Tuesday, May 29, 2007

High Home Prices = LAYOFFS

Maybe I've beat this point into the ground, but the idea that high home prices will result in loss of jobs and a generally withering of Central Oregon economic vitality has actually made it into "print". The Bulletin is running two stories today:

Food, health, housing drive Bend costs up
Bend plant to close; 30 to lose jobs

The crux of these stories are exactly the same. Costs are rising at an alarming rate in Bend. Companies that pay "living wages" are closing in Bend. Flip side of the same coin.

Forget Bend, and the "mental baggage" so many seem to have about high living costs here. Would you buy from a company that sells door jams for $100, or another company that sells the exact same product for $25? Before you go on an uneducated rant about "supporting the common man", "buying local" and such, realize that sort of soft-headed thinking will close you down. You don't eat. Look at Oregon Woodworking: Buyers voted with their feet, and now OW is closing.

High costs equal Non-Competitiveness. Non-Competitiveness equals declining sales, which equals economic contraction & malaise. Oregon Woodworking, Seaswirl, Columbia Air, Brightwood... these aren't coincidences. These are symptoms of Central Oregons growing inability to compete in any way on this countries economic stage, much less the Worlds.

The ONLY scenario that high costs are tolerable is when a market is impervious to "long-distance" competition. Look at housing: Doesn't it seem like it's impervious to Chinese competition? Nope. Ask Oregon Woodworking. The Chinese can't disintermediate the actual on-site construction, but they are killing "factory components" industry. They are starting to build more and more of the value added for US homes. I'll bet in 10 years that TWICE the revenue from homes constructed in Bend will go to China.

What happens when huge chunks of pre-built home "parts" are shipped here and the trades value added for each home shrivels away to nothing. Don't think it won't happen. It's happening more and more everyday, in all industries. Chinese and Indian doctors reading CAT scans? Who ever thought that would be possible?

But that is the way of the World economy. The US innovates, the third-World reverse engineers our innovations, and in just a few years they destroy manufacturing base that we had built only a few years prior. So what do we do? We innovate again, and the cycle starts again.

This is the model for a high-cost competitor: Innovate FAST or die. The US remains the Worlds dominant economy SOLELY because of this. We innovate very quickly, and obsolesce our own products. The US is VERY HIGH COST. And the economic solution for any competitor that is high-cost is to innovate, and innovate quickly. The higher your costs, the FASTER you must innovate, or it's all over.

Central Oregon costs have risen at such an astounding rate, that our companies are totally unable to adapt. Look at what is happening. Big manufacturers are simply closing their doors. Any Cent OR company that competes on the Worlds economic stage to any real extent is downsizing.

Bend's cost-of-living index was 116.4, up from 107 the last time the annual index was compiled in the second quarter of 2006. The index, which does not measure inflation, rates cities against an index base of 100. More than 100 is considered a higher-than-average cost of living.

The index shows Bend is trending in the "wrong direction," said Bend Chamber President and CEO Mike Schmidt.

"This is quite startling," Schmidt said.

"This tells us we're losing a competitive edge with companies thinking of coming here because it's so expensive to live here."

In Bend, the most drastic index increases were in housing costs and the price of groceries. Housing increased from 109.9 to 130.4, and groceries rose from 102 to 122.3.

From 107 to 116.4, or about 9% in one year. I'll say that's "startling". And then there's the admission that an economies competitive edge is linked to prices. Wow. Readers of this blog have probably read that same line here so often they want to throw up. High prices means less competitive, and the only real way to keep a high cost economy alive is to have barriers to trade. Bend doesn't have any. We CAN'T be an affluent, small resort town like Aspen or Jackson. What happens to the thousands of homes we've built? Do we burn them down?

So what happens? If prices remain high, places like Oregon Woodworking and others will continue to downsize to the Zero Point. We will start shrinking. Is downtown & The Old Mill the only areas that survive? I don't think so. There is very little barrier to supply. There is land available, and developers are starting to build Up. But as I've stated before, RE is NOT a leading business indicator, it is a result. But we are closing down Bends large employers.

I've said 100X, we need anchor tenant employers. Big Ones, now, and we should pay for them. Tax incentives, or whatever, just get them here. We will have to bite the bullet and absorb a LOT of their costs to get them here. If we keep going down the Build RE & Screw the Rest road, we will have an economic A-bomb go off in Bend. Oregon Woodworking, Seaswirl, Columbia Air will turn into closing Safeways, McDonalds, and Wendys which will then turn into Mondo Pizza, Super Burrito, and God help us, Pegasus Books. There will be no one who can work these jobs, because homes cost 3X what anyone can afford.

I personally think the Bend-as-Aspen thesis is untenable. Can't happen. We're too big. We're also not pursuing big employers. This all points to a decimation of housing prices in Bend. Which will have a domino effect of killing per capita incomes. But in the wreckage lies the cure: Lower costs will have the effect of restoring some measure of competitiveness. But it's probably 40% lower than here... and THOUSANDS of jobs and years away.

132 comments:

Duncan McGeary said...

Oregon Woodworking did say it was the low cost of Chinese imports that was causing them to quit. So, there probably isn't anyplace in America they could've gone to compete. A national problem.

The cost of living index is less than totally useful without knowing what the average wages are in each of these towns. Most of that data seems more than a couple years old....so useless for comparison.

Anonymous said...

Indexes and numbers seem to get massaged. I personally can say that it is getting to a point where my finances are getting worse and worse. My business has ground to a halt, and I haven't done anything different than last year. By the way, it is not construction related, but it is not something people absolutely need. In addition, my cost of goods has gone way up, as has my fuel costs. I moved here ten years ago, and it was far easier to survive,and back then everyone used to call Bend poverty with a view. About the last 5 years I have noticed a sense of prosperity here, with all the expensive trucks and toys I see being towed around, but how much of it is cunstruction guys making big bucks during the boom years,and even more than that, how in debt are all these folks. When good times are rolling it is easy to start thinking that the money will just keep coming in. I know several people that bought homes in the last two years that are now facing serious problems with their mortgages re-setting. One friend got a neg am loan, and figured he better refi, only to find out that his house did not appraise for enough and now he is stuck. He told me that when he bought, he thought that things were just going to keep going up. This is the problem I have with the pump and dump that goes on here. He is a smart educated guy, but he got suckered by the hype. Now, my question is, how many people are in the same position? I beleive that this scenario is very widespread in Bend, and when people find themselves in this position, they begin to pull back spending, and this will certainly start to be more widely felt in our local economy. Does anyone out there have any stats on what percentage of our population is employed in construction and real estate related fields?

Anonymous said...

Another nail in the coffin...

Oregon Legislature overwhelmingly behind mortgage-broker regulation bill; mortgage industry deploys army of lobbyists to Salem

Anonymous said...

I know from insiders that the furniture and decorating stores are slumping hard in Bend right now, pretty much across the board.

But that probably doesn't surprise anyone, does it?

--TT

Duncan McGeary said...

You'd think a 55% drop in housing starts would scare the hell out of everyone, but almost everyone I talk to thinks it won't happen to them, because.....fill in the reason.

Interesting study in denial.

Anonymous said...

I work in the hardwood flooring business, I get alot of work from design stores in town,and have noticed that a significant amount of wood is now made in China. Even just a few years ago most of the wood came from canada and the U.S. This post brought this to mind. The price is still the same for customers, but I wonder what the stores are getting it for?

Anonymous said...

I think this is a bigger national problem. The US cannot compete yet maintain a higher standard of living. A recent study shows those in their 30's are consistently making less then their parents did when they were in their 30s.

The US is leveraged to the hilt. The savings rate is nil. The days of cheap oil have ended. The party is over.

Anonymous said...

did you hear....donald trump is eyeing some property in bend...

Anonymous said...

That rumor was debunked months ago.

Anonymous said...

I love it when these asswipe chamber cheerleaders and so called analysts are "quite shocked" when undeniable, or un spinnable stats come out. No shit, I could have told Mr. chamber dude that groceries are up, I have been seeing it get worse for a while now. My kids eat more than I do,and they're not even teenagers yet. I'm to the point that if there is an article or a quote, and it is by an "economist" or a real estate agent or a chamber cheerleader or mortgage broker, I automatically have to figure in the bullshit factor or try to read between the spin for the truth.

Anonymous said...

Interesting study in denial.

Hey Duncan things will get very interesting in the next stages to come fear and panic.

Paul its nice to see we have a little something in this tread about the overall economics of this country which are in dire straits. I posted a week or two ago about the high cost of food, fuel, forms of energy (home heating and cooling) the cost of automobiles and lest we forget HOUSING. I was dismissed pretty quick by someone who regurgitated the lastest spin from the CPI and any other lovely index which paints a rosey picture of things.

I have to agree with the guy who mentioned to be careful about numbers and the fact they can be manipulated, excuse me I guess his word was massaged. Props to that man because if we believe all the numbers that are reported we will be killed slowly instead of changing our course we will one day wake up and the wonder how any of the financial disaster could've possibly happened I mean afterall the MSM told us everything was ok and had numbers to prove it. Look at the numbers with a very discerning eye.

Anonymous said...

Mondo Pizza, Super Burrito, and God help us, Pegasus Books may close ...

What percentage of Bend is RE & Const???
**

If they closed I would perish, had MP on friday night, an SB yesterday for lunch. I always plug PB as the place to 'order' books.

The last stat's I saw on Bend Realtors was 2200, I think our population is around 70k, the last construction stat I saw was 15K, but the 'un-documented' would be hidden, just from my hood and hanging out at long-board and super-burro I would say that 1/2 of Bend is direct/in-direct Construction-Worker, hell just count the pickup's in this town in yards. Just look at all the utility trailers in all the neighborhoods.

Let's be honest if you integrate the realtors, construction, mortgage-brokers, 'RE investors', Flippers, speculators, carpet-layers, home building supply store, furniture stores, ... Bend HAS to %80+ RE related.

My guess the rich retired folk are less than 2%, I saying this based on the fact that my rich-retired-friends don't go biking, hiking, until 3pm everyday, because that's when play pardners get off work. There's probably 5k of people also who work at home on their computers doing odd professional jobs, a lot of the ones I know are commodity analysts they get up at 4am and are done at 2pm.

BENDBUST said...

DENIAL, INSANITY, ...

Interesting study in denial.

*

Denial hell, Bend has now reached insanity. If you have lost 20% on your home, and you keeping putting in money on the way down, ... you are terminally ill. Normally like the dot-com crash you cut your losses by losing your investment.

Our Bend 'investors', simply watch their equity being wiped out, and then their debt accumulate, their wages decline, and they sell what they have to pay the mortgage, all the while heading towards catastrophe, and they continue. This is insanity.

Now with regards to 'denial' its quite simple, when your neighbors are suffering its a recession, when you are suffering its a depression. Must folks on the street in Bend are not yet in a a 'personal' depression, but they see the recession, and they know some people who are in the depression.

The denial is that a pump&dump fluff article is going to rescue us, and/or lesSchwab moving to JuniperRidge will turn it all around.

The folks already in a depression, couldn't sell if they wanted to, and still believe that their $250k homes are worth $750k, but their cash flow is gone, so by fall, their will be many foreclosures.

80% of the recession folk would sell today and be gone if they could get 2005 prices and cover their loans, and walk with enough down to get a house in the next location. That's the NUMBER-ONE reason for ALL I know not to sell is that they HAVE NO CASH all thier 'money' is in thier house, and THUS all thier wealth is an illusion. If there is a denial, if this is what it is all about.

I have noticed with fake beautiful people you find them in california and they come to Bend, you know the Becky-Breeze type in an SUV. They'll always tell you life is good, and Bend is getting better. You can't really tell whats up until they forget to apply their makeup one morning.

To admit that your $750k home is worth $250k, and that rather than having $100k in CD's, that you actually are $500k in debt, and this is true for at least 25% of Bend, is to feel stupid. We all know that like Sisters, the folks in Bend are smart, sophisticated, special, right-place-right-time, entitled. These kind of folks will NEVER tell you the truth.

Bend is 80% preppy's without the endowment, our bend-preppy class can only go to ALL the fancy restaurants with a credit-card. They have NO rich parents, but like all folks that really ONLY own the clothes on thier back they'll pimp their way through life always looking good, and talking the talk, and they'll never tell you the truth.

IHateToBurstYourBubble said...

To admit that your $750k home is worth $250k, and that rather than having $100k in CD's, that you actually are $500k in debt,

I think this is true, although maybe not to that degree. I think when people have to bring a really large check to close the sale of their house, we'll start to see what a mirage incomes are around here. Nominally, they seem high, but much home equity has been built in & SPENT. It's what's allowed a LOT of this town to live far beyond their means. The balance sheet for Bend appears to be deteriorating, with assets falling, debts rising. I guarantee you when people have to plop down 6 figures to unload their white elephants, the reverse wealth effect will be heinous.

My business has ground to a halt, and I haven't done anything different than last year.

Any chance of saying in a roundabout, non-specific way what it is? Don't give anything away, of course.

What bums me out, is that I have made more money on owning my own homes, than I have working in my adult life. That won't happen here, not for many, many years. I have ALWAYS found a way to make 6 figures on a real gem every few years, and roll it over. Won't happen in this town, probably not for well over a decade.

TT said that he doesn't get advice here about when or where to buy. Probably because I don't think that time will occur in any relevant time frame. I don't think ANY money will be made here for the typical discriminating buyer for OVER A DECADE. In a normal market, you can find a good deal on about 5% of the listings, a GREAT deal on 1%. I have not seen a compelling RE buy in Bend for over 3 years. Not one. And I look everyday.

Rent & invest the diff. Very unfulfilling as a lifestyle, but I have to stick with it from a financial standpoint. I think it'll return 10X what straight buying a home will (with equal capital investment).

I occasionally check BendBB for prices, reductions, and things like that. Some are knocking 10-20% right off. Still, I'm not interested. When the NASDAQ dropped from 5,050 to 3,000, was it a "good time" to buy? Well, it was better than buying at 5,050 when the NASDAQ got whacked for 75%, but is losing 60% by buying at 3,000 a "real win"? Not to me. 40% down (real terms) from here is not appealing.

I think bend is like a Gold Rush town. Ever hear of heap leaching? It's a method of removing gold that throws ore in a big pile on an "impermeable" pad, and a sulfuric acid solution is poured on top. The gold dissolves & is syphoned off.

But many times the pad is destroyed, and sulfuric acid contaminates all the surrounding ground, and the soil is completely barren, unusable. When the gold is gone, the mining companies uproot, and the entire site is destroyed in the process.

Instead of miners, we have flippers. They've mined the gold, some have made a fortune, some have lost their asses, but we who remain are left with a barren RE market, unusable for years. Our housing market is diseased, and will take decades to recover, and it'll probably NEVER be the same.

IHateToBurstYourBubble said...

"This tells us we're losing a competitive edge with companies thinking of coming here because it's so expensive to live here."

Read between the lines: Absolutely no concern for people & businesses here already... But God help us if the conveyor beltof cash stops.

Duncan McGeary said...

I just have to say, you know, that Pegasus is doing fine. If it wasn't I'd either tell you, or keep silent. But thanks for the concern.

Anonymous said...

I've said 100X, we need anchor tenant employers. Big Ones, now, and we should pay for them. Tax incentives, or whatever, just get them here. We will have to bite the bullet and absorb a LOT of their costs to get them here. - wendy breeze

Wendy,

What do you propose? That we let les-schwab build their HQ there? and make them exempt for ALL taxes for six generations? I know the portland has been doing this tax-free five year gig for years, and ALL that happens is the anchor moves from pdx to troutdale, and signs another deal. I know companys in the pdx area that have never paid any property tax or business tax in twenty years, just playing this tax incentive game.

So pray tell wendy, who are these big anchors?? In a place 120 miles from a transportation structure. Who in the HELL would create an anchor in Siberia or Bend? At least siberia had trees and minerals, why in the hell is the old-mill now a mall? Because the trees are gone, the wealth has been stripped.

All that is is left of Bend it its a nice place 3 months a year in the middle of no-where.

Wendy you sound like just another spokesperson for BIG business that wants to be tax exempt, tell is it ain't so.

Anonymous said...

To admit that your $750k home is worth $250k, and that rather than having $100k in CD's, that you actually are $500k in debt,

I think this is true, although maybe not to that degree.


What part isn't true paul? Let's say you have NO cash because its all in the house. You paid 500k for a rat-trap in Shevlin two years ago that you want $750k for, but you owe 600k, you down 100k. You could walk but have NO down payment to start elsewhere. What part of this is not true?? I know 100's and 100's in Bend that would get the hell out today if they had a down-payment to start over somewhere else.

Anonymous said...

http://www.nwcn.com/topstories/stories/NW_052707ORNpighouseSW.1678f6e8.html

Desparate homeowners making sure the bank literally has a pile of crap when they're through. Things will get very interesting in the next few years when the fear and panic set in and people don't know what to do with their homes. My guess is that the C.O. fire dept's will get real busy in the next few years.

Anonymous said...

The good news is our latin brothers in Bend will be able to keep thier houses. They live ten to a house, and at $23k/yr, that's $230K/yr aggregate income, yes it extended living, but at least they have a home, and they can make payments.

The there is the Bend white-trash { 50-80% }, they have no cash savings, and they have IO HELOC loans, that are max'd out, the credit card is max'd out,

The point is our latin brother can always get the $5/hr to $15/hr because there are services that most don't want to do, and our latin brother is ahead because of his willingness to do anything.

On the other hand our white folk the entitled-class are used to not working or getting dirty, and they're used to NOT renting the home.

Now they have to leave bend to find a real job, but have NO cash down payment. What do they do? Bankruptcy is over now, so the debt is carried forever.

What do they do?

I think that eventually the smart white folk will underbid the latin brother, then the latin will go home, and the old bend mill shacks will once again be worth $40k, and life will be good.

Best of all californians will stay away from central-oregon for at least two generations.

IHateToBurstYourBubble said...

What part isn't true paul?

This part:

your $750k home is worth $250k

Dude... I agree Bend housing isn't worth what people think it is, but getting cut 66% immediately isn't in the cards, except in the area of a direct meteor strike. Maybe if the South Sister blew...

I know the portland has been doing this tax-free five year gig for years

But... PDX is better off economically than Bend, and much of the nation. Portland is doing great.

I just have to say, you know, that Pegasus is doing fine.

Yup... just an example. Note that it was the final entity to "succumb" in the example.

I was in Pegasus a few weeks ago... very busy.

Anonymous said...

>>TT said that he doesn't get advice here about when or where to buy. Probably because I don't think that time will occur in any relevant time frame. I don't think ANY money will be made here for the typical discriminating buyer for OVER A DECADE.

Actually, that's a really good point. But I think it's possible that things will drop enough in the next couple years that I won't lose much if I buy the right home from a troubled seller.

And there are people in trouble now. As I heard from a Realtor this weekend..."There are people who have gotten themselves into a pickle."

I think that's code for, "Some dumb bastards have been soaking the gains out of their houses to live a lifestyle hey can't afford."

I really want to watch the stats closely, so I can recognize, if not a bottom, at least the relative agony and comfort of the sellers.

Anyone noticed just how INCREDIBLE the inventor is now?

--TT

Anonymous said...

did anyone hear....donald trump is eyeballing some property in bend....

Anonymous said...

I read this blog and I have always enjoyed coming to Bend from Portland fro week-ends at the holidays, going to sunriver, ice skating, bachelor, etc...

I grew up in a small town similar to Bend. That was 40 years ago. The town is still small.

Because of Bend's location and lack of infrastructure it will always remain small.

The local politicians and media seem to be thinking real estate will always last forever and carry the town. Bend, as I am sure all of you know, was; I think the most oevervalued priced real estate in the nation according to Office of Federal Housing Oversight Enterprise.

I think the only way to grow the town and get some long term infrastructure going would be to get a university campus there. I don't know if the State of Oregon is considering it, but that would be a good start.

Anonymous said...


your $750k home is worth $250k

Dude... I agree Bend housing isn't worth what people think it is, but getting cut 66% immediately isn't in the cards, except in the area of a direct meteor strike. Maybe if the South Sister blew... Beverly Breeze


Dear Mrs Breeze,

I'll try and explain this very carefully.

They paid $500K, they think its worth $600k, they took out a HELOC for $100k, and owe $600k. The actual price to sell in today market is $400k, maybe, perhaps it will go to $250k, but if it does it will be 1-2 years, I'm talking today market. The $250k come from the difference of purchase and what they think they can sell for.

Now here comes the pickel.

$500k purchase - interest only
$100k line-of-credit HELOC - SUV...
Debt $600k

Value of house in today's markey
$400k

Thus they're in debt for $200k,

But here is the real pickel, they have NO cash, ALL thier saving was used to buy the 'investment' in Shevlin in 2002. They would love to move and start over, but there is NO down payment.

They cannot get a down payment unless they sell for over $600k, a lot over. Again 50% of bend would move tomorrow, if they had a $100k cash to pay a down payment elsewhere.

What part of this too difficult to understand?

The denial comes in that they want $750k, even though these people are working every hour of the day in odd jobs to pay the mortgage to 'keep the house', which is insanity.

The ONLY HOPE is that the market comes back this year and house's that are worth $300-400k in shevlin start selling for $750k, not likely to happen until the next bubble, 2030.

Anonymous said...


I know the portland has been doing this tax-free five year gig for years

But... PDX is better off economically than Bend, and much of the nation. Portland is doing great. - becky breeze


Becky, I'm NOT going to let you off on this one. You told us 100 times that Bend needs incentives, and in PDX the only GOVERNMENT incentive is PDC, tax exemption for business tax and property.
We all know pdx is better off that's not the point. The point is YOU said that Bend needs to give BIG ANCHORS incentives. Pray tell us what your thinking of, get to the point. Normally you quite good at specific points of abstraction.

List and tell us exactly what you would like the city of bend to give away from the piggy bank of bend tax-payers to BIG BOSS ANCHOR HOGS. TELL US.

Lastly, let me say that in PDX its the boss hogs that pay no property tax, and NO business tax, its the most rich that they themselves that benefit from 'economic development', in fact to say the same people running EDCO are who's-who of Portland.

Nothing new under the sun.

Becky, your a major in this group, please tell us exactly what the incentives would like to see that would turn Bend into a Detroit, Mi, and rescuse the Bend-Bubble and return the good times, so all morons can flip houses and get rich quick.

IHateToBurstYourBubble said...

Anyone noticed just how INCREDIBLE the inventor is now?

I have. Over ONE BILLION in Bend homes on lots for sale, just passed that in the past week.

The Bulletin has yet another You & Your Business Are Getting Blown Away piece:

For the Mill Quarter, an uncertain future
New owners' rent increase forcing out local businesses


First, the problem for Mill Quarter tenants:

A handful of the building's 25-or-so tenants had clauses in their leases that allowed cancellation within 180 days if the building were sold.

It was sold. Maybe Larry Brumwell (Possibly Paul-doh ?) said it best:

"It's disappointing," Brumwell said Friday. "Bend has changed in so many ways, in this area and all over, especially in the last five years, and it's all rooted around money and that kind of progress. I don't know that Bend has progressed very much in a lot of other ways, so much as just real estate development."

And Brumwell gets the privilege of losing $300K:

Others say they have been told that their lease rates will likely double when their current leases expire, in effect forcing them to move or strongly consider moving. That's the case with Inclimb Rock Gym owner Larry Brumwell, who's staring down the probability of having to saw apart $300,000 worth of built-in indoor rock walls and find another location before his rates double next summer.

Owner Pam Blanton of Azillion Beads who is being ousted:

"I mean, who wants to come and see a Gap? A Victoria's Secret? A World Market? I mean, they've got all that at home."

Still, aside from a disruption of the synergy the little businesses have built in their current Mill Quarter sites, the changes are causing real economic pain.

For Blanton, it's the second shake-up in less than five years. She moved out of one of the Eriksen family's buildings on Brooks Street downtown shortly before they bulldozed it to make way for a condominium and retail project that is currently stalled. Now she's 2 1/2 years into a five-year lease at the Mill Quarter, where she took out two loans on her family's house to pay for $30,000 or so in improvements, and she has been told she has six months to leave.


This is the dreaded inflation-creep that I talked about many moons ago on BEM's original blog. Prices are going up, but not incomes. I think a lot of small business owners at the time remarked that they felt things were going well. They are now receiving the "Oregon Woodworking Treatment" -- have no doubt, many of these Old Mill tenants will just flat out close their doors. There are fewer and fewer places in Bend these types of hard-scrabble small businesses can survive in this town.

And what happens when they are all replaced by Victorias Secret, and other idiotic retail? It's great for tourists, but where will WE shop?

High prices. A year ago, everyone (in RE) thought it had no downside. Now what do we have? Dead home market. Over one billion in Bend homes for sale, a shrieking new record. Core businesses shutting down. Edge-case commercial property doubling in price. CACB non-performing loans blowing higher. Mass layoffs.

Yeah, high home prices are a Godsend.

IHateToBurstYourBubble said...


Now here comes the pickel.

$500k purchase - interest only
$100k line-of-credit HELOC - SUV...
Debt $600k

Value of house in today's markey
$400k

Thus they're in debt for $200k


Dude... you said a $750K house was worth $250K originally. THAT is what I was calling pretty fantastic.

But I do so enjoy being called "Becky Breeze" for thinking home prices will get cracked for 40% over the years. Is Bend housing getting beaten down 40% too optimistic for you? I will revise my estimate lower if the South Sister goes Pompeii on us.

IHateToBurstYourBubble said...

I really want to watch the stats closely, so I can recognize, if not a bottom, at least the relative agony and comfort of the sellers.

Just remember how it was on the way up... it went way, Way farther than rationality or reason or financial good sense dictated. The optimism became ecstasy. Look for the flip-side on the way down. I think it'll go beyond "discomfort" for many.

Once you buy, you will be in exactly the position of those you pity right now. I would not try to catch a falling knife man. Let'r hit bottom, HARD. I just think it'll be a few years before there'll be good money made in Bend, and it'll be at prices that many find unbelievable today.

Look for the mirror image of what happened on the way up: Dollar volume peaked out in 2005, prices in 2006. Look for lower prices on stronger volume. Even then, I think appreciation will be average for a long time. Be picky. Skulk around for that 1 in a thousand mega-deal.

IHateToBurstYourBubble said...

Here's a tinyurl for that story about the Clackamas dude who unleashed 3 pigs in his house after he got foreclosed on:

http://tinyurl.com/38uh8w

Pics:
http://tinyurl.com/2xgncd

Interesting twist. Bend has only seen the traditional arson route so far. Three little pigs. I give the guy marks for originality. Although the cops are after his ass.

IHateToBurstYourBubble said...

...a Gap? A Victoria's Secret? A World Market? I mean, they've got all that at home.

Well, it's officially Them vs Us!

Anonymous said...

Yo Paul,

I have to admit I posted about the pigs I couldn't help it I was cracking up had to share it, also I'm not familiar with posting tiny url's so if you have some quick instructions I would be happy to post correctly next time.

Anonymous said...

>>I personally think the Bend-as-Aspen thesis is untenable.

I agree. Absurd.

--TT

Anonymous said...

>>Let'r hit bottom, HARD. I just think it'll be a few years before there'll be good money made in Bend, and it'll be at prices that many find unbelievable today.

OK. But to recognize what is happening, I watch the data. It's how I work.

IHateToBurstYourBubble said...

quick instructions I would be happy to post correctly next time.

No sweat, I had the same problem.

1) Go to tinyurl.com
2) Paste the long URL into the box
3) After you submit, it gives a real short url to use. Copy/paste it whereever...
4) When anyone clicks on that tinyurl, it forwards them seemlessly to the long URL you pasted in.

OK. But to recognize what is happening, I watch the data. It's how I work.

Ohhhhhh, yeah. Me too. But "watching the data" on this thing told me that 2004 was The Top. Just like the NASDAQ told me the top was down around 2,500. This badboy is a bubble though, and watching the data screamed "SELL!" years ago.

Take it from someone who's tried to catch a lot of falling knives. My best stock market rule is wait until I'm DYING TO BUY.... then wait 6 more months. It's almost ALWAYS lower.

I don't know though, it doesn't seem like there's been any "mass giveback" yet. The market here hasn't really been crushed, it's just gone dead. Seems like a standoff. The occasional big markdown is interesting, but not really compelling... at least not to me.

I'm not really at my "foaming at the mouth to BUY" point yet. Not even close. But that's me. Other people have other situations, and it might start making sense to them earlier. I'm still seeing completely insane prices out there... it'll be better when every single one of those is gone. When there is total recognition that The Good Times are OVER, and they're not coming back. Seems like that's a ways ("way's", "ways'"?) off.

IHateToBurstYourBubble said...

Oregon Woodworking did say it was the low cost of Chinese imports that was causing them to quit. So, there probably isn't anyplace in America they could've gone to compete. A national problem.

I agree, for the most part. But companies like Gateway seemed to go for extremely low cost areas like the Dakotas, and did OK for awhile. Amazon.com has a huge warehouse out in the NV desert.

I don't know what the economics are of every industry is that China has a foothold in, but shipping that stuff here isn't free, and it's very time consuming. There's something to be said for the quick response that is possible in some US industries that Asians would have a hard time duplicating.

But Cent OR is so far above cost parity, that it doesn't seem like any service or other differentiator will let us overcome such a large cost premium. And there's only so many people who can buy every single thing at Victorias Secret.

I should also say that I think many of the high costs inherent in being based in Cent OR can be mitigated to some degree. Really, REALLY streamlining IT, and putting a premium on upping the productivity of workers will make $15/hr possible in some industries. But I have met precious few business owners who understand this, much less would consider doing it. They are operating like it's 1950, which was OK when costs seemed to rise in lockstep with the rest of the country. But when you look at wages inflating 10%/year, what got you by even 5 years ago, WILL NOT WORK. You have to become 10% more productive just to maintain parity. That's DAMN HARD, and very few around here are up to the task.

On a similar note, I have started noticing that the "Lifestyle Business" (zero profits, Do What You Love sort of stuff) is starting to see the light. Reading todays article maybe tells why: The woman who had to get 2 home loans just to build out her space... which she is now losing. I think pre-Bubble burst, a Lifestyle Seller could say, "Hey, you really don't need to make money on this business, you just buy a house here, and you get $100K/year from that! So, you really don't even need to work it that hard. Take it easy, it's Bend Oregon!". I've seen some Wake Up & Smell The Homeless pricing recently. Dillons Books in Prineville is selling for less than inventory. There's a Sunriver BBQ place for $24K. I think they're seeing a lot of people who are unwilling to give a single dime for these perennial money losers, and many are just shutting down rather than try to fleece a new buyer. A lot of "Re-Lease Shutdowns". People who need the money by the first of {some_month} are getting blown out by a lease doubling.

Anonymous said...

I have told you a 100X times we have to give the Boss-Hogs an Incentive to Anchor the Big One in Bend - IHTBYB-Breeze

Mrs. Breeze,

Please tell us exactly what incentives we should give the boss-hogs to anchor in Bend??

Tax exemption?
Tax exception?
Condo tax Deferral?
History property Tax Exemption?
Infrastucture Exception?

You talk and talk about how you would attract the BIG Boss Hogs to Bend to stop the Bleeding Bubble, but you change the subject to dancing pigs. You destroying your own credibility.

Anonymous said...


I do so enjoy being called "Becky Breeze" for thinking home prices will get cracked for 40% over the years. Is Bend housing getting beaten down 40% too optimistic for you?

$500k purchase - interest only
$100k line-of-credit HELOC - SUV...
Debt $600k
Value of house in today's markey
$400k
Thus the NET-WORTH is NEGATIVE $200k - Paulina-Breeze


Have you had too many PBR's during the three-day? The question: how are these people going to get out of Bend without a down-payment to start anew elsewhere?? When you have $200K in debt, and NO saving's how are you going to buy a house in So-Carolina? When you have NO down-payment, that makes you a renter. How are people going to deal with this?? Is this going to be a new Grapes-of-Wrath Eastward Bound?

Anonymous said...

Looks like its time for paul to start a new subject-thread, he seems to be doing a Duncan on us.

Never answer a question, always suggest that something, is sometimes this, and sometimes that. ... That people think sometimes this, and sometimes that ...

Paul said that he has told us 100X times that BIG BOSS HOGS need an incentive to SQUAT in Bend, but he refuses to tell us what he means. He says that big boss hogs need to "anchor in bend", that they need "incentives", but he refuses to be specific. This is VERY duncan like. Are they the same person?

Is he simply using the bend-bubble to manufacture consent?

The incentives that EDCO wants seem very similar to what paul now refuses to discuss, which leads me to think that paul is an EDCO whore.

Anonymous said...

>>I'm still seeing completely insane prices out there...

My buddy and I were driving through a neighborhood and he said, "what are these going for?"

I said, "last year they were trying for $600. Now they're trying $500."

He said, "Well, I think they're just worth $200."

Thing is, he's a beneficiary of the run-up, having bought about 8 years ago. So even some people who have a vested interest in WANTING to believe that a $200k house is worth $500k don't really believe it.

--TT

Anonymous said...


I said, "last year they were trying for $600. Now they're trying $500."
He said, "Well, I think they're just worth $200."

That's not unusual, its just the depression-recession theory. It's one thing for the "other-guys" Bend mcMansion you bought for $600k in NW-Crossign to be worth $400k in todays market. Then its another thing for YOUR mcMansion to be worth 1/2 of what you paid.

Most people at most times and most places believe they are smarter, and there is no place like bend when it comes to geniu-asses. The folks here like sisters are real bright. Most can be found at one of the 100's of $50/plate restaurants looking good, thank god for 22% APR credit cards.

Year before they paid $600k or over, today they offer $500k, and they don't move. What will it take to move? In a normal boom cycle everyone is moving up, our mexican bought the bottom and moved everyone up.

Now NO ONE has a down-payment, and so the move up is over, and NO ONE can get a stated-income, nothing-down, interest-only loan, game-over.

It's a perfect storm in Bend,
1.) Nobody has a down-payment to move up, or down, or OUT {preferential}.
2.) Nobody can get a loan, unless of course they have cash, and a damn good job { non-existent }.
3.) Convervative Bloggers are begging for incentives to Boss-Hoggs, which translates into MORE taxes, which drives out jobs, and enriches the few.
BendyBreeze

Anonymous said...

People who need the money by the first of {some_month} are getting blown out by a lease doubling. - IHTBYB
---------------------
Another thing to watch is gated-community's like highlands@broken-top, and broken-top golf, ... ALL these places had failry low monthly HOA { condo fees } for security, based on the assumption that they would fill, at most of the places they're are only 1-5% built, and the owners are being told that the monthly HOA may go from $500/mo to $5000/mo. W
When you have a development with a $500k/yr security, landscape, maintenance cost, and the developer based the initial HOA on 50+% fill within 1-3 years, and after 3 years the place is still less than 5% developed someone has to cover the bleeding, and that is going to be the owners.

In ALL depressions, this is what KILLS these rich persons homes, small single family homes are usable, the 1000sq-ft kind, the 10K-sqft home on 10acre in a 1500 acre community that needs +500K/yr security/maintenance cost is a bleed that even rich people don't want.

ALL remember what happened last year at Inn@seventh-mtn? The new owner raised the condo fee from $50/mo to $1,000/mo, which caused the condo value to drop from $150k+ to $30k/avg.

These BIG gated community's will see their value drop just like Inn@7, when the HOA goes from $500/mo to $5,000/mo, Note in many cases these HOA's are bigger than the Mortgage.

There are dozens and dozens of these "rich mans gated community" in Central-Oregon, all in the middle of nowhere, and all partially built, and NOTE their is little to NO new building taking place. Then there is the gold courses which are still being built, ...

Anonymous said...

I'm a Bend Real estate investor, been doing this for thirty years.

I have a couple golden rules.

1.) Never buy a home you wouldn't want to live in.

2.) Never buy a home that has an HOA fee, they can pull any number they want out of their ass down the line.

3.) Never pay more the 4X average income for a home in any market.

4.) Small single family homes will always sell in any market, this is called liquidity, a very important concept. All other categories generally never sell when it gets bad.

If you do the above on the long haul you'll always do fine.

Right now the CityOfBend has big plans for Condos for ALL, which means HOA's for all, which just means rent even if they were paid for, Condos are shit when you add up the HOA,taxes,& MTG.

Soon the city of Bend will offer Property-Tax-Exemption to move condos that don't sell. This is odd, because the reason for the condos was DENSIFICATION to raise revenue, yet owners of our poly-tic-ians will demand an 'incentive' for folks to buy the condos, thus the very reasoning for their being built is lost, by the loss of tax revenue.

An intelligent bystander of bend would call this all insanity. Building crap that is not wanted, .e.g. office-space, and then converting it into condo's, ...

Fallacy's
a.) Get permits for buildings that aren't needed, based on the fact that the existence will bring needed jobs. Outcome - turn them into condos'
b.) Build condos on the argument that the densification will make bend livable, and increase tax revenue 10X, OUTCOME - tax exemption to move unwanted condos, benefit to citizens -> more taxes to cover the condo purchasers.
c.) Its a terrible squeeze, the city should halt permits, but then that would kill construction work, which would kill jobs, nobody is going to buy this crap, but it will be built. They're not going to come, even if this crap is tax exempt.

The tax exemption will only help the developers who have to sit on the crap for the years it takes for the excess inventory to clear.

Good news is that in 2-3 years, there will be lots of low income section-eight housing near the old mill area.

IHateToBurstYourBubble said...

Thing is, he's a beneficiary of the run-up, having bought about 8 years ago.

I think these deep-equity types will do the best when things go South, but even they will have to endure the deteriorating economics that will hit everyone.

I would rather have a home worth $250K, going up a slow & steady 4-5% year AND a steadily rising paycheck, than have a house that's doubled (that I can't really sell for a double), and the chance that the company I work for will close down or downsize.

I think 4-5 years ago, Central Oregon was a great place to come & have the prospects for a good life. We could have even aggressively expanded the UGB and kept prices reasonable, and the area would have remained a draw for employers. Now it seems like we're just in a hopeless situation: STAGFLATION. Slowing growth, and outrageous prices.

And we're in a dead market where prices are still forcing developers to build! Look at the article in todays paper:

Company takes new name, but it's still in the family

Knife River (aka Hap Taylor) has gone into development. After decades of only doing "horizontal" work, sewers, concrete and the like. Everybody's in construction & development.

There's only 2 industries in Cent OR: Construction/Development/RE where even morons made millions. And EVERYTHING ELSE, where you made squat. And RE is now busting HARD here, RE incomes are about to GO DOWN. I mean to hell with RE, what happens to the rest of us when these nuts can't buy RV's, SUV's, home improvements, and other high-ticket stuff?

I think we are just screwed. The gold miners are about to pack up & leave.

IHateToBurstYourBubble said...

Good news is that in 2-3 years, there will be lots of low income section-eight housing near the old mill area.

I think there'll be that collective head-slap moment when we just wonder, "What the hell were we thinking?". We'll be this strange little postage-stamp town that had a totally unsustainable runup, and in response we built UP, and there will be these weird vertical edifices to remind us for all time of the folly of 2004-2006.

An intelligent bystander of bend would call this all insanity.

Dang. I think someone is calling me Smart! Remember BEM... back in the day, back when this thing would Never End, you & me against the World? Good Times...

IHateToBurstYourBubble said...

ALL remember what happened last year at Inn@seventh-mtn? The new owner raised the condo fee from $50/mo to $1,000/mo, which caused the condo value to drop from $150k+ to $30k/avg.

I actually never followed that. Is that really what happened? My knowledge of HOA fees, and buying condos in general is poor... I would NEVER buy a condo. I'd rent first. Hell, I'd move somewhere where I could afford a house before I'd even think of buying a condo. Condos are real scary after a few years. They can just get real nasty. And even if you are meticulous, it just takes one nasty-ass neighbor to inflict a buzz-kill on the rest.

IHateToBurstYourBubble said...

I'm a Bend Real estate investor, been doing this for thirty years.

I have a couple golden rules...

3.) Never pay more the 4X average income for a home in any market.


If you'll only pay 4X, your 30 years must have stopped sometime in the early 90's. I'm renting in a place near 30X yearly income. I can see 10X maybe as recently as the 90's. 4X? You gotta be in the Spider Hole renting business to pay that. In Millican. And not good Millican... crappy Millican. And not those fancy Spider Holes... I mean the real nasty ones, the Spider Holes that have gone condo.

Anonymous said...

You can still get 4X pretty easily, just not on this side of the continent.

As a result, West Coasters have had to DEPEND on capital appreciation. Works as long as it works. Then, when it doesn't...

Well, I just don't think many people yet have a concept of just how bad off the West Coast is if it's not appreciating.

Anonymous said...

http://bigpicture.typepad.com/comments/2007/05/housing_freefal.html

Anonymous said...

This post is B.S. Rental prices are dirt cheap in Bend. There is no need to buy at these prices and I would stay away if I didn't already own. The inflated housing prices is not a reason that companies would not move here or are moving away given the cheap rent.

Anonymous said...

I've said 100X, we need anchor tenant employers. Big Ones, now, and we should pay for them. Tax incentives, or whatever, just get them ... bechtoria breeze

Dear Bech,

What do you mean by "big ones"? are you talking walmart?

A tax incentive is just a shift from taxing group A less, and taxing group B more, I seriously doubt that county and city government will trim waste in order to create your $100Million incentive package.

"Who is this WE should should pay for this whiteman", you gringo's are crazy. Why should the richest people in Bend become tax exempt because they made stupid investments. If before the bubble folks had seriously thought about business perhaps we wouldn't be in the SHEEEET. But we are in the SHEEET, and bailing out the biggest fish in Bend isn't going to get you back into the flipping business.

Anonymous said...

This post is B.S. Rental prices are dirt cheap in Bend.

Of course everybody except the white-folk driving suvs knows that that. Hell me, pedro, gonzales, and gomez got a 4000sqft place in nw-crossing for $600/mo, and they gave us three months free to move in.

Over 80% of NW-XC was bought on spec, and most of the housing is-was empty, and thus now finally after two years of bleeding its all turning into rentals,

Only one stupid gringo would BUY in this market, keep the difference in mtg payments and invest them in tbills and tbonds.

The point here is that everybody in this forum knows that since august 2005 buying a home in or around BEND is a fools games, only the last or GREATEST fools of all have bought.

You can rent a new hyper-inflated $750k home for $800/mo, while the payments would be $5000/mo, and the owner is losing another $50k/mo watching the value fall. Meanwhile the renter is living in the same house, and nets $4500/mo, that he can save to get a down-payment and bail out of this two-bit-hustler town.

Anonymous said...

You can still get 4X pretty easily, just not on this side of the continent.

What I said was 4X in any market, since the 1960's { when I came here } there have been many troughs and peaks. The last big one was 1983-1983 stuff went down 70%, thats when most of the logging in Oregon went kaput.

Everything is cyclic, todays avg income is $60k, thus a home over $240k is a ripoff, that said there are lots of folks that bought their mill-shack for $75k fifteen years ago, that would love your $240k offer, trouble now is YOU probably don't have the $48k-down { 20% }, and you probably cannot qualify for the $1300 payments, because you just go laid off at walmart.

There problem in BEND is NOT the little 1,000sq-ft mill shacks, the problem is the shit east of 27th, and broken-top, shevlin, overturf, that was built post 2001 that is now worth less than they all paid, this is the problem. Every builder will tell you that all built from 2001-2007 is crap, through together overnight. Folks paid $500k, took out a HELOC, bought on an IO, and now the crap is worth $400k, and dropping daily.

Sure there are a few morons that paid $400k for a mill-shack, but there are a lot of people that also paid $120k just a few years earlier. The most stupid thing I saw inside of bend was these contractors paying $300k for a 50by50 lot, so they could build a little $600k home, folks that bought that crap really got screwed,

You can buy all over town all day long if you have 4X, e.g. $240K cash in your hand, and the seller paid less than that, and/or owes less than that.

The problem is a lot of shit in Bend they owe MORE than $240k, but that is just property pending foreclosure auction. Those property's will sell for less than $240k once they pass through auction.

IHateToBurstYourBubble said...

There is no need to buy at these prices and I would stay away if I didn't already own. The inflated housing prices is not a reason that companies would not move here or are moving away given the cheap rent.

Where were you a year ago? One hell of a lot of people bought at prices higher than todays, thinking if we don't buy now, we might NEVER be able to own a house. I won't say who is primarily responsible for promoting that idea... but their head economist just quit his job.

Why should the richest people in Bend become tax exempt because they made stupid investments.

Geez, I'm gonna regret this. Dude, I'm talking Google, and the like, not Bend Big Wigs. And I'm talking 15-20 year commitments. And I'm talking like 3-4,000 employees.

Let's face it: NOT GONNA HAPPEN.

Anonymous said...

I actually never followed that. Is that really what happened? My knowledge of HOA fees, and buying condos in general is poor... I would NEVER buy a condo. ihtbyb


Except for old houses in Bend, all new developments everywhere pay HOA's.

Currently for instance in the westside Bend gated community's, its about $500/mo, that pays for the ponds, greens, security, cameras, goons, .... That said its all based on capacity, the initial purchaser's couldnt' be strapped with the actual, so the developer pays the first three years. Often in places like highlands@broken-top the owners are the board, and they can of course let the lawn go to weeds, and rent the security building to mexicans, but then that might effect values.

HOA's are dangerous, and ALMOST all the homes built in Bend that are in developments come with them, and quite often folks just pull a number out of their arse, which is what happened at inn@7mtn, $50/mo to $1,000/mo and the value fell from $150k to $30k, of course a lot of folks bought those condos at $30k, and now on average they're back to $120k, but the $1,000/mo hoa is still there.

Just another example of how people will bleed to shit monthly for the dream of winning the RE lotto.

Anonymous said...

In the exclusive Westside gated Broken Top PUD neighborhood the HOA dues are $130/month. That does not include optional Broken Top club membership which is $55K initiation and $600 a month.

Anonymous said...

$500/mo I was thinking of the highlands@broken-top, on the other hand the SMUG shit-hole also known as BrokenTopClub "welcome to the club", AKA the worst place to play golf if BEND, there HOA's are really pulled out of the arse, as there currently is a war to make everyone pay for the golf-course or the latest owner of the week is threatening to cover the entire green with a walmart, now how would you feel about spending a Million bucks on a fancy house looking at the backside of a mall?
One thing is clear @ brokenTop that call it what you want fee, hoa's, ... charges they're ALL going up bigtime, the latest investor knows they can charge whatever they want, watch closely it may be another inn@7th-mtn, which means if the FEE's go to $1,000+/mo, then the homes drop over-night to ghetto prices.

Rich Ray, Speaking Soley for himself said...
This comment has been removed by the author.
Anonymous said...

"I moved here ten years ago, and it was far easier to survive,and back then everyone used to call Bend poverty with a view."

I've lived here for more than 20 years and they were saying it when I moved here, and probably way longer than that.

Another saying was: "The way to make a small fortune in Bend is to start with a large one."

High housing costs need not be fatal to a local economy -- viz. San Francisco and Silicon Valley -- but people need to have a greater incentive than pretty views to be willing to pay a housing premium. SF has a nice climate, a rich cultural and social life and, above all, economic opportunity. Bend has none of those assets.

Anonymous said...

"All that is left of Bend is its a nice place 3 months a year in the middle of no-where."

Precisely.

In my observation the only people who call Bend "paradise" are those who either (a) are trying to sell you real estate or (b) have limited experience with other places.

Anonymous said...

My first job out of college answering phones for a tech company paid $42k back in the 90's. I'd say normal, enterprising college educated couples should be able to bring in 80-100K without too much problem. That is low end. That puts your 4x figure at more like 320-400K, and there are a lot of houses on the market near that price level right now. If you can't find jobs that earn that amount in Bend and you must own your home, why even live here? Or if you just have to live in Bend job or no job, work elsewhere until buying a house outright in Bend is a possible. People should not expect to be able to buy houses on the wages of a sales clerk.

Anonymous said...

Normal, enterprising college-educated couples. Hmmm... any idea what percentage of the population that is? About 25%. And $80-$100K combined income is "low end?" Okay. Assuming I make that amount of money, why do I want to live in Bend, of all places? Why not San Francisco? Seattle? Denver? A myriad of other places? After all, those places have lots of low-end $80-$100K combined-income jobs. Not so, Bend.

Are you trying to sell houses in Bend, or whistling past the graveyard?

Bend Economy Man said...

People should not expect to be able to buy houses on the wages of a sales clerk.

This is the "paradigm shift" theory of real estate. When I was a kid in Bend all parents I knew of owned their houses. Sales clerks, bartenders and all. The less you made, the less desirable house you could afford. There wasn't much cachet in owning a crappy house, but if people were staying put they would/could buy a place within their budget because it made more sense than renting. People who were solidly lower-middle-class owned homes, no problem.

The idea that certain normal (not minimum) wage-earners are permanently shut out of the housing purchase market, as far as I can tell, is a fairly new one. I think historically you rented if you needed to remain mobile, or if you had financial problems (not including mid-low wages) like gambling, divorce, illness, etc.

I agree with those who say that the overbuilding associated with this boom is most likely eventually to put homeownership within reach of even MORE people, not less.

Think about it. OK, it's 1999. If you make the average income, or even a bit lower, and are able to put a bit away each month for a year or two to save a down payment, you can buy a house. Not a McMansion, a house. Then, due to a number of policy / macroeconomic factors (low interest rates, loose lending, easy refinancing), from 2000-2005 there's a big runup in prices and a lot of speculative demand and transaction activity (meaning high liquidity of a historically illiquid asset). Millions of additional housing units are built to meet demand in numbers far exceeding population growth. Those policy / macroeconomic factors that led to the boom go away in 2006-2008. Transaction volumes fall; speculative demand disappears. Houses are again illiquid.

So now here we are in 2007-2008-2009 and with more houses than America "needs" (noone "needs" a second home or investment property) and no objective reason to expect a big runup in the short-to-mid term. The only reason it makes sense to buy a house now is not for investment, not for a "getaway" (if you take away capital gains on a second home, you can stay in 5-star hotels for the same money and it makes no financial sense to buy), but to live in it long-term. And the financials needed to buy a house are reverting to the norm (down payment, full documentation).

So can anyone tell me why homeownership, given the thousands of unsold units in Bend and millions of unsold units nationwide, should become LESS accessible or remain so?

Anonymous said...

I see Bend becoming sort of like the Lake Tahoe area in terms of prices. High prices because it is the playground of richer folks from Portland, California, Hawaii,Washington etc but especially it is the up and coming playground of Portland. As Portland grows and gentrifies, the rich there will see Bend as their Lake Tahoe for skiing, rock climbing, mountain biking, fishing, rafting etc. It does not matter that the average income is low in Bend relative to house prices, although I think prices and inventory are definitely too high right now. I believe prices will always now be higher than the 4x local income figure. There may be an initial correction in the upcoming years, but prices will never return to 1990's levels relative to income.

Bend Economy Man said...

As Portland grows and gentrifies

I'm a negative bastard, I know, but I see no reason why Portland would gentrify further over the short- to mid-term. If anything, gentrification will reverse somewhat. People who bought old, small ranch houses in NoPo on the forefront of gentrification are now seeing that process reverse a bit.

Some folks are just not getting it into their heads that the trends they've seen over the past 5-10 years are going in a different direction. Stopping. Reversing. That's what unwinding this RE economy is all about. The dollar is devaluating, inflation is picking up momentum, economic growth is slowing, credit is tightening, and the country shows all signs of entering into a recession. And any economist will tell you that you've GOT to have a recession every once in a while. It's healthy.

Regardless of all that, there's some kind of weird mental inertia at work that makes some people say "OK, the fundamentals have all changed and the economic precursors for the trends of the recent past are now gone. But those trends will continue anyway."

Anonymous said...

>>So can anyone tell me why homeownership, given the thousands of unsold units in Bend and millions of unsold units nationwide, should become LESS accessible or remain so?

That's easy. With loans so loose, anyone could qualify for anything. How could that fail to drive prices up to silly levels. It was inevitable.

Also, I think you're glorifying the past as far as home ownership goes. We're at 69% nationwide--the highest percentage of households EVER to own in the U.S. Look it up.

Now, plenty of those "new" owners will go into default because they should NOT have bought.

Anonymous said...

Bend as "Lake Tahoe?" Why not go to/live in the ACTUAL Lake Tahoe? It's not much more expensive, if anything. In fact, Reno prices are crashing.

Just got my Oregon Business magazine. On the stats page: Central Oregon MLS Sales - March 2006: $302.2MM. March 2007: $154.2MM - Down 49%. Feb was $127.7 MM.

Looks like stuff isn't moving.

Anonymous said...

(I believe prices will always now be higher than the 4x local income figure.)

Another Kool-Aid drinker.

Anonymous said...

I think the new Water-Park in Redmond will turn Bend around. I can see BEM, and IHTBYB with Mrs. Breeze everday on the water slide.

Nobody will drive through Redmond without stopping.

With endless supplies of water, and the best banana belt weather in Oregon. Redbend/Bend will become the international destination. The folks that brought us Mt. Bachelor say their water park will keep all the high paid ski employees around during the summer.

It doesn't get any better, we live in the best of times. City of Redmond has an infinite supply of cash and credit the sky is the limit. When the new bypass is completed this fall, downtown Redmond will be like Aspen. The central-oregon irrigation ditch through downtown Redmond will create a new 'drake park'.

I love central oregon, best place in the world to invest ALL your 401k, why put you lifesavings into the stock market when you can put your money into heaven.

Anonymous said...

I think prices and inventory are definitely too high right now. I believe prices will always now be higher than the 4x local income figure. There may be an initial correction in the upcoming years, but prices will never return to 1990's levels relative to income - believer

You really should study real-estate history back to 1880. The only times that the ratio of home-price/income exceed's 4X is when there is easy money.

During the past five years money has NEVER been easier, folks got 'stated-income' loans, which means they got to define their income verbally, they got zero-down loans, they got interest-only loans, .i.e. they had to PUT NONE of their own money into the 'investment'. During the last 120 years whenever this happens you get a bubble. Most people today are way over their heads and all the 'fools' have bought, their are NO more 'rich californians' coming to bend to buy highland-mcMansions.

The USA had a terrible problem after 911, recession, so they primed the pump like never before, HELOCS, ... today folks are in debt like never before. Over 25% of folks will lose their home over the next three years.

The easy money was shut-off February 2007, now if you don't pay 20% down, you must pay an incredibly high PMI, fire-insurance. If you don't have a credit-score of 800 or better stated-income is not an option.

Most people today cannot re-finance. The party is over. With the ability to rent a nice house in Bend for less than a $1,000/mo even the landlords will be dumping thier homes.

You would have to be a complete idiot to buy in Bend and pay $3k/mo for a house collapsing in price, instead of renting on the cheap and saving the differnce. In time the rental market will get better as more people figure this out.

It will take years for homes to again be attractive as the myth that home prices only GO-UP is currently being de-bunked and all the 'greatest fools' that had to get in on the road-to-riches are now going to be highly dis-illusioned.

Historically ALL corrections are based on leverage. For instance in any given market if you can purchase 10X, e.g. buy a $10 stock for $1 on credit, then the potential for fall on that stock is $1 as that is the average intrinsic cost, this is what happened in the great stock crash of 1929. Real-Estate now is far worse as folks had paid NOTHING DOWN, which means many homes were FREE, and thus could potentially fall to almost zero value. This is what happened in the greate depression.

In the 1990's in Bend, you could buy a nice little house for $150k, wages were similiar then to what they were now, and that was a HOT market. You have to go back to 1986 to see the $50k home, but then wages again were very good prior to the mill closures.

The 4X is just a historical ratio to tell you if something is sane or NOT, just like the P/E in the stock market. Sure there exceptions, but generally, historically the ratio's are based on rationality.

All bubbles are based on IRRATIONALITY, and wishful thinking.

We're still in the bubble, and most people are still feeding house-payments they cannot afford, as the economy slows and folks have no more toys to sell there will be less and less cash. The banks will panic because they don't want MORE foreclosures so they'll simply not loan money, unless the house is near 4X, for instance try to get a loand today on a 10X, or 8X house, you'll find it doesn't appraise.

With todays highest home-ownership in history of almost 70% and the easiest money in history, we can only go down, and this correction will be the biggest since the great depression, and then folks only could borrow 10X, during the past five years folks in effect borrowed 100X { infinite actually } because they borrowed for nothing down.

At some point the RATIO N-X will mean nothing because wages-income will drop, because fuel is up and tourists will not come, there will be no MALL JOBS, no can afford to ski, EVERYONE in bend talks about the 'rich', remember ALL the rich was from easy money from the dot-com and real-estate and they're spending like no tomorrow, this money will dissapear very quickly.

Anonymous said...

I'd say normal, enterprising college educated couples should be able to bring in 80-100K without too much problem. That is low end. That puts your 4x figure at more like 320-400K, and there are a lot of houses on the market near that price level right now

We're talking Bend here, the average wage is $60k/family.

There are next to NO 100K college jobs, with the exception of doctor, lawyers, dentist, cpa, ... and those folks are dependent upon the masses, and if there is no blood is squeeze, these parasites will die.

There are only two real tech companys here, and they're a joke, low wages, and long hours.

There are a few folks that telecommute here for $100k/yr, but that is rare.

It is agreed that $400k is a good figure, but at the income level of $100k, that is less than 90% of Bend. Now that the bubble has burst the MTG, RE, and CONST jobs are gone. Most construction folk are now lucky to make $25/hr which is $50k,

In summary 'college' will not get you shit in Bend.

Anonymous said...

>>There are only two real tech companiess here, and they're a joke, low wages, and long hours.

Sony has high-paying jobs. There are several people there making 75k+ "college" jobs. Yeah, the hours are long, but the wages aren't low.

Of course, that doesn't really affect the local housing market much.

The 4X+ thing can only be maintained in areas with incredible wealth creation, like the Bay Area. Bend will _surely_ get creamed.

Bendy Breeze said...

IHTBYB has deleted his comments about incentives, what a coward. ALl he said was that 'google' was the kind of company that should get incentives. While I can address that later he also inferred that the city could work a good deal. read the below, the city council are panzy's that they couldn't get a good deal ever, its impossible Brogman { Les Schwab } is now the boss and what he say's goes. This is how it works, and if LS says we don't pay any tax, so be it, and you'll never know, because everything is secret, now any other BIG ANCHOR see's this, ditto for more, why? Because CITY-COUNCIL are chumps.


"The City has great dreams for Juniper Ridge and respects Les Schwab
as a regional partner. She understands that the Council is being asked
not only to vote for Bend, but to vote for the region. The vote is
difficult for her because Council has been held to secrecy and been
asked by the employer to put relationships with regional partners at
risk. Council has only been given an hour to review the agreement and
to discuss it." - Linda Johnson December 12, 2006
"Mayor Friedman hears a huge amount of affection for Les Schwab and
excitement about the
company locating in Juniper Ridge. He also hears distress about the
agreement itself. In terms
of secrecy and restriction, it is not consistent with his image of Les
Schwab." December 12, 2006
"Councilor Hummel believes the details are bad." December 12, 2006
"Councilor Clinton believes that Les Schwab is the kind of company
Bend would welcome in Juniper Ridge. However, the details of the
contract have put the Council in a box. It is an unfortunate way of
proceeding that looks like bullying. The contract is not in the best
interest of the City or of Juniper Ridge and is not fiscally prudent
for the community, Juniper Ridge, or the City. December 12, 2006
http://www.ci.bend.or.us/city_hall/meeting_minutes/docs/minutes12_12_

Anonymous said...


Sony has high-paying jobs. There are several people there making 75k+ "college" jobs. Yeah, the hours are long, but the wages aren't low.


I said that 90% of Bend didn't make your wages, and your refutation was that SOME made them, I'll remind you that your SOME are part of my 10%.

Folks note that Mr. Sony is college edoocated.

Anonymous said...

>>There are only two real tech companys here, and they're a joke, low wages, and long hours.

That's all I was refuting. Not your main point. You can calm down now.

IHateToBurstYourBubble said...

When the new bypass is completed this fall, downtown Redmond will be like Aspen. The central-oregon irrigation ditch through downtown Redmond will create a new 'drake park'.

Hilarious! That's good sarcasm...

IHateToBurstYourBubble said...

IHTBYB has deleted his comments about incentives, what a coward. ALl he said was that 'google' was the kind of company that should get incentives.

I deleted nothing. Don't you have a puppy to torture? Or maybe a girl you're keeping in a well in your basement?

"It rubs the lotion on its skin, or else it gets the hose again"

IHateToBurstYourBubble said...

You would have to be a complete idiot to buy in Bend and pay $3k/mo for a house collapsing in price, instead of renting on the cheap and saving the differnce.

Then there's a lot of complete idiots out there. And the whole "should you buy at 4X, or 8X, or 10X, or 12X" is sort of moot. My house is close to 25-30X. 12X is a halving of prices, which I don't think will happen "overnight".

And between bendbust's rampant name-calling, he's making the point (I think) about what is going to happen to the Cali-locusts that have come up here, survived the gypsy moth spraying, bought a house for $750K, managed to HELOC it up another $200K, and are either finding themselves out of a job & MUST sell, or needing another fix because they are debt junkies and have never made enough to service their debts. And they can't sell for what they owe, and in fact would have to pay 6 figures to get out from underneath their white elephant.

I'm seeing a lot of Denali's & Escalades with For Sale signs in the windows, and wonder if people will try to preserve their FICO, take the $200K hit and move on, or get sentenced to 10 years bad luck by just throwing the house keys on the loan officers desk, leaving town, but keeping their 401K.

I think Bend will become the Land of the Vanishing 401K, where 15-20 years of work ($200-300K) fund the dream to come & live in bend, but after 18-24 mo., the 401K will just be wiped out.

I say again: When you pit the New Economy Types From The South vs Bends Pernicious Craptacular Economics, I'll bet on the latter every time.

IHateToBurstYourBubble said...

2,391 properties For Sale in Bend 5/31 (Realtor.com)

From May 23 comment:

2,343 Today 5/23
2,320 last Friday 5/18
2,280 the Monday before that 5/14


17 days, +111 properties. It's actually slowing a little to "only" 6.5 new properties/day. So Mr 3,000 is now about 90 days away.

Anonymous said...

So do you think 240K is what the average price should be in Bend based on 4x? For what size house? There is a great deal of hyperbole on about the number of people in Bend who are at risk. You might be at risk if you bought in 2006 or later and are in the relatively low income bracket of making less than 100K family income per year. If you bought in 2004-2005 you might have overpaid a bit but prices were still much lower than now and "normal" appreciation would catch you in a few years. If you bought in 2006 or 2007 and can afford the home, you will still be fine if you are going to live in the house for 5 years or so even if prices take a big hit.

Anonymous said...

>>You might be at risk if you bought in 2006 or later and are in the relatively low income bracket of making less than 100K family income per year.

Or is you bought 5 years ago and used a HELOC to buy an SUV, a boat, an RV, a motorcycle, a golf membership, and redid your deck, kitchen, and bathrooms.

Of course no one would have been dumb enough to do that!

Anonymous said...

$100K is a low income bracket? Really? Where? In Silicon Valley? Certainly NOT in Bend. Which brings us back to: The only thing holding this place up is an influx of California and bank money. As soon as that stops: Look out below.

Anonymous said...

So do you think 240K is what the average price should be in Bend based on 4x? For what size house?

To quote IHTBYB "I have said over & over ..." { 100X's } That anyone who bought a house over 1200sqft in Bend is an idiot. There is a reason ALL the little homes in Bend are little, only up in the 'highlands' do you see a mcMansion.

Thus to answer YOUR question, we're talking a small normal affordable home in a nice hood.

In a depression the mcMansions take the hardest hit, because NO one has cash, and nobody can afford to maintain them.

There are 1,000's of nice little homes in Bend and Redmond now for $240K, and note this is $200/sq-ft for a little remodeled mill shack.

Besides the 4X argument, there is the argument of sq-ft cost, and certainly most homes in Bend are NOT are not worth $200/sq-ft.

Lets review the argument, its sort of like what stock should cost if you look back historically during rational times its PE-9, with the real-estate classically banks don't want people to have more than 25% going to housing, as more than that is the pain-point { foreclosure is pain in the arse for the bank }, now four years gross wages is where our 4X comes from.

There is a lot of pathetic bullshit here about our $100k/year koolaid-educated YUPPY, anyone who lives in bend knows these jobs don't exist. The average family income is 60k/year.

FORD long ago said "The reason I make cars cheap is so people can buy them", he knew that if you price your self out of the market then you don't sell shit.

In bend today most people have priced themselves out of the market, and there will be a correction.

1.) If you have a nice home in bend, close to downtown, it will sell for $240k, and that is a fair price.
2.) If you have a 3000sqft mcMansion up in the highlands, or out east of 27th, you be fucked.
3.) If you bought a house for over $400k in the last three years in bend, you be fucked.
4.) If you bought a house today in bend a nice little 1200sqft or smaller simple family home on a nice lot, you pay less than 4X { where X=avg family income }, then you can sleep at night, otherwise you be fucked.

BENDBUST said...

If you bought in 2006 or 2007 and can afford the home, you will still be fine if you are going to live in the house for 5 years or so even if prices take a big hit.

If you bought a home in Bend in 06 or 07, and you paid over 4X, your fucked. In hindsight I would say our bubble peaked August 2005, if you go to Merenda, look at the inside wall "Gourmet Magazine, call's bend next gastronomical Aspen...", this is what we call buy on rumor sell on News. It did not get any better than that, that marked the point where the GREATEST-FUCKING-FOOL had bought.

If you bought in Bend from 2001 to present, and paid more than 4X using 1200 sq-ft in a nice downtown hood as the norm {unitary and orthogonal }. You got hosed, and are part of the fool group we love to beat on.

When I say that 4X $240k is fair, what I'm saying is that in three years you should be safe when things start working out. Let's look at the facts our 'hypothetical' nice little mill-house hit $480k short after Aug2005, that what I call the critcal point of BendBubble inflection. Again go to Merenda's and laugh your arse off, I wonder how quickly they'll take it down?

Now when I say $240k is a fair price, that's because smart folk that wanted to sell did sell in 2001-2005 and got those bucks, by summer of 2006 the game was over, and by this past winter, folks that could sell for $240k did. The only people still sitting are those that will NEVER move { bless their heart }, and those that cannot sell, because they OWE more than they can sell { HELOC, ... }.

Things should go down at the worse to -70%, and I expect stabilization to be -50% from the AUG05 high point of critical mass insanity. { Thank you gourmet magazine }.

The NORM { 4X $240k } may go down to as low $120k in the coming 1-2 years, remember we're still very early in this game, we're only at stage four or five, I'll repost the stage analysis so folks can see how far we have to go.

BENDBUST said...

I say again: When you pit the New Economy Types From The South vs Bends Pernicious Craptacular Economics, I'll bet on the latter every time.

There seems to be a lot of newbies here that don't get it, I have been around the Bend for forty years.

I have know dozens and dozens move here from pdx, and get a job at BendResearch, APT { now microsemi }, and a few other places requiring 'college', hell I was around when Tektronix's built their plant in Redmond, that is gone. Ok, so here is how it work our koolaide-edoocated kid comes from pdx with his/her fresh degree and gets a job at BR,APT,... and then low and behold the long hours and low pay and they actually fish, ski, hike, bike LESS than they did when they came here on the weekend!

You say how can that be? First of all our 'high-tech' employers in Central-Oregon make salaried folk work seven day weeks, at 12 hour days, because there is NO competition they know you cannot leave. May I also mention the SHIT pay, given NO competition, the pay here is crap, and it costs more to live. Like they say, poverty with a view.

The average college edoocated last's here about 3 years, before they go back to pdx, and get a good paying 8-5 m-f job, and then they can start spending all weekend mtn-climbing again, ... This is how it works, and this is how it has worked for the past thirty years in Bend, since the great high-tech boo m started in Oregon in about 1978.

BENDBUST said...


Why should the richest people in Bend become tax exempt because they made stupid investments.

Geez, I'm gonna regret this. Dude, I'm talking Google, and the like, not Bend Big Wigs. And I'm talking 15-20 year commitments. And I'm talking like 3-4,000 employees.

Let's face it: NOT GONNA HAPPEN. - IHTBYB


It could and will happen.
a.) Nobody 'anchor-company' makes 15-20 year commitments, the average in Oregon is five, and I cannot think of a single case where the anchor didn't bail when time was up, and move to another close city and start over, with a new tax-exemption package... I can see Redmond & Bend fighting back & forth for years to come over two or three anchors, and the company just moves back and forth every five years.

b.) The condo's are not selling, we all know what going on here, the city permitted densification, and now these pigs sit, its quite common in portland to see +$1million condos be tax exempt their first fifteen years, this would bail-out Mrs. Breeze, one of Bend finest citizens. Pigs that normally not sell look good to folks who think the can avoid tax legally.

c.) Google is building a server-farm in "The Dalles" because of cheap power, about the only Oregonian they'll need at the old alumnimum smelter is janitors to keep the dust off the floor. There is NO way in hell that anybody would build a server-farm in Bend.
Google folk like being near Stanford, seminars everyday, ... PHD's don't want to be in Intellectual Siberia, this is why Oregon has always been a nice place to play, but a shitty place to do interesting work, been that forever. There is NO school of advanced education worth a shit other than Reed College, and that is a four-year, and those prof's are bored out of their mind, and have to frequently be rotated to Darmouth, Brandeis, Smith, Stanford, ... so they don't become basket cases.
There never has and there never will be advanced intellectual high-tech work in Bend. I have my theory's, but that is another thread.

I'm glad you said "its not going to happen", but that said, the way City-Council played lapdog to the lesSchwab-Brogman secret-deal leads me to think that anything might happen, given that ALL can be secret.

Ok, lets play the rhetorical game, 3k+ new jobs come to Bend from one new anchor, now who could that be? An interesting jobs to boot, in a State that has NO schools to speak of, especially at the graduate level.

Look what we have to date, high-tech slave shops! Why because they have to play this game to compete, when every screw and bolt has to come over the Cascades how can they compete? Besides ALL the high tech jobs have been exported abroad since 911 { dot-com }.

The only anchor I can think of that would bring 3k jobs to Bend would be if the NSA or equiv, decided to diversify their HUMINT, but why would they pick Bend?

BENDBUST said...

The Stages of the BendBubble Blowout

Below is the descending BendBubble staircase, its best to print and post, and the daily try to guess where we're, my guess is somewhere between 6&7, they probably should be transposed. The point here is that we have a long way to go, my theory is that AUG2005 was the crest { Gourmet Magazine calls bend gastro-aspen }, the trough will be when 1/2 your nieghbors on your street are living in their cars, or gone.

****

1. Housing markets increase, slowly at first. Faster in the “Hot Markets” { nuttin hotter than bend & CALIF }

2. First-time homebuyers get scared, want in, and need low payments. Homeowners want to enjoy newfound equity (upgrade older homes), especially in “Hot Markets” { dubya has just created two generations of renters that will never crawl out of debt, new peonage system created }

3. Lenders oblige by aggressively marketing Interest-Only loans (mostly ARMS) and HELs, and relaxing requirements to obtain such loans. About 50 - 70% of all new loans in “Hot Markets” are IO/ARMS { Until subprime collapse in fall06, termination spring07, this got to 90% all new loans }

4. Potential for huge gains using IO loans attracts new (but naïve) real estate investors (as well as seasoned investors) who use equity in primary home to finance investment propert(ies). This all combines to fuel an unprecedented demand for housing.

5. Interest rates rise, imperceptibly at first, to fight inflation levels, partly caused by rising housing prices.

6. As Interest-Only periods start to end, payments rise as much as 70% (based on only a 2% rise in interest rates) because (1) catch-up principal payments (2) shorter amortization period (20-25 years for remaining loan) and (2) rising interest rates. If rates are still low enough, some borrowers will refinance into another IO loan to avoid the large payments, postponing the inevitable for 5 to 10 years.

7. IO loan borrowers tap out remaining resources (Stock market/banks) to make payments. Stock Markets drop as money flows out to meet the higher payments.

8. Unsophisticated investors are hit with 2 or more rising mortgage payments at the same time, leading to foreclosure/bankruptcy because (1) a double/triple, etc, effect with no increase in income and (2) inexperience in timing market changes and setting sales price, leading them to ride the market down.

9. Sophisticated investors unload property, priced for quick sale. Lenders unload foreclosed properties as quickly as possible to limit their losses. { This what the baby-jeezus may have meant when he told dubya that we're in a grace period }

10. Property values start to plummet as properties flood the market.

11. Most IO borrowers cannot refinance, especially if steps 6-10 happen simultaneously because (1) new fixed rates will be higher than ARMs and (2) outstanding loans will exceed property values. { under new bankruptcy laws, folks that lose their homes on this cycle will be renters for the remainder of thier lives, look at the great dubya RE scam of 2002-2006 as a retirement plan for republicans }

12. Steps 6-10 will repeat over and over, causing ever increasing declines in both the stock and real-estate markets, as (1) houses get harder to unload due to market supply, (2) lenders with a significant IO position go under, (3) money is pulled out of the stock market to mitigate the huge losses and payoff IO loans, and (4) Fannie/Freddie losses are reflected in the market.

13. Record foreclosures/bankruptcies will follow as property values plummet, particularly in the previously “hottest markets” where most of the IO loans originated. { Bend is-was dependent on California sales, which were ALL IO, and ALL incoming californians to Bend were ALL IO, thus the Bend-CALIF symbiotic-parasites will prove to one of the greatest financial failures in America }

14. Given the new bankruptcy laws that work more like “reorganizations” than a “fresh start,” thousands will carry this debt and bad credit ratings for decades. Some will never recover. Many, many will never be able to afford a home again with a government bailout. Today, more than ever before, there is no “walking away” from a mortgage.

Anonymous said...

My main problem with the analysis of BendBust is that I don't believe that most people who bought houses in Bend in the last several years were people who only qualified for loans because of relaxed lending standards. If true, what is the evidence for this?

Anonymous said...

If you can accurately paint a picture of the types of people who bought property during the last 5 years, and then factor in how many of those bought as speculators, sub-prime borrowers etc then I think you might be able to make a more or less accurate prediction about what is going to happen. It seems a lot of properties bought by rich out of staters has been bought outright, and in cash. Is this only because they hoped to flip property? How many people who bought in Bend really fit this profile of financial idiots portrayed on this blog? Analysis is shallow so far.

Anonymous said...

I suspect many Bend buyers were equity refugees from CA.

IHateToBurstYourBubble said...

I don't believe that most people who bought houses in Bend in the last several years were people who only qualified for loans because of relaxed lending standards.

Of course, it's not true for every single buyer in Bend... but like the "Velocity of Money", much of what funded the purchase of Bend property may have been loose lending standards for the buyer of the Cali house that got a buyer to Bend... or the buyer before that... ad infinitum.

And there's a lot of vacant homes in Bend. And I have heard that many, Many homes in Bend were bought by flippers in 2005-2006. Believe me... the financial situation here is tenuous. There's a good chance this place could be technically bankrupt in a few years. Home equity going the way of the dodo, and people borrowing out of total desperation.

IHateToBurstYourBubble said...

It seems a lot of properties bought by rich out of staters has been bought outright, and in cash. Is this only because they hoped to flip property? How many people who bought in Bend really fit this profile of financial idiots portrayed on this blog? Analysis is shallow so far.

From The Bulletin: "Area home sales are leveling off"

Still, after the abrupt deceleration of late summer and fall last year, builders say they are taking fewer chances this spring, launching fewer housing starts until they see where the market is going.

And that, some market observers say, might be a good thing.

"It appears we have lost the investor class, but we've moved into a nice, stable, fundamental market," Bratton Appraisal Group appraiser Mike Caba said. "It's not the crazy, overheated market that we did have, but it's a good, strong market."


What would a comment be w/o a Blast From The Past!

Jerry Veenker, president of Hollman Homes, said he's also hitting the brakes in 2007, partly for personal reasons - he's 64 and he doesn't want to work as hard this year - and partly to see where the market goes.

His bet is that inventory levels will plunge again this summer and early fall, whittled away by caution in the construction sector and falling interest rates, creating a profit opportunity in the late fall and spring for the owners of developable lots.


Ah yes. You can practically HEAR the inventory PLUNGING.

AGHHHHHHHHHHHHHHHHHHH! AHHHHHHHHH!

And don't forget the FALLING INTEREST RATES! Ummmm, yeah. UP SHARPLY since this article.

Need more proof?

Area economy cools after run-up

Deschutes County builders have been responding to the downturn in housing by sharply scaling back construction plans, Duy found: Residential building permits are down 49 percent from their peak in the third quarter of 2005.

"Locally, we know there was quite a bit of speculation activity in housing, especially in Bend," Duy said. "The unwinding of this housing bubble is not causing people to not move here, but it will have an impact."

"With rental prices rising, we're seeing a lot of first-time home buyers and investors picking up homes before prices go up again."

Overall, the market still looks good to investors, Robertson said. He expects most of the housing inventory will be absorbed by the first half of 2007 and as Central Oregon's population increases, more housing demand will result.


Quiet. Put your head to the ground so you can hear the housing being ABSORBED. I say again:


AHHHHHHHHHHHHHHHHHHHHHHHHHH! AGHHHHHHHHHHH! AHHHHHHHH!

Maybe you're not from around here, but this is what we have to live with. Shameless pandering to RE interests. "First-time buyers & investors buying"? My hairy ass. If you DO live here, then you know how ridiculous these statements are. Inventory PLUNGING? My Lord, there is only so much bullshit the human body can endure.

In answer to your question, How many financial idiots bought homes in Bend?

ALL OF THEM

Anonymous said...

What an ass. Rental prices are dropping. First time home buyers can't afford to buy a home. Every time I read a quote by one of these RE cheerleaders, I feel like I need a shower.

BENDBUST said...

It seems a lot of properties bought by rich out of staters has been bought outright, and in cash.

[ Seems? Based on what? The whole gig in the BUBBLE was leverage, not to lock up your money, little down, and make big returns on the 'value' of the house, LEVERAGE, putting 100% into a purchase is very rare, I know a few RICH folk that did that in 2002-2004, and they NOW kick-them-selves-in-the-ASS for doing it because ALL their money is tied up in REAL-ESTATE that is now worth much less. ]


Is this only because they hoped to flip property? How many people who bought in Bend really fit this profile of financial idiots portrayed on this blog?


[ First of ALL our idiots were ALL genius's until 2006. Everyone I know that bought post 2001 did so as an "investment", aka a can't lose oppurtunity to make it big. I hate the word investment myself, when I hear it I think lottery. ]

Analysis is shallow so far.

[ This is NOT hard, if you have the time, and I'll NOT waste my time, since you inquired, and we all do a little work on this why don't you do the research. Using the DIAL system, and the Deschutes County Assessor system, for 2005, just take the third quarter, look at whether the homes are in the name of a person or bank, and then do the calc. The seat of my pants if 5% paid cash. ]

WRT to the final statement, I don't think you have read the entire past blog, and blogs on this subject, the community has committed 1,000's of hours of research, and we cannot re-post everything everytime someone makes a simple inquiry. My suggestion is to take the time to read EVERYTHING that has been previously posted, and then to inquiry explicitly on what you want to know and couldn't find, and we'll tell you how to find the information.

Most of us are older rich guys, none of this will ever effect me as I paid everything off years ago. I'm just along for the ride. Be explicit in your questions, provide a reference of where your coming from, and we help you. My only beef with the BendBubble is that the get-rich-quick money grubbing folk in Bend 75% I would say have hosed this nice little desert town. Lastly, most of my nice little downtown homes were bought for less than $100k, so I'm not worried about losing money, the market would have to go down 80%, it could happen and probably will, but thats when opportunists will move in, and bring the stabilization back to 4X.

BENDBUST said...

My main problem with the analysis of BendBust is that I don't believe that most people who bought houses in Bend in the last several years were people who only qualified for loans because of relaxed lending standards. If true, what is the evidence for this?

I could do a mathematical proof, but it probably would still not be sufficient. This has all been documented in the past.

Here I go again, from my personal experience. This is a post 2001 reference as that is when "they all came to Bend" in the most recent bubble mini-cycle.

1) Local folks { been here at least ten years } in mill-shacks sold the bottom loser homes to mexicans { sub-prime }, then they move up as an investment to Shevlin...
2) Colorado/California massage therapists, hair-salon folk bought the better downtown stuff. { subprime }, the shit went to mexicans,
3) Out of town retires bought east of 27th, and west of 16th, the cost living is screwing their retirement plans, and now they cannot move because their house is worth less. { conventional }
4) Construction folk from all over USA came to Bend { subprime }
5) Mortgage & Real-Estate folk, these jerks not only bought their own house SUBPRIME post 2001, but they a few more spec houses in shevlin, broken-top, northwest-crossing, this group will get hosed the worst, and this group being the MOST powerful lobbying group in the CITY, and this group that controls the city-council will demand 'incentives' to stabilize the economy. The folks that get the bill for this know that the 'incentive package'' is a lifeboat for greedy morons. Even clerks in these RE&MTG shops bought spec property as an investment and why not? by 2004-2005 a family pet could and did qualify for a stated income 110% loan. Lastly, even today these folks will tell you that real-estate only goes UP.
6) There were a few hobbits that came from all over the world to bend to hike, bike, and live. These are very few. { subprime }

The inquirer here is essentially questioning the validity of easy money, as being the cause. Let's make this clear, that groups 1,2, and 4 would have NEVER qualified for a $400k house, given the fact that the average family income here is $60k/year. 2&4 are leveraged to the hilt and will get totally hosed, 1 will get hosed because they moved from 1,000sq-ft to 4,000sq-ft, and now they negative equity. 3 is the only group that is questionable, and this is where the 401k comes in they'll have to dip into that to get out of Bend without screwing their credit.

The above is simply a few words, again if you want information read all the prior posted data to date, from all relevant websites.

In summary every greedy person in Bend moved up a notch that could, the people who stayed put, look pretty damn good right now.

Thank god for the mexicans, because they are the sill-plate that allowed even the lowest economic meth folk to move up. My estimate is that 90% of post 2001 purchases had a mortgage and 80% of those were interest only, variable, heloc, stated-income, ... .e.g. SUBPRIME..

I think the issue here is term's, lets make this clear.

1.) CONVENTIONAL: 20% down, down cash not borrowed, 20% of 400k is $80k, the average american as of 1998 had a negative saving's rate, most folks couldn't have paid $80k down.
2.) SUBPRIME: stated income, no down, interest only, heloc, 120% finance, ...

My gut feeling from the research I have done to date is that 90% of the homes bought after 2001 had a MTG, of those 80% were subprime.

WRT the rest of you, sorry to bore the shit out of you,

The entire easy money program was engineered by team DUBYA so that they could get a second term. The fall-out will be "Debt, Bankruptcy, Prison: Bends road to riches". Since 1998 the usa american average savings rate had been negative, easy 'subprime' money was essential for the real-estate lobby to market home and move classic values from 4X to 10X or higher { where X is the avg household income }. We're talking average here, not the exceptional 'rich person', they make up well less than 5% of Bend.

Let's discuss the BIG house, do you all note that there are NO old big houses in BEND? This is the desert, its always been expensive to heat, folks had always had homes around 1,000sq-ft or less, this is how they survived being out in the middle of no-where, during the last twenty years a large percentage of new homes have been BIG SQ-FT, luckily these homes are all crap, and thus will be gone in twenty years, the point is that in a depression BIG homes don't sell, as expense is too high, and nobody wants them. There are NO BIG OLD HOUSES in Bend, yet overnight mcMansions grew out of the desert. Contractors generally make money on sqft, and banks go by sq-ft the assessor goes by sq-ft, and our "investor" kept moving up on sq-ft so they could get more leverage and make more money. Every little person in bend is-was moving to the million dollar home with the idea of selling and moving on rich, ... It didn't happen. The desert won, the desert will always win. That's why there are NO big old houses in Bend, your aren't the first hoard of humanity to strike it rich in the middle of the Oregon desert.

I like inner downtown bend, so I can walk and ride a bike, when you all move the sub-burbs will be of legend, but the sprawl will remain, and in-filling will take place.

In summary the questioner seems to not know what a 'relaxed lending standard' is-is, I suspect him/her to be a MTG broker. I have defined a relaxed standard as anything that is NOT CONVENTIONAL, and I have DEFINED CONVENTIONAL.

Anonymous said...

I have said this before. I'll say it again because I like to hear myself talk.

With money so easy, how could huses FAIL to move up to a ridiculous level?

With 100% financing, why not buy 5 expensive houses? Why not bid up the price by going after the same 5 houses that the other 100% financing dork is going for?

Where do you think all this inventory comes from? There are hundreds of houses that simply can't sell until they drop by half. Without easy financing, there's no one to buy.

If the problem were only in Bend, no big deal, but it's WORSE in California, where 35% of buys were subprime in '05 and 50% were subprime in '06.

It really is going to be a massacre. Maybe not for the $300k houses, but certainly for the $600k houses. And don't forget the million dollar houses. We still have 200+ of those, right?

Anonymous said...

People like to look at Bend as a special place, but Bend's real estate for the next 5 years will be driven by the national real estate markets. Especially California's.

---

Fed to discuss max 50% debt-to-income ratio for borrowers, prohibition on "stated-income" loans to subprime borrowers, and other new rules

---

http://bigpicture.typepad.com/comments/real_estate_/index.html

---

http://interestrateroundup.blogspot.com/

Anonymous said...

Of all the people I know, probably at least 75 % have either a neg am, Interest only, or an ARM. Very few could put 20 % down on a conventional loan. Most of these people bought more house than they could afford. I still hear from some of them that when their loans adjust they are going to sell. My question is, what happens if they can't sell. They can barely affford to make their payment as it is. Also, alot of them got HELOC's to buy cars, toys etc. So many people have absolutely no clue that things are not selling. I know of one person who bought 2 houses in a very expensive part of Bend, and two condos. Now he can't sell any of them.

IHateToBurstYourBubble said...

Anyone have access to the Bulletin online? I'd like to see a copy/paste of:
"Bend's home appreciation rate drops"
in today's issue.

Anonymous said...

I'm one of those college-educated folks from PDX. You hit the nail on the head with your note about having more free time here. I was priced out of the Bay Area a dozen years ago, so moved northward. Bend wasn't even on my radar, because I did not want to buy a house in a one-horse town. I saw the same thing in Santa Cruz - folks taking part of their pay in scenery, to live near the beach - when the smarter ones discovered living in San Jose was more lucrative, and permitted time to drive to the beach.

And yes, Oregon's higher-education system is PATHETIC. That's why the good jobs will continue to go to imported Californians.

Anonymous said...

>>I still hear from some of them that when their loans adjust they are going to sell.

Excellent, Smithers, excellent. Still more inventory. I'll get my McMansion for $250k, with $50k down.

Bend Economy Man said...

How many people who bought in Bend really fit this profile of financial idiots portrayed on this blog?

I bet it's more than fit the profile of super-successful telecommuters, retirees and trust-fund babies portrayed in The Bulletin.

Anonymous said...

_________________

Bend's home appreciation rate drops
National rank drops from No. 1 to 10

By Anna Sowa / The Bulletin
Published: June 01. 2007 5:00AM PST

Bend no longer has the nation's highest home-price appreciation rate, according to a report released Thursday. It's now 10th highest, the Office of Federal Housing Enterprise Oversight reported.

The new No. 1? Wenatchee, Wash., with 5.96 percent appreciation in the first quarter of 2007 over the fourth quarter of 2006, and 25.6 percent price appreciation from first quarter 2006 to first quarter 2007.

Bend's home prices appreciated 0.37 percent from the fourth quarter last year to the first quarter this year and 13.67 percent from the first quarter of 2006. The city, however, had the highest five-year price appreciation of the top 20 regions in the latest report, at 100.87 percent since first quarter 2002. The report does not contain median sales prices.

Bend had the lowest quarterly appreciation from fourth quarter 2006 of all top 20 cities, which leads local brokers to suspect Bend will be out of the top 20 by the third quarter, which ends Sept. 30.


"(The top 20 list) is telling me that our prices here in the Bend area went up way too high (in the past couple years)," said Bill Berger, principal broker for The Hasson Company Realtors. "The pendulum swings both ways - we were on top of one side and now we're swinging back to the other side."

Any high appreciation numbers are remnants of the real estate speculators and investors who flooded the Bend market through 2005 and 2006, Berger said. They were still buying new properties through May and closing on properties through July.

"By the third quarter, we'll have that speculative buying frenzy completely purged out of the market," Berger said.

The region is still trying to find its balance, Berger said, adding that he doesn't think Bend's appreciation will fall into the negatives, as is occurring in many once-hot California markets. West Palm Beach, Fla., has a 112.33 percent five-year appreciation rate, the report said, but slumped to -2.27 percent for the quarter and -2.16 percent from last year.

"I'm still convinced it's a good market right now," Berger said of Bend. "Buyers and sellers aren't necessarily in agreement with me."

Overall, interest rates are stable, buyers are still coming in, albeit at a lower rate than they were a year ago, and sellers are "just kind of out there negotiating."

Home buyers are still waiting for prices to come down further, he said, and think they are in the driver's seat.

Conversely, "sellers feel, rightfully so, that they've been beat up pretty darn hard," Berger said. "And they're not ready to come down."

Nationwide, the rate of home-price appreciation was slow in the first quarter of 2007, according to the report. The OFHEO House Price Index was 0.5 percent higher in the first quarter than in the fourth quarter 2006, based on data from sales and refinance transactions. Still, prices in the first quarter were 4.3 percent higher than they were the same quarter one year ago.

Other top 10 regions for home price appreciation from fourth quarter 2006 to first quarter 2007 were, in order: Provo-Orem, Utah, 3.03 percent; Salt Lake City, 2.96 percent; Grand Junction, Colo., 2.56 percent; and Ogden-Clearfield, Utah, 3.07 percent; Gulfport-Biloxi, Miss., 4.77 percent; Myrtle Beach-Conway-North Myrtle Beach, S.C., 1.76 percent; Boise City-Nampa, Idaho, 1.96; and Corvallis, 1.46 percent.

Anonymous said...

glad to be in the minority

-bought at 3X income in early 2005
-conventional
-currently 40% LTV ratio
-no Heloc
-no other debts

Anonymous said...

And yes, Oregon's higher-education system is PATHETIC. That's why the good jobs will continue to go to imported Californians

You know what, the higher ed system isn't that terrible, I'm a native that graduated from OSU in Corvallis and it gets a little old having outsiders beat up on this state. I've always said and will continue to, if it so great where you came from then don't let the door hit you in the ass on the way out.

I'm not going to defend it and say that Oregon is not without a myriad of problems because it is but news flash "every other state has plenty of problems as well."

As for higher ed there are plenty of private colleges you can rack up decades worth of student loans at if that is your desire but just because the state is not going to shell out the dough to build a university in C.O. doesn't make the higher ed system a joke.

Good old Cali folk (or people from what ever other state is so great}bring their dumb ass mentality up here in the droves whether it has to do with education or city services and other tax measures that we've been hit with recently. I'm sure before long we are going to be saddled with a sales tax and it won't be a yes vote from the majority of native Oregonians I gaurantee you that. If Oregon is so bad and backward pack your shit and get.........!

Anonymous said...

Higher Ed in Oregon is pathetic. The best and brightest high school students in Oregon are LEAVING. It's cheaper for them to attend out of state, sometimes at private colleges. Those kids then don't come back, which is why Oregon remains Podunk, and always will. People like the poster above just don't get it. It's necessary to INVEST in education if you want the benefits. You few longtimers, and your Southern California brethren, have killed off the economics of Oregon with your insane tax cuts. You say, "If Oregon is so bad and backward... well - yes, I don't CHOOSE to live in Bend, and - to make matters worse - I'm one of those Cali imports. I enjoy my job, make decent money at it, have a reasonable house on land. Though my kids are grown, I continue to lobby for a real (Stanford, Berkeley, UCLA, UC Medical Center) higher-ed system to bring prosperity to the state as a whole. Too bad you can't see past the end of your own nose. People like you will cause Bend to tank over the next few years.

Anonymous said...

People like the poster above just don't get it. It's necessary to INVEST in education if you want the benefits

There you have it folks " we are the only enlightened people that have moved to Oregon from where....?"

First of all you didn't read the post very well because I never said it is not necessary to invest in education; however, I don't believe Bend is ready for or will warrant the kind of state tax dollars to fund a four year university here in C.O.

Ever heard of OHSU a research medical university which is pretty famous west of the Mississippi?

That's great you continue to lobby for your great universities which all seem to hail from Cali, mean while I'll continue to vote no on the ridiculous legislation that you enlightened folks can get on a ballot.

Great for you since your kids are grown but mine are tiny tots and it's hard enough to pay the mortgage and put food on the table and medical bills let alone think about how we can justify another public university.

I would be real interested to find a list of all of those private colleges that can be attended and public universities out of state that are far less expensive than going to one of Oregon's public universities. I'm calling bullshit on that but in the words of a famous philosopher known as "paul doh" if you show me substantial proof I'll eat my own head.

Anonymous said...

wow 107 comments so far. I've got to hand it to you oh guru of the bubble, Mr. Paul Doh, this site is stimulating some serious dialogue. I love it. I have been a a denizen of this site since it started. I should start using a screen name. Paul, make sure you keep yourself safely anonymous, I'll bet that a lot of real estate asses read this site and get pissed off daily. Some day I want to buy you a few beers. Keep the ball rolling my friend. Bend economy man has been kind of quiet lately, but I love his comments as well. I sold my house last march and got out just in time because of info I got from his blogsite.

BilboBend said...

Ever heard of OHSU a research medical university which is pretty famous west of the Mississippi?

Ever hear of packwood and hatfield, those old boyz got the bucks for OHSU, and yes, the eye clinic is world famous, pretty descent med school and dental, but NOTE I said descent.

Oregon is an educational joke, OHSU is exception because hatfield and packwood were senior, on the finance committee and got PORK for Orygun. They're long gone, and PORK for Orygun is long gone.

FACT

Anonymous said...

"Pretty famous west of the Mississippi?"
Ever heard of Stanford University Medical Center? Loma Linda Hospital? Many people on the PLANET have; in fact, they seek out those places for treatment.

Read last Sunday's Oregonian for stories about three high schoolers at the top of their classes who are attending two public and one private college for LESS than their cost to attend U of O.

The reason Silicon Valley kicks tail, and always will, is that education is cheap, and one can better their life at any time. As a result, high school dropouts end up with accounting degrees and MBAs, and achieve financial success.

By being selfish, you will get what you deserve - nothing. The good jobs will continue to migrate elsewhere; your kids will grow up and LEAVE to go to college. Whether they return or not will depend on what opportunities await.
Enjoy your short-term kicker.

One last thing: You're an Oregonian by accident of birth. I'm an Oregonian by CHOICE.

Anonymous said...

One last: Cost to attend PSU (public) or George Fox (private) for an MBA: $21,000.

Cost to attend San Jose State University: $7,000.

And um no, California is not the source of all good universities... UW is world-class in many areas.

Bend is not ready for a four-year university - we're too cheap to support the ones we have now, much less start another one. Keep voting those investments down... you only hurt yourself. After all, despite your OSU degree, you're admittedly struggling to put food on the table. So I understand your reticence. Apparently it hasn't been a very good investment for you. Sorry about that.

BilboBend said...

Higher Ed in Oregon is pathetic.

Been in this racket a loooooong time, and MONEY is NOT the problem.

Been in Science a looooooong time, and I know that Oregon is a great place to vacate, but a terrible place to intellectualize.

Ok, lets get real if we REALLY wanted to be ASPEN we would have Aspen-Institute and Santa-Fe has the Santa-Fe-Institute, both places have more PHD's than Bend has taco shops.

The fact is there is NO way in hell that Bend is going to get an Institute like the Einstein Adv Learning in Princeton, NJ or the Aspen Institute because we're the MORAL equivalent of the deep south during the civil war, and now that OUR senior senators packwood&hatfield are gone, and are junior boyz are minor league gimps, there is going to be NO pork.

Back to the money problem, one of my favorite of all time is pack in 1983 when they tested the graduating class of master's folk in Education for readin,writin,and arith'n, and they tested at the third grade level in writing, and they were the future folks to teach in our high-schools in Oregon.
In summary it will take MORE than money to fix the edooocation problem in Oregon, it will take a vacuum cleaner and a full rectal enema to purge what really is just a jobs act for people with fine-arts degrees, this is what Oregon is an education boon-doggle,

All you ever will see here is re-cycled losers, and that's all there ever has been.

It's Oregon,

BilboBend said...


glad to be in the minority

-bought at 3X income in early 2005
-conventional
-currently 40% LTV ratio
-no Heloc
-no other debts


Very good grasshopper. You truly are on the correct end of the Bend-Bubble continuum. You should weather storm just fine.

We all need to hear more success story's in this gloom and doom forum.

Anonymous said...

>>but NOTE I said descent.

descent implies that it's going down. ascent is going up.

BilboBend said...

My question is, what happens if they can't sell.

1.) There are New bankruptcy laws that make it virually impossible to walk from debt.

2.) Many folks and their children will never be able to own homes again.

This is how it works, when you reach the point you cannot pay mortgage you tell the bank. They sell the house, and you pay the difference by signing a NOTE-OF-OBLIGATION, you'll be in debt for the rest of your life. This is why the children are screwed because there goes the college fund.

The entire bubble was very clever, easy money, new bankruptcy laws, ... Many States have re-instituted Debtor-Prison for the first time since 1880's.

If you don't let the bank sell the house, and sign the NOTE-OF-OBLIGATION, then they go after you and sue you for everything you got, and under the new bankruptcy laws everything is game, even the kids college fund.

All this was pathetic, talk about leverage and how for nothing down you could get rich, and how RE only went up, well guess what when you buy a $400k for nuttin, and it goes south -25% then your now in debt for -$100k, and this is real money.

We have I should say LORD DUBYA has instituted a new year 2000 peonage system.

Anonymous said...


>>but NOTE I said descent.

descent implies that it's going down. ascent is going up.


We have a troll, troll alert.

Note I said that senior finance US senators hatfield&packwood are gone, the PORK for OHSU is over, thus its now no longer ascending, its descending,

The best days for OHSU are long over, I know they just got $32million for that new sky-train, but that isn't edoocation myrtle, that was a Bechtel moment, sort of like a Halliburton Moment.

Anonymous said...

Success stories? OK - bought a country place in 2000 with a funky trailer-
Put a nice trailer (three pieces) on it in 2003
Haven't touched a penny of equity
Making 25% extra principal payments every month
Not concerned with house value more then as a curiosity right now - instead we like watching the mortgage balance shrinking.

BilboBend said...


Bend is not ready for a four-year university - we're too cheap to support the ones we have now, much less start another one. Keep voting those investments down... you only hurt yourself.


Talking about MONEY, I remember over twenty years ago in Hillsboro, OR AREA State folks put a little place in called OGI, for Oregon-Graduate-Institute, it was supposed to be OUR STANFORD, CALTECH, PRINCETON, .. you know...

It never attracted any names, they gave prof positions to folks graduating from PSU, ... Today its now part of OHSU in name.

The fact is Oregon has DUMPED MILLIONS AND MILLIONS into HIGH-TECH HIGHER ED, and its always GONE to SHIT.

The reason is that this State is incapable of sharing the graft,

Go there sometime and walk around OGI, its depressing, I was there for a seminar this winter, and in the cafeteria there job posting's from 2002 on the wall. It literally reminded me of a third world university.

We are NOT capable of importing good people, NEPOTISM is alive and well in Bend, Redmond, and SALEM.

The thing is that the folks at Stanford, and Caltech are NOT stupid, the only people who don't know what goes on in Oregon, are Oregonians, and this is because we're a one newspaper state, and that paper is-was created by KKR, which was created by PERS, ...

Every dollar in this State has to go through the FAMILY. OMERTA.

The point here should be on Bend Real-Estate, but the point I'm trying to make is that this State is incapable of managing money, and incapable of hiring the right people to get the job done, and track record is 100% dismally incompetent.

Anonymous said...

California and Washington have competitive elections for governor, despite the fact that they are liberal states.

Oregon doesn't. It elects Democrats over and over. They don't even have to be any good. There's no bar too low.

Oregon also only has one big city. It's really a Podunk state. Lousy gov't.

Anonymous said...

I'll bet in 10 years that TWICE the revenue from homes constructed in Bend will go to China.

In five years Oregonians will be sending their daughters to China for prostitution to pay for feed for their male children.

Anonymous said...


Oregon doesn't. It elects Democrats over and over. They don't even have to be any good. There's no bar too low.


Oregon has had many Republicans in charge. Nothing ever changes, its always about pork, look at the DUBYA clique, are they not complete fucking nitwits and incompetent bamboons?

Oregon will always get the Government they deserve.

We shouldn't bash Oregon schools because its like kicking newborn puppy's we should focus on the Bend-Bubble.

What I would like to "DEBATE" to quote paul-ihtbyb is the complete inability for the spineless posters to discuss the complete pansy cowardice of the Bend City Council. Its easy to bash Oregon-Edoocation, its easy to bash DUBYA, and but NOT a single one of you has the balls to bash our electable Bend City Council. Why is this?

Back in the 30's they used to have a joke, Democrats got you into a war, and republicans robbed you blind. What is new? Nuttin.

Oregon has always been a bastard child, a southern plantation locked in the past. The problem here is that NEPOTISM, old names like Roberts, GoldSchimdt, Tom McCall, { a republican }. Most of the crap today is-was setup by Republican Tom McCall, yet they like to hold democrats accountable. Don't get me wrong they BOTH suck. Oregon is a Southern Plantation State and old boy Boss-Hogs have been running this State since the great depression.

The LOTTO, Edoocation, Transportation, they're just revenue. Hell ol Goldschidmt had SAIF paying him a cool million a year just for protection, e.g. "Public-Relations", but the fact is it was protection money, his job was to protect them from Liberty. Goldschidmt was the king maker. Since 1991 when Goldschidmt setup his own company he was shaking down virtually every state agency in the State.

The efficiency of money has never been good in Oregon, thus its no surprise that our schools suck, at all levels.

Nobody can fight the NEA { National Education Association }, its one of the strongest unions in the country, their mission is not to edoocate children, but to ensure maximum wages for the patronage. It doesn't matter which party is in charge, because the game has been play this way in Oregon since the 1920's the game is now set in stone.

Let's wonder just for a second now that we have solved the Bend-Bubble crisis. Given not a one of you has the balls to bash the Bend City Council, is it surprising that no one has the balls to reign in the Government? Too many family members on the payroll ... They say in Redmond that over 60% of the police department is related by blood or marriage. Think about this stuff,

Oregon is still a very small State, with a very few major players running the whole show.

Anonymous said...

you guys are so sophisticated. The publisher of this blog seems to not allow my posts.

I have had a few drinks tonight, but let me explain this......

Bend is too msall for long tem...can I bang a hooker? no. Can I make $500,000...no do house cost $500,000....yes. Well that does not work....get it? if Not fly down to Laguna Beach and ask me...


thanks

IHateToBurstYourBubble said...

you guys are so sophisticated. The publisher of this blog seems to not allow my posts.

I have had a few drinks tonight, but let me explain this......

Bend is too msall for long tem...can I bang a hooker? no. Can I make $500,000...no do house cost $500,000....yes. Well that does not work....get it? if Not fly down to Laguna Beach and ask me...


Actually this does explain why Bend is in need of the technical prowess & sophistication of Californians. Just some notes though:

1) You must actually be able to click "Publish Your Comment" to publish your comment. I know, hard to remember sometimes.
2) No, YOU guys are sophisticated!
3) Electric boogaloo, moochie moochie humbo goochie-mac, mooga butt, donta you-a have-a anything-bo better-ta doo-ble than-go get-em hammered and-doo type-on this-here blog-dom?

Anonymous said...

I'd love to bash the Bend City Council, but I'm embarrassed to admit that I know nothing about them.

Anonymous said...

I didn't mean that Republicans are any better than Democrats. All I meant was if you don't do a fair amount of flipping back and forth, no one can be held accountable for anything. How many years now have we had a Democrat as governor? It's just too easy for them. I want both sides to have to put in some work. I want the guy to get kicked out if he sucks.

BENDBUST said...

can I bang a hooker? no.

Bend has lots of hookers, perhaps they're not street walkers like PDX or LA, ...

This needs to be said, regarding women. Bring your own woman to Bend, or your wife or whatever. The few women you find here are gold-diggers.

I know of dozen's and dozen's guys in this town that are middle-age and single, and very lonely. I have been married for almost thirty years, but still I scratch my head WRT this isssue.

Here's is what I think ...

1.) There are lots of girls if your under 22, by then they get married or leave,
2.) Single by 25 they want money, remember this is Aspen,
3.) Single by 40 they want lots of money,

Now for the guys,
1.) Board bums, good looking, get lots of girls until 22,
2.) By 22 they're either a loser or gone,
3.) By 25 they're either working construction or gone, and hopefully they got married,
4.) By 40 they're fat slobs and the good looking, jogging, hiking, biking Bend gals will have NOTHING to do with them,

Getting back to Prostitutes, there are lots, just hang out at D&D downtown, or the truckstop's along 97. Yes, they're not the Laguna quality, but then again, you can get what you want for $10->$100, I would suspect in Laguna Beach, given that a room is $200, your hooker is why you need to make $500k/year.

In summary, if your over 22, and you come to Bend bring your own women, otherwise you'll be one of the guys at deschutes, bend-brewing, and cascade locks just sitting there after work everyday loving your beer.

BENDBUST said...

How many years now have we had a Democrat as governor? It's just too easy for them. I want both sides to have to put in some work. I want the guy to get kicked out if he sucks.

This is a myth, remember Matalin and Cargill are married, the two intellectual heads of left versus right, live together and laugh all night.

Nader said it best "there is no difference between dems and repubs", both beholden to big-bucks and wall-street, Hillary Clinton is just Cheney-in-Drag, and Dubya is just part of long family line of Nazi's.

Malcolm-x said that there was no difference between dem's and repub's.

HL Mencken in the 20's said that the difference between repub's and dem's is the difference between wolves, and foxes.

I going to write on this, and I have already written much but the issue here is ENGAGEMENT, and simply by posting what you think your being ENGAGED.

Years from now when folks know this war cost two trillion, and there are 100,000 disabled veterans, ... Folks will ask how did DUBYA get us in this war? The answer is Dis-Engagement, most people are too busy fucking, eating, and watching TV.

The worst kind of FUCKING HUMANITY are the folks in Bend that don't even watch the CityCouncil or County-Commissioners, poly-tickin's in Bend get away with murder, because everyone thinks that they'll keep the bubble up in good times, and fix the bubble in bad times, Folks in this town are COMPLETELY dis-engaged from reality. Focussed on left vs right, and dem vs republican.

Remember that Oregon is a kleptocracy, and has been so since post WWII, its only in the last ten years that the people who run PDX { morrisette, ... } have moved into Bend to do the same thing they have been doing in West-Oregon for fifty years.

As long as everyone thought they were getting rich too, everyone went with the program, eventually when you have too make your wife and daughter into whores, perhaps you'll realize that ENGAGEMENT is required in a DEMOCRACY.

Look at this forum not one person has the Cahunas to even discuss CityCouncil or the Brogman LesSchwab power grab.

SPEAK-UP, or you deserve your fate.

Bend Economy Man said...

One last thing: You're an Oregonian by accident of birth. I'm an Oregonian by CHOICE.

What a fool. If you weren't a fool, that would be an insult to everyone who was raised here, went to school here, studied Oregon history in junior high here.

And with that attitude, the closest you'll ever get to being an Oregonian is reading The Oregonian.

Anonymous said...

"That's great you continue to lobby for your great universities which all seem to hail from Cali, mean while I'll continue to vote no on the ridiculous legislation that you enlightened folks can get on a ballot."

Many Oregonians are prey to Lake Wobegon Syndrome (they think everything here is "above average") but the ugly fact is that OSU and the U of O are third-rate institutions that have been nearly starved to death, and as long as our state universities are third-rate the state will remain the Appalachia of the West.

BilboBend said...

The ugly fact is that OSU and the U of O are third-rate institutions

I beg you all not to bash the Orygun edoocation system, this is like kicking a pregnant dog, and drowning her pup's, what is the point?

The reason the Oregon colleges are terrible is the Prof's, Oregon hires the MOST mediocre. You cannot have a top school if you hire PHD's from the worst schools.

Oregon edoocation has always been a works program, e.g. welfare for people with liberal-arts degrees, been that way since the 1920's. Nuttin new here.

Every attempt in my lifetime here { over forty years }, I have seen millions and millions go down the drain.

The debate on Edoocation seems to have two sides, the not enough money side, and the more money side. MONEY IS NOT THE PROBLEM.

The ENTIRE edoocation toilet would have to be flushed, and somehow we would have to bring in folk that run Standford, MIT, Smith College, to run it all. It would cost some money, the most difficult part would be ALL the existing prof's would have to go, the new folks would have to bring in to line prof's who 'wrote the book' in their subject.

Oregon spends Billions of dollars on edoocation, and nothing has changed.

When I moved to Oregon in the 60's, I left behind CalTech, interesting jobs, and intellectual stimulation. Upon my first jobs in Oregon I quickly realized the depth of incompetence. Everything in Oregon is cronyism and nepotism.

Everywhere I went it was the kids from MIT, Purdue, Univ Wisconsin, ... I never saw Oregon kids 60's-80's ever do interesting work from PSU,OSU,UofO, its like they were only good at task involving repetition, not original problem solving. The problem is NOT the kids given that intelligence is random, and we all know that Linus-Pauling was of Oregon. The problem is the Prof's, you cannot pass to the students that what you don't have yourself.

The folks that run Oregon edoocation at the very top ... Bab's Robert's, ... are all crony's, a sophisticated academic would NEVER work in this State. When I moved to Oregon in the 60's I knew I had left behind seminars, meetings, interesting people, librarys', I came to Oregon to climb mountains. I think the only way an intellectual can deal with Oregon is have a large library at home, and travel frequently to workshops and conferences out of State.

I noted a few days ago on this thread that the ONLY good school in this State is Reed College and they rotate their prof's who are excellent, most graduate to of class at Harvard, ... they rotate these folks out of State to Top-Schools every other year for a term, so they don't go stale.

NO AMOUNT of MONEY in the World will EVER fix Oregon eDOOcation. It would require the elimination of the State Board of Education a complete purge from there below, and a complete purge of ALL stuff down to janitor.

Here's the real issue even in third world country's with NO money, just chalk, a board, a room, ... what you need are GOOD teachers. People with PASSION, people who wrote the book on their subject....

Like ALL averages, most teachers are mediocre, there isn't enough good teachers to go around, just like there isn't enough beautiful women for everyone. Oregon WILL NEVER get the best teachers, and NEVER has.

Good teachers, want to be near other GOOD teachers for intellectual stimulation. Oregon has ALWAYS been the equivalent of an isolated southern plantation during the civil war. While this is good for the environment, and I came here for the environment. I accepted the fact that when I came here forty years ago that I had left ALL possibility of an interesting job, and intellectual stimulation.

Some places are about making money, e.g. Houston, LA, ... some places are about nature, Hawaii, there is no one place that has it all.

Folks that tell you that if YOU just give them MORE money, that they will turn Oregon into an educational paradise are just pathetic liars shaking you down.

I have said what needs to be done to fix Oregon eDOOcation, and it requires a 100% enema, and this is NOT going to happen after eighty years of nepotism and cronyism, especially in a place that had NO track record in the first place.

One last thing I would like to comment on is the utility of education. I have noted in my conversation with the rich & powerful of Oregon during my last forty years ago, and a common theme is they don't want the masses educated, as then there would be MORE competition for their children. There will always be a limited number of good things in life, good jobs, good food, and good-looking women, men will always fight for the little good that there is. In spite of all the talk about a world class education, the elite know that this is NOT needed or wanted in a place that is composed of walmart greeters, costco-scanners, and micky-d flippers. The last thing the elite wants is a real smart child to rise out of a colored hood and compete with their child in law school or med school. I always tell people with kids in Oregon, "Send you child to Private School", especially in K->12, always been this way.

On this subject of education there is another fact, education is promoted by the education lobby to get more money, ... On travels to Africa I frequently had folks in remote english come up to me and say "I was told if I was educated life would be better, but I still have no food, and an educated man can only work with tourists, and there no tourists coming to our village", many African people who are educated move to the City's where they can find 'tourist' work. We're all told in this country that those people just need an education and a laptop, but the fact is they need potable water.

What exactly happened in Oregon, this is a long story, prior to the 1920's in Oregon education was provided by the Catholic Church, who got money from Salem, the education was fairly good. In the 1920's lobbyist's for the Public Education Board forced the Catholics out of the Education Business, and public schools became a monopoly. Over the years the ENTIRE education system in Oregon became an old-boy network patronage program for political party's. Easy jobs, good benefits, lots of time off, PERS pension. Today in Oregon the eDOOcation lobby is one of the MOST powerful in the State. There is NEVER enough money, they always want more money.

Remote villages in China have very good education. Children attend school twelve hours a day, seven days a week. The class room is only contains a board and chalk, the teacher generally has to sleep in the classroom as this is their home. These are the people we compete with, this is why there are so many PHD's in China. The villages have no computers, parents are required to provide pencil and paper for the student, their are NO book of their own, kids take turns making a copy of book by hand. Thus they get to know what books that school has very well, and note they're required to copy the books outside of class time. A common complaint of the children is no time to play.

In the USA kids are bored out of their minds. Teachers are zombies, and quite often schools are prisons.

Money is NOT the education problem in Oregon, the problem in Oregon is that education is simply a way for a lot of people to make a living off of tax revenue. The elite that run Oregon don't even want an educated populace, otherwise the entire system would collapse.

All is well, just keep folks in the dark and feeding them shit.

BilboBend said...

And with that attitude, the closest you'll ever get to being an Oregonian is reading The Oregonian. - BEM

Bem, Can I, Can I pleeeeze write about the Oregonian??? Pleeze, ...

Ok, here it goes ...

Once upon a time there were two papers in Oregon, and the Oregonian bought the other.

In the 1980's a bunch of Crooks got together and took over the Oregon PERS pension fund and created a little Junk-Bond-Fund called KKR.

KKR used PERS money to buy the Oregon, Fred-Meyer, ... Almost every business in Oregon. They took out all the cash and replaced it with IOU's { plain paper }.

Once KKR had the Oregonian they had ALL the media in Oregon under control, and Fred-Meyer was the largest advertiser in Oregon, and they owned that. By 1988 the Oregonian was the most profitable paper held by KKR in the country, and KKR by its use of PERS funds became the most powerful junk-bond-fund in the USA.

For the past twenty-thirty years folks that run the Oregon Treasury and PERS pension fund have had a revolving door with KKR.

Oregon is a plantation State, in teh 1950's after WWII a group of NewYawk investors led by Meier&Frank { oregon retail } created a group in NY called "Friends of Oregon", this group got ahold of PERS money, and used it to purchase most of the large business'es in Oregon,

The replacement of Oregon cash, with IOU's allowed KKR to make other purchases all over the world. Today KKR is one of the biggest LBO firms in the world, all from using PERS as a piggy bank, and all because they controlled the only newspaper in a one horse State.

The public employees of Oregon of course made a killing with the deal from 1985 to 1995 annualized returns was 15% on PERS, and why NOT KKR and was turning paper into GOLD all over the country.

How pray tell it was easy, buy a company raid the private pension fund, take the cash, replace it with an IOU. Thus in effect public UNION employees were allowed to FUCK private UNION employees ALL over the USA.

By the 1990s PERS became SO powerful they passed a law that said that PERS would have an 8% return forever and baby-jeezus so it was good.

To this day the Oregonian gets some of the best advertising revenue in the country from Fred-Meyer and Les-Scwhab. All the BOSS hogs in Oregon are happy, and real Oregonians reads the Oregonian.



The private pensions in USA became dinosaurs and the public employee became the last bastion of pension, and benefits.

Alas the New World Order was complete and our Adolf Hitlers dream of a GREAT National-Socialism had came to fruition.

During WWII the great tribes of BUSH, HEARST, and FORD had secured Hitler's plans of a New World Order for America. Having obtained those plans "Friends of Oregon", became "1,000 friends of Oregon", note this group is of New York, that's why they're friends of Oregon.

In 1972 with the blessing of Oregon Republican Governor Tom McCALL the Oregonian blessed the passage of SB100, that allowed the creation of Sunriver, and Black Butte Ranch. The Oregonian saw that it was good.

And everyone lived happy ever after,

IHateToBurstYourBubble said...

As a result, high school dropouts end up with accounting degrees and MBAs, and achieve financial success.

Uhhhhh... what? So... to get my MBA, I should have dropped out of high school? Damn. I went the traditional Graduate From High School & College route, go into debt up to my eyeballs, and got my MBA & worked! What a sucker I am!

I don't know BEM... maybe not such a fool after all.