoods in Dickinson maintain their homes so well that the nicest looking areas in Dickinson are these vast neighborhoods in the downtown city blocks.

Although there is one corner of downtown Dickinson that has more affluent people, and this neighborhood is fairly nice, with dead-end streets, private drives, some larger yards, and even an $800,000 house with a swimming pool, this neighborhood is not as well maintained as many of the lower middle class neighborhoods in Dickinson.  This is very strange to me, and might be a unique situation found only in Dickinson.

I have thought about why this may be the case, that the lower middle class neighborhoods in Dickinson are so nice looking.  I believe that there are four main reasons.

  1. Putting aside the oil booms of the 1950s, 1978, and 2007, the growth of Dickinson has been slow and steady.  There did not occur the creation of vast new suburbs outside of Dickinson, and the abandonment of downtown Dickinson.  Downtown Dickinson has been continuously occupied, and has always been a fairly desirable location to live in, by the local residents.
  2. Putting aside the oil booms of the 1950s, 1978, and 2007, Dickinson has not been a town where many people became rich or affluent.  There were not tremendous numbers of people in Dickinson that made so much money by the time they were in their late thirties, that they needed to have a “McMansion” built.  Nor were there tremendous numbers of people that were making so much money that they looked at their first home as a “starter home”.  Now that I am writing this, I think that the fact that most home buyers in Dickinson believed that, “This is it, this is the only home we will ever have.”, made the homeowners take care of their homes.
  3. Due to the recent oil boom that occurred in 2007, home prices in Dickinson literally doubled and tripled in just a few years.  Homeowners in Dickinson that might not have even had significant pay increases in their line of work, would have had easy access to home equity loans to make home repairs, renovations, additions, and improvements.
  4. Due to the recent oil boom that occurred in 2007, many home owners in Dickinson did have significant increases in the amount of money they were earning.  With home prices literally doubling an tripling within just a few years, it would not have been appealing for local homeowners to buy a better house now that they were making more money.  It would make sense to repair, renovate, add onto, and improve the home that they already owned.  Many local residents did do this.

Not only do these lower middle class neighborhoods in Dickinson look very nice, they currently do not have very much crime in these neighborhoods, and they are fairly quiet and peaceful.

Real Estate agents and homeowners in Dickinson currently believe that their homes in these lower middle class neighborhoods are worth $225,000 to $380,000, which is ridiculous, for several reasons.  A family would have to expect to make at least $70,000 per year for the next thirty years to be able to afford that much money, which very few families can expect to do now that the oil boom is over.  There will be many houses for sale now that the oil boom is over, there are fewer jobs, and people have to leave Dickinson.  House prices will become lower, and lower, and lower.

These neighborhoods do look nice though.  Many, or most of these houses have new vehicles parked in front of them, which I think is an indication that the homeowners did well financially during this most recent oil boom, or they took out home equity loans when the housing prices doubled and tripled.

What Other Researchers Found About The Cost Of Housing In Dickinson, North Dakota

There are many people who do not believe what I write about Dickinson, North Dakota.  So I wanted to write some blog posts that show what other people write about Dickinson.

In mid January 2017 I wrote a blog post titled, “How Excessive Land Greed Has Hurt Dickinson For Ever”.  In that blog post I explained that during the Oil Boom the price of housing in Dickinson quadrupled.  There was not a scarcity of land around Dickinson, there was more vacant unoccupied land around Dickinson than just about anywhere else in the United States.  Though the local land owners, local property owners, property managers, and real estate agents may have been able to gouge the out of state workers from 2007 through 2014, this made the out of state workers make up their minds that they would never be able to make Dickinson their home.  They all planned on leaving when the Oil Boom was over.

If you do a Google search for “relocating to Dickinson, North Dakota”, you will find an article from the Inforum.com website titled “Survey: Most out-of-state oil workers not interested in moving to ND”.  This article was written by Mike Nowatzki of Forum News Service in February of 2016.

Two North Dakota State University researchers named Nancy Hodur and Dean Bangsund surveyed 15 firms representing 8,100 employees in 2014 and 2015.  These two researchers presented their results at the North Dakota Housing Finance Agency annual conference in Bismarck in February 2016.

Here are a few quotes from this Inforum.com website article:

“More than 80 percent of nonresidents working in North Dakota’s oil and gas industry don’t want to put down roots in the state, while those who want to relocate see housing costs as a major barrier, researchers found in a survey released Tuesday.”

“When asked if they would like to move to North Dakota, only 19 percent of nonresident workers said yes.

“I thought that was one of the more startling statistics out of this,” said Hodur, an assistant professor in NDSU’s Department of Agribusiness and Applied Economics.

Those workers most frequently cited the high cost of housing and the fear that home values would someday fall below current prices as factors affecting their ability to relocate.

“It’s not because the weather’s too cold. It’s not because they think North Dakota’s a lousy place to raise a family” or that the state’s schools are lacking, Hodur said in an interview. “It’s because it’s too expensive.””

I encourage readers to go read this Inforum.com website article.  You can see, that I am not making this up, the high cost of housing in Dickinson made out of state workers decide that they could never live here permanently.  What the land owners, property owners, property managers, and real estate agents did during the Oil Boom is going to hurt Dickinson for ever.

Advice To Wealthy People From Out Of State Regarding Dickinson, North Dakota

If you are a wealthy person living in a different state, and you are considering moving to Dickinson, North Dakota, I have some advice for you and some warnings.  You can buy a new custom home just outside of Dickinson on 10 to 40 acres for approximately $450,000 to $700,000.  These homes will have large modern kitchens, custom cabinetry, wood floors, five bedrooms, three bathrooms, a three car garage, and probably a large shop building big enough for a tractor, or motor home.  These houses were built by local people who owned land and began receiving oil well revenue money in about 2008, these houses were built by people who had successful oil field service companies, and these houses were built by high paid oil company managers.  If you pick up one of the free local real estate guides, you will see several of these houses for sale.

At any of these new custom homes outside of Dickinson, you will have a good view of undeveloped grasslands.  Most of these new homes will probably not have “wind break trees”, which are rows of trees planted close together not far from the house in order to block the wind.  Once you move in, it won’t really matter what time of year it is, within about a month, you will discover that the wind often blows across the grasslands at about fifty miles per hour.  A new homeowner might think, “Wow, that’s a strong wind”, and it will not fully dawn on them that that’s what it’s going to be like, most of the time.  If you had pictured yourself sitting out on your deck in the mornings, leisurely reading the newspaper, you may now see that your deck chairs and table have tumbled into a barbed wire fence at the end of your property.  At least you have a modern home, with tight fitting double pained glass windows.  You won’t have as much dirt blowing in through cracks around windows and doors, and you won’t hear the wind constantly gusting and buffeting your house, hopefully.  Thank God you have a garage that you can drive into and shut the door behind you, otherwise you would have a hard time getting into your house if you had anything to carry like groceries.

You will be able to sit inside of your modern home with your family, and watch television via Dish Network, and use the internet, if you don’t want to be out in the wind.  There are some days in the summer when the weather is moderate, when you can get out and mow the lawn or have a cook out.  You really need to get outside and fully appreciate the nice summer days when they are here, because there are not many of them.

If you come to Dickinson with a Jaguar, Mercedes, or BMW and try to take it somewhere to be serviced, Dan Porter Toyota may or may not be willing to change the oil.  You may have to take your vehicle to Bismarck, Fargo, or Minneapolis to get any work done.  You will start to notice more and more, that even the housewives drive big four-door pick-up trucks and Suburbans.  After your first winter in Dickinson, you might start to realize that the people who can afford it, get for their wife and themselves, the biggest four-wheel-drive vehicle they can.  Driving into Dickinson, you can hit a deer in the road.  It is sometimes fatal for the driver of a car when the deer goes through the windshield.  You are safer in a big truck because the hood is higher than the deer.  Also, in the winter when the roads have not been plowed, or the roads are icy, you can get into town better in a big heavy four-wheel-drive truck, and you can survive an accident better if you are in a big heavy truck or Suburban.

For entertainment or sport, some people like to go deer hunting and pheasant hunting.  Hunting, hunting…deer and pheasant stand beside the road when I drive by, or run back and forth across the road in front of me when I am driving into town, like retarded children.  They are right there, just like the neighborhood dogs, cats, and rabbits.  So I don’t see any entertainment or sport in hunting deer and pheasant in Dickinson.

Entertainment for women, they can shop at Menards, Wal-Mart, a few shops downtown, and the Prairie Hills Mall.  The Prairie Hills Mall has a JC Penny and Herbergers.  If the women want more than this, they will have to drive to Bismarck.  The West River Community Center has two indoor pools, one outdoor pool, two indoor tennis courts, indoor track, weight room, and exercise equipment, so there are things for women, moms, and kids to do.  There is a golf course in Dickinson, which I believe is supposed to be O.K.

I have written many blog posts about restaurants in Dickinson.  My frequent complaint is that most of the servers are disgruntled troubled women from out of state, and being a waitress or bartender and serving people is the last thing in the world that they want to be doing, and they let you know.  Don Pedros Mexican restaurant has good food, and pleasant courteous staff.  The Brickhouse Grille is supposed to be the upscale restaurant in Dickinson, and it is in a way, however it is not upscale enough.  At any restaurant in Dickinson, at any time, you can have a group of male out-of-state workers, that work in construction or the oil field, and they want to go out to eat and have some fun.  The restaurant owner and managers can spot these workers a block away, and they can tell that they are White Trash or very nearly White Trash, but they don’t know if they are going to behave or not.  The following is what typically happens.

An educated, professional, well-mannered person or persons will go to a restaurant in Dickinson, be seated at a table, and place an order.  Even at what is supposed to be a nice restaurant in Dickinson, a group of White Trash or nearly White Trash workers will arrive at the restaurant.  To the waitress, who lives in a trailer park or an apartment, likes to smoke pot, crack, and meth, these White Trash workers are her kind of people.  The waitress couldn’t be happier to seat these White Trash workers at the table adjacent to a professional husband and wife.  If the educated, professional husband and wife, chose to stay, they would be treated to construction worker tales of sex with ugly women, drunkenness, fighting, arrests, DUI’s, and other conversations that they might hear if they were in jail or prison.  This is exactly how it is.  So most of the wealthy people in Dickinson do not go out to eat at restaurants in Dickinson, to neither be in the company of low class disgruntled waitresses, or White Trash workers.