Monday, August 27, 2007


Well, we finally got our much anticipated July summary from the Bulletin, but first I thought I'd talk quickly about a subject near & dear to BendBust's wretched little heart: SDC charges. In the Aug 22 Bulletin, there's a front page piece, "Two years after canal breach, irrigation district is still worried". This piece is in essence about piping canals in Bend to reduce flood losses, like the one in 2005, and who should pay. Here's a snippet:

Johnson said the banks of the canal aren’t stable enough to withstand construction like that, and that the only long-term solution would be to pipe the canal through that entire area.

Driving slowly on the road atop one bank of the canal Tuesday, Johnson pointed out all the nearby development: dozens of homes; a strip mall with ice cream and video stores; an auto parts store with its parking lot 10 feet below the canal; and the Sun Ranch Mobile Home Park on the canal’s south bank, which will be razed for the condominiums.

If the canal were to breach near the planned development, water would flow across Reed Market and back toward Third Street, he said. And even if the water was cut off immediately at the top of the canal, the torrents out of a rupture would last for several hours.

Johnson’s piping solution is more complex and costly than it may seem at first blush.

“You can’t just do this, plop a 50-foot piece of pipe in the middle of the canal, because you can’t necessarily get all the water in the pipe,” Johnson said.

Such a pipe would have to start where the canal’s current is faster — in that case where it passes under Third Street.

And with the city’s possible future plans to create a new intersection at Reed Market and American Lane, Johnson would like to extend that pipe past the Burlington Northern Santa Fe railroad tracks to the east.

Cost for such a project: $5.5 million, Johnson said. In a perfect world, he’d like to do it in the next five years, too.

“It’s fair to ask the developers for a share,” Johnson said. “I think it’s likely the city and COID will have to pay something (also).”

"Fair"? What the hell does he mean it's FAIR! It's not just "fair", it should be implicit & mandatory. But of course it's not. You must remember these are developers bringing something we are in dire need of: About 2 billion housing units. You see, we are down to our last couple of decades of housing supply. Prineville only has 10,000+ home units, or 76 years supply at July's torrid sales pace (11 homes sold). Madras is in more perilous condition having breached below the half century mark (in Yarrow alone) by blowing 8 homes out the hatch in July.

This issue has been (over?)addressed by BendBust, SDC charges are Way Too Low in Bend, and this article brings this out in high relief. This move will cost millions, and is being brought on largely by construction activity itself, which threatens to burst these canals. But as usual, City Councilors walk on eggshells around developers who basically run the show in this 2-horse shithole. Perhaps a short graphical novelette is in order? Yes, yes it is. We'll call it:

Shut Up And Pack That Fudge

First, The Players:

Steve Johnson, district manager of the Central Oregon Irrigation District, has got a haircut you can set your watch to. I like this guy. He is tired of fuckin' around, and that haircut clearly telegraphs that this guy ain't gonna take any bullshit.

Yeah, here's your typical sleazy-ass Bend Condo Developer. It's not bad enough these bitches make millions, they gotta nickel & dime taxpayers to death on SDC charges. I hate these bitches.

Typical City Council meeting swarming with filthy stinkin' rich developers, trying to sleaze their way out of $5 in SDC charges. City Councilor Linda Johnson chimes in when asked about the consequences to locals if excavation activity breaches the canal.

Here we see a recent proposal by Brooks Resources President, Mike Hollern, to build a underground condo parking garage. Hollern uses PowerPoint technology & a laser pointer which quickly makes the male Councilors remark about his virile constitution, and women City Councilors moist about their mid-sections.

Of course, Steve Johnson doesn't like this one bit. It's his job to see that the muddy banks of the Bend canals ("River Fudge") are packed hard as a fuckin' carp. Above, Johnson utters a solemn creed within his COID corps and it's loyal band of ruthless fudge packers.
Of course this proposal, like all others, is quickly approved, and Hollern is in the air in no time.

Here's your typical outcome: Stupid-ass City Councilors, reassured by some glad-handing and a $6 bottle of wine from The Grocery Outlet compliments of condo developers, have overlooked the pesky business of DUE DILIGENCE. And something they were assured would cost $1.59 ends up costing $250 million and kills 6,000,000. Nice.

Condo developers celebrate with the Usual Victorious Fly-By...
...before returning to headquarters. And Bend taxpayers end up where they always do...
Well, I don't want to bore you anymore with tales of Bend City Councilor incompetence, so I'll move on....

The Bulletin finally came out with what I can typify as The Tipping Point article in the implosion of Bend real estate, "Prices still sliding, sales still slowing". Now, if you go back and take a quick look at last months article, "Home sales continue decline", you see The End Of An Era: The Last YoY chart of Bend home prices rising for what will be many, many moons.

Yup, sales are imploding, but PRICES as of June 2007 were UP year over year. No more. July 2007 is DOWN, across all Cent OR markets. This was clearly telegraphed by the terrible state of volume implosion. No one is buying homes in Bend Oregon anymore. You'll hear different, but simply respond with, "Then why in hell are volume AND price falling?". OK, this is The End that I talked about wayyyy back last Winter. Here is a reproduction of the data from The Bulletin piece:

These are July data points, and it's smooth sailing until July 2007. And then you see something that hasn't happened in many moons, DROPPING PRICES. Get used to it. Now for a better vantage points, here are area medians normalized at 1.0:

You can see it's a pretty close horserace with Prineville taking the clear lead in 2006. Prices are really being led by volume though, which is disastrous:

In Bend, 109 single-family homes on less than an acre of land sold in July, down 27.8 percent from June’s sales, according to the Central Oregon Multiple Listing Service. The median price — the price at which half sold for more and half for less — stood at $340,000, 4.5 percent less than the median price of homes sold in July 2006.

Monthly sales figures in Redmond, Crook County and Jefferson County also fell to their lowest levels in five years, according to the MLS, while median sale prices dipped below prices in the same month a year ago.

In Redmond, 40 non-acreage homes sold in July, down 45.2 percent from July 2006. Median prices also slipped to $247,000, down 5.7 percent from the same month last year.

In Crook County, 11 homes sold — half of the July 2006 number — while median sales prices slid to $190,000, off 13.5 percent from homes sold in July 2006.

In Jefferson County, eight homes sold — a third of the July 2006 volume — while median sales prices dipped 4.9 percent from July 2006 to $173,250.

These are just huge declines. It's hard to remember that on an individual basis, people of course care about the value of their own home. But the industry as a whole is about dollar volume. When there's no volume, you can ask all you want for your house, but you got a snowballs chance of getting it. You have to have volume to get "what you think it's worth", otherwise you're just dreaming.

And volume has gone to hell here. And the other implication of imploding volume is that The Largest, Most Influential, And Certainly Most Lucrative Industry in Central Oregon IS DYING. The 300 layoffs at Columbia Air will look like chickenfeed compared to the RE industry losses coming in the next few years. There will be THOUSANDS losing their jobs day in and day out for as far as the eye can see around here.

THIS IS IT, THE END. This is what this blog has been about in large measure: When will there come a day when there is INCONTROVERTIBLE PROOF that the RE bubble in Bend has busted? That day is today. It's Over.

For a aside, I noticed the Bulletin has gone far afield looking for fresh young nubian Realtors with which the Bend blogosphere could tear a new ass... if it dared. And they found one Pam Lester of Redmond. Clearly not staying abreast of Whitey McBlogfuckers penchant for tearing nitwits a new corn chute, Lester popped off this Cleveland Steamer:

“I don’t expect prices to go anywhere but up from here,” Lester said, “because they can’t go any lower.”

Pam, cuz you quasi-hot, I'm going to give you some advice. That statement is what we call, in the business, a TAUTOLOGY. Like "Boys will be boys". Wikipedia puts it this way:

In propositional logic, a tautology (from the Greek word ταυτολογία) is a sentence that is true in every valuation (also called interpretation) of its propositional variables, independent of the truth values assigned to these variables.

Sounds smart, but actually it's real, real stupid. Your thesis, "they can't go any lower" is flawed in that it is idiotic. Prices can go lower, and will. I'm going to go easy on you, cuz it's your first time, and like I said, you got some moderate hotness. Please refrain from making tremendously stupid statements like that again. Your clients start to wonder where your cheerleading outfit is. And so do I. Where is it, by the way?

On a personal note, the fact that The Bulletin is going farther afield for their Skank-O-The-Month, and skirting pathological liars like Norma "Sold Out" DuBois & Becky Breeze, makes me think that this blog may be achieving one of it's primary goals: Making RE markets FAR more transparent by raising awareness of what are clear misstatements in the public media. It takes me back...

Man, what a proud moment. About 45 minutes after we commenced bombing those filthy stinkin' rich Iraqis, GW arrives via hoverbus on the USS Fuck You, to deliver the Good News:


Damn right. And as we all know, it's been smooth sailing ever since with Iraqi's celebrating, basking in an economic renaissance, and carrying American GI's down Baghdad's glorious palm tree lined boulevards in their Rolls Royces, Lamborghinis and Ferraris. Well, in that spirit, I thought I'd share a personal moment when I realized the battle between Paul-Doh, Blogger Extraordinaire, and Evil Bend Media had well & truly been won:

Finally, for all the World to see, we see Paul-doh sitting on his patented "Coff-Toila-Matt" (combination Mattress, Toilet, and Coffin), soaring light as a feather over his vanquished foes, who he later ate. But Paul-doh doesn't work in a vacuum. No, Paul-doh never give up the fight due to the unwavering support of his Old Lady, who give him comfort when he low, snap occasional PR pics (with titillatingly placed T-shirt/pup tent), and bring Paul-doh 32 gallon drum of lard when it dinnertime.

I love you Baby!

Seriously though folks, this blog & the comments therein show the power of what just a few determined indivduals can accomplish when they set their mind to it. Congrats.

Monday, August 20, 2007

Bend Oregon Real Estate: A Graph Perspective

Well, last weeks "Picto - Plummet" proved so popular, that I thought I'd try another, this time using BendBB's excellent storehouse of Bend RE data. And besides, the Bulletin STILL has not run their usual monthly review of RE conditions, which virtually always comes out within a few days of David Fosters monthly summaries, and the volatility of the markets in discounting the fact that the American Mortgagor (and many mortgagees) is in Deep Trouble, and hence the Mortgage Industry is quickly become a hot spot for Chap 11 filings seems to have a ways to go. When these things seem like they've played out, I'll write a bit on them. But for now, some charts:

This is the sum total dollar value of all (homes & land) listings in BendBB's spreadsheets. I should say that the source of his data is sort of a mystery, as is the exact code that harvests it. I'm pretty sure it's not the Cent OR MLS. I really don't want any of this made public, as I have received the always enjoyable "cease & desist" preemptive strike from COR MLS for violating TOS, even though I was doing nothing of the sort, and I don't want BendBB to get shutdown.

Also, this data has evolved over time, with data points added, such as PPSF (Price Per Sq Ft), and Listing Dates. The January data had no PPSF data, and hence no way to discriminate between homes and raw land, so I many times omit Jan.

Anyway, as you can see there was a large increase in the total value of listed homes & raw land in Cent OR over the first 7 months of this year, about 37% from January.

This is the Median Price for Homes Only in each of the large Cent OR markets. The weaknesses of using AVG prices is very apparent when comparing these towns. Towns with large timeshare activity, Sunriver in particular, have AVG prices skewed sharply lower in comparison to places like Bend. But for those interested:

You can see that Bend goes from a $400K median to a $532K Average, or up 33%. While Sunriver, with a large number of timeshares, and hence low dollar properties, goes from $473,900 to $562,404, or up about 19%. Maybe it doesn't sound like much, but the distribution of Sunriver prices is near the highest in Cent OR. The AVG(Price)/STD(Price) is about 1.36 for both Sisters & Sunriver, and 1.28 and 1.17 for Bend & Redmond, respectively.

So, here's the Big One, Medians by Town. The problem with this graph is that it's sort of hard to discern changes because the Y-axis range is fairly large. So I created a graph normalizing all markets, and only showing % change from the starting month:

What's interesting here is the clear decline in all markets in July. I think there was a Mass-Realization that things were not going to turn, and that all the hopes placed on a Summer 2007 turnaround, were unfounded. And you can see The Rich (Sunriver & Sisters) realized this The Most. They also had the most unrealistic expectations of how wonderful Summer 2007 would be. Bend medians have been declining from the start.

I wrote in a June post that I thought we had reached a precipice, of sorts. July seemed to confirm this in price & volume. I think the trend will continue, and volume will only really pick up once prices fall dramatically and mortgage markets normalize, and that'll mean many of the marginal homeowners of the past 8-10 years will become renters again, and real estate as an investment will be seen for the low-grade loser that it truly is. Bend will suffer this fate in spades.

Here is a PPSF (Price Per Sq Ft) frequency chart for each town, in $25/sf increments (Sorry about the awful X-axis formatting. That's $ across the bottom.). Now the frequency is the percent of all listings in each price tranche, not the total number. Bend really swamps all the other markets in raw numbers, so that the Y-axis is "stretched" out by Bend numbers, and everything else is just tiny little bumps near the bottom. This graph normalizes for this. You can see the relatively large percentage of Sunriver properties with PPSF prices between $25-49.99/sf. This is all timeshares. Bend has most of it's inventory in the $175-224.99/sf range. Redmond lies mainly in the $150-174.99 range.

For those who want the raw number of homes in each $25K price tranche for Bend, here it is. The "price tranches" across the bottom are computed as follows (in SQL):


So "$0", is all homes between $0 and $24,999. Notice the inordinate number of homes in the "75" tranches: These are sellers who have price just below the round figures, like $400,000, and are at $399K instead. I think it's sort of funny in a market characterized by large dollar figures, many people gravitate towards the "99's" and "49's" prices, when logic seems to dictate a smooth continuum of prices. There's inefficiency there...

Here is the Median PPSF for each town. Again, the large values make figuring out the changes in the smaller values, so I prepared another chart normalizing to a 0 starting value.

Note the difference in % changes between home price medians (3-4 charts up), and the change in PPSF medians above. Redmond is going up in median PPSF, and down in raw medians. Sunriver raw price medians exploded higher earlier, and are plunging now, whereas the PPSF numbers did not go up nearly as much, so Sunriver was listing some Big Homes earlier in the year. Sisters seems to be where there was tangible evidence of not only higher PPSF, but larger homes as well.

This graph is the monthly percentage drop in each month for MLS numbers common to ALL months. In other words, MLS numbers appearing from Jan through Jul are represented here. It's more an indicator of what you can expect the AVG listing to do price-wise as time passes. After about 6 months, most listings had been chopped for 5+%.

Here is an attempt to show the AVG, MIN, and MAX price change for the largest subdiv's in Bend. Unfortunately, you can see that Bloggers auto-resizing kills resolution, and I had far larger charts that would not survive the process in readable form, and even this one is barely legible. The MAX & MIN price % change is at the right & left ends of the blue bars, with a "tick" mark for the AVG (which strangely seemed to not appear for some subdivs).

(I wish this chart had turned out better, as most of the interesting data for Cent OR is going to be in really big data sets, most not amenable to charts that are resized by Blogger. Maybe later I will try to post a summary of all Google spreadsheets containing this data...)

Central Oregon RE still is a moving target. Some things that seem clear in one regard ("Redmond medians went down in July."), are less clear in others ("Yes, but Redmond PPSF were UP in July."). Some generalizations can be extracted, though:

  • High priced markets seemed to list large homes starting with April month end data (Sisters & Sunriver).
  • Sisters had the highest run up in PPSF medians earlier this year, and large drops in July.
  • There were universal, large losses in price medians in July.
  • Summer 2007 is NOT the Savior of the Bend RE market many hoped it would be.

There is $2.6 billion in RE listed in BendBB's data as of July 31. $1.86 billion is homes, with almost 7.5 million square feet of living space. That's an awful lot of space looking for a new owner, about 18,750 people assuming about 400sf/person. At July's sales rate of 100 homes/month, there are going to be FAR tougher times ahead in Bend real estate.

And these are figures WITHOUT the attendant mortgage fallout that swept through all tranches this month, ill-contained within the subprime "Cletus" tranche to date. What happens now?

Well, so far there has been a stand-off: Sellers have not lowered price (en masse), and buyers have stepped back, leading to a very volumeless market. No one knows what anything is really worth, because prices are obviously not "market clearing". This is bad. People DO NOT like to be unsure of the value of something as large as a home purchase. Would you like to go door-to-door and have stock brokers quote wildly divergent prices? You'd never really know the value of what you're buying, and most people step back from such a situation. You could buy at $X, and not 5 minutes later not be able to sell for 50% of $X. People like stability in prices.

But I don't think we'll remain in this state of "suspended animation" for long. Winter is coming, and the Myth of the Discretionary Seller will come crashing down soon. Seized up mortgage markets are starting to seize up amenity markets like Bend. Chronically high gas prices are starting to show up in anecdotal "surprises", like the steep drop in Deschutes County Fair attendance. Jumbo loan ($417K+ home loans) problems that hardly affect markets like Wichita and Houston, will obliterate Bend. It's our "AMT": something meant to hit The Rich has spread like a plague to almost everyone in this town because our AVG home price is North of $500K, so no home is going to be easily "loanable". In my mind, a Perfect Storm is coming, and we are about to be economically decimated.

The Worst Economic Catastrophe Ever Experienced By Any Town In U.S. Modern History Is About To Happen To This Town.

Monday, August 13, 2007

Picto-Plummet - A Graphical Novel

Wow, talk about your crazy week. The markets went berzerk over the subprime contagion spreading to the PRIME market; that's code for YOU & ME, Whitey. Seems a lot of stated income "consultants" bought a lot of homes making $180K/year... well, not EVERY year, but certainly once in awhile! But mainly they made a LOT less (and if you didn't lie on your mortgage app, your loan officer was happy to do so for you). But they bought 12 homes anyway, cuz the terms were good. So once that factoid was common knowledge, the Central Banks of the World responded by flooding banks with money, more than after 9/11. I knew the housing market would get bad... but 9/11 bad? THAT'S pretty bad. I'm waiting for this scenario to hit bottom before writing about it.

And BendBB has got the motherload of MLS data, and has made it available on Google spreadsheets. I've put together some interesting data on that. And also have started putting it together in graph form.

And David Fosters monthly summary came out, but has yet to hit the Bulletin.

But I'll write about those things later. Today, I'm going to take a page from Duncan's book, and do my own little graphical novel.

First of all, I was blown away by all the building. They are building every available square inch of this town. Well, either building it or selling it. I don't drive the back roads of Bend too much, but builders are still going nuts out there, building like there's no tomorrow. I saw 2 subdiv's for sale, and I mean wholesale, all lots in one shot.

And there are signs of desperation: Lots of sales of every type, including garage sales, estate sales, car sales, and the increasingly popular fire sale of subdiv's. Remember when those "covered" re-pricing numbers were higher? Yeah, as you can see from Eagle's Landing, it's best to NEVER put the price permanently on the sign to where it cannot be easily covered up. Even Stupid Whitey, who loves a gold starburst, will look down & see how desperate you really are.

Speaking of signs, that pesky sign ordinance that the City has decided EVEN applies to Realtors (la dee da), has gone into effect at Renaissance Ridge. But since they have zero space between the sidewalk & the front door, they just folded 'em up & put 'em on the porch. The upside is that it doesn't look like a cascade of homes for sale.
But the signs that do stay up in Ren-Ridge are for available lots, reading "Stay Bend". What are we, dogs?

There's still some pretty stupid crap going on in Bend. The "GarajMahal", and "Tuscany Pines" both come in near the tops of a race that no doubt has hundreds of participants. Ummm, the GarajMahal is an attempt to sell storage spots for your car at $63,000 STARTING. No car I'll ever own will be worth that much Garajing. Or Garaging. Tuscany Pines has convenient access to the neighborhood juvy jail, so at least you can make mortgage payments selling crack to the guards. "Ranch at the Canyons" is making this idea work. Tuscany Pines, besides being a horribly conflicted name, is just in an awful location. Talk about your Bad Idea.

Well, man doesn't live by bread alone, sometimes you just need a plain sweet ride! That top dude obviously has decided to roll his paycheck into some sweet units, including a vintage International Harvester or something, a pussy-wagon Camaro, and a rusted-out 1954 VW bug converted into a chopped 1945 Ford dually. NICE! That bottom one has decided to go the other route, and has a 1995 Subaru with duct tape rear window, and cardboard underneath to avoid bringing down the house value via oil stained driveway. Now that's smart. The car says, "I'm dirt stinking poor", and the cardboard says, "But I didn't pee on the carpet."

Not everyone is dragging bottom. I drove thru "North Rim" a subdiv on Awbrey for people who like money bonfires. This pic does not do justice to this macro-shack. Holy Crap... this badboy is large & in charge.

After all the gab about NWX-ing being full/empty, I went to look for myself. Saturday afternoon, 1PM. You see for yourself. No kids, no one walking around, no one buying coffee, no one on playground.

And there is just the usual, mile-upon-mile of empty lots and of course, loads of construction, everywhere.

Lots of FSBO Dark Matter out there. BendBB's data shows Coldwell with 4-5 Eagle's Landing listings, but there are at least 50 lots there. And lots of Generic RE Broker signs. No-name nobodies that came out of the woodwork. Everyone in this town is a Realtor.

Plus, this boom has led to some real weird stuff: New mansions next to Fuqua homes, homes about 10 ft wide, and some just plain ugly homes being built. Man, and it is being built in every little corner of Bend.

Here's the upside of a great big juicy RE bubble: poor folks like me can live like a King in some sweet new construction Flipper Bait! This house is BIG!

There's just some funny stuff out there... nice homes with plywoods doors, Realtors with "come-hither" language is just hilarious, and Pahlisch posting a sign at the entry to one of their subdiv's, with some sort of quasi-legal contract about contractors shutting up while building... a sign no one has ever read but the signs typesetter.

Well, like I said, there is liquidity contagion in the credit markets when they found out Cletus was not the only one who lied about his income on his mortgage app. But I figure it was time for a brief drive thru Bend, and then top it off with just a twist of Paul-doh's warped-ass logic.