Tag Archives: real estate prices in Dickinson North Dakota

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?

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Lies About Dickinson, Lies About Real Estate, And Banks Betting Against Dickinson

About one week ago, I wrote a blog post about all of the crime and drug dealing at the apartment building where I live in downtown Dickinson almost causing me to move.  I don’t want to live here, I would like to get out, but I don’t think that I could escape the drug problem by moving to a more expensive apartment building in Dickinson, the occupancy rates are so low at the new apartment buildings, that they will rent to anyone.

This past week, I began looking at the real estate multiple listings for properties in this area, and I found one that was very low priced in Belfield, North Dakota, which is 24 miles west of Dickinson.

This property, which I will give the details of below, was perfectly fine with me, though many people would not find it appealing.  You have to keep in mind, that my first year in Dickinson back in 2011 during the oil boom, I slept in a 1978 truck bed camper, and I took showers at the company where I worked, or at the Tiger Truck stop.  My second year back in Dickinson in 2013, I slept in an enclosed utility trailer that was 7 ft x 14 ft, with no water and no sewer connections.  In 2011 and 2013, I was very cold when the temperature was below 0 degrees Fahrenheit outside, while trying to live in a camper with one electric heater.

The property that I saw in the Dickinson real estate multiple listing guide last week that interested me, was a 3 br, 1 ba, 1,000 square foot manufactured home on a 75 ft x 140 ft owned lot, for $25,000.  According to the website Realtor.com, for a 30 year mortgage at 6% apr, the combined monthly payment for the mortgage, property tax, and insurance would be $106 per month, total.

Because I can’t park my equipment trailers and some of my vehicles at the apartment where I live now, my combined storage and rent payment is $500 per month.  Which is better, $500 per month to live in an apartment building with drug dealers and crime, or $106 per month to live in your own home, on your own land?

$25,000 is pretty cheap for a 3 br, 1 ba home on its own lot, for this area, or for any area.  From 2009 to 2015 during the oil boom, the rent for this manufactured home would have been $2,000 per month, which equals $24,000 per year.

I went and looked at this manufactured home, inside and out, on Friday of last week, and I took a video of it which I will show below.  I liked this manufactured home, it was fine with me, the yard, the outside, and the inside.  On the good side, it is fully furnished, and all of the furniture, washer and dryer come with it.  On the bad side, the roofing shingles on the south side are cupped, and will have to be replaced.  A new roof will cost about $5,000.

The real estate agent was pleasant and professional.  He told me that the property had been purchased by a company that needed to provide a place for three workers to live, but now that this company no longer does business in North Dakota, they just want to sell this property.  Other prospective buyers had offered to make a large cash down payment, and make monthly payments to the property owner, but all of these offers were declined.  The company wants to receive complete payment at one time, and be done.

A little over a year ago, I received a mortgage application package to complete from Dakota Community Bank where I have an account.  When I spoke to the loan officer again at Dakota Community Bank on this past Friday, she said that Dakota Community Bank will no longer lend money on any manufactured home whatsoever, no matter how new it is, or how much owned land is involved.  Later I had a short discussion about a personal loan using my vehicles as collateral, but most of these vehicles are not in North Dakota, and their value would be assessed at wholesale trade-in value, which is nothing.

I talked to someone at ENG Lending in Dickinson, and their policy is that they will loan money on a new manufactured home at the dealer, but not on a used manufactured home.  I spoke to a loan officer at Gate City Bank in Dickinson, and they said that they looked up this property, and would not loan money on this property because the area that it was in was zoned commercial.  I suspect that Gate City Bank was just looking for a reason to excuse themselves from lending on an older manufactured home.

I was told that I would have a high likelihood of getting a loan from the bank in Belfield where the home is located, Choice Financial.  I went to Choice Financial Bank on Friday last week, discussed this with loan officers, but they have not called me back.  I don’t think that they can do anything with an older manufactured home either.

In a way, this whole process was funny and unbelievable to me.  All throughout Dickinson, all of the business owners, real estate agents, property managers, property investors, business people, financial people, and bankers, like to talk and make announcements about how the economy in Dickinson is booming, growing, expanding, and taking off.   Yet all of the bank owners have so little faith in the economy in Dickinson, that they have issued instructions that no loans are to be made on manufactured homes even if they are on owned land.

The other thing that is kind of funny and absurd to me, is that this property is not 3 times my annual income, not 2 times my annual income, but ½ of my annual income.  In many parts of the U.S., people are getting home loans, where the cost of the home is 3 to 4 times the person’s annual income.  Yet in Dickinson, I can’t get a loan to buy a home on owned land, that is ½ of my annual income.  Or, I could probably be approved to buy a new car in Dickinson for $35,000, a car, whereas I can not get a loan for a lesser amount, for a 3 br, 1 ba home, where I would live, for less money than I have been paying for rent the past four years.

I could put the whole $25,000 purchase on my credit cards, I receive credit card checks that I can use just like a regular check with no discount to the recipient.  But my interest rate would be 18%, which is about $4,500 per year in interest alone.  Why would I want to pay about $375 per month, just in interest?

I discussed with the real estate agent, making a cash offer for $18,000.  The real estate agent said that this proposal had already been made to the property owner, he refused, he will accept nothing less than $25,000.

The real estate agent, each of the bank loan officers, the other bank personnel, and the Stark County personnel that I spoke to in the past several days, were all pleasant, polite, and professional.  I like this manufactured home, it is fine with me, I can afford it, I don’t mind paying the asking price, and I don’t mind living in Belfield.  I just could not get financing.

There were many other people who also wanted to buy this manufactured home, on its own 75 ft x 140 ft lot.  The loan payments on this property, would be lower than just about anything you could rent in this area, even lower than the rent on an old studio apartment.  However, no one could get a loan, the owner would not accept a large down payment and finance it, nor would the owner accept cash payment for a lesser amount.

I got a lot of insight from this.  No matter what the talk is on the street, in the newspapers, and on television about how well the economy in Dickinson is doing, the people with money, the people who know what is really going on, are not about to loan money on manufactured homes, even manufactured homes on owned land, for at least three reasons.

One, they expect the economy in Dickinson to decline, people to continue to lose their jobs, and they expect people to default on their home loans.  Two, with the economy in Dickinson declining, and people defaulting on their home loans, who are they going to get to buy a foreclosed manufactured home, or who are they going to get to rent a foreclosed manufactured home?  Three, with the economy in Dickinson declining, wealthy people and bank owners do not want to be stuck owning multiple manufactured home properties that people have defaulted on, these things will be worth pennies on the dollar there are going to be so many vacancies in Dickinson.

Think about this, on the other hand, if the bank owners and the people with money in Dickinson, truly believed that the economy in Dickinson was expanding, they would not hesitate to make loans on manufactured homes on owned land, for at least three reasons.

One, with more job openings expected in Dickinson, people would not be losing their jobs and defaulting on their home loans.  Two, so what if someone defaulted on their home loan while the economy was growing, it would be easy to find someone else to buy or rent a foreclosed manufactured home.  Three, so what if someone defaulted on their manufactured home loan when the economy was expanding, the value of manufactured homes on owned property would be going up and up, who wouldn’t want to own assets that are appreciating in value?

At this point, I don’t care, I am done trying to work this purchase out.  I will just sit back and watch this manufactured home not sell, and continue to decline in value.  I don’t care if someone else finds a way to purchase this home, to live in, or to own this home as an investment and rent it out.  I have nothing against this home, I like it, but it will need a new roof soon.  Here is the video, if you want to make an offer on this home, just look on any real estate site for Belfield, North Dakota.

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.