Tag Archives: home prices in Dickinson North Dakota

How I Messed Up A Home Purchase Last Week

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.

Dickinson, North Dakota Could Have Had Permanent Growth If….

In this blog post, I am going to try to explain one of the mistakes that has been made in Dickinson that has prevented permanent growth.  No, I am not going to write about local people in Dickinson being unfriendly, uncooperative, not helpful, and hostile for the 100th time, I am going to write about something that I have not covered yet.

I will illustrate what I am trying to explain using a real life example of a woman named “Trudy” who moved to Dickinson with her husband approximately two years ago.  Trudy and her husband are in their late forties, and they moved to Dickinson because of her husband’s job.  They had moved to different towns more than several times during their marriage because of her husband’s job.

Initially, when they moved to Dickinson two years ago, they rented an apartment.  They wanted to look for and try to find the right house for them.  With the sale of their previous home and their financial situation, they could have afforded to buy the most expensive home listed for sale in Dickinson if they wanted to.  But they were really only looking for a nice looking, comfortable, modest home that was the right size for them.

Trudy and her husband did not like paying the very high apartment rent that was the result of the oil boom that began in 2007 in western North Dakota.  The rent for a two-bedroom apartment in Dickinson was typically $2,000 to $3,000 per month.  Most people recognized that if you are going to pay $24,000 to $36,000 per year in rent, you would be much better off financially by using that amount of money to purchase a home.

Trudy liked Dickinson, and she liked the people in Dickinson.  She was looking forward to buying a house and making a home here with her husband.  She was looking forward to getting out of their apartment, this was only supposed to be a temporary arrangement.

Trudy looked, and looked for a house in Dickinson.  She looked at every on-line listing, she looked at all the printed real estate guides, she went to real estate offices, she drove around Dickinson looking at homes “For Sale By Owner” and to look for any house for sale that she wasn’t already aware of.

Trudy looked for a house in Dickinson for 1-1/2 years.  Though from time to time she found a house that would have been O.K. for her and her husband, everything was overpriced.  It was as if the home owners and the real estate agents did not think that anyone else was aware that the oil boom was over, and that the oil field was not going to pick up any time soon, and possibly not for a long time.  It also appeared that the home owners and the real estate agents believed that there were people “with a lot of money”, that would just go ahead and buy a house for $250,000 to $450,000 without even thinking about it.

Most people that are capable of purchasing a home for $250,000 to $450,000 are financially shrewd people, who are not in the habit of losing money.  These people don’t willingly over-pay for anything.  But in Dickinson, there seemed to be this wide-spread belief that there were vast numbers of home buyers that didn’t know how much homes were worth, and that the thought never entered their mind, “What could I expect to re-sell this home for in the future?”

Dickinson began to lose its charm for Trudy and her husband.  The people didn’t turn out to be that friendly or very helpful after all.  They could not find a reasonably priced home, and living in their apartment was unpleasant.  There was not a lot to do in Dickinson.  Eventually, both Trudy and her husband agreed that they would be happier and better off if they just moved to a different state.

I used this story up above to illustrate that both the excessive gouging on housing during the oil boom, and the current and continuing over-pricing on houses, has made about 90% of the people who came to Dickinson in the past ten years make up their minds that they would never stay in Dickinson.  I am not saying that 10% of the people decided to stay, I am saying that 90% of the people made up their minds that they would never stay.

Of the 10% of the people who came to Dickinson in the past ten years who didn’t make up their minds that they would never stay, many or most of this 10% had to leave anyway because they lost their job, or they could not find a reasonably priced house.  Trudy and her husband would be in this 10%.

In other words, Dickinson drives almost everyone who comes here away.  The population of Dickinson is going to continue to decrease every year, for years to come.

Real Estate Prices In Dickinson, North Dakota

Today I looked through the free “Real Estate Preview”, published by the Dickinson Press & The Advertiser.  There are a tremendous number of homes for sale in Dickinson and western North Dakota.

The house prices range from overpriced to ridiculously overpriced.  In general the houses are priced about 50% above where they should be if they were to have any chance of selling.  For instance, a house that might actually sell within several months at $200,000, is instead listed for $300,000.  This is the case for listing after listing, page after page.

People in Dickinson are trying to sell their homes now for three main reasons.  One, they recognize that the oil boom is over and that real estate prices are going to fall, so now would be a better time to sell rather than later.  Two, they can not see being able to afford the home they are in now, now that the oil boom is over, because they have greatly reduced income.  Three, they can not afford the home they bought in Dickinson, now that the oil boom is over, and they must leave Dickinson, or they have already left Dickinson.

Everybody in western North Dakota knows that the oil boom is over now.  Everyone knows that real estate prices are going to drop.  Everyone knows and can see that people are desperate to sell their homes now, for the three reasons that I just explained in the previous paragraph.

I don’t understand, and then again yes I do understand, how the several hundred home sellers and the one hundred real estate agents expect to sell homes for 50% more than what they could sell for now.  Just for fun, to check the sanity and stupidity of the home sellers and the real estate agents, here are some questions that I would like to ask them:

  1. How is it that everyone knows that the oil boom is over, that now is the time to sell because real estate prices are going to drop, and you don’t know, that everyone knows?
  2. Real estate agents and home sellers, how is it that the oil boom is over, that there are several hundred homes for sale because the oil boom is over, people have lost their jobs, people have reduced income, people have had to move away, and you are pricing homes like there is an oil boom going on?
  3. Real estate agents and home sellers, can you describe the imaginary buyer that you have pictured in your mind, that is going to buy an old, not very attractive home on a city lot in Dickinson for $227,000, when most blue collar workers, trades people, and oil field workers have lost their jobs, are fearful of losing their jobs, or are working reduced hours?

The only sane recommendation that I could make to a home seller now would be, that if you want to sell your home within the next several months, you had better drop the price to the point that it is clearly a very good deal in comparison to the other several hundred houses that are for sale in western North Dakota.

The advice that I would give to a home buyer would be to wait.  The home prices are going to drop, whether the home owners and real estate agents like it or not.  My estimation is, that a home that is currently advertised at $300,000 now in the Dickinson area, should actually be priced at $200,000 in order for it to sell within several months.  One year from now, this same home would have to be priced at $175,000 for it to sell within several months.  Two years from now, $150,000.  I base this on what happened in Dickinson after the oil boom of the late 1970s.  It is not that the home is actually worth so much less, it is that people will be leaving Dickinson, so many houses will be for sale at the same time, and there will be not many people wanting to buy a house in Dickinson.

I want to point out and remind the people in Dickinson, especially the real estate agents and property owners, that if you had not tried to take advantage of the out of state workers so bad during the oil boom, they all would not have planned on leaving Dickinson.  If the local people would not have been so hateful and hostile, Dickinson would have had permanent growth and a larger economy.  Dickinson will possibly or likely see a decline in population that continues for the next twenty years.  Other towns and cities that are welcoming and hospitable will grow and experience new development.