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):
(floor(curr_price/25000))*25000
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.
152 comments:
If I'm reading your chart right, looks like West Hills has dropped hard in asking price.
Sellers have not lowered price (en masse), and buyers have stepped back, leading to a very volume less market. No one knows what anything is really worth, because prices are obviously not "market clearing". This is bad.
The apt usage of terms at this point of time is paralysis, and insolvency. Read the following from 1932 real estate pricing was paralyzed, largely because the people had become insolvent.
“The decline in the quoted value of New York listed stocks is only part of the story. The total of real-estate mortgages in default, particularly mortgages on city property, is unexampled. The value of real estate can no longer be accurately appraised, because the market for real estate has been practically paralyzed.”
"We are already seeing this. Many properties are simply sitting on the market and stubborn lenders and sellers are refusing to lower prices. Buyers are refusing to buy or are unable to get loans. The market is on a downward spiral" - 1932
I think the google spreadsheet on that is here:
http://spreadsheets.google.com/pub?key=pWE_FqZMoakgL_ZzsufjeXQ
West Hills:
AVG chg: -9.98%
MAX chg: -4.15%
MIN chg: -26.79%
STD: 6.32%
COUNT(*): 9
"We are already seeing this. Many properties are simply sitting on the market and stubborn lenders and sellers are refusing to lower prices. Buyers are refusing to buy or are unable to get loans. The market is on a downward spiral" - 1932, three years into the great depression
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This always reminds of that scene of LordofRings, when Gandalf was reading the last testimony of the dwarve's, right before the orc's attacked.
The above quote is exactly what is going on, the lenders are holding for the 2006 prices, and the sellers. The buyers even if they were 'Bend Marks' or the greatest fool of all time cannot buy because there are NO loans.
The Orc's are coming, the Orc's are coming.
The total of real-estate mortgages in default, particularly mortgages on city property, is unexampled.
I'm not sure where this quote is from, but I'd much agree with it. It's darn hard to figure out what anything is worth, because the market has dried up. I can think that the recent mortgage turmoil will only make things worse.... and it's not reflected in Bend RE prices or volumes at all yet.
So far we've just had a seized market due to stubborn overpricing... we're about to get a lending shock cuz subprime Cletus problems are spilling into the Alt-A Income Fake-A-Mundo "consultant" ranks, which is a LOT of Bend home buyers.
Don't know about August, but Sept will be THE END. You WILL DROP PRICE, or you just flat will not sell. End of story.
I'm not asking you, but perhaps someone else sometime could throw it in, but given that Brooks has 3-4k homes in Priny, and another 2-3k in Madras, two places not known for lots of jobs. It would be interesting to see how they're doing in terms of the housing glut.
Another useful metric would be the building permits per year for all areas, so we can see when and if the housing creation will cease.
All over the country its the same problem, the builders just keep creating more, which is really killing the prior purchasers.
The quote is from Saturday Evening Post, Nov 1932, recently discussed at drhousingbubble.
The total of real-estate mortgages in default, particularly mortgages on city property, is unexampled. - 1932
I'm not sure where this quote is from, but I'd much agree with it. It's darn hard to figure out what anything is worth, because the market has dried up
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Just from the depression, note a lot of people focus on stock when they think of the depression, everything was on margin, 10 to 1, thus shoe-shine boys could by a bucks worth of stock for 10 cents,
Same for houses, just like now, folks bought RE for speculation, right now we're one year into the crash, and we have paralysis. Just like 1932.
City property was first, then country.
The quote is from a famous banker during the depression.
That's true, most people think of stock.
Very interesting things went on with Florida Real Estate then. In fact, reading about Florida RE bubble is just as interesting as reading about the 20s equity bubble.
Gee, sounds familiar, huh? Florida always seems to be where the insanity shows up.
--TT
http://en.wikipedia.org/wiki/Florida_land_boom
Wikipedia entry for "Florida Land Boob"
Florida always seems to be where the insanity shows up.
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Proximity to east coast bankers.
Summer in the Hamptons, winters in Florida.
Hampton seems to actually enforce UGB,... Florida on the other hand has this infinite ability to pull land out of their swamp-arse, sort of like Central Oregon and our 0.06cents/acre land, infinite supply, and 'marks' coming from cali everyday.
It seems to me that all these white-bread fads are all about the bamboozled trying to be like the plantation-owners.
Good article in the today's sunday NY-Times about how luxury goods are now worthless to the rich, as they can be had by anyone at any outlet mall.
Florida was once a special place where a few elite wintered, like our west-coast sunbirds, but hucksters quickly marketed Florida to all as they're own little piece of paradise.
Sounds so much like Bend, have a second home in paradise, fish, ski, hike, do all the things that nobody has time for in LA. Trouble is as we know here in Bend, as the people who actually work here, never have time working two jobs.
Let's get some serious debate here.
Today like Duncan I'm going to read an ol book I haven't read for a few years.
"The Great Depression"
Robert S. McElvaine
Studs Terkel considered it an essential read to all students of the great depression, note that FED CHAIR Bernanke is also a student of the GD.
There are no many parallels between the RE paralysis ( 100 trans/mo ), and the insolvency ( negative savings coming home to roost ).
It's an essential time to reflect on our history.
People never change, they are weakened by excess. They are strengthened or ruined by hardship.
Don't be sad about coming hard times. Understand that they are inevitable.
I do want to point out that the first graph is misleading, though - the base does not start with zero. If it did, the graph would be far less dramatic.
Holy PPSF Batman, 'maybe', 'perhaps', 'could', we'll all be at the DEEP for a night this winter eating bacon wrapper tempura. Down towards a home? Negatives savings rate over? Trickle down?
Median kicker this fall for Oregon taxpayers could be $285
OregonLive.com, OR - 2 hours ago
Starting Monday, analysts will start running reports to determine precisely how much each taxpayer can expect, economist Michael Kennedy told Bend ...
The potential for recovery here is endless. Only four more months and we all eat like kings.
Ore. kicker checks should be in the mail by Thanksgiving
8/20/2007, 12:02 a.m. PDT
The Associated Press
SALEM, Ore. (AP) — Analysts this week will start figuring out exactly how much money will be returned to Oregon taxpayers this fall.
The median kicker refund is expected to be about $285 and the checks should be mailed around Thanksgiving, providing a boost to retailers and debt-riddled consumers during the Christmas shopping season.
Don't be sad about coming hard times. Understand that they are inevitable
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Where will we go?
We'll pack our escalade, and tie grandma on top, but where will we go?
Will we head east? Back to the dust bowl for which we came?
Do we take junior? Or leave him in Bend?
Sad? Hell soon we'll be camping by a fire, hanging out with new friends. Sharing what we have with others.
Where will we go? I think "head east" is right. We can go work in Asia. Not Australia, though...
http://www.dailyreckoning.com.au/maxed-out-on-debt/2007/08/20/
AN incredibly good piece by Bill Fleckenstein at MSN today.
Central banks are stealing from the average citizen
What happens when fiscal irresponsibility gets rewarded with bailouts? You get more fiscal irresponsibility. Let's stop rescuing greedy financiers and investors.
By Bill Fleckenstein
As regular readers know, I have been a longtime critic of the Federal Reserve. Not too far back, that view was a decidedly minority one.
But as our credit bubble undergoes an ugly unwinding, it's dawning on folks that central banks lie at the epicenter of the problem. Andy Xie nailed it in Tuesday's Financial Times, which is why I've chosen to begin my column with quotes from his article "It's time for central banks to stop bailing out markets."
The bailout stops here
He writes: "The global credit bubble is bursting. This bubble is primarily leverage financing for owning risky assets. The people who were responsible for what happened played with other people's money, marketed arcane financial products with false promises of fat profits, but stuffed their own pockets with big bonuses. Neither these masters of the universe nor their greedy but naive investors deserve to be bailed out. They deserve what is coming to them.
"The central banks should focus on price stability, not financial market stability, and should provide liquidity only to contain the multiplier effect of the bubble bursting on the economy. Nor should central banks stimulate to avoid recession at any cost. Business cycles are not bad. Excesses must be followed with cleansing. . . .
"Markets have been taking more risk than they should because they believe that central banks will come to their aid during times of crisis, like now. The penchant of Alan Greenspan, former U.S. Federal Reserve chairman, to flood the market with liquidity during financial instability is the genesis of this 'central bank put.' As long as this expectation remains, financial bubbles will occur again and again. Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan 'put' for good."
All I can say is amen to that -- and hope this is how events turn out. Of course, given how central banks have behaved in the past decade, I'm not holding my breath. But perhaps this article in the Financial Times will help crystallize for them what it is they need to do. It's always possible that this time around, the central banks will let capitalism work. That could help hasten the cleansing process -- aka creative destruction -- which would be a positive development, for sure.
Illiquid versus insolvent
Similarly, folks should read what Nouriel Roubini says at RGE Monitor about the current crisis, because I think he hits the nail on the head.
Rather than being a liquidity crisis like the 1998 failure of Long-Term Capital Management -- which was more like a run on the bank and was stemmed by the powers that be -- Roubini describes the current situation as a "liquidity crisis that signals a more fundamental debt, credit and insolvency crisis among many economic agents in the U.S. and global economy."
For folks in a hurry, the last paragraph of Roubini's piece captures the essence of the problem. In the meantime, the last few lines nicely sum it up:
"We are indeed at a 'Minsky Moment' and this recent financial turmoil is the beginning of a much more serious and protracted U.S. and global credit crunch. The risks of a systemic crisis are rising: Liquidity injections and lender-of-last-resort bailout of insolvent borrowers -- however necessary and unavoidable during a liquidity panic -- will not work; they will only postpone and exacerbate the eventual and unavoidable insolvencies."
Turning to the intersection of big-bank and little-guy bailouts, a contact in the housing ATM notes that more folks than ever are electing not to pay their mortgages. Apparently, the thinking goes something like: "Gee, if some folks are not paying their mortgages and are going to get bailed out, why shouldn't I? Particularly if I have a little equity in my house."
That is the danger that's been created by the government talking about bailing out the housing market: A multitude of people decide to join the party and not pay. This is a slippery slope we've been going down for a long time, and it looks at long last like the problem will be too big to bail out. Bottom line: The dislocation and pain are starting to be felt throughout the financial system. We are headed to a lot of financial turmoil, and there's no getting around that.
Could the fall of Rome hit home?
Lastly, in a sad commentary about where we are as a country, U.S. Comptroller General David Walker was quoted Tuesday (also in the Financial Times), as follows: "Drawing parallels with the end of the Roman empire, Mr. Walker warned there were 'striking similarities' between America's current situation and the factors that brought down Rome, including 'declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government.' "
Unfortunately, it seems to me that he is dead right.
I do want to point out that the first graph is misleading, though
Huh? It's a graph, with Y-axis clearly labeled. No attempt to distort or dramatize.
The RUN on banks last week was the RICH, this week its everyone else. The TBILL is going down, because there is no reason to entice buyers, everything else is being dumped, everything MUST be sold to cover withdrawals.
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Treasury Bill Yields Fall Most Since 1983 on Money Fund Demand
By Deborah Finestone and Elizabeth Stanton
Aug. 20 (Bloomberg) -- Yields on U.S. Treasury bills fell the most since in at least 1983 on demand for the safest securities amid concern over a widening credit crunch.
Bill yields have fallen five straight days as money market funds dumped asset-backed commercial paper in favor of the safest government securities. Three-month yields dropped more than on the day of the stock market crash of 1987 or than in the wake of the Sept. 11, 2001, terror attacks in the U.S.
``We had clients asking to be pulled out of money market funds and wanting to get into Treasuries,'' said Henley Smith, fixed-income manager in New York at Castleton Partners, which oversees about $150 million in bonds. ``People are buying T-bills because you know exactly what's in it.''
Andy Xie nailed it in Tuesday's Financial Times, which is why I've chosen to begin my column with quotes from his article "It's time for central banks to stop bailing out markets."
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All fine & dandy, but its DONE, the richest people got out last week, now this week as I predicted last week the bamboozled would be let on the secret.
Not enough money in FDIC to cover this one, don't believe them, only TBILLS are 100% safe.
One good NOTE we DONT need the japs or chinese anymore we got people killing each other trying to buy uncle-sam paper. Right here in American, suddenly everyone has become frugal, conservative, and non-speculative.
For the first time in years people are DAMN happy to get 3% on their money.
The bailout is done, the rich got theirs out first, country-wide got to cover them with short term cash loans.
I have said for months and months here, now we reach the point where NOBODY will invest in MTG-BONDs or paper, its worth NOTHING. ALL MTG financing has evaporated, nothing will sell unless you have cash.
That said hold your cash.
It's now time for MASSIVE RE, MTG LAYOFFS, MASSIVE.
ALL MTG origination is NOW on HOLD, total paralysis, until someone can step in and GUARANTEE THE INVESTORS ZERO RISK.
Remember this is about RE paralysis, and total insolvency of MTG paper. Liquidity is gone, ONLY cash is now liquid, and or course gold & oil, and other hard tangibles.
Not Australia, though...
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Almost ALL of Australia has been going through the BEND BUBBLE boom for the past 10+ years, they have simply ran out of buyers, big bust down there.
That said, they don't have the racial problems we do, its still basically illegal to immigrate there unless your rich ( if your not white ).
USA in one generation when the white folk lose their majority forever is going to be overnight just like south-africa, a lot of whitey's are going to get to feel the love of a burning tire around their neck.
This is why CEO's have been buying haciendas in Italy, Spain, Portugal for the past 20+ years, the future of the USA is just like Iraq today.
If the prices for RE fall in Australia, don't waste time, go down and check it out, nice place to retire.
>>That said, they don't have the racial problems we do
Tell that to the natives.
Mortgage company job losses? Already happening. COF layed off 1900 GreenPoint Mortgage employees moments ago.
--TT
Bend Bldg. Permit Stats
Jan 06 140
Feb 06 212
Mar 06 206
Apr 06 171
May 06 175
June 06 189
July 06 121
Aug 06 87
Sept 06 74
Oct 06 45
Nov 06 49
Dec 06 47
Jan 07 76
Feb 07 99
Mar 07 81
Apr 07 76
May 07 95
June 07 74
July 07 58
2007 through July 559 total
2006 1518 total
2005 2048 total
Numbers are for new single-family detached and attached homes.
Source http://www.ci.bend.or.us/depts/community_development/statistics_-_building_division.html
"The potential for recovery here is endless. Only four more months and we all eat like kings."
LOL! Yeah, on those big fat kicker checks we can eat like kings for one weekend.
YOY numbers are crushingly bad...
Jan -45.71
Feb -53.30
Mar -60.68%
Apr -55.56%
May -45.71%
Jun -60.85%
Jul -52.07
I know it's hard on them, but I'd rather they built and built and built.
"Hell soon we'll be camping by a fire, hanging out with new friends. Sharing what we have with others."
In the '30s they called those places "Hoovervilles." What should we call them now? Bushvilles? Cheneyburgs?
Tell that to the natives.
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99% of the aborigines wiped out to date, 100% of Tasmanians,
The only place down there with natives is New Zealand, nobody fucks with Maori's.
Native's in Australia are very hard to fine, you basically have to hang out at the skid-row in Sidney, or go up to tribal areas where 'crocodile dundee' shot his movie.
In the '30s they called those places "Hoovervilles." What should we call them now? Bushvilles? Cheneyburgs?
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Naw boyz, we're in Bend,...
Hollern-Hotel
BrooksBurg
OldMillVille
We must pay our respects to our local boss-hoggs,
Duboisville
BreezeBurg
SebastianVille
Bendbust I believe you could give that GAS BAG Sean Hannity a run for his money with all your psudo names and the fact you can't shut up. Like I've said before if someone wants to listen to your ridiculous diatribes then they'll go to your blog spot. Take the thumb that is stuck in your ass and put it in your mouth for a while give the readers a break shut the F up.
The following is some good-shit, and I completely agree on his take on the articles in the NYT about ben stein saying that the mtg-meltdown was NOBIGDEAL, its a very big deal.
Good shit. ...
6 Questions Every Trader Wants Answered
By Peter Navarro
TradingMarkets.com
August 20, 2007 12:00 PM ET
1. Why did the Fed cut the discount rate rather than the Fed Funds rate?
The Fed’s injection of liquidity into the system has not been filtering down to the smaller institutions in the most trouble because the big boys are soaking up and hoarding all of the funds. This was a measured move to hit that segment of the problem.
2. What is the downside to the Fed lowering interest rates?
The Fed has refused to cut interest rates so far for two reasons. First, there is concern about inflation being at the top of the tolerable range. That’s a real fear. Second, and related, the Fed fears further erosion of the dollar. Lower interest rates lead to capital exodus and a lower dollar – therefore more inflationary pressures as imports become more expensive. So the Fed has exercised caution – now thrown to the winds as the markets approach meltdown.
3. What is the Fed likely to do in September? Will it work?
The Fed will cut, and probably by 50 basis points in September, but that will push the dollar further towards crisis. The bigger problem facing Bernanke is the slowdown in key areas of the global economy. The worst spot is Europe. It has been a bright shining light the last year or so but it is clearly in trouble now and that’s bad news for American and Chinese exporters. Another big emerging problem is inflation in China, which has hit a 10-year high. That’s a bubble ready to burst. No American Fed is now capable of stemming the global tide one way or the other. Still a third problem is a wave of “exploding ARM” mortgages that will need to be refinanced in the Fall. Many won’t have enough equity in their homes for the refi and that’s a time bomb waiting to happen.
4. Ben Stein got a lot of ink and TV chatter downplaying the significance of the sub-prime meltdown last week. Is he right?
The U.S. sub-prime market may be small in absolute terms, but its meltdown has not only national but global reach. If Ben Stein was right, the other Ben – Bernanke – would not be throwing so much credit and liquidity at the markets. If Ben Stein was right, Countrywide would not have run down its $11 BILLION line of credit in a heart beat. Conclusion: Ben Stein is dead wrong.
5. What was all of last week’s chatter about “moral hazard”?
That’s an Econ 101 concept that journalists really sunk their teeth into. In this case, it describes a system where high risk takers will not be punished by the financial markets for their behavior because the government is riding to the rescue – and that encourages more risky behavior than is optimal for the economy. In simple terms, we’ve had a situation where mortgage lenders and banks have been doling out money and repackaging the loans and offing them immediately – which lowers the incentives to check credit and terms carefully. Bernanke deserves more damns than praise for playing a pivotal role in this process.
6. Has the market found a bottom for now?
Despite ending the week with a bullish bang, the upward trend is clearly broken, technicals are accurately reflecting difficult fundamentals, and traders face more risk to the downside than up. Bernanke’s gambit is a mere ice cube in a bigger meltdown. Cash is king for the conservative mind and the short side is the best side for speculators.
By the way, whenever you hear someone describe this market’s down drafts as “buying opportunities”, chug a beer. You’ll be drunk all the time between now and Xmas.
. Take the thumb that is stuck in your ass and put it in your mouth for a while give the readers a break shut the F up. -- TT
Does this mean your not going to do the fairy ring tonight?
Was it something I said? or Wrote?
... devastated
Naw boyz, we're in Bend,...
Hollern-Hotel
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A Hollern-Hotel is a cardboard box, with a sign that says "Real People, Real Children; without real jobs".
Welcome to the New Bend
Hey fake TT, you still got the sign-off wrong. How hard is it? Hit enter twice, hit space twice, hit minus twice, and then hit T twice. Jeez.
--TT
Hey fake TT, you still got the jerk-off wrong. How soft is it? Hit the willy twice, hit the tallboy twice, hit the pocket pal twice, and then hit TT twice. Jeez.
--TT
A Hollern-Hotel is a cardboard box, with a sign that says "Real People, Real Children" herein.
In need of real jobs.
Welcome to the New Bend. For forty long years the best town money can buy.
Tomorrow the best of Bend, .e.g. mortgages jobs, real estate jobs, and endless construction jobs are forever gone The best of Bend, Best Brooks Resources is now forever gone.
What you sow, so shall ye reap.
So tell me this, bendbust, how do you see Brooks failing? Is it all-at-once? Or is it like dominoes?
What takes them down? Having a bunch of houses built but not sold? Or some bit of surprise leverage that gets them?
How does it play out? And how long does it take? And is there an upside for anyone?
Wow.... here is a good piece (Go & have a look at the graphs...):
Housing Minsky Moment: 3 Factors. Prime Contagion, Record Foreclosures, and Publicity.
This week witnessed the final nail in the housing bubble coffin. We have reached what seems to be the Minsky moment for the housing market. Named after the US economist Hyman Minsky, the idea holds that over long periods of economic stability leverage tends to grow in predictable stages. This economic stability leads to a fertile environment sprouting trunks of easy credit access with little perceived risk. However, as the growth continues there seems to be a movement from moderate lending, risky lending, and finally outright irresponsible Ponzi like lending. With 100+ subprime lenders imploding on their own convoluted mortgages, the housing market is like a fish out of water gasping for life and clearly in the last stage of the lending cycle. The first event occurred on Tuesday when the gargantuan mortgage lender, Countrywide Financial announced dismal second quarter results. They announced that second quarter profits shrank by a third due to growing delinquencies and get this, creditworthy borrowers defaulting. The talk early in the year about subprime being contained turns out to be an absolute ruse. Now we have prime mortgage borrowers swept up in the housing slump. Yet the bigger news came from Countrywide’s CEO Mozilo, saying that he does not see housing recovering until 2009. Imagine that.
Then we have the inability of the mainstream news media to inform us regarding critical issues. Instead, we have the morning news plastered with Lohan up to her usual debauchery and athletes gone wild. As a matter of fact, while California set a new record in the foreclosure department, the mainstream media felt this only warranted a footnote at the end of the newscast. We don’t hear much about Iraq anymore. And what of the collapsing dollar? I think I hear Nero Fiddling while something burns.
In this article we’ll examine three critical factors that propelled housing into its public Minsky moment; prime contagion, record number of foreclosures, and negative publicity.
Prime Contagion
Mozilo likened the housing market to a gigantic ship needing to turn in the ocean. It will take time was his underlying point. I like to think of the housing market more like a NASA mortgage rocket with no turning back. Have you ever tried turning back a rocket-propelled vessel? His statement seems to offer some hope that housing will return even though he unloaded millions in his company stock. Maybe he forgot to mention that the ship he was referencing was the Titanic. Either way, housing is passed the shaky ground stage. I’ve shown countless examples in our Real Homes of Genius series that clearly highlights an outrageous bubble housing psychology. We also discussed a few months back the subprime implosion as credit suddenly tightened and subprime lenders started dropping like moths heading toward the light. In fact, I felt this was the watershed event and would set the tone for the summer.
Yet glorious housing bull pundits at this time championed the amazing summer rebound and the silo mentality of containing the subprime debacle. Ignoring rising inventory, $1 trillion in mortgage resets, and a stagnant market they decided to jump on the housing Pollyanna bandwagon. After all, this summer was housing's last shot to demonstrate continued bubble resilience. Unfortunately, this summer is only the beginning of a very difficult downturn in the housing market and most likely the overall economy. The market has ballooned beyond any economic model of sustainability. I discussed the pseudo $5 trillion in wealth created by this housing bubble and all credit linked to it. How much of this wealth will disappear is yet to be seen.
Yet now we are realizing that prime loans are also taking a hit. No longer is this implosion contained to one segment of the housing market. For a large part, we have this entitlement mentality of folks thinking their homes are worth more than what they truly are. Say you bought in 1997 for $200,000. Now your home is worth $600,000. This is a very typical scenario in California. You’d feel $400,000 richer simply by living in your home. And many folks had this wealth effect. In fact, they converted their homes into ATM machines and used mortgage equity withdrawals to prop the economy. Unfortunately, many folks are now realizing that some appraisals may be bubblicious in their estimates. Say this given home drops to $400,000 in a few years. Nothing is lost, in fact they are “up” $200,000 but the psychology and perceived loss does make people feel poorer. When people feel poorer, they spend less. In our economy based on 70 percent consumption, that equals a recession. Clearly, this is where we are heading. We have scheduled mortgage adjustments set for 2008 and 2009 to the tune of approximately $2 trillion:
This housing market followed no economic rules and like the Minsky moments of past, greed and irresponsible credit will once again collapse another bubble. Chalk it up to history repeating itself. Which leads us to the historical moment set in California.
Record Foreclosures
Southern California has reached a record number of foreclosures. That is correct, we are swimming in uncharted territory. Notice of defaults are quickly approaching record territory as well. To be exact we are off by 102 homes, which by the time this article is posted, we will surpass. So we can say that we have record numbers of Notice of Defaults and foreclosures. Take a look at the chart below and see if you can spot the trend in California:
The interesting tidbit of this information is NODs are turning over and going into foreclosure. If anything, you can consider the NODs as a canary in the mine; and if we are to read the data correctly we are in for some massive foreclosures. As stated by DataQuick:
“Most of the loans that went into default last quarter were originated between July 2005 and August 2006. The median age was 16 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.”
Now if you examine the rate reset chart in conjunction with the foreclosure data, there really isn’t anything stopping this train. Over 75 percent of loans originated in August 2005 were adjustable-rate mortgages. Given the hot product was 2/28 teaser suicide loans, what special date are we approaching? That is right, August 2007 where a massive batch of these loans will be resetting in a declining market with higher rates. So even if these folks want to refinance, they will be hit by higher rates and a larger payment.
Amazingly, these loans are also fairly new. With a median age of 16 months. Clearly the problem here is people jumping into homes they cannot afford by horrible mortgage products. In addition, the rate of default on second mortgages is also skyrocketing. This would seem obvious since missing the payment on the primary loan implies you are not paying your second. But guess what? In the midst of all this there is good news. The median price for a home keeps on going up! We won’t go into exposing the inaccuracy of using a tiny sample size of higher priced homes skewing overall market stats. We want to leave you with one piece of good housing news for the day.
Negative Publicity
This may turn out to be the only good news left for housing. The media is fickle and suffers from long-term memory loss. Even a year ago, we were reading about stories of people making thousands in real estate transactions. People were racing over like NASCAR drivers ready to become brokers and agents as reflected by the number of licenses issued by the Department of Real Estate here in California. Now, you are more likely to find negative housing information permeating the media machine. And don’t you find this odd in a state where housing is still flirting with a median price of $600,000? If the media dug deeper into this implication and did constructive journalism, it would be clear that we are in a full fledged housing bubble bursting. Why are they afraid to come out and simply admit what the data is suggesting? That housing is in for a major correction and housing prices grew on the back of irresponsible lending and greed. The key ingredients from any historical bubble are present again.
The issue is the real estate industry employs countless people, pays high amounts of money for advertising, and has many politicians bought. So of course they carry clout. But this will only get you so far. You can only fool the market for so long. It is becoming apparent that this system will collapse on its own weight. In a way we haven’t felt the ramifications of what is to come. We are only getting a sneak peak of the real housing bear market. I was looking at old LA Times articles and the positive rhetoric from housing peak to negative bubble chicken little print took about 3 to 4 years. So given this past reference, you can expect a bottom somewhere in 2009 or 2010. Employment numbers still do not accurately reflect the coming job losses we will face. Our economy was based on this bubble via credit, mortgage equity withdrawals, trading houses up like baseball cards, and a cultural neurosis on all things housing.
When do you think we will reach a housing bottom?
The best line:
Over 75 percent of loans originated in August 2005 were adjustable-rate mortgages. Given the hot product was 2/28 teaser suicide loans, what special date are we approaching? That is right, August 2007 where a massive batch of these loans will be resetting in a declining market with higher rates.
What's funny is Bend probably peaked out in Aug 2006, so we are being telegraphed what will happen here FAR in advance of the implosion. Things actually still seem good in Bend, witness the still-huge building activity. Frankly, I don't understand the low permit numbers, when anecdotally I see building humming merrily along.
Fear & Greed -- always the motivators at times like this. Should I mark it down 20% to get 'er done, or still shoot for the moon & hope I get hit by the money train?
I think that if you do not sell by the end of Sept, you are SCREWED. As Duncan has pointed out on his blog, the Period of Grace is over; the time you could still have some greed checks that you could cash. Now if you do not mark it down 20% below comp's, it ain't gonna happen. And after that, it'll just get worse.
I think another Seminal Moment may have arrived: Realtors used to have a "Name Your Price" attitude towards listings, and even took just outrageously overpriced crap, cuz there DID EXIST some chance (quite large during the boom and declining recently) that some nut would come along and do the deal. That time is over. The Flush With Cash Freakshows From Down South era is OVER. There will not be anymore. Until NOW, these nuts COULD still get easy money. No more. I think Realtors will start to have Real Life conversations about realistic and realizable pricing, not pie-in-the-sky bullshit. They will be less apt to tolerate "Greed" and will introduce "Fear" into seller vernacular. They'll put the "Real" back in Realtor.
I think they'll actually say "No" to listings that are just pie-in-the-sky, which has never happened in modern Bend history. The "small" chance of Bucket/Box buyers materializing, has simply gone to ZERO CHANCE. The entire credit boom that created these types has unceremoniously ENDED. IT IS NO MORE. There will be a moment during the listing presentation when the Seller will clearly present themselves as Pie-In-The-Sky types, and Realtors, who used to smile & nod & get the signature, will get a look of consternation & begin to explain the realities of the market, and it won't be a pleasant conversation. Realtors will FINALLY see overpriced listings as a dead-lock money loser, instead of a lottery ticket. There will actually be LOSSES in writing bad listing agreements, and these Realtors will wake up to the fact that Getting That Signature is the equivalent to just setting money on fire. Realtors will actually start refusing bad listings.
And Realtors that DO take Pie-In-The-Sky listings will be a dying breed... literally. They will quickly exhaust a fortune in advertising cash to no effect, and exit the RE business.
The Grizzly Old Timers will actually be FAR BETTER OFF when this shakeout is done. The industry will probably be half as large, but with a 75% headcount reduction... those that survive will actually do better.
Re: The absence of the disastrous July RE market summary that have appeared WITHOUT FAIL each & every month in The Bulletin for years:
The Inspector was discussing the case with the consulting detective from London.
"Is there any point to which you would wish to draw my attention?", the Inspector asked.
"To the curious incident of the dog in the night-time."
"The dog did nothing in the night-time."
"That was the curious incident," remarked Sherlock Holmes.
how do you see Brooks failing? Is it all-at-once? Or is it like dominoes?
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First of all we need to do review convenient facts that are easy to forget. Namely that 'Brooks Resources", is in actuality dozens if not 100's of shell LLC's in Central Oregon. Each and every development is its own LLC. Each and every business ( banks, investment, consulting, development,... ,contracting, RE sales, MTG ) is its own LLC.
This is why they don't even show up on the radar of employer, and why should they its mostly contract labor, easy to dispose. Ran lean & mean. Not one BIG employer to notice, but 100's of little outfits that are small enough to be classified as small business, and thus be off the fed radar. Super Lawyer has done a damn good job structuring this outfit.
Take NWXC there is a primary 'Brook/Hollern' front, but then there are a dozen sub LLC's doing different sub-parts like marketing, real estate sales,...
Recall that 'super-lawyer' put this together. I liken Brooks to be like the battle-ship analogy, it takes time to turn it around, but I'll add one more aspect on our 'brooks' they're also a submarine. Sub's are highly compartmentalized and each is water proof ( LLC ).
In my mind 'Brooks' is like a toxic-waste bond portfolio in a HUGE hedge-fund. It would be seriously difficult for outsiders to even begin to un-ravel all the dots, and tentacles. Hell if you worked on one of Brooks LLC's you wouldn't even know what the guy across the street was doing, they're organized on a "need to know" like the CIA.
The debate here is what the bubble means for Oregon. For now watch Brooks. Sadly we have to watch their dozens and dozens of central-oregon LLC's and many don't even publicly link back to Brooks. This is stuff for a textbook Harvard retro analysis.
Watch what Brooks does, not what they say. We do know they barely got through with the skin of their teeth during the last recession when they were short of cash, and sat on a ton of land. Now they're short of cash, and sit on +10k homes that have to be maintained, that are not selling.
I have no beef with Hollern the man, and no very little about his legacy. He's an older man, if this 'correction' had been 20+ years ago I would speculate that with him at the helm things would be fine.
I have written OVER&OVER that this game will NOT even play out until 2011, its simply to early to say what the final outcome will be. That said, five long cold years is a long time to bleed.
Haven't look at inventory in awhile:
Bend Res --
July 31: 1,604
Aug 21: 1,626
Bend Acreage --
July 31: 297
Aug 21: 296
Realtor.com: 2,713
Boyz, this piece is dynamite. Builders are hurting, and thus the CITY must fast-track the projects, so the draws move along. Where are the BUYERS? Nobody cares, the tone is such the city is the ENEMY, note to remind bubble heads the CITY is US.
The builders are in pain, paying for land at 9%, and the project sits because the city is slow! The city just raised the SDC cost 35% and builders are mad as hell, lets pencil this the old SDC was $12k, and the true cost is $60k, thus it would take a 400% increase just to break even. The builders had BETTER SHUT UP while they were ahead.
Note the 'PAIN' in this story.
Fast-track we must fast-track all development in Bend, We MUST not make the builders pay for infrastructure, lets just keep building and wallow in shit down the line.
Somebody please bitch slap the city and the builders. We need a moratorium, and these problems will be solved.
Bend, builders at odds over speed issues
Aug 21, 2007 12:32 AM
City, Bend builders struggle to get along (8/20)
As building slows in Bend, builders and city continue to focus on improving relationships, speeding permit approvals
As building slows in Bend, builders and city continue to focus on improving relationships, speeding permit approvals
Approval delays cost money, builders say
By Amy Easley, KTVZ.COM
A new hike in building fees is not the only reason the city of Bend and local builders are at odds.
Andy High of the Central Oregon Builders Association says in part, the city is responsible for higher home prices. High says in the worst case he's seen, a project was delayed for eight months.
"They get ready to pour foundation and put in the streets, then come to find out that engineering maybe lost plans, or plans weren't transferred over to engineering, and so now the project gets stopped," High said Monday. "And let's say it's mid fall, and because of the delays they cannot pour concrete or asphalt in the dead set of winter, so they have to wait."
Thus stacking up the costs for builders, which of course get passed onto home buyers.
"You look at what a builder or a land developer holds in carrying costs at 9 percent interest a month on a multi million dollar project, at the end of the day, these delays, they need to make up for those projects," High said. "It could cost thousands of dollars for the builder, the future homeowner, or resident."
David Kloss with Bend's Community Development Department didn't want to wade into a verbal debate with High but responded, "That's a bigger problem to try and solve."
(COBA also is challenging the city's recent 35 percent permit fee hike before the state Building Codes Division.)
Bend CDD Director Mel Oberst does admit the city has a communication problem within its development departments.
"It is difficult for engineering and planning particularly to communicate because they're in different buildings, and for building and engineering to communicate because they're in different buildings," he said.
One solution to ease tension between the two groups is a committee called the Blue Ribbon Group. The panel is made up of 10 people, appointed by the mayor, to oversee the operations of the department. The goal is to make sure things run as smoothly as possible.
So far, Kloss is optimistic but realistic about the committee's progress.
"I think we've come a long way, but we're not there yet," he said." And we're going to continue to improve upon communicating in the building department, communicating with engineering, with planning and public works. But with the help of the blue ribbon committee we can help improve our services."
The city is also remodeling the planning departments at City Hall, so all the engineering, planning, and building divisions will be right next to each other, better ensuring no plans slip through the cracks. The new counters are set to open Sept. 4
...given that Brooks has 3-4k homes in Priny...
Where in the world did you get this figure?
I am not in any way trying to defend Brooks Resources, but they do not even have 3-4 HUNDRED homes for sale in Prineville, to say nothing of 3-4 THOUSAND.
Brooks does have almost 3000 homes PLANNED for their Ironhorse development, with a predicted 15-20 year build-out. But they only have about 15 homes actually BUILT at this point, and only a few actually under construction at this time.
Whoever posted this ridiculous figure is seriously confused.
I am not in any way trying to defend Brooks Resources, but they do not even have 3-4 HUNDRED homes for sale in Prineville, to say nothing of 3-4 THOUSAND.
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In Priny alone they have taken out almost 4K building permits.
Go do your home work.
n Priny alone they have taken out almost 4K building permits.
Go do your home work.
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The point with these large numbers is that in the next five years perhaps as much as 50% of these homes will default, as 80% of ALL priny was bought on a speculative basis.
Thus in the New Central Oregon Order, there is no need for new housing.
Then there is metolious, Madras, Ashwood,... Endless developments, Redmond, ...
Brooks is CURRENTLY DEMANDING that the city let is build a development west of Summit-High.
They also own 33,000 acres between Bend and Sisters they call "Skyline Forest" that they're currently trying to develop, thus another +10K homes coming down the stream.
This is INSANITY, but folks have gone completely insane. Like the above article of the builder bitching about losing 9% on land that he cannot fast-track the building process. Whats the point, it will not sell. They're building new shit quicker than the total number of homes are selling.
It's only going to get worse. Somebody has to bitch-slap Brooks and tell them to slow down. Trouble is this is all they know, build, build, ...
Its insane to throw away good money, to keep doing it is insane. Cut your losses, let your profits run.... But not in Bend its just bleed to death, and share the misery.
We the citizens are going to get a multi-billion dollar BILL in the form of SDC becuase we didn't force the builders in the last five years to pay for their demand on our existing infrastructure.
carrying costs at 9 percent interest a month...
I'm guessing this is a typo by KTVZ. 9% a month?
...given that Brooks has 3-4k homes in Priny...(then later)...In Priny alone they have taken out almost 4K building permits.
"Go do your home work."
Apparently I need to point out that 4k PERMITS is quite a bit different from the 4k HOUSES in your first statement.
Brooks has about 1% of this number of HOUSES listed for sale in Prineville. Of those, their subs have built about 15 in Ironhorse.
To be sure, there are plenty of for sale signs around here. Things have slowed down a lot for Pahlisch and also seem to be moving pretty slow for Brooks in Ironhorse and elsewhere around town.
But your estimate of newly constructed supply over here is wildly off base.
"Brooks ... also own 33,000 acres between Bend and Sisters they call "Skyline Forest" that they're currently trying to develop"
Why do you keep repeating this absurd statement? "Skyline Forest" (aka the Bull Springs Tree Farm) IS NOT and HAS NEVER BEEN owned by Brooks Resources; it used to be owned by Crown Pacific, and when that company's holdings were sold off after its bankruptcy it was bought by Florida-based Fidelity National Financial Inc. Fidelity is trying to work a deal wherein it will be allowed to build luxury homes on 5,000 acres in return for donating the other 28,000 to the Deschutes Basin Land Trust.
But your estimate of 'newly constructed supply' over here is wildly off base. -- TT
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What was said that was during the MOST recent 'boom cycle' is that almost 4K home building permits were taken out in Priny.
What was said is that 50% of these 4K homes will foreclose in the next five years.
What was said is that over 70% of Priny is-was bought on speculation.
What was said that Priny like Madras will be one large over-building fiasco, and people will be asking ... What in the HELL WAS BROOKS THINKING.
Sure they sold the homes to speculators, mostly BEND speculators, who could NO longer to afford flippers in BEND.
To date Priny has a 30 years inventory, with a name of guess who?
I'm guessing this is a typo by KTVZ. 9% a month?
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Nah, nobody ever makes typos anywhere, everything you read is 100% factual.
Perhaps its a sympathy ploy? 9%/mo on millions 'ouch' please can we fast-track these mega-developers,...
>>But your estimate of 'newly constructed supply' over here is wildly off base. -- TT
Will you please stop ascribing quotes I did not make to me? That wasn't me! You do that all the time. I'm a housing BEAR, in case you didn't notice. Holy cow.
--TT
"You look at what a builder or a land developer holds in carrying costs at 9 percent interest a month on a multi million dollar project, at the end of the day, these delays, they need to make up for those projects," High said. "It could cost thousands of dollars for the builder, the future homeowner, or resident."
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It sounds like that is exactly what they HIGH said, of COBA, aka central oregon builders assn, aka EDCO, aka 'pump,dump, and bail',... aka welcome to BEND.
It sounds like a bail-out is being requested, please defer our SDC costs because our cost of money, aka business costs are out of hand.
Please bail us out, because our need to borrow money to develop unwanted projects on your behalf is killing us,...
Time for crocodile tears.
You have to admit its sort of ironic that the developers and builders have to have to sign off as -- TT
-- TT
state #/HH # chg rank
Oregon 2,329 -23.98 30
Georgia 299 75.25 2
Note above that we have 2300 foreclosures in Oregon, and actually less, we're 30 in rank of other states.
Oregon is the least efficient in the nation it takes 1-2 years to get out a defaulter, thus the last of our 2006 defaults will not even be evicted until 2013 ( 2011 default ), note the MOST efficient is Georgia. #2 in rank and 1 in 300 so far, Georgia is the MOST efficient with less than 60 days required to evict.
Should government bail out lenders, homeowners or let situation stay as is?
MSNBC 20 August, 2007
The nation's mortgage crisis worsened last month as thousands of homeowners across the country failed to keep up with their monthly payments and faced the possibility of losing their homes.
Foreclosures rose 9 percent in July compared with June and were up 93 percent from a year ago, according to the latest monthly figures released Tuesday by RealtyTrac, a Web site that tracks foreclosed properties.
Nearly 180,000 fillings — including default notices, auction sale notices and bank repossessions — were reported during the month. That means that one in every 693 U.S. households was hit with foreclosure in July.
TED SPREAD SIGNALS BIG SHIT TO COME
The U.S. financial system is in the worst shape since the stock market crashed almost 20 years ago, according to a gauge known as the TED spread.
The yield on three-month Treasury bills closed yesterday at 3.09 percent. That's 240 basis points lower than the comparable rate for borrowing dollars in London through the Eurodollar market. Each basis point equals 0.01 percentage point.
There hasn't been a difference this large since the 1987 plunge triggered speculation that the world was destined for a recession. The TED spread peaked at 300 basis points on Oct. 20 of that year, the day after U.S. stocks recorded their biggest percentage losses ever, and stood at 255 on Nov. 30.
Investors saw much less risk of a crisis this year than they did two decades earlier, judging by average spreads. The figure for January through July was 39 basis points, less than half the average of 113 in the seven months before share prices plummeted in October 1987.
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The TED spread is the difference between the interest rate for U.S. Treasuries and Eurodollars as represented by the London Inter Bank Offered Rate (LIBOR). The TED spread is a measure of liquidity and shows the flow of dollars into and out of the United States..
The Ted spread can be used as an indicator of credit risk. This is because U.S. T-bills are considered risk free while the rate associated with the Eurodollar futures is thought to reflect the credit ratings of corporate borrowers. As the Ted spread increases, default risk is considered to be increasing, and investors will have a preference for safe investments. As the spread decreases, the default risk is considered to be decreasing.
[edit] History
The value of the TED spread fluctuates over time but is often between 10 and 50 basis points (0.1% and 0.5%). A rising TED spread often fortells of a downturn in the U.S. stock market as liquidity is withdrawn.
state #/HH %chg rank
Oregon 2,329 -23.98 30
Georgia 299 75.25 2
Note above that we have 2300 foreclosures in Oregon,
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Oregon has about one in 2300 foreclosures to date, we're the most in-efficient, thus the last to clean our house, Georgia is the MOST.
>>You have to admit its sort of ironic that the developers and builders have to have to sign off as -- TT
At least you learned how to do my signoff.
--TT
Can we maybe have one "post as TT" day and just get it out of our system?
--TT
I think its like the recent movie 'V' for Vendetta with everyone having Guy Fawkes masks, or the Bond movie where in a museum everyone was dressed as Bond.
If everyone signed off as -- TT Then the enemy ( Realtors, MTG Pros, Builder's,... would go out of their minds ) -- TT
Besides its all about ME, ME, ME, TT.
-- TT
Thus stacking up the costs for builders, which of course get passed onto home buyers. -- High, COBA
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Is that really true? If its true, then why not accept the true cost of infrastructure @ $60k and pass it to the buyer?
All buyers are rich right? Even Wilsonville that is actually the rich per capita city in Oregon, passes a $90k infrastructure to all new homes, why must silly little Bend pass only $12k?
Perhaps Bend isn't really about rich, perhaps its really just a little desert town that has been over-sold? Besides, forcing developers to front the actual cost. To date "The Citizens" of Bend have been making up the difference perhaps its time to QUIT SUBSIDIZING BUILDERS.
-- TT
Well, well... we finally hear about July..
Prices still sliding, sales still slowing
If prices drop further, losses may be in store for industry
By David Fisher / The Bulletin
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Life in Central Oregon’s sluggish real estate market is a double-edged sword this summer.
On one hand, for first-time buyers with good credit and some savings, life is good. There are plenty of homes to look at and plenty of sellers willing to cut a deal.
For sellers, though, the laws of supply and demand could be conjuring little more than gloom.
Overloaded with unsold homes and underloaded with buyers, July median sales prices in all four of Central Oregon’s largest home markets dropped below July 2006 levels, while the overall number of sales for the month fell to the lowest level in at least five years.
Some market watchers are hoping the Federal Reserve will move to inject more cash into the nation’s badly knotted credit markets — a factor that could tend to push mortgage interest rates down and open the affordability window a little wider without deeper price cuts.
In the meantime, though, things have gotten to the point in the local markets, especially for home builders on recently purchased land, where prices can’t sink much further without inviting losses, Redmond-based Century 21 Gold Country agent Pam Lester said.
“I don’t expect prices to go anywhere but up from here,” Lester said, “because they can’t go any lower.”
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.
Median prices in all four regions remained solidly above July 2005 levels. But persistently high levels of unsold homes indicate that the market’s hangover from the boom — which was fed by cheap mortgages and high levels of speculative buying before it ended in June 2006 — is far from over.
In Bend, 1,588 single-family homes on less than an acre were listed for sale on Aug. 6, according to tracking graphs maintained by Bratton Appraisal Group’s Mike Caba — down slightly from a high of 1,611 in early July, but still more than 11 months’ worth of inventory based on average monthly sales over the past 12 months.
In Redmond, inventory levels — measured by the number of months it would take to sell all houses that are for sale, at the average monthly sales volumes of the past 12 months — also have crept up from 8.3 months in April to 10.9 months in August, Lester said.
In Bend, the inventory bulge is at its worst in the $400,000-and-under price range, which accounts for more than 68 percent of the homes for sale, according to Bratton’s graphs.
It’s no accident that that’s the price range most production builders build in, and the price range that attracted the heaviest interest from speculators and investors during the boom years, Lester said.
The builders have cut way back on the pace of construction, taking out 56 percent fewer building permits in all of Central Oregon through the first seven months of this year than they did during the same period a year ago, according to Don Patton, president of Cascade Central Business Consultants, who tracks the industry on a monthly basis.
But some of the speculators who tried to flee the markets beginning in June 2006 when it showed the first signs of weakness, are still trying to sell homes, although many in Redmond have given up and rented them out, Century 21’s Lester said.
Buyers market
Builders, meanwhile, are trying to keep their operations moving — but they’re forced to wheel and deal to sell the fewer homes they are building.
Random incentives like free vacation packages and discounts on furniture have disappeared from some new subdivisions now, Lester said, but they’ve been replaced by a willingness to help buyers with specific needs like landscaping, paying off a car loan, or buying appliances — “whatever you need to make the deal work,” Lester said.
Asking prices also are dropping as sellers adjust to the new market realities, said Bill Berger, principal broker at The Hasson Company Realtors.
Average list prices in Bend dropped from $533,481 on all types of housing in May to a little less than $467,000 in July, Berger said. In Redmond, the average list price held about steady through the same time frame in the $370,000 range, while average sales prices ran much lower in the $285,000 to $289,000 range.
Why the strength on the lower end of the market?
“The buyers tend to be first-time home buyers,” Lester said, “because they don’t have to go out and sell a house first in order to do it.”
There’s nothing unique about the weakness in the local markets.
Existing home sales in the second quarter in most states dropped below the same period last year, the National Association of Realtors reported last week, and 50 of 149 metropolitan statistical areas reported price declines.
Home sales in California plunged 24.7 percent in June, according to the California Association of Realtors, but median prices on the homes that sold rose 3.2 percent over the same month in 2006, reaching $594,260 statewide.">Prices still sliding, sales still slowing
If prices drop further, losses may be in store for industry
By David Fisher / The Bulletin
-
Life in Central Oregon’s sluggish real estate market is a double-edged sword this summer.
On one hand, for first-time buyers with good credit and some savings, life is good. There are plenty of homes to look at and plenty of sellers willing to cut a deal.
For sellers, though, the laws of supply and demand could be conjuring little more than gloom.
Overloaded with unsold homes and underloaded with buyers, July median sales prices in all four of Central Oregon’s largest home markets dropped below July 2006 levels, while the overall number of sales for the month fell to the lowest level in at least five years.
Some market watchers are hoping the Federal Reserve will move to inject more cash into the nation’s badly knotted credit markets — a factor that could tend to push mortgage interest rates down and open the affordability window a little wider without deeper price cuts.
In the meantime, though, things have gotten to the point in the local markets, especially for home builders on recently purchased land, where prices can’t sink much further without inviting losses, Redmond-based Century 21 Gold Country agent Pam Lester said.
“I don’t expect prices to go anywhere but up from here,” Lester said, “because they can’t go any lower.”
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.
Median prices in all four regions remained solidly above July 2005 levels. But persistently high levels of unsold homes indicate that the market’s hangover from the boom — which was fed by cheap mortgages and high levels of speculative buying before it ended in June 2006 — is far from over.
In Bend, 1,588 single-family homes on less than an acre were listed for sale on Aug. 6, according to tracking graphs maintained by Bratton Appraisal Group’s Mike Caba — down slightly from a high of 1,611 in early July, but still more than 11 months’ worth of inventory based on average monthly sales over the past 12 months.
In Redmond, inventory levels — measured by the number of months it would take to sell all houses that are for sale, at the average monthly sales volumes of the past 12 months — also have crept up from 8.3 months in April to 10.9 months in August, Lester said.
In Bend, the inventory bulge is at its worst in the $400,000-and-under price range, which accounts for more than 68 percent of the homes for sale, according to Bratton’s graphs.
It’s no accident that that’s the price range most production builders build in, and the price range that attracted the heaviest interest from speculators and investors during the boom years, Lester said.
The builders have cut way back on the pace of construction, taking out 56 percent fewer building permits in all of Central Oregon through the first seven months of this year than they did during the same period a year ago, according to Don Patton, president of Cascade Central Business Consultants, who tracks the industry on a monthly basis.
But some of the speculators who tried to flee the markets beginning in June 2006 when it showed the first signs of weakness, are still trying to sell homes, although many in Redmond have given up and rented them out, Century 21’s Lester said.
Buyers market
Builders, meanwhile, are trying to keep their operations moving — but they’re forced to wheel and deal to sell the fewer homes they are building.
Random incentives like free vacation packages and discounts on furniture have disappeared from some new subdivisions now, Lester said, but they’ve been replaced by a willingness to help buyers with specific needs like landscaping, paying off a car loan, or buying appliances — “whatever you need to make the deal work,” Lester said.
Asking prices also are dropping as sellers adjust to the new market realities, said Bill Berger, principal broker at The Hasson Company Realtors.
Average list prices in Bend dropped from $533,481 on all types of housing in May to a little less than $467,000 in July, Berger said. In Redmond, the average list price held about steady through the same time frame in the $370,000 range, while average sales prices ran much lower in the $285,000 to $289,000 range.
Why the strength on the lower end of the market?
“The buyers tend to be first-time home buyers,” Lester said, “because they don’t have to go out and sell a house first in order to do it.”
There’s nothing unique about the weakness in the local markets.
Existing home sales in the second quarter in most states dropped below the same period last year, the National Association of Realtors reported last week, and 50 of 149 metropolitan statistical areas reported price declines.
Home sales in California plunged 24.7 percent in June, according to the California Association of Realtors, but median prices on the homes that sold rose 3.2 percent over the same month in 2006, reaching $594,260 statewide.
Best Line EVER?
“I don’t expect prices to go anywhere but up from here,” Lester said, “because they can’t go any lower.”
Ohhhh man... I can feel the blogosphere gettin' weird on that one. Also weird:
1,588 single-family homes on less than an acre were listed for sale on Aug. 6
Funny, but this is the LOWEST number achieved in the past 22 days. It's right back up above 1,600 now. Aug 6? Hmmmm...
Geez, and the talk about "strength" in Redmonds "lower end". Avg list prices at $370K and avg sales at $285K. Whoa, that IS real strength! I don't think the reporter understands what those numbers mean...
There’s nothing unique about the weakness in the local markets.
Existing home sales in the second quarter in most states dropped below the same period last year, the National Association of Realtors reported last week, and 50 of 149 metropolitan statistical areas reported price declines.
Home sales in California plunged 24.7 percent in June, according to the California Association of Realtors, but median prices on the homes that sold rose 3.2 percent over the same month in 2006, reaching $594,260 statewide.
Uhhhhh, he he, huuuu, he, huuuuu.
WHAT! So we're swimming in markets DOWN sales YoY, BUT you couldn't find ONE, and the example you use is UP?
Bend sales are down 37.4%
Redmond: "down 45.2 percent from July 2006."
"Crook County, 11 homes sold — half of the July 2006 number"
"Jefferson County, eight homes sold — a third of the July 2006 volume"
And medians are DOWN in ALL CENTRAL OREGON MARKETS.
Right. So we're JUST FINE, looking at sales down 66%, 50%, 45.2%, and 37.4%? Right, right... NOTHING UNIQUE ABOUT WEAKNESS IN LOCAL MARKETS.
What in the hell is this guy smokin'? Wow. This is one of the most ridiculously & overtly biased and pro-RE articles ever put out by The Bulletin.
And that's saying something.
Well, this piece is coming close to the Mass Realization Moment that I've been talking about since Jan & Feb, although Fisher does everything possible to gussy up this pig.
It seemed clear that Q3 would be down here, and there would be no hiding that fact. And the graphs accompanying this piece clearly show this is the case. And while the price drops are a reason for concern, the Big Story is the dried up volume. It's damn near impossible to sell a house at any price around here.
I can see one thing I was dead wrong on: Crook County holding up. I thought that would be The Place To Be, but they've been killed with 14% drops in medians and 50% sales drops. Damn.
And I guess Pam Lester is The Bulletins Skank-O-The-Minute. And they went to Redmond to get her. And granted, from her picture she appears to be quasi-hot, and hence will receive every benefit of the doubt here. Can someone confirm Lesters hotness?
From David Foster:
The median YTD sale price remained stable at $349,249 in July, $349,250 in June and the first of the year at $351,978.
So medians dropped to $340K on those additional 9 sales that David had not reported. I can taste that Parilla burrito now...
And I question this quote:
Average list prices in Bend dropped from $533,481 on all types of housing in May to a little less than $467,000 in July, Berger said.
From BendBB's data I have $528,675 in May, and $532,165 in July, or a small increase. I realize there may be some errors there, but that drop to $467K seems really unlikely. I mean, I'm within about 1% in May, and then the bottom drops out? That seems wrong...
Builders, meanwhile, are trying to keep their operations moving
Yup... there's the rub. I drive around and see these guys still building like things will be OK. Nuts like Randy Sebastian seem to want to Build Their Way Out of this thing. I, for one, wish them luck. And I think I can speak for Tim, and he also wishes them Happy Building. You go guys.... if Economics has taught us anything, it's a Supply Flood is always good for prices.
If you're buying and want prices to plunge.
In Redmond, the average list price held about steady through the same time frame in the $370,000 range, while average sales prices ran much lower in the $285,000 to $289,000 range.
Why the strength on the lower end of the market?
“The buyers tend to be first-time home buyers,” Lester said, “because they don’t have to go out and sell a house first in order to do it.”
Woof, I feel like I have to explain why this is so ass-backwards. In "normal times" AVG list will ALWAYS be higher than AVG sales prices. Part of it is normal bargaining, and knocking people down from their ask. But FAR more important is that NOT EVERY GAT DAMN PERSON IS A MILLIONAIRE! There will ALWAYS be more sales activity in lower priced homes, ALWAYS.
It's got ABSOLUTELY NOTHING to do with first time buyers, and other bullshit. Overlay the income frequency of this country on a price frequency chart of U.S. home prices. There are simply WAY MORE people making $40K and such, than there are people making $5MM.
The only time sales prices will exceed list is when an inordinate number of VERY high priced homes are sold in a low volume market. So maybe this is possible here. BUT DAMN UNLIKELY.
One thing it AIN'T is "strength" in the lower end. It's just normal people buy homes in far larger volumes than hyper-rich people cuz there's one hell of a lot more "normal" people.
And I love how they had to use the word "strength" to describe sold prices way the hell lower than list. Not only is the logic just ass-backwards, they HAD TO find STRENGTH in a numerically low number. Wow.
PUT THE LIPSTICK DOWN! YOU ARE POISONING THE PIG! YOU'VE PUT SOME BIG ASS DOUBLE D'S ON IT, YOU'VE PUT A BLONDE WIG ON IT, YOU'VE EVEN PUT SOME TIGHT LOW-RIDER JEANS ON IT! BUT IT'S STILL A FUCKIN' PIG, AND ANYMORE LIPSTICK WILL KILL IT!"
"And we have a large percentage of condos, and people are seeing increases in monthly assessments and special assessments. In some of those cases they have doubled, also."
The above from a national list of housing problems, seems like developers everywhere are now starting to realize the HOA is a piggy bank. Best to grab now what you can, improve the cash-flow.
Never BUY anything with an HOA, anywhere. Its just a license to pull numbers out of your ass, and send a bill.
-- TT
Let's do a little math on the Cluster-Fuck that is Prineville real estate. From
Prineville subdivision gets initial approval
Anglers Canyon would add 877 housing units...
A Portland developer proposed in January a nearly 300-unit, four-story hotel-condominium...
IronHorse, a 15- to 20-year project, would add up to 2,900 homes...
Brasada Ranch, Hidden Canyon and Remington Ranch are projected to bring between 5,500 and 6,000 homes to Crook County.
So that's 10,077 homes. From todays's Bulletin piece:
In Crook County, 11 homes sold
OK, so 10,077 divided by 11 is... OK, carry the 2 million. Right:
916 MONTHS OF INVENTORY, or just over 76 YEARS. Conclusions? Well, let's ask Randy Jones, project manager of Ironhorse over at Brooks Resources:
*The resorts won't hurt IronHorse sales, Jones said....
*"A lot of folks will move to Prineville because they want the small-town quality of life."
*The slowdown could open up market opportunity for lower-priced homes, said Brooks Resources' project manager.
*"We have a very interesting opportunity to offer lots at a price point that's very pleasing to Prineville," Jones said.
Interesting. The first quote is.... well, let's just say it looks like Randy went bobbing for apples in the Kool-Aid vat. The second quote. Huh. It's like saying, "ANARCHISTS, UNITE!", or something. So a "lot of folks" will congregate in one place because they do NOT want to live around a lot of people. OK.
The 3rd & 4th quotes are dead true. You CANNOT quibble with those. From Anglers Canyon:
"I can't say what's going to happen the next year or two, but we're confident about the next 15 years," Curry said. "Prineville is more about the nice downtown feel and its surroundings. It's a beautiful place where someone will want to go."
SOMEONE? Really? You are going to build 877 homes cuz you think SOMEONE will move there? That's tight. So we got "SOMEONE" responsible for absorbing an amount of housing inventory that is about equal to how long the average American lives, and Pam Lester has assured us that PRICE WILL GO UP, “because they can’t go any lower.”
I am humbled in the presence of these Mental Giants. Really. I've been straggling along at the bottom of the mother-fuckin' food chain my whole life cuz I am of the mind that 76 MOTHER FUCKIN' YEARS of inventory is "a lot". But I can agree with some of it: Jones does have an "interesting opportunity" to offer homes at a price point that will be pleasing to Prineville, and a lot of other places for that matter:
$0.
Yarrow, the 800ac development in Madras is by comparison, going to have scorching sales rates. I found a web page offering 0.17ac lots starting at $90K. That divides out to 4,706 lots, and at Jefferson Counties blistering sales rate of 8 homes per month, figures to 588 MONTHS, or a paltry 49 YEARS of inventory. And that is Yarrow, ONLY.
Yeah, it'll be fine.
And I have to agree with BendBust re the insufficient SDC's around here. From todays Bulletin:
Two years after canal breach, irrigation district is still worried
Steve Johnson points out where the Central Oregon Canal in southwest Bend breached and poured a quarter-million gallons of water into a neighborhood in 2005...
The best solution for Johnson is to start piping canals in the city, though such projects would be costly, and it is unclear who would pick up the tab...
Though there have been no big incidents since the 2005 breach, Johnson raised the risk at a Bend City Council meeting last week, when a zoning change for a 432-unit condominium project next to the canal and Reed Market Road was up for a vote...
“You really can’t monitor every square inch of a canal that’s 40-something miles long,” Johnson said...
In any town BUT Bend, you can bet your ass that 432 unit condo would pick up one hell of a lot of the tab, at least near them. They are the only ones threatened by a breach and SHOULD pay every nickel of piping that canal in thier vicinity (as should every other development). Either that, or there should be something signed by the developer & EVERY SINGLE BUYER stating that they understand that the canal, unpiped, represents a flooding danger & the City and noone else, is liable.
Of course this will not happen. The City will invoke it's FUCK THE INDIGENOUS MASSES dogma, and we'll pay. Nothing like living in a town where the powers that be will screw the locals to get one more development built.
Bend's New Motto:
WE WILL LEAVE NO BUTT UNFUCKED
Whoops. Looks like I did a double paste on that Bulletin story. Oy, and it's all in a link too. Yarg.
916 MONTHS OF INVENTORY, or just over 76 YEARS. Conclusions? Well, let's ask Randy Jones, project manager of Ironhorse over at Brooks Resources:
*The resorts won't hurt IronHorse sales, Jones said....
*
Thanks, this is what I have been trying to say for MONTHS Brooks isn't just fucked, they're FUCKING insane,
Even if they STOPPED BUILDING today, it would be 27 years of inventory, but NO they want to build 100 years of inventory.
Please somebody bitch-slap Brooks, aka Hollern.
>>“I don’t expect prices to go anywhere but up from here,” Lester said, “because they can’t go any lower.”
Good lord what a foolish thing to say. If a seller needs to sell and no buyer comes along, the price will go lower. That's just how it is, Pam.
Guess what, Pam, a lot of these houses were much cheaper than the current asking prices back in 2004. Much cheaper. Tell me why that cant get back to 2004 prices, Pam.
As foolish as Pam's comment is, guaranteed she hasn't said the dumbest thing on record by the time this is all over. I'm really eager to see the letters to the editor vilifying the Bulletin for being demons who have caused a housing downturn in the most glorious city on Earth.
Falling prices in Bend. No one's seen a tragedy like this since Icarus fell out of the sky.
--TT (for reals)
The problem that the water-folk (OID) Oregon Irrigation District folk have with subdivisions is that folks that live near them are dumping garbage into the canals.
Which is plugging the fucking spill-ways, which is causing the fucking breech.
Let's MAKE THIS CLEAR, building fucking subdivisions on or near fuck OID canals should NOT have been fucking approved by the fucking city.
Now the solution is to pipe the canals so the sub-divisions can build over them!
The REAL FUCKING PROBLEM, and I'll NOW REPEAT the real fucking problem is once the canals go pipe ALL rural wells are expected to go dry. Thus its expected to cost $300M in known costs to deliver potable water do the dry wells.
My figures for the cost of the canal piping are around $200M.
There are to date another Billion dollars of known infrastructure costs that were ignored during the past five years because the city could only get $12k/home out of the builder instead of the known cost of $60k.
The difference the builders have saved is a Billion dollars, guess what; $500k storm, $200k water, $300k for sewage. Thats just what we need to now.
The canal is whole other fucking problem because sub-divisions were built on the canal. Short term, make it a fucking felony to dump your garbage in the canal. People who live near the canal are literally throwing there fucking trash bags over the fence, this is the fucking problem with BREECH.
"Thanks, this is what I have been trying to say for MONTHS Brooks isn't just fucked, they're FUCKING insane,
Even if they STOPPED BUILDING today, it would be 27 years of inventory, but NO they want to build 100 years of inventory.
Please somebody bitch-slap Brooks, aka Hollern."
The more you talk about Brooks, the more I believe you. I never knew to what extent that Brooks had built Central Oregon.
Brooks isn't the first nut in the world though. There's a recent book whose whole thesis is that England and America grew so fast precisely because of absolutely insane buildouts that come in a culture of risk (and we see China and India and rest of Asia embracing the kind of risk we pioneered so that they can emulate and surpass us).
Over and over, we've had mad dreamers who built out crazy and lost big time.
Brooks is one of those. The problem, as you've pointed out, is they've built the dwellings but not the supporting infrastructure, so we may not benefit by the tons of cheap stuff that will result after the market for what they built collapses.
In other words, even if Brooks has built tons of dwellings, are they of any use without jobs, adequate roads and sewers, water, etc.? Cheap McMansions for everyone, but are they really "cheap" if they don't come with a REAL, working town around them.
This may not end up being a buildout that actually helps us move forward, as so many other massive builds have helped us.
The Economist had a story last week about Cerritos, California (Google Search: economist california suburb) that is actually working, and working well. What makes it work so well? Turns out it's incredibly great planning and unusually good city planners who decided to start by building infrastructure FIRST.
Cerritos is racially diverse, but everything is clicking. It's kinda a marvel. When you read the comments from their city council, you say, "Wow. They are smart. Way to kick ass." When was the last time you thought that about our city gov't?
http://www.economist.com/world/na/displaystory.cfm?story_id=9655054
--TT
Prineville is a really interesting situation.
27 year inventory to date, with +80% purchases in the last bull-cycle on speculation.
During the prior 3 years virtually every secretary at every title company in Bend, bought a spec property there. Why? Because Bend cost to much, and the little secret that everyone in Bend knew is that Priny is-was the next Bend. Thus they beat the calis.
The problem is the calis didn't come to priny.
Now its NOT just little peggy-sue, at Ameritrade, its Boss-Hogg-Hollern, he knows that Priny is-was cheap, so they bought tons of land back when it was cheap, and htye too have 'speculated' in Priny.
Now there is still the same problem. Who is going to move to Priny?? With a 100 homes a month selling in Crook County, its sort of silly in an environment where during the next few years it will be impossible to get a mortgage to even consider what these people are thinking??
My guess is that if we keep building, someone will say "They MUST BUILT TOO MUCH TO FAIL, LIKE TOO BIG TO FAIL"
BOSS-HOGG-HOLLERN is just to big, and too important to central-oregon to let all this housing go to waste, thus we need a bail-out.
Affordable housing, yes shit in Priny will soon sell for $100k, the jobs? Easy commute to Redmond, where they're hiring security-gaurds for gated communitys quicker than you can say IHTBYB.
Let's also be honest here, its getting harder to build in Bend, as Boss-Hogg-Hollern has litterally played every play in the playbook in this little town. Thus they're up in Jefferson, and Crook playing the 'mark' ( city-hall ) with old con-artist talk of "SMART GROWTH".
Smart-Growth was paid for and created by HOLLERN, and the product? NWXC holy shit, all of madras, and priny, metolious, culver, ... all covered with $100k low income versions of NWXC...
Where in the fuck is the state land control? What in the fuck is investing this turd shit?
Even medford oregons leader of low-income housing is feeling pain, as the jobs are now leaving, and they're on the fucking I5 corridor.
Somebody bitch slap hollern.
-- TT ( The real and ONLY )
Hey Guys sorry for all the 'French' today, but sometimes FUCK needs to be capitalized.
One of the MOST repetitive and incompetent statements we hear in Bend is how fucking rich everyone is and the rich are coming.
In the prior quote of TT-101, he/she pointed out about 'planning', and cerritos. We don't have to go that far, the RICHEST city in Oregon per-capita, not phony rich ( $40k/household ) rich like Bend, Wilsonville is REAL rich, highest per-capita in Oregon.
Guess what they do? They MAKE the builders pay $90k/home infrastructure, and guess what everything is working. Schools, roads, sewer, water, storm. Its all working, this is what it costs to do it right!
Anytime anybody in this two-bit little fucking desert town called BEND talks about the rich, then I want you all to say, "Then how come we can't afford to pay for sewage, water, and flood control".
Note lately from OUR fucking leaders, its NOT the rich, now its affordable housing the WHOLE fucking debate is HOW FUCKING CHEAP CAN WE PRODUCE home in Central Oregon??
Solution, everybody gets their own septic, haul in water by truck, and rain-barrel collection for storm. This is cheap, this is Central Oregon.
Welcome to Hollern-Ville a destination resort of the poorest people in America, where everyone get's to live in a Hollern-Hotel. A card-board box that say's "Real people, & real children Herein; Real jobs wanted".
What's happening now is our builders are leaving Bend, and heading north, to do what they do best. Build. Trouble is there is NO jobs, thus even if the affordable housing sells to welfare people aka section 8, they're still going to commute to Redmond to work @ walmart, which means 10X on I97, who in the hell is going to pay for the fucking infrastructure?
ALL along boss-hogg-hollern has been getting a free fucking ride, and not paying the actual cost. Something is going to break, and what its going to be is we're all going to be wallowing in shit, and I97 is going to become a parking-lot, and we're going to have to drive for water.
-- TT
There are to date another Billion dollars of known infrastructure costs that were ignored during the past five years because the city could only get $12k/home out of the builder instead of the known cost of $60k.
*
Given that Boss-Hogg-Hollern is the largest builder/developer in Central-Oregon.
It's quite simplistic to hold him accountable.
About five years ago many of us demanded a moratorium on building in Bend and central-oregon, at that time the debate was yes-growth, no-growth, then HOLLERN paid the most expensive dog&pony PR firm to pull "smart-growth" out of his ass, the the debate ended, and we got NWXC,... and then everything got approved.
Five years ago we demanded that actual infrastructure costs be paid at the time of permit, now its actually over $60k/home.
We're talking schools, roads, sewage, water, storm. It many surprise some that the storm cost in Bend alone that has NOT been resolved is now over 1/2 Billion dollars. Just the storm-water problem.
Hollern, brought us 'smart-growth', ok, now he don't look so smart, and most of his developing has gone north.
Let's fucking put a moratorium on building and start forcing developers to pay actual cost of infrastructure.
Let's NOT pass the cost on to those who didn't participate in the get rich quick "Smart Growth" Bend Bubble Boondoggle.
In summary we would have had 'smart growth' long ago if boss-hogg-hollern hadn't gotten his way, ok he got his way, now lets pass him the fucking bill for having his way.
Let's talk storm-water, lets also remind you all that right now up at Summit-High School there is a little $10 Million dollar yard problem of fixing the football field. ( Who in the helling is paying the $10M is it you & me?? )
Problem is that up in PUMMY-VILLE ( near hollern NWXC ), nobody bothered to do any storm-drains, all the water from the school ran out over the track, and the water percolated down through the turf and washed the underlying pummy away, and then one day the whole place became a sink hole. This is a brand new fucking school, and we have problems like an old coal mining town.
This is the future of ALL NWXC, SHEVLIN, everything west of 17th. For that matter is the future of ALL post 1998 get rich quick projects.
Walk around NWXC in the areas not developed and you'll see ravines 10 feet deep and 15 wide from ONE STORM.
The problem is NOBODY does anything other than throw a slab on pummy, and put up a hollern-hotel, and move on today, there is massive lawsuits in NWXC over flooding basements the water from the roofs just sits between the houses and percolates into the finished basements.
Let's talk about the mildew problem, how many years are these central Oregon 'hollern-hotels' going to last?
Where in the hell was county/city planning?? Every time someone demanded things be done right the boss-hoggs said "your costing us money your slowing us down".
Well now we know where the fast-track got us, the old story about not having the money and time to do it right the first time, now where is the money and time going to come from? Now that boss-hog has moved north??
The Willamette Valley would never allow the kind of 'get rich quick' speculation that occured in Central Oregon.
Here in Bend during the past five years it was known that the cost of infrastructure for a single family home was over $60k/home. To date developers only had to pay $12k/home.
Infrastructure is schools, water, sewage, storm, and roads.
The failure to force developers to pay the true cost will eventualy create a complete collapse of Bends over-loaded infrastructure. In many ways the easy-building, and low cost fueled the over-building that we're stuck with today.
In Prineville estimates are from 25-80 years of inventory, and current sales rates, Madras, ... same problem. Even today in Bend the builders are getting new permits quicker than housing are selling every month.
All this speculation would end tomorrow if developers were forced to pay actual cost of infrastructure.
A familiar BIG-LIE in Bend is that is the place of the rich. The fact is Bend is a town of poor people who refused to pay the true cost to flush their toilet.
In Wilsonville Oregon, the highest per capita income in the state, all new homes MUST pay $90k/home for infrastructure, the true cost today for a new home. Thus there really are places where real-rich people live, and plan, and desire that their toilet flushes in the future.
Bend Oregon, is simply a place of get rich quick, and move on people, so called "non-placement-bound" to quote boss hollern. Nobody intends to stick around, so nobody cared if you can flush your toilet tomorrow.
Bend is NOT the home of the rich, but it is a way-station for the dumb and miserly.
--TT
I said it twice and I'll say it again: What is with all the confusion between building permits, plans, houses that are on the drawing board, planned etc., with houses that are actually BUILT???
Since when do you include houses that are merely mentioned in plans in actual inventory?
Answer: YOU DON'T. There is NOT 76 years of inventory in Prineville!!
Were a lot of cheap older houses bought here for speculation? No doubt about it. Are some new homes still being built even though the market is stagnant? Absolutely.
But this constant conflating of schemes to build thousands of houses AT SOME POINT with houses that are ALREADY BUILT is silly and illogical. Even the most irrationally exuberant builder is not going to continue to overbuild at the rate you are suggesting. They will run out of money and financing long before that.
In Bend, builders had a lot bigger head of steam built up, and therefore a lot more inertia when the market crumbled overnight last year. As has been pointed out, there is still much more building going on in Bend than demand indicates is wise.
But Prineville is farther behind the curve and for once this might work in our favor. Sure there is excess inventory here, but again it is far from the magnitude you are suggesting. Some of the new subdivisions that have already been approved may very well turn out to be pie in the sky. But the point is that they are just plans on paper. And, FWIW, Remington Ranch is not in Prineville. It is much closer to Redmond.
Supply in Prineville most definitely exceeds demand right now, and some new homes are still being built. But there simply are not 1000's of unsold new homes around here. Why don't you come over and do one of your photo documentaries for Prineville, and see for yourself?
Supply in Prineville most definitely exceeds demand right now, and some new homes are still being built. But there simply are not 1000's of unsold new homes around here - TT
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Your always changing the fucking subject.
Nobody said there were 1,000's of home on the market.
What has been said, has been said, and re-said for months on end.
To date there are 10,000+ homes approved on the books to be built in Crook County. Most of which are near Priny.
Even in the spring of this year there were 27 years of inventory in Priny, +80% of all priny purchases in the last five years were on speculation.
There's NO point of listing 1,000's of homes in priny, and think everyone that owns there knows that, the 100's that are listed aren't even selling.
Priny is going to be fuck in the RE biz, for the next 25-80+ years,
Get over it.
-- TTb
Now that houses are not selling, what Lester should do with her time, rather than talking to newspaper reporters, is take an economics course. I suggest Econ 101, given her statements.
--TT
Answer: YOU DON'T. There is NOT 76 years of inventory in Prineville!!
-- TT
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That is IHTBYB's # based on current sales and future development. Thus its a reasonable to number to predict.
The very people who are marketing the +10K homes are calling it PRINY, and NOT Redmond take that up with them. This ironic we have Priny person who doesn't consider his own subdiv's to be part of Priny, yet the realtor marketing people consider anything 5 miles east of redmond to be priny, again take this up with PR-RE.
My number right now with the speculative basis to date today, given speculative purchase, lack of jobs, and building to date is 27 years of inventory, and assuming +80% speculative purchasing. These are hard numbers that I have gotten from three different prineville builders since spring-2007.
Prineville is fucked, then you have LesSchwab bailing to CEO Brogman doesn't have to commute.
Personally my guess is that 1/2 the homes in Prineville would have signs today if there was a market, there is no market, there is no MTG financing, people are just bleeding to death waiting out the recovery on their Prineville speculation.
You are obviously one of them.
Yes, in about five years you'll be able to buy homes all day long in Priny for $100k, low income affordable housing paradise.
Right now Prineville is simply in paralysis, because there are NO buyers.
-- TT
I said it twice and I'll say it again: What is with all the confusion between building permits, plans, houses that are on the drawing board, planned etc., with houses that are actually BUILT???-TT
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These are permits that are paid, and ready to go, these are NOT virtual permits. When somebody has PAID, and there approved, then WE need to seriously evaluate them and plug them into the predicted models.
Let's take your metric "BUILT" I say bullshit to that metric, becuase most of this shit will never get past the fucking slab, but guess what central oregon is fucked, we'll have a sea of fucking slabs.
You seem to be a realtor trying to focus on completed homes on the market, and always changing the subject.
My concern is the fucking fast-track destruction of Central Oregon.
They have already started excavation, you can do that without permit. The permits have already been PAID & AUTHORIZED.
Builders/Developers need work in progress to get draws.
I don't give a fuck if anything is ever finished, its irrelevant, the land is destroyed.
On the metric, we concur that the 'plan' is Bullshit, but these crap is way beyond plan.
I currently call a house a slab, when they get the far along, thats enough for me, quite often today the realtors have to pre-sell, that means they have to sell this shit while its still in 'plan'. Your telling us to ignore everything until its done. Most of this shit will NEVER be done, we all know that, hell the builders know that, but planning keeps taking checks, and approving plans.
Builders and Developers MUST keep putting deals together, to keep some cash flow, nothing ever gets done in Central Oregon, never, I can't think a project anywhere that has gotten beyond 60%.
DO you take us for fucking idiots?
Me thinks they're serving lots of kool-aide in Priny.
The folks approving plans to build the +10k homes are out of their mind, I think given that you live in Priny, you should be down at city-hall asking some questions.
--TT
So much for dropping back to 'normal': if the bubble was 2004, 2005, and 2006, we have smashed right through the floor of 2003.
What is with all the confusion between building permits, plans, houses that are on the drawing board, planned etc., with houses that are actually BUILT??? -- TT
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Why is OK, for Real Estate to pull to good to be true shit of their ass, but not good for the masses??
All these subdivisions are sold of promises of schools and parks that NEVER get completed, when a new sub-division is sold you always see pictures of what will be, never what is.
Now your telling is to only consider what is, I say this is RE trying to have it both ways.
We're supposed to believe that all is promised is to come, but for the sake of value were supposed to believe that no other new dilution is come.
The fact is in Central Oregon, the promises never come, and the dilution of value ( over-building ) always comes.
In summary, the bloggers are 100% correct.
The over-building is about one thing, the builders ( BROOKS ) didn't have to pay the true cost of infrastructure, and thus made a ton of money ( PROFIT ), had they paid the fair cost of actual/real infrastructure there would have been no easy profit, and most of these project would have never been built.
Thus in effect ALL Brooks profits from the past years are in effect to be paid for by the taxpayers of central oregon, in the long term.
Someone PLEASE explain this economic conundrum regarding California. Sales slide by almost a quarter but sales prices rise by 3%. Huh????? Is this a sign of higher end properties holding up the median? I mean, just peruse craigslist for So. Cal and you have many desperate sellers.
>>Someone PLEASE explain this economic conundrum regarding California. Sales slide by almost a quarter but sales prices rise by 3%. Huh????? Is this a sign of higher end properties holding up the median? I mean, just peruse craigslist for So. Cal and you have many desperate sellers.
Until volume picks up, or inventory comes down, the prices reported are not meaningful. Huge bid/ask spread on houses now. No liquidity.
Please lets try to ignore ALL the RE people who try to take our minds off Bend and Central Oregon.
There are a 1,000 or perhaps 1,000,000 blogsites for the USA bubble, but just a few for Bend.
Let's just pray that Calis all go to tell and leave it at that.
--TT
Sales slide by almost a quarter but sales prices rise by 3%. Huh?????
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Let's apply this rhetorical question to anywhere.
+90% of all people who bought, bought on zero-down.
Thus even if they have to sell, they cannot sell what is NOT there's for less than they paid.
Those who did pay a down payment, are waiting out the storm, as NOT to lose money.
Now jump back 75 years to 1932, this is exactly what happened during the great depression. Complete paralysis, nobody wanted to sell at a loss, but nobody could buy, because they were all insolvent.
This storm is going to last until at least 2012 in Oregon, and thus eventually the bleeding will end, and the paralysis will become hysteria.
Here in BEND we're still barely even one year into the first year of the bubble decline, and the last REFI-RESET defaults will not have turn into evictions in Oregon until 2013.
By 2010 there will be folks with "CASH" that buy, but note it will be nice little houses by Drake Park.
The sub-division desert land Siberian homes will be permanent blight, as NOBODY ever maintains RE during a depression, except an owner occupant with money.
Given there is NO jobs in much of central-oregon, and there will be even less jobs by 2011, most of the homes built in the last five years will become chipmunk dens.
--TT
'FAIR' to make Brooks pay for getting rich? Not in Bend, we'll just pass the costs to the taxpayer.
Hell right now the Builders are up in arms about a 37% increase in SDC going from $12k/home to $16k/home, but the true break-even is $60k/home ( 400% increase ), and that wouldn't even pay for the COID problems, thats just for sewer,water, and flood control.
****
“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).”
Bend Public Works Director Ken Fuller, who talked with Johnson recently about the issue, said it isn’t up to his department whether or not the city would chip in for such a project.
“That’s really a City Council decision about whether they want to propose funding,” Fuller said.
Ok, but here is a question:
Why has Cascade Bank show upward in the past few weeks? It was near 21 at the beginning of August, and is now almost at 25, despite the subprime meltdown that has been taking place.
They did do a stock buyback, but clearly the fundamentals have not improved.
I'm thinking of shorting again. But I could be wrong.
-CACB Shorter
Let's understand this I buy 1.425 Million share's of my own thinly traded stock and the price goes up. I wonder what would happen if I tried to sell 1.425 shares? What would Homer say?
If I owned a bank loaded with non-performing loans I would be borrowing money at the 30 day discount window to buy my own stock.
--TT
Cascade Bancorp authorizes share buyback
Portland Business Journal - August 13, 2007
Cascade Bancorp announced today that its board of directors authorized the company to acquire up to 5 percent of the company's outstanding common shares.
Cascade (NASDAQ: CACB) has approximately 28.5 million shares outstanding.
Brooks has built tons of dwellings, are they of any use without jobs, adequate roads and sewers, water, etc.? Cheap McMansions for everyone, but are they really "cheap" if they don't come with a REAL, working town around them.
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Yes, but if you build they'll come, and they came,...
Non real people,
Non real children,
Non real jobs,
and they kept coming and coming,
I'm thinking of shorting again. But I could be wrong.
-CACB Shorter
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The best 'short' play was back in January 07, at the high ( 30 max downside potential), go to the 5yr, this puppy plays just like the bend-bubble 100% correlated.
Last aug-06 dived, then came back, then peaked in jan-07, and been downhill ever since. High of 30 5yr low of 10. Lately VP been selling at 25. See insider trading report.
Shorting at 30 was probably safe jan-07, now that its floating at 20, it would be dangerous around ten to assume it would go lower. A better bet would to buy at 10 or below, and wait, and wait,...
Remember the book "where are the customer yachts", very few schmucks ever make money shorting.
This puppy is playing exactly like Bend-RE to the hilt, 10 back in 2002 flat, then up to 30 aug-06, now fighting to stay about 20, soon down to ten, then??
It would have been interesting if they weren't buying their own stock. Given the open ended buying notice they'll probably be covering downward pressure for awhile.
Given the fact that the stock is 100% correlation to the bendbubble with zero lag or lead its great way to lose money if your from elsewhere else and want to BUY high and SELL low, and participate in the deflation of the bendbubble.
In the long term anyone want to place bets on this outfit surviving? Came in on plus flood tide, will go on a minus ebb tide, This bank will be high and dry for many years to come. --TT
I expect them to be the Bauhofer and (despite BendBust's hard-on for Hollern) Brooks Resources. - duncan
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The reason for the harp on Hollern is simply for a historical basis. I know you have been around for a long time, but even you may not have paid real close attention to the history of UGB and its relation to Mike Hollern and JD Gray.
UGB is a big deal right now, and the context of how its been run in Central-Oregon by Hollern during the last 30-40 years needs to be repeated and repeated.
I agree, I think that Brooks projects in Bend are pretty much dead, for no other reason than the day of getting a free ride, e.g. maximizing profit by not having to pay true cost of infrastucture is over in Bend. Thus the BIG-BOYS aka boss-hoggs are doing what they do best these days up in Madras & Prineville.
The history of Brooks-Timber to Brooks-Resource, the relationship with SB100 ( UGB ) is too important to ignore.
Virtually everything that happened in West Bend is because of 'smart-growth' something that was 100% paid for by Brooks-Resources. They opened the flood gate and made conservation and moratorium a bad word years ago.
All the NWXC crapsman shacks and their clone are all 100% hollern-hotel legacy spawn.
Development in Prineville - Pay NO attention to Permits or Approvals
Today we were told by our Priny representative that only finished-homes counted. I just wanted to comment on that.
First of all for 'DEVELOPMENTS' like Brooks "Ironhorse" The MONEY is made on the development, the contractors just make a percentage, perhaps two digits. The DEVELOPER is the one who gets to turn worthless desert land that cost 0.06 cents/acre into a million an acre.
Once the County approves 10K homes or 4K, its good to go, then you can get the electricity folks in to do power, water, sewage,... Now you can sell developed lots for a couple hundred grand that cost not much at all, thus its possible to make triple digit returns on investment.
This is why its FAR more important to pay attention to whom is getting permits today, than it is to whom is finishing homes tomorrow.
We already know that many homes in NWXC are not finished, nor will never be finished, nor will parks and playgrounds and schools promised ever be finished. Finishing a project in Central Oregon is rare.
One or instance 'Ironhorse' has developed lots, then they can be sold to investors or builders, which creates "CASHFLOW". For a low enough price this stuff can sell. I can only guess that Brooks paid very little for raw acreage up at 'Ironhorse' thus they can afford to go quite low in order to sell the lots.
A builder cannot do this, a builder is stuck with high cost of property that MUST be maintained.
I felt that the the above had to be said, that we were being told earlier NOT to pay attention to permits and approval. That to me is total BULLSHIT in my mind once you have broken ground, and have your permits the project is un-stoppable, unless of course your insolvent, but that is another story.
If brooks got the same low infrastructure cost that he got in Bend, e.g. $12k/home, then there will be margin for the builders to create a nice little crap-shack that can sell at a low price. There are a lot of first time buyers in Central Oregon that got left out. Actually lucky for them. Thus I see a lot of potential for the 25 mile radius of Prineville or 5+ miles east of Redmond becoming a low-income resort housing mecca.
Once again history repeats itself, first build 1,000's of homes, and then try to find money to build a city around it, this is probably why central oregon will always be poor, and will never attract real jobs, real people, or real children.
A couple of the better designed and capitalized 'destination resorts' will come on line and have modest success.
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You ask for comments how about elucidation.
Hollern/Brooks has NOTHING going on big right now in Bend, they're trying to ram-rod a HUGE Shevlin size development in behind Summit High School but that seems to be going no where with planning and council. There big projects right now are up in Madras and Prineville, but those have largely been reduced to selling lots.
Bauhofer/Tetherow is also been completely reduced to selling lots, all the infrastructure plans seem to be on hold, major hotel, condos, time-share,... It's now become Highlands@Broken-Top with a golf-course. Trouble is there are TOO many golf courses, most people up at Highlands@BrokenTop where they got 10 acres for $500k just 2-3 years ago think that what makes their gated community 'special' is there is NO golf-course.
Tetherow can hardly be considered to make it even to phase-I if all they have is a 9-hole course, and sell a few lots. The whole point was a major self contained resort city.
Bauhofer got $100M for developing Tetherow, he's at war with Brenneke and Broken-Top owners. It doesn't look like a good time add golf-holes to the region. That said thats what these guys do is add golf holes.
I think the model to look at his BANDON, note the same bend PR firm that runs Bandon runs Bend (DVA). Bandon 'golf' is VERY successful with a private airport, but they are a self contained city, with their own private airport for the rich.
Bandon is notorious for making the taxpayers pay for the private golf-airport. The only way Tetherow can begin to achieve Bandon like success is to have a world-class 18-hole strip and private flights to and from Bandon/Bend. Now how can we force the Bend taxpayers to pay for the private airstrip @ tetherow?
My point is-was here for YOU to name these Baufhofer and Hollern projects that were well capitalized and going somewhere. Both require borrowed money which is NOW dear and difficult.
In my mind the current activity in Bend is low-income housing, lots of it as quick as you can. The REIT for commercial are still doing fine, thus money is still flowing to those REIT-FUNDS that buy commercial and develop in Bend. That's going to be the BIG project in Bend for sometime. Outside of Bend its going to be low-cost low-income housing.
The golf thing has been way over-played, too many golf-resorts chasing too few golfers. With the loss of the HELOC very few can pay for maintenance, witness the war at Broken-Top and this is just one course. ALL 24 Bend area golf courses are in this problem today.
Tetherow might be different with DVA marketing it as comparable to Bandon, but the problem is Tetherow doesn't exist, its going to be several years and then what? Golf in a basin a few miles from Bend? It's not like being on the beach, note that Tetherow MUST be a world-class golf resort to even come close to Bandon as planned. People aren't going to want to drive from Redmond through the traffic and strip-mall canyons to get to a little basin golf-course with NO amenity.
With 24 area golf course resorts ( EDCO website ), what in the hell are these people thinking by adding more? Basically to get around UGB ( hollern/gray SB100 1972 ), you must have a resort to develop, and a golf resort is upfront the cheapest kind ), most of the guys are developers only trying to SELL LOTS as quick as possible. Long term GOLF maintenance always gets dumped on the HOA of lot owners, whether they golf or not.
In summary like the richest in Bend up at Highlands@Broken-Top say, "Sure glad we don't have a golf course, makes us special".
--TT
What is fascinating about the New Bend Post Septemeber 2007, is that we have gone from "rich" and beautiful people, Dubois, Breeze, ...
To poor, we're now going to build infinite low-income housing projects, all over the central oregon region.
My what a year makes, one year ago we were waiting for rich calis to come up on their horse and keep buying and buying. +1Million/home.
Now we're waiting for mexicans to come up and buy +10K homes for less than $100k/home.
What else would you expect? From a region that ONLY cares about developing, building,... target the rich, ahh it failed, now lets target the poor, doesn't really matter, the super-rich are still making money.
Who is really in charge here?
In the past we couldn't force the developers to pass real infrastructure costs on to the rich, how in the hell are we going to pass them on to the poor?
This is a recipe for huge scale failure in the long term, gridlock in traffic, sewage backflows, non-potable water.
What do you expect, everyone is highly-mobile, from out of town, there's a zillion building supply stores, contractors, that need to be kept busy. Hell we could in theory open ALL the land in central-oregon wide open sell it for $100/acre, and let them build, that would create the economic stimulus to keep those who control the region happy?
Where is all this really going?
What if the poor doesn't come to buy the low income housing out in the desert?
The rich never came, what came was hustlers hustling one another, they'll move on when the cash is gone.
What is the long term plan here? Boss Hogg Hollern Says we have no real people, real children, or real jobs. But this is his fruit, not likely this is NOT what was wanted all along. Non-Placement people highly flexible could just go from one new low-cost resort to the next, and always keep the sales up, which would please the banks. Pay no attention to last years resorts, always look toward the future.
Are we building a community or a locust colony? I really think that we're creating a highly-mobile non-placement-bound locust colony. That just keeps descending on the latest and greatest development. Which justifys bank-draws and cash-flow,... and keeps everything from stagnating.
--TT
>>We already know that many homes in NWXC are not finished, nor will never be finished, nor will parks and playgrounds and schools promised ever be finished. Finishing a project in Central Oregon is rare.
Curious about this. They are still plugging away there, building even as dozens of houses sit empty. The Parks have gone in as the houses have. High Lakes is obviously there (though woefully small compared to the potential, or even current, number of kids). Summit is obviously there (sporting its crappy athletic fields). There's commercial and retail space that is finding tenants. You can see they've already cut several new roads for the next crop of houses and condos.
I agree there's huge potential for it to grind to a halt, but it's clearly not going to be just a bunch of houses with no parks and no schools. So what do you mean exactly in the case of NW Crossing?
Over in Portland, Centex (natl. builder) is running their "12-Hour Sale" temporarily (we'll see about that!) reducing prices by $15-35K One Day Only!
They've been doing that in Sacramento and Socal for some time now (with bigger cuts) so it just confirms my thought that we are six months behind the country, as usual. I'm sure if you came back a couple days after the "sale," they'd be happy to give you the new, lower price.
I biked up at Tetherow last week, did the whole perimeter, you can get in from the old phils trailhead, just stay on the paved road after the gate, and following, and keep to the left and it will take you to the golf course. The green is just a a little area around a very large mud hole ( pond ), there can't even be two holes ready yet,
My guess is that it will be two years before there is even an operational golf course at Tetherrow, forget about a clubhouse, and other golf perks.
The roads are ready, the little lots are already you to buy, and pay cash, and then pay a local builder cash to build.
We're waiting,.. Bring your cash to Bend.
So what do you mean exactly in the case of NW Crossing?
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NWXC is going to be one of the largest low income rental projects in Bend.
Over 50% was bought on spec, and nothing is selling, someday some rich guy will buy the stuff at $150k/home, and it will finally pencil to be a profitable rental.
$150k, $50k down, $100k loan at 6% is about $800/mo, then you get $1k/mo, and the $200 pays taxes and insurance and fifteen year fixed, then you own it.
This is the future of NWXC.
Trouble is ONLY those in 2-3 years that have $50k cash can even play the game.
It's the end of the world as we know it, and I feel fine.
Normally I don't care much about the stock market, just plain boring.
Yesterday, one the boyz, most likely 'TT' the one that says he's a broker, inquired about CACB, Bend Bank of the Cascades.
Haven't heard much back, but given they're so tight with the bendbubble, its sort of fun to watch. Whats most interesting is large buys, besides insider trading.
Note the newest big buy > 5% of cap right now posted is no newer than march 30, of 2007. Thus we don't know who has been buying or selling in the last few months.
What we do is know interesting, especially given they lost +30% in the spring of 2007.
They're mostly owned by large mutual funds. That seem to buy and sell large blocks at random. One did catch my eye 'Mazama Capital', they sold a huge block back in the spring. Now that is an interesting play, here is a fund that only does long-term, growth, on a conservative basis. One of the finest funds of its type, basically bought by legacy rich folk who want to preserve longterm capital.
They dump their CACB.
My guess is they bought this stuff @10 a few years ago, and sold on the way down at 25 right about the time that all but the dead knew the bend-bubble was over.
The real question now is what kind of fund would even buy this stock or hold it?
We'll have to wait until the next batch of large block sales is released for july31,07, and then see who is buying and dumping.
This stock is 100% tied to Central Oregon RE, and all but the dead know that condos are dead, and single family. That said commercial is still HOT, if CACB can keep investment firms concsious of their commercial play, then they're safe, if there non-performing is too heavy on condo and single, then watch out.
The roads are ready, the little lots are already you to buy, and pay cash, and then pay a local builder cash to build.
We're waiting,.. Bring your cash to Bend.
I don't have any cash, but I'm going to invest in Tetherow and learn to play golf.
I'll buy a lot on nothing down contract, and then secure a zero-down, interest only, ARM from a good Bend MTG company, stated income of course to finance my home. Then I'll have one of the finest builders in Bend build me a mcMansion in Tetherow. I'll throw party's every night with the HELOC money that I make, and buy my girlfriends memberships at the club with HELOC money. I'll have Tempura Bacon catered everynight from the DEEP. I'll have Mike Fish personally deliver Beer to my door. I'll do all this without a job.
No need to work Bend, its a rich mans paradise. I'm telling all my friends about Bend, and they're moving here also, to live the life.
I love Bend, keep the easy money flowing.
Curious about this. They are still plugging away there, building even as dozens of houses sit empty. The Parks have gone in as the houses have.
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NWXC was all HAT and NO CATTLE.
25% + marketing, -25% house-quality,
Seven builders were selected, no better than any other in Bend,
Via marketing a mystic was created, and then the promise of 30% ROI forever for spec purchases,
Today, the new houses are just tiny little affordable housing,
Yes, the commercial is coming, 7-eleven, video poker, lotto, getting ready for the next wave of human locust.
>>Yesterday, one the boyz, most likely 'TT' the one that says he's a broker, inquired about CACB, Bend Bank of the Cascades.
No, it wasn't me, and I never said I was a broker.
It was CACBshorter.
I played CACB long, not short.
Shorting gives me a stomach ache. I shorted RITE-AID once and the damned thing would double every time there was a rumor.
Hate that game.
Sorry Guys I couldn't pass this one up, yes of course we all don't want to see harm to Bend, but I think that harm has been happening in the past five years.
1) People stop having babies,
(india,china,africa,...poor doesn't stop sex, it actually encourages it, rich people don't breed)
2) People stop immigrating from other countries,
(yes, our mexicans are going to solve the problem, I predicted this a year ago, yes the mexicans helped the bubble buying buying sill-plate RE from white-trash, the mex is NOT our cure all )
3) Land and houses become more expensive than in California,
( Bend will never be santa-barbara no matter how many PR, RE, marketing people we put on the city payroll - DVA )
4) We lose our tourist attractions, like snow and water,
( H2O in its various thermodynamic states is NOT why people have been blowing up the RE bubble. )
5) We start making more land.
( We have an infinite amount land, in fact that is essential are downfall in the RE speculation racket, we're surrounded by an infinite desert )
At the end of the day 40-60% of the masses will own their own home, and they'll pay what they can afford which is 4X of household-income, which now is $40k, what it will be 2-3 years I cannot predict, but given with certainty that we're headed into one of the most major economic credit-crunch since the great depression I can with confidence that its highly likely that +25% of the public will be out of work. Given that SO many of Bend's good jobs are government, but with NOBODY to tax they'll be let go. PERS will go un-funded, a lot of things are going to change.
Folks its really time to study the great depression in detail.
It was CACBshorter.
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I hope he's happy, today at 10AM their stock dropped 50 cents in a minute, somebody dropped a large block of stock.
We'll not know until xmas, who it was that called the SELL order.
let's talk about BIG LIES, over on BENDBB, theres a realtor saying "Call countrywide they'll give you money".
Yes CALL country, sit on the phone, lie to them, make sure you own a home and have perfect credit, and then make them EMAIL you a GFE ( good faith estiate of close ). I did this last week with ALL the majors and Bend MTG's.
What I got back was CONSISTENT, my credit is 800+, the lowest I can get is 6.73% 30, and 7.5% jumbo, now here is the crux, ...
The closing costs were $8k/100k across the board. They ALL wanted 4% pts just to get the advertised loan of 6.75%, thus 4pts is now are zero base point, the reason that 'points' has skyrocketed is to pay for risk, then the other $4k/100k was fee's.
For a $200k REFI, I was quoted almost $16K from everybody I talked to once I forced them to email the GFE, note on the phone they all said "NO closing costs", ahh but there are fee's, when you force then to produce a GFE they have to put ALL the little tricks on the table.
Then you also have to have a large down, my hypothetical REFI I was running on them was a house appraised at $400k and I told them $200k REFI, thus it would have been a 50% down, perfect credit.
I told them to take a leap, as I wasn't going to throw $16k in the toilet today to reduce payments.
Note the OLD rule-of-thumb was 2% drop in interest was a good reason to REFI, but now with these astronomic points&loan-fees I think the new threshold should be 6%.
In summary, you would have to be a complete MORON right now to get into a REFI or a loan, there are so few people that can qualify, and so few deals closing that MTG is simply fucking everyone to make what nickel they can.
Just heard today from a friend that the lady he is renting from just gave the keys back to the bank. She also "owned" three other houses all of which she also gave back to the bank today. Look out below!!!
I did this last week with ALL the majors and Bend MTG's.
Good info...
This is getting old, and the SORE will do what it can to divide and conquer, ...
M37 got voted, and M49 will probably pass, WHY? Money, there is BIG money behind M49.
Why because M49 lets you transfer development rights to a third party, something that M37 doesn't let you do.
Thus the BIGGEST and richest folk in Oregon, will be behind the passage of M49, including the people who own the SORE.
"Both the large builders and investment bankers had incentive to put lipstick on pigs."
Yeh, right here in Bend we have Brooks and CACB. A lot of money was spent on a lot of lipstick in Bend.
This is an excellent read for those who haven't been following the blog.
When Trust fails, Credit Markets collapse
By Professor Peter Morici, Robert H. Smith School of Business, University of Maryland
Aug 23, 2007, 02:17
Peter Morici is an economist and professor at the Robert H. Smith School of Business at the University of Maryland. He is a recognized expert on international economics, industrial policy and macroeconomics. Prior to joining the university, he served as director of the Office of Economics at the US International Trade Commission.
The Pope and Ben Bernanke* both rely on a higher force to motivate millions. The Pope relies on faith in the Resurrection, poor Ben depends on the credibility of the bond market. The latter, ultimately, rests on the integrity of investment banks and bond rating agencies, and those have proven faulty.
Back in the days of usury laws and regulated interest rates for savings accounts, mortgages were fairly straightforward. You went to a savings and loan, it checked your credit, purchased an independent appraisal, and gave you the money. Either the bank held the note, or sold it to Fannie Mae or perhaps an insurance company. The bank serviced the loan--it collected the payments, administered the escrow account and foreclosed if things turned sour. The bank loan officer had a strong incentive to be certain that the loan application was accurate. If not, it would come back to him.
Today loans go through complicated chains. Many more do not qualify to be sold to Fannie Mae, and many never pass through the granite confines of a community bank. Often an agent hanging around the real estate office takes an application, and forwards it to a mortgage company, who may or may not be his employer. The mortgage company processes the loan, and sells it to an investment bank, or similar entity, that bundles mortgages into bonds. The investment bank sells those securities to hedge funds, pension funds, mutual funds, and other investors. As mortgages vary significantly in quality, mortgage-backed bonds are rated by Standard and Poor's and other rating agencies.
At each step along the way, information can be lost and temptations build up to understate the risk of default. The agent gets a big fee for writing the loan only if it is approved, so he puts the prospective homeowner in the best possible light and finds an appraiser who aggressively values homes.
Mortgage companies get their cut from origination fees and are able to push off the risk of default onto the ultimate purchasers of the bonds. Hence, they are inclined to be lenient with agents.
Investment banks earn money on the spread between the interest rate charged borrowers and the interest rate on the bonds. The less risky bundles of mortgages that go into bonds appear, the lower the interest rates on the bonds and the more profits the mortgage bankers receive.
As we peel this onion, we are finding many purposeful compromises that look much like the insidious corruption that characterizes commerce in places like China. Just as China exports tainted toothpaste, Wall Street manufactures bad bonds.
But it gets worse. Large builders established mortgage-writing subsidiaries. When they built more houses than the market could absorb, those subsidiaries exaggerated the incomes and qualifications of buyers on loan applications, and pressed for exaggerated appraisals of their properties to move houses. Those entities operated on lines of credit and resold the loans to investment banks who bundled them into bonds. Both the large builders and investment bankers had incentive to put lipstick on pigs.
Also, investment banks sought and received collaboration from bond rating agencies in bundling mortgages of differing quality into bonds. In the process, bond raters like Standard and Poor's got compromised.
Subprime mortgages are hardly the whole credit market, but the meltdown of their bonds cast a spotlight on the decaying integrity of investment banks and bond rating agencies. These institutions underwrite and rate all manner of credit, and if they could be corrupted in the subprime mortgage market then all commercial paper and bonds becomes suspect.
Over the last several weeks, creditors have increasingly sensed they can’t trust banks or bond rating agencies, and they have fled to short-term Treasury securities. This was much worse than the collapse of mortgage companies that originated housing loans, because it caused all segments of the credit market to collapse. Good businesses with sound cash flows couldn’t borrow operating capital, and good companies faced escalating interest rates for new bond offerings. Together those threaten to throw the economy into recession.
For Ben Bernanke, the corruption of the investment banks and bond rating agencies is terrible news. It is akin to the Pope learning Easter morning was a hoax.
*Ben Bernanke is Chairman of the US Federal Reserve.
Girls, this is BAD news, every fucking chinese in the world is now going to be selling anything marked 'usa'. The end is fucking near.
Bank of China Shares Fall in Hong Kong on Subprime (Update2)
By Luo Jun
More Photos/Details
Aug. 24 (Bloomberg) -- Bank of China Ltd., the nation's second-largest, headed for its biggest drop since going public last year after disclosing almost $9.7 billion of securities backed by U.S. subprime loans, the most of any Asian company.
The shares fell 5.6 percent to HK$3.86 at 11:10 a.m. in Hong Kong after earlier plunging as much as 8.1 percent. Bank of China raised $11.2 billion in an initial public offering in June 2006. Hong Kong-listed shares of larger rival Industrial & Commercial Bank of China Ltd. also fell.
``Bank of China disclosed numbers that no stockholders wanted to hear,''
Why were people buying CDOs when they knew they were garbage?
http://bigpicture.typepad.com/comments/2007/08/cdo-insiders-we.html
http://tinyurl.com/3xcfwo
Why were people buying CDO's when they knew they were garbage?
*
Why were people in Bend buying homes at NWXC?
Why did the sales people up @ NWXC on behalf of Brooks tell ALL prospective customers that the homes would appreciate 30%/mo forever, and that RE never goes down?
Why do people act like lemmings? Why is ALL of Wall-Street essentially a hoard of locusts behaving the same?
Because this is always the safe thing to do, to imitate those that are around you.
Not following masses, is a lonely life.
To answer your question, what has happened is that everyone was printing their own money.
EVERYONE, was printing their own money.
Get a few MTG's bundle them into a bond, get S&P to stamp 'aaa', and then it becomes paper-cash, pool it with 10k similar bonds and it became a CDO/CMO tranch, pool even more and they call it a hedge-fund.
Almost a 1,000 trillion dollars of CDO's have changed hands the past 20 years, think about this for a SECOND, that is 100's of BILLIONS of commission dollars.
Much of this money goes straight to our politicians. EVERYONE was making fucking money.
I hope this answers your question.
Nobody FUCKING cared, the underlying money is PENSION-MONEY, traders trade, and they always get paid by commission. Only the pension holder gets fucked when he finds out his pension is worth penny's on the dollar.
I guess your real fucking question is why did the pension holder allow this for the past twenty??
The reason is fucking greed, every old fart wanted his/her god given 10%/yr, now they lost their principal. Is everyone happy now?
It will be interesting to see how this all plays out. I'm doing fine financially, never been better. This crunch has no affect on me so far since I'm a tech worker and the company I work for isn't in any way tied to Bend's local economy.
Below NPR report is cute, valentine the pessimist, and a mention about easy MTG money, yes its easy, but you would have to be an idiot or desperate to except the current MTG costs to close.
http://www.nhpr.org/node/13658
But Bill Valentine is the President of an investment firm in Oregon. He's also very bearish on the real estate market there and nationally.
(Valentine) :15
“Real estate nationally is going through its biggest contraction in over 30 years. And I don't think that's being disputed by anyone at this point, and clearly there's more to go on the downside.”
Valentine even tried to sell his own home in Bend, Oregon, but missed the market peak in the real estate recession that continues.
But one New Hampshire banker said that falling prices will actually help create opportunities, ultimately. He's Jay Gibson, President of Piscataqua Savings Bank in Portsmouth.
(Gibson) :12
“There is value out there right now. There has been an increase in the inventory of properties on the market, so that's going to bring opportunity. Rates generally are still relatively low.”
Gibson says that his bank receives calls from people asking if there is any mortgage money out there.
(Gibson 2) :12
Yeah. China is sucking a funky egg now. Expect Europe to get pissed when more of their banks admit to being duped by American mortgage paper...
http://www.reuters.com/article/reutersEdge/idUSN2343968420070823
http://tinyurl.com/2z347k
"It will be interesting to see how this all plays out. I'm doing fine financially, never been better. This crunch has no affect on me so far since I'm a tech worker and the company I work for isn't in any way tied to Bend's local economy."
That may be true - that's the position I'm in too - but if consumer spending goes down, businesses cut back, as a result of this, then we may both be affected also. In my book right now, cash is king.
yeh, I think the tech economy will be hosed.
Most is gone from DOT-CON, pretty much a lot more after 911, there is still a little niches here and there. I think these 'remote' telecommuters in Bend are in for a real surprise, that said MOST that I know are wall-street tele-commuters, and I think those folks are going to be very surprised.
Sure theres a few symantec, and nortel; security, virus-patrol, ... when spending plummets, watch out. Things have from my point of view, have gone on complete hold since July 07.
People don't like to lay people off until late, but right now corporate spending has STOPPED, just a wait a few more months it will start hitting folks where they sit.
The war machine and its ancillary, is the only thing I think you can be sure of.
The Chinese thing is big, because in effect Hong-Kong is efficient, thus down the line we're going to see pain in Mainland, and Japan, and every other place thats holding this FUCKING TOXIC PAPER.
It ALL SAYS "USA" stamped all over it, "MADE IN USA".
We're completely dependent upon asians for all our WALMART crud, and guess what now they're going to want gold or an equivalent.
Anything that says "made in usa" now means your a sucker, that likes to get screwed, and the USA has screwed the world big time, and theres NO way they can cover it, Like I have said earlier today, this shit has been going on for 20+ years, its only most recently that the toxic paper got out of hand.
Compare it like this "How did you know when to get out of the stock market in 1929?, when my shoe-shine boy told me to buy stock".
Well this play is the same shoe-shine MTG companys have been selling toy-paper to the INTL community, and its going to take a long time to unwind all the shit from the shinola.
Everybody and his dog has been issuing 'AAA' paper and getting a moody and S&P stamp. Now a lot of this paper is worth NOTHING.
Take out the asians, and europeans and the USA has nobody to fuck, ah they can fuck the arabs, but most of them are dead.
For years people have been predicting that the world would put a wall around the USA, the time is near.
Cash is King
*
Where under your mattress,
have you been watch wash-mu closely they're almost hosed, going going gone,
bank-holiday soon,
come late September when grandma finds out pension cash is gone and non-redeemable, many folks are going to pull out of the banks
Thus your cash had better be in the mattress and not at wa-mu, golds note safe because people are already dumping it to get cash,
Its a good time to know lots of mormons and be their friends, as they have two years of food in storage by law,
The smartest knew that money maarkets are not caash. The most alert are finding out now. Some won't know until they get the weirdest bank or brokerage statement they've ever seen.
Talked to a guy the other day who had had customers in CFC bonds. He was making those awkward calls... Lost about half your money there in that AAA bond, old lady. Want to sell it or hold it?
yeh, I think the tech economy will be hosed.
The company I work for had the best quarter it's had since the dot-com boom. We are hiring like mad and sell to clients all over the world.
No, not everyone is screwed, nor is the sky falling.
The smartest knew that money maarkets are not cash.
*
I remember 10+ years ago some idiot asked Greenspan where he kept his money and he said "Tbills", and everybody just starred ...
The thing that people seem to forget is that the game has always been capital preservation, NOT high income on capital.
Folks road the wave from 1978 until 2008, and now they're going to pay the piper, I know that the past 20+ years I have been quite happy to get 3% on my money, knowing that I had no chance of losing.
Just like our RE says that NWXC returns 30%/yr forever, everybody believed that they were entitled to 10%/yr forever no matter who you gave it to, they have a word for it a 'ponzi-scheme', trouble is now that the WHOLE USA investment portofolio other than US-NOTES is ONE BIG PONZI scheme.
No where is safe, outside of the t-bill, of course like they used to say, as good as the US government. :>
. We are hiring like mad and sell to clients all over the world.
*
Without being specific what do you sell?
Personally I think we have a fictitious Pollyanna here, especially if they cannot even mention the industry.
Most of ALL industrys are going to go down, the liquidity crisis will effect all, except those who produce bullet-proof vests for the government and the bankers, I agree there are some ventures that will do well, ... like locks, guns, ... I'm sure NOSLER is ramping up right now for those new civilian depleted-uranium rounds, ...
>>Personally I think we have a fictitious Pollyanna here, especially if they cannot even mention the industry.
No reason to think he's a Pollyanna. Tech has been on an incredible roll.
Whether you think it continues or not is another issue. Doesn't mean it hasn't been rocking up to now.
Ultimately, tech can't roar ahead when the rest of the economy is crap. Sure, maybe videogames can, but that's more entertainment than tech. Most tech industries work best when the overall economy is doing well. When there's a spike in the economy, tech is like a multiplier.
As entertainment moves onto the internet, Cisco and EMC and Corning will do well.
Mr. happy-tech is ignoring something, though. He's "unaffected" by the housing malaise. He'll feel affected when shopping and restaurants go out of business. He'll feel affected when neighborhood houses sit empty. He'll feel affected as panhandlers bug him outside bars. As emergency rooms fill up with kids that don't have insurance.
Sure, maybe videogames can, but that's more entertainment than tech.
*
Games is funded by mom&dad, when they quit putting out for $49 games, watch out.
Besides, the game industry is notorious for low wages, and our mr. ficticious, is making a ton of money, thus he/she is NOT in games, ...
How about legal? Good for a while, but when everybody is broke??
How about CPA, ok for bankruptcy's that leave meat on the bone, ...
Most service is this way, ...
Let's review the great depression, only 25% were unemployed, yet it effected everyone. Say your the only guy on the block that makes a bowl of soup that night, ok you better be ready to help the line out out at your door, otherwise they'll collectively eat their golden-goose. ...
I personally think this was why the gated community of bend is such a big deal.
>>I personally think this was why the gated community of bend is such a big deal.
Gates work when everyone has cars. These golf communities have giant perimeters. They aren't like the gated communities (san golf) that I marveled at as a kid.
You can just walk right into Broken Top. They'd need regular patrols to keep away the riff-raff. And that's more than one or two cars. It's probably more like 6. It's a lot of space to cover.
If things got rough and Broken Top has a few incidents, I wouldn't be surprised to see a real fence around the place.
As part of the Broken Top development land use approvals, the requirement that the bike paths be open to the public exists. Anyone is welcome to use the Broken Top bike paths. Same is true for Tetherow. The only place where the paths seemed to be closed to the public is Cascade Highlands.
About 3-6 months ago a couple drunks in a jap-jeep did $25k damage @ Highlands@Broken-Top, which is what I think your talking about when you say "cascade highlands'.
Phils-Trail has a right of way through Highlands@Broken-Top, but NOBODY is allowed on the walk-ways.
There are several ways to ride a bike through Broken-Top, which is like SunRiver.
Even SunRiver you have to have a permit to legally use the bike paths, in years past their were 'BLUE-SHIRTS' riding around writing tickets if you couldn't prove you belonged.
The damage at highlands@broken-top, was basically they rammed the gate until they could lift it, once inside the ran down dozens of streets signs, 25k damage in one hour, all caught on video, cornered by private security, and arrested by bend police.
Gated Community's will keep the haves from the have-nots, the thing to watch for is the security-guards the fastest growing job in Central-Oregon, all major outfits ran out of Redmond.
Rent-a-Cop they'll have a job, but I think this is going to be the major 'mob force' here when its the last man standing and one 'pinkerton' has it all.
What about our 'pollyanna high-pay' did we ever find out what he does?
Things aren't even bad yet, we're just the first year into a 5+ year down cycle. It's good to hear that there are people in Bend resistant to economic collapse.
Like somebody said, when your the only guy in town that can afford gas, watch where you park your car.
>>What about our 'pollyanna high-pay' did we ever find out what he does?
Doesn't matter--yet. Right now they are all kicking ass. I know dozens of these guys in Bend. Business is great.
But when the economy goes into recession none of these jobs will be safe. Telecommuters who work for a company are endangered when the economy goes down. Out of sight, out of mind. And lots of these guys fly for meetings. Travel will be cut. And if you're a consultant, business can dry up.
Really good people can get through the hard times, but the marginal will be left to hang.
Yeh, I know a few of these 'personality consultants' in Bend, these guys fly all over the country and get un-popular things done before the locals, sort how folks come in here and get the growth debate to be only "smart growth", paid for by Hollern.
Today, these guys are NO longer getting six figure incomes, and nobody is calling them, ....
I agree with 'work at home' telecommuters, it makes it real easy to lay them off, because nobody sees the pain at corporate.
Also via proof of concept if they can work online in Bend, then you know theres a $5/day guy in Bangalore that can do it, as long as corporate knows he doesn't have to be at the office why pay for johnny-whitebread in Bend?
I think all these 'telecommuters' are in for a surprise.
Let's review the 1983+ crash, Oregon was in shit, but the IBM-pc had just came out, and if you could use your house as collateral, you could start your own biz, by buying an ibm-at for $6k, and make a ton of money.
I just don't see any kind of entrepreneurial think today, in fact I see more & more of the HOT shit in Europe ( skype,... ).
This is why I honestly ask when people say "I make a ton of money in Bend, and always will", I'm curious, not in the competitive sense, because I'M DONE. I just like to know whats hot, ...
I think whats hot in bend will be ...
1.) law enforcement
2.) Rent a copy
3.) security
Again, it all goes back the great-depression, only 25% were out of work, but it sure caused a lot of pain for everyone.
Yes, Bend is still booming, busy-busy, only the realtors have been hurt bad, of course title and MTG are dead and dying, ... We all know that 80% of US economy is the consumer, and with HELOC gone, and negative savings rate since 1998. Theres NO way in hell that across the board we're not going to see a complete drop in income for MOST people.
Sure a few lawyers will make money on good days, and a few cpas, eventually even the doc's and dentist will have to renegotiate service fee,...
Again, I'm curious so please all tell me what's HOT, and will stay HOT????
Alcohol, Porn, Lotto, ... movies were real hot during the depression
Another thought...
bend has lost a big advantage--being "cheap." The local head of Sony said they used to be able to draw people because you could make a good salary and live in a cheap house. He said in an interview that the recent hires over the last year have not bought houses. That makes them a bigger flight risk. Bend's housing boom has therefore hurt Sony here. That obviously puts the whole operation at risk.
So, yeah, the boom here helped some people, but it ruined a lot of mid-sized business models. Hard to convince someone to come off the beaten track. It's harder now.
With single-family homes, "you put up a couple of model homes and build the rest as you get sales contracts." says James Haughey, director of research at Reed Construction Data in Norcross, Ga. "But you have to build the entire...building before you can sell a single condo."
*
Condo sales are not following through, all these nice building's and the 'buyers' are walking from their $500 earnest.
Commercial Condo Funds are in a world of hurt.
Mrs Breeze, Dubois what are you going to do? All these Bend condos all dressed up and nobody to blow?
*
Condo Troubles
Further Squeeze
Property Lenders
Full Force of Glut Is Felt
As Buyers Back Out;
'More of the Iceberg'
By ALEX FRANGOS
August 25, 2007; Page A1
For the nation's real-estate lenders, the other shoe may be about to drop: condominiums.
Already plagued by rising home-loan defaults and foreclosures among overstretched consumers, major markets across the country -- including parts of Florida, California and Washington, D.C. -- are seeing rising foreclosures and bankruptcies of entire condo projects.
[Flodding the Market]
The problems are emerging as some buyers who signed contracts to buy new condos two to three years ago, when construction was just starting, seek ways to back out as they encounter trouble getting financing in the suddenly dicey mortgage market. Falling prices are forcing appraisals down, so banks aren't willing to lend the full amounts that people committed to in the sales contract.
"Closings that are scheduled to take place are not taking place," says Marvin Moss, a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts.
The condo market, while tied to the housing market overall, behaves differently under stress. While a single-family home builder generally constructs units as orders come in, a condo developer builds all at once and hopes for the best, adding risk. So while the speculative overhang of newly constructed single-family homes may have peaked in many markets across the country, the full force of the condo glut is starting to hit now.
With single-family homes, "you put up a couple of model homes and build the rest as you get sales contracts." says James Haughey, director of research at Reed Construction Data in Norcross, Ga. "But you have to build the entire...building before you can sell a single condo."
In 2006, the number of new condominium units completed jumped 145% to 102,800, from 41,900 in 2003, according to the U.S. Census Bureau. Last year was the highest level since 1985, when 135,800 units were built. So far this year, 48,354 units have been built and another 72,000 are under construction, according to New York research firm Reis Inc.
Downtown San Diego can expect 2,900 new units to arrive on the market in the next year, according to real-estate investment brokerage Marcus & Millichap. Hessam Nadji, a managing director at the Encino, Calif., firm, estimates it will take as long as 18 to 24 months for the most-saturated markets to buy up the glut of condo inventory -- if the economy overall stays strong.
Miami is in worse shape: The city added 4,549 condo units in 2006 and 3,276 so far this year. Another 7,985 will be delivered by the end of the year, with another 8,260 slated for 2008 to 2011, according to Reis, for a grand total of 24,070 news units between 2006 and 2011.
"More of the iceberg is being revealed, but we haven't seen it all yet," says Norman Radow, an Atlanta real-estate investor who works with lenders to rescue distressed condo complexes.
MORE
• Complete Coverage: Debt Dilemmas
Typically, condo developers are required to pay off construction loans shortly after construction is completed. But with sales stalled, more developers are defaulting, creating headaches for banks and real-estate funds that financed the projects.
The percentage of bank construction loans overall that are in default has risen to 2.3% in the second quarter of 2007 from 1.0% at the end of 2005 . "Condos are a significant share of defaults and delinquencies going on," says Matthew Anderson of Foresight Analytics, an Oakland, Calif., research firm. His analysis shows condo lending ballooned to $31.3 billion in 2006 from $8.4 billion in 2003. These figures don't include the large amounts flowing into condos from hedge funds and investment banks.
One of the biggest condo lenders, Chicago's Corus Bankshares, has seen its $3.7 billion portfolio of condo loans deteriorate. The value of the bank's nonperforming assets has skyrocketed to $242 million in the quarter ended June 30 from $620,000 a year ago. The bank continues to be profitable, and made three new condo loans worth $400 million, though it predicts darker times are ahead. "It would not surprise us to see an even greater impact on earnings over the next several quarters, or even years, depending on when the market improves," Chief Executive Robert Glickman said in a note to shareholders.
The failures so far have been concentrated among developers that bought land -- or existing rental apartments to convert to condos -- at the top of the market in late 2005 or early 2006. The worst collapses have so far involved condo conversions. Developer Triton Real Estate Partners of Annapolis, Md., bought a Rockville, Md., complex known as the Pavilion in November 2005 for $117 million, with plans to pump in $30 million to upgrade and sell the units. There are 434 units, so the average price it paid was $271,000 a unit. Triton changed the name to the Monterey and offered the one- to three-bedroom units for $300,000 to $500,000.
The sales didn't materialize and Triton failed to pay its lender, CBRE Realty Finance of Hartford, Conn., which foreclosed on the property in May. With the sales market on the rocks, the lender had to write down the project's value by $7.8 million, forcing the company to record a $4.6 million loss in the second quarter. The commercial-property lender, incorporated as a real-estate investment trust, has stopped making new investments and almost missed a $17 million payment on a line of credit from Wachovia Corp. It hopes to restart the sales program at the Monterey complex shortly.
Triton and CBRE declined to comment.
Buyer's remorse is also causing problems for some developers. Cindy Cicala plunked down a 10% deposit on a $370,000 two-bedroom condo in a new project in Tampa, Fla., in August 2004 -- a time when investors were elbowing each other aside to sign contracts. The site was particularly attractive to Ms. Cicala because, in addition to superb views, her unit was to be finished by August 2006, making it one of the first high-rise residences to be built in the city's reviving downtown.
But in April, 2005, the developer asked for an extension. "It was just one delay after another," says Ms. Cicala, a 51-year-old residential-mortgage broker. She decided she didn't want to close on the condo, claiming the developer hadn't held up its end of the contract. Ms. Cicala says she asked for her deposit back but hasn't received it, so she sued under a federal law that guarantees condos must be delivered within two years unless the developer can prove certain extenuating circumstances.
Her attorney, Harry Lee Coe IV, says Ms. Cicala and other clients "are seeing their investing potential has dwindled, and they are now no longer at the front of the pack -- and you don't want to be in the middle of the pack in a bad or down market."
Left holding the bag amid the defaults and foreclosures are the banks and real-estate investment funds that lent money to people such as Farbod Zohouri, an Atlanta developer who took out $300 million in loans for more than a dozen projects in 2005 and 2006. Within a year, all were foreclosed or had filed for bankruptcy protection.
In a sign of how widespread the condo frenzy was among lenders, Mr. Zohouri's financing sources ranged from tiny local banks to Lehman Brothers, which lent him $180 million for two Orlando condo-conversion projects that flopped. Several commercial banks lent him money for five projects, despite his relatively small operation and spotty track record, which included a settlement with the federal government on mortgage-kickback allegations.
Mr. Zohouri, who goes by "Fred," says he is "an honest person" who is working hard to get his investors' money back. He says because of possible legal actions, he can't explain exactly what went wrong.
Underlying the defaults was a loosening of lending standards. In the past, wary of the high risks posed by condo sales, lenders such as commercial banks would give money to condo projects with the understanding that if the condos didn't sell, the developer could rent them and still repay the loan. That would limit the amount banks would lend, because the cash from renting units is slow and steady and can cover a smaller amount of debt than the amount generated by selling all units within a year of completion, as most condo projects aim to do.
But in the latest boom, a host of nonbank lenders began throwing cash at condo projects, allowing developers to pay prices for land and buildings such that they could pay back the loans only if the units sold at high prices.
Mr. Radow, the Atlanta real-estate investor, says troubles in the condo market stem from the proliferation of new players in the real-estate finance world, many of whom never went through bad times. Before the condo boom, there were only about a dozen major sources of equity or mezzanine debt, the riskiest -- and potentially most rewarding -- parts of real-estate finance. In past five years hedge funds, real-estate funds, private equity and community banks all got into the act.
"Who are managing all the funds?" Mr. Radow asks. "Where did all the real-estate experts come from?"
I've seen some business condos around. I guess the idea is you own your office space instead of renting it. Not sure what I think about that.
Sure, you don't have to worry about the owner kicking you out. But getting kicked out is a bigger deal to a retailer than to someone who just needs a desk and a phone.
it ruined a lot of mid-sized business models
I would say it's wrecked business models of all sizes. iSky is doomed. So many blue-collar type places are doomed. This will be a transformed place in a few years. Either prices implode & blue-collar gets it's heart re-started, or it's all over... then just restaurants, galleries, and geezers. All at $7/hr.
iSky is customer service, right? I imagine that works best in places with reasonable housing costs.
Bend is Aspen. We don't need no jobs, we're all rich.
Either prices implode & blue-collar gets it's heart re-started, or it's all over...
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It's never over just last year the BULL was showing tearing eyed story's everyday about Redmond couples that couldn't afford a home in Central Oregon.
Now the folks that couldn't afford, are looking smart, especially if they squirreled away a little %5 down.
In 3+ years the smartest people around are going to be the ones who said "I waited after 2002+ for the prices to come down". The dumbest ones will be those that bought 2002-2006, we call them folk foreclosures.
The call center thing isn't doing well in Medford either, DELL just dumped a ton folk. Anything that can be done in Oregon, can be done in Bangalore or Tianjin.
It's the same with Les Schwab, the only reason they have for wasting ALL that money to move to Juniper Ridge is to cut the commute for Brogman. A total waste of stock holders money. Not a smart move.
Moving a mid-size or bigger biz to anywhere in Central Oregon is not a smart move.
The slow years ahead will be no worse than the hard years of 1983+ for logging family's anywhere in Oregon.
Prices are imploding, they have already imploded. Sure the 'median' is hanging, but you can buy all day long now for under $300k near downtown, and a year ago everyone was asking $450k+. We'll be down below $250k by xmax, and $200k by next spring.
Long term is another story, if you really think that blue-collar folk need to own a home? Note historically home ownership for working class was NOT the rule, its a new idea. Look at the all the Mill Houses in Bend and Crescent, those were for the workers, not the owners.
Home Ownership got almost to 70% highest in our history, it will probably go down to low 60% or lower, and may not come back, why? You yourself have pointed out many times that Home Ownership is NOT really a good investment.
One of the thing I have stressed over and over in this forum is the small mill house of 1000sqft, or about 250sqft/per-person, thats another story, but these mcMansions for blue collar we have been seeing. Thats over. Hell we have passed peak-oil, soon most working folk will not even hardly afford gas-heat in the winter for anything over 1000-sqft whether they own or rent.
Once people see that houses no longer appreciate, unless your in for the long haul what will be the point of ownership?
Then there is the baby-boom issue, millions dumping their home, there are millions of kids today that will never be able to spend money like their parents generation.
Over a year ago, here is a little story a lot of our favorite names are here, iSky employees barely make enough to keep their trailer in a trailer park. Rich guys buy trailer parks and evict them. The high-cost of Bend as Aspen. This is a good read from April 2006, how much as changed, six months prior to the peak. Condo buying at peak, all in Bend to become millionaires. Now most are going to be like the family depicted in this story.
The Dark Side of the Real Estate Boom
Mobile-home tenants evicted after land is sold for pricey homes
RISMEDIA, April 27, 2006?(KRT)?The dark side of Bend, Oregon?s real estate boom filed patiently into City Hall Monday night, looking for help.
Any kind of help.
There was Dan Hayward, a computer technician, and his wife, Rebekah, carrying the youngest of their five children, 8-month-old Brooke.
They have two weeks to stay in their double-wide mobile home before they’re evicted from the land to make way for new housing.
There was Patty Allen, a home health care worker. She and her disabled boyfriend and her 14-year-old grandson have a little longer — a bit less than a year — before their home faces the same fate.
Among the 100 or so others who packed City Hall was Nate Lund, the soft-spoken retired college librarian who is trying to organize the city’s remaining mobile home tenants before they, too, find themselves with the choice of uprooting their homes or leaving them for the wrecking ball, forcing them to search for other options in the city’s increasingly pricey neighborhoods.
For the poorest residents of Bend’s 30 manufactured home parks, Lund likens the current loss of mobile home spaces to “an economic Katrina.”
Unlike most homeowners, mobile home owners generally don’t own the land under their own homes. Instead, they lease space from a park owner.
Until, that is, the value of the land rises to the point where it’s more valuable as a site for expensive housing.
In Oregon, if a mobile home park is sold, the tenants have a right to $3,500 in compensation from the park owner if they are given 180-day notices to move their homes. But if the landlord gives them a year’s notice, they are owed nothing.
The problem, Lund noted, is that many, if not most mobile home owners can’t afford the $12,000 to $17,000 it would cost to move their homes to another park, even if there were vacancies — which there aren’t.
Many face the stark prospect of abandoning their homes altogether, even if they still owe money on them, while they search for some alternative that’s as affordable as the $300- to $350-a-month lot rents they pay in the parks.
That’s not an easy task. The Central Oregon Regional Housing Authority uses a lottery system every month to distribute its limited supply of Section 8 housing vouchers, which give low-income people money for their rent. Each month, about 450 people apply for roughly 15 or 20 vouchers.
Other options aren’t much better. CORHA’s Ariel South and North apartment buildings in east Bend have about 20 vacancies between them, Cook said. But they are only open to people who make less than $34,680 for a family of four, and the rent is $550 a month for a two-bedroom apartment — more than many pay for their mobile home rents.
“The people in New Orleans lost their homes to rising water and we could lose our homes to rising land values,” Lund said last week. “The devastation is the same, the way we see it.”
The devastation, as Lund terms it, has grown increasingly worse in recent months.
Of the 1,885 mobile home park spaces listed in Bend in June 2005 by Oregon Housing and Community Services, the agency that oversees the state’s mobile home park housing rules, at least 243 spaces in three large parks — 13 percent of the total — are under eviction notices to make way for new developments.
–At Juniper Hills Mobile Home Park at Brosterhous and Murphy roads — once the site of 108 spaces — the handful of remaining residents, including the Haywards, have until May 1 to get out. In its place, work will start this summer on a new subdivision with 161 new $300,000 to $700,000 homes.
–At Cascade Mobile Homes on Reed Market Road, the residents of 53 spaces got one-year notices to vacate in November. Ryan Peters, a principal in Oikos Development LLC, said he and his partners aren’t ready to discuss their building plans yet.
–At the Parrell-Sisters Mobile Home parks on Parrell Road, the residents of 82 spaces got their one-year notices to leave in March. Ron
Meyers, managing partner of the company that’s developing The Shire, an English cottage neighborhood on neighboring Benham Road, said the company eventually hopes to build around 70 new homes on the 13.5-acre trailer site. Homes on the existing Shire site are expected to go on sale this summer for $400,000 to $800,000 apiece.
At the average occupancy of 2.3 people per mobile home estimated nationwide in 2002 by Foremost Insurance Group, a manufactured home insurer, the Bend evictions are displacing around 559 people.
It’s a situation that’s driven by money, but the developers who are closing the parks say they’re not happy about it either.
Meyers said his company, Butterfly Holdings LLC, bid on the Parrell-Sisters site after another buyer beat him to some empty land to the north of the 6.3-acre Shire. The price of the parks, according to county records, was $5 million.
The Shire’s project manager, Steve Colburn, said he spent a month researching space availabilities for the tenants and alternative rental housing.
There have been a few transition successes — one of the park’s 80-year-old residents might be able to get into a low-income assisted living center, and her government support may rise because she can ditch the mobile home that counted as a $7,000 asset.
If other tenants ask for advice on alternative housing, Meyers and Colburn said they will give it. Otherwise, the residents are on their own to find new situations.
“There is a human side that hates to see any suffering occur,” Meyers said, “and I’m sad about the whole condition there that needs to be served in some way. But if we hadn’t bought it as The Shire, somebody else would have bought it. And I think we’re doing a good job of stewardship of it.”
Darrin Kelleher, the developer who will subdivide new lots at Juniper Hills, said he would support some kind of government-mandated monetary transfer between park owners and their evicted tenants because the cost could be factored into the price of any land deal. But the economics that are driving developers to buy parks likely won’t subside as long as developable Bend land is as scarce as it is, he said, and the parks that have been bought for closure likely won’t be the last.
“You’ve got to feel for these people,” Kelleher said. “We bought the piece because it came up for sale. It’s not one of our proud moments.”
Monday’s show of public muscle by Lund’s new group, T.U.F.F. — Tenants United For Fairness — apparently got some attention at City Hall.
The City Council told its staff to bring ideas for fixing the problem to a May 15 “committee of the whole” meeting so it can sort them into something on which it can act.
“The city is taking steps to create more affordable housing,” City Councilor John Hummel told the crowd Monday night. “We are discussing fees and incentives. But it would be a shame if, while we are trying to come up with a way to create more affordable housing, we actually lose affordable housing in the process. So as bad as it is now, if we start losing affordable housing, it’s going to get worse.
“In whatever way we do,” he said, “we are going to help you.”
Two days later, the city’s affordable housing director, Jim Long, said he had no idea yet what the staff will bring back.
A few ideas were kicked around at Monday’s meeting:
–The city of Wilsonville, Ore., passed an ordinance last year that requires park owners to pay the full cost of relocating their tenants’ mobile homes to a site within 100 miles. If the homes can’t be moved, or there is no alternative space, the landlords have to pay fair market value for it.
A park owner immediately attacked the ordinance in court. A decision on the first phase of the suit is expected in the next couple of weeks, Wilsonville City Attorney Paul Lee said. Its progress is being closely watched by high-value cities throughout the state.
–The city could rezone existing mobile home parks to be used exclusively as mobile home parks, city Community Development Department Director Mel Oberst said. That would open it to Measure 37 land-use claims from existing park owners, but would prevent new buyers from redeveloping the parks for stick-built housing.
–The city could buy land or use existing city-owned land to build a park of its own, Hummel said. Or it could partner with a nonprofit organization or another developer to fund parks that would stay off the resale market.
Statewide, a group of park owners and tenants’ representatives are meeting to try to hammer out new legislation that would possibly give tenants more protection, said Lane County Law and Advocacy Center attorney John VanLandingham, a leading authority on mobile home park issues who works with the group. But the group is far from consensus and nothing is expected to go to the Legislature until 2007, at the earliest.
Park closures are a growing national problem and states have tried a variety of fixes, VanLandingham noted. Nevada, Florida and Massachusetts require landlords to pay actual relocation costs to displaced tenants.
Arizona and Connecticut require between $5,000 and $10,000 in compensation.
New Hampshire set up a statewide loan fund to help tenants buy their own parks. The fund has resulted in 72 tenant park purchases throughout the state, VanLandingham said, but that’s a solution that is unlikely to pencil out in hyperexpensive markets like Bend because tenant rental rates are unlikely to cover the real cost of the land.
“That’s not going to help the people in Bend right now,” VanLandingham said. “It may never help them as long as Bend is a red-hot market.”
For some families in Bend, any help that might be coming is already too late.
Brian Lucy, one of the last residents left in the Juniper Hills park, said the stress of eviction from the trailer he and his family have lived in since 1998 has effectively broken up the family. His girlfriend will probably move in with a child and granddaughter, he said. He may end up in a tent until something better comes along.
“There has got to be some recognition by the law that these really are homes for people, and homes in every sense of the word home. Not just a house,” Lucy said Wednesday in his living room, where empty boxes waited to be packed with old pictures, birthday cards and knickknacks. “There are a lot of hard-working, good people who have had their lives completely interrupted at the least and more torn apart.
“The anger spreads out into the family, you know,” he said.
“Everybody’s pissed off about it, and there’s nothing anyone can do about it. It’s not fair.”
Allen and her boyfriend, Ray Elquist, have more time to look for options. But none of the options look good.
Elquist, 61, gets $603 a month in disability checks for his heart problems and diabetes. Allen brings home about $1,200 a month after taxes.
That might be enough to cover rent, if they can find anyplace that will take their teenage grandson and three dogs, Allen said. But the trailer they paid $6,000 for in 2002 is too old to be moved and they have no idea what they can do with it besides leave it behind.
“Whatever we’ve got here, we’ll just have to lose,” Elquist said.
“I know we have to move, but I don’t think it’s really sunk in,” Allen said. “We just got the notice three weeks ago. It’s very stressful. Next year will be here sooner than I want it to be.”
A year after her family got its own eviction notice, Rebekah Hayward said she still doesn’t know what the family will do.
Hayward quit her job as a customer service worker at iSky last year to stay home with her new baby. Her husband, Dan, just graduated from Central Oregon Community College with a pair of associate degrees in computer science. After 13 years of working construction jobs in Central Oregon, then going to school for his degree, he’s working as a computer technician at the college, but said he doesn’t make enough to afford a new house.
The Haywards managed to sell their 1988 trailer for $7,500, Dan Hayward said, but the money wasn’t enough to solve their future. So the seven-member family may have to pack into his parents’ 17-foot RV while she returns to work, Dan rejoins the National Guard Reserves, and they continue their so-far-fruitless search for an apartment to rent.
After seven years in Bend, “it almost feels like an exile, you know?” she said Wednesday. “Like I feel like we’re poor. We’re not rich enough to live here in this society that’s being created in this town. And it’s just… hard.”
1932 Roosevelt - "The root cause of the depression is the lack of purchasing power in small town rural America." - McElvaine, "The Great Depression", pg-125.
Certainly small remote towns like Bend will have a 'lack' of purchasing power.
With regards to out 'retired' classes, vast amounts of retirement funds will be wiped out, 10%/yr income funds are over, once again a majority of retirees will depend on social-security, at a time when the government was hoping to discontinue entitlements.
On the subject of home ownership for the 'poor', e.g. the working class.
During the past five years the #1 'oprah' issue I saw for home-ownership was the HELOC.
That if you didn't own a home, you didn't have access to your 'HELOC', that ever American was 'entitled' to a piggy-bank equity line of $200k or more, and that all you had to do to get such a line of credit, was buy any house for nothing down.
Given the lotto mentality of contemporary America, most people simply don't need to own a home. With the fact that baby-boomers will be dumping their homes, the inventory will take 10-20 years, even if we put a moratorium on Bend building, which is currently building new unites quicker than old ones are selling.
The other issue is combined family living, in the past this website has condemned the practice, but there will be MORE people living in a household in the future. The fact is MOST of the world lives 2-3 generations in one home, .e.g. granny, mom, & junior share the same home. This is how the world lives, soon Americans will be living like the rest of the world. For no other reason that granny can't sell her house, and mom has no where to live, and junior can't get a job.
Just some issues for our current 'bend bubble' debate.
1.) Do folks really need to own a house, especially working class folk.
2.) Can future retirees across the board really afford to live in resort community's, especially given the fact the income funds ( 401k's,... are being de-funded )
3.) What are the industry's in Bend that will do "just fine" throughout the whole cycle of bend-bust?
I hope that IHTBYB's next thread addresses some these issues, as I don't think they have been addressed and answered.
On the subject of #1, home-ownership in America was NOT common in America until cookie-cutter homes were created post 'FORD' manufacturing techniques before then it simply cost too much for a working American to 'own' a home. The post WWII levittown is only 2-3 generations, home ownership is out of reach for todays kids. The answer from banking is 1% down, but this is going to cause 40+ yr loans and 1/2 of working income going to housing, and given that food and oil for Americans will soon be parity with the world, smart people will realize that renting is the way to go and home ownership is the road to poverty and longterm debt.
On the subject of ownership, obviously if you can buy small homes for cheap, and rent them, that is income generation, and NOT home-ownership.
I've been puzzling about this for awhile, now: exactly what are the mechanics of mortgage payments and foreclosure actions after a mortgage has been collateralized and sold to a hedge fund, etc.
Do you make your payments to the hedge fund? To the originating bank?
If it is foreclosed, who actually does the foreclosure, filing the papers with the county, taking possession, auctioning it off, etc.
Anybody out there have a handle on this?
exactly what are the mechanics of mortgage payments and foreclosure actions after a mortgage has been collateralized and sold to a hedge fund, etc?
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Under the terms of your loan, for a fee the loan is 'serviced' by an appointed fiduciary. If you have a few mtgs in the last 10+ years, you'll know that that the loans frequently get sold, and that you must frequently re-assign insurance and payment to the new holder of the mtg.
WRT foreclosure, default, ... its all subject to state law.
Since you mention 'collateralize & hedge', your talking about an order of magnitude of depth from a simple loan by an originator, this is called unwinding, and has nothing to do with the debtor.
Too many, if not 100's of articles have been posted even in this thread this week on the subject.
For instance your bringing up issues on opposite ends of the continuum "foreclosures' which effect the individual debtor, and 'hedge funds' which effect the individual investor.
Both are going to get FUCKED investors and debtors, the difference is the debtors were deadbeats to begin with, many of the investors were hard working albeit suckers for a high rate of income generation.
I feel that your question is like "What are the mechanics of physical science?", which can be answered, but I feel the first step should be obtaining a PHD in physics, your economic question is basically "what is the mechanics of the post 1980 USA MTG industry."
Please be specific in your question, otherwise your going to get 1000's of textbooks to read.
Again in the past few months and even this week, many good articles were posted on the subject of post 1980 RE-MTG finance 101.
"Please be specific in your question..."
I think where I may be confused is that the buyers of the CDOs are not actually buying the mortgages, but rather the rights to the cash flow from the mortgages in return for assuming the risk.
From
http://www.pwmnet.com/news/fullstory.php/aid/301/CDO_issuers_promise_portfolio_diversification.html
"But CDOs do not always own these assets outright. Sometimes a CDO achieves exposure to these assets synthetically. In one common synthetic structure, the CDO purchases a credit-linked note that references one or more underlying assets. The credit-linked note is designed to mimic the risks of owning the underlying assets. If referenced assets default, the principal and interest due the CDO under the note is reduced via a specified computation. The credit-linked note’s coupon reflects the credit risk of the referenced assets as well as the note’s obligor.
Typically, the issuer of a credit-linked note is exposed to the referenced credits by, for example, having made loans to the name. Any credit loss that the issuer sustains from its dealings with the referenced credit is offset by the reduction of its obligation under the credit-linked note. Because the CDO assumes exposure to the referenced asset without buying it, the issuer of the credit-linked note gets rid of credit risk without selling the asset."
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