Everyone seemed to not want to hear from me the week before, and that's cool. And coincidentally, I noticed that while we have a tendency to just hammer away at some of the local RE schill's, and that some of that "bile" has seeped into hammering away at Bend in general. Seemed like we were starting to beat the shit out of each other.
And a long perusal of the comments gave me a little eye-opener: I know what I think are quite a few people in Bend, and I in fact know or have casually met many of the local luminaries that we all collectively hammer on periodically, and you know what?
They're not all that bad.
Timmy, Marge, Dunc, Brucey, rdc... and on and on. Most of the people making comments here are not the pathological locusts we whomp on. And neither are most are most of the people I know personally. Most of the people I know are work-related in some way, and many of them came from... California. And what's funny, is they are... dare I say... decent?
I know several ex Cali-bangers who came to Bend to escape. They feel like CA is an alien landscape, and they didn't really belong. Like transvestites: Born a woman in a man's body, these people are normal decent people, who were born in California. They knew something was wrong pretty quick.
So I wanted a week which was devoid of my take on things (Hallelujah), and just had the comments of you guys. Not many appreciated it, which I suppose is understandable; if I bought a copy the Wall Street Journal and all it had that day were letters to the editor, I guess I'd wanna roll it up & cram it up their corn chute.
Now the flip side is that people are selfish, they act in their own best interests, virtually at all times. And we are going to endure a crushing death blow, especially to Bend's local economy. And some of these people, decent, hardworking, and personable as they may be up close & personal, they may end up like the infamous "Raisin Face" (Heather Clark? Dang, she hot), and just leave a long-term bad taste in your mouth after really getting to know them.
But most people ain't that bad.
Most. Buster.
OK, I love the Buster as much as anyone, but the bitch got on my last nerve this week. Here's a snippet:
Yes, if your an intelligent investor, and your young, and you like to fix shit, there has NEVER ( in 25 years ) been a better time to buy in Bend.
Only fools can call a bottom, and you don't want to compete with man-twats on after the trough, thus right now when all the man-twats are panicking is a great time to buy.
I mean, what the fuck, did you join COBA this week? Bitch you been talking this thing DOWN 90% at times (remember $0.0006/ac?), and with medians down to a wimpy $275K or so, it's the best time to buy in 25 years? Are you fucking kidding me?
Needless to say, I strongly disagree with this crap. Things are going LOWER, something you've harped on HARDER than anyone here Buster. Way harder. I think it is still, overall, a crappy time to buy, and it will remain so for many years. When we have medians in the $100's... then maybe.
The RE market is a bell curve, some dumbshits asking WAYYYY too much, and a scant few offering a decent deal. In the bubble, the latter disappeared. And I mean, DISAPPEARED, extinct. I personally looked DAILY, all day, for a house from 2004 on that represented a decent deal around here, and found NOTHING. Hundreds, and hundreds, and hundreds of properties. Nada.
And it is still very close to those conditions. Is it lower than the absolute top? Hell yeah, but that don't mean dink. Ask marge:
Anyone that buys a rental in Bend before 2012 is a retard and will be feeding the pig forever. Buy it with cash and it's still going to go backwards for a long long time.
OK Buster, on to point 2:
Above click on "Bend Economy" BEM, last month, 30 days exactly BEM published "How to Fix Bend".
This is what we should be discussing, the upside, the down is over. It's Over, its going to take years for Bend to recover. In the meantime we need to stop government spending on PR&MARKETING. 90% of BEM's proposals are good. This is what we should be discussing.
Now here's where I am gonna catch shit, cuz we're about to go into Bizarro World, where I am contending what BEM & Buster are saying is mostly wrong. Hold on BEM... it gets better. Here is a summary of BEM's points about how to fix Bend:
Raise taxes
Increase funding for essential services & parks
Suspend master planned projects
Cut the destination resorts loose
Lobby for a 4-year University
I disagree with 80% of these points. Buster, you'll have to tell me what 90% of 5 is... you agree with 4 1/2 of these things?
Anyway, I STRONGLY agree with #4. These chameleon subdiv's out in the scratch are simply end-runs around Oregon's land use laws, plain & simple.
And the recent piece in the Bulletin shows that NONE of the requirements are really being enforced. There was a purpose to WHY the destination resorts were given exemptions to traditional land use statutes, and now poor downtrodden pentamillionaires like the Pronghorn developers are claiming destitute poverty, and they don't want to build 99.999% vacancy units equal to 1/3rd of their housing stock. They are hoping for something closer to 0%.
This of course, makes them a regular subdiv. They must have their cake & eat it too. Dunc's summation:
Pronghorn gets it's fifth extension.
Disgraceful.
This the old-boy network in full-swing, and if you re-read the piece, you see they are actually in essence subverting OR land use laws by granting never-ending extensions. Unbelievable.
Now, for the other 4 points, I don't agree with. Let me put my objections in the form of an anecdote (you lucky devils):
Say some poor redneck schlub, LeRoy, wins the lottery. LeRoy wins $100MM. Now LeRoy ain't Einstein, and like 99.97% of all dudes, he wants to do 2 chicks at once, and basically live the good life after a hard life of fucking sheep.
So LeRoy lives it up, and I mean MC Hammer style. If he even thinks he wants it, he buys 20 of 'em. He gets jets, takes out his now lengthy list of friends to $1,000 plate dinners, $10,000 hookers, in short he goes berserk. He do it right.
OK, now it's 5 years hence, and LeRoy finds himself in a 1 bed apartment, $200 in the bank, shooting the cracker, no furniture, strung out, hitting rock bottom, wondering what the fuck happened.
LeRoy is Bend. We ain't got shit, we're fucked.
So back to BEM's well meaning list. Drawing a parallel to LeRoy, it's like he stood up, dusted he-self off, and proclaimed in Scarlett O'Hara fashion, "I'll never be poor again!". All I have to do is invest wisely (ie "Raise taxes"), spend wisely (ie "Increase funding for essential services and parks"), spend within my means (ie "Suspend master planned projects"), and keep a rainy day reserve (ie "Lobby for a 4-year University").
OK, these are all good ideas. Hell, they're Great Ideas.
But it's too late. LeRoy is down to his last $200. He's got nothing, and the days of making hay are over. He should have done all this to START. Can he take his $200, and turn it into $100MM again with his Good Ideas? Maybe. But it would have been a hell of a lot easier had he done it from the start.
My own philosophy for running a Country, State, County, City, or your life, is to Save when times are good, so you can spend when times are bad. If you do that, and the bad times are not really protracted, or they are evened out by protracted good times, then you should be OK.
If you do what LeRoy did, and spend every single penny on extravagant crap, well, you will go down hard.
Of course, this is exactly what Bend has done.
We can't raise taxes without cratering an already bad local financial situation. We should be LOWERING TAXES right now to stimulate... but we don't have ANY MONEY. We're $20MM in the hole. We are WORSE OFF than LeRoy.
And the same goes for each of the other items. New parks? With what? We're dead broke. Suspend Juniper Ridge? OK, this is one where I sort of also agree. But what do we do with it? Let it rot out there? Sell it? Is selling it even remotely possible? Give it to Les Schwab? My Lord, the City is actually still thinking they can move forward on this thing.
A 4 year University? Again, a great idea whose time has passed. We're busted.
During the boom, we spent on flagrantly idiotic crap. And to make things worse, we exacerbated the situation by lowering our SDC's BELOW COST. And just like underpricing insurance, you can actually watch the money pile up in impressive fashion by doing so. But you'll also ultimately go broke. This happens with amazing regularity in the insurance gig.
We under-priced city services, people rushed in to POCKET OUR MONEY by building homes in roughshod fashion, and now it's time to pay. $300MM to upgrade our sewers, and such. But what are we going to do? Where's the money? What's your answer Buster?
OK, and here's some good shit:
I have been demanding this for months, and BEM picked up the ball. Not one of you fuckers even read BEM's proposals. But what do you expect from a bunch of lazy retarded renters?? Like you think they actually care about Bend??
OK, Buster, fuck you.
You claim to be a landlord, and you are living off the largess of... who? Yeah, fucking renters. So fuck you & your elitist "owner" bullshit. Were it not for renters, you'd be cracker ass broke.
And that fucking lame false dichotomy about "Owners Care About Bend, Renters Don't"... Christ, how fucking moronic. I mean, think that if you want, but cripes... that loses you credibility.
No one, NO ONE, has been enumerating an exhaustive LITANY of prescriptive measures for CURING BEND than me. Maybe BEM. Fuck, as recently as 6 months ago, I held out hope that BEM's list was at least in some measure implementable. I don't anymore. LeRoy is sitting with a needle in his arm and $200 bucks in the bank. My money ain't on fucking LeRoy anymore, cuz I told the motherfucker time & time again to GET UP & DO SOMETHING and stop wasting his money, cuz this was a ONE SHOT DEAL & WHEN IT'S OVER, IT'S FUCKING OVER, AND IT WILL NEVER HAPPEN AGAIN.
Well, LeRoy said Fuck You. You know what, Fuck You Too, LeRoy.
This town is broke, We spent when we should have saved. Even under-priced insurance might be sold by salvageable issuer, IF they invest very well. IF we had done all the things on BEM's list, there MIGHT have been some way to save this place.
Juniper Ridge could have been a fantastic industrial center. But what is it? It's 1,500ac of scrub, whose de facto owner & sole tenant is Les Schwab. Could have been a billion. We actually LOST MONEY on this thing.
4 Year University? Could have been a reputation maker. Could have made Bend a REAL destination, not a Bachelor motel dive. No. We did not pursue it AT ALL, and we briefly had the money.
Parks? Fuck that never had a chance, cuz that's about making things good for those that live here, and the City fathers have clearly shown they have NO REGARD for indigenous folks who they've already landed.
So yes, in this strange Bizzaro World, I actually stand alone on this triad against BEM & Buster.
And Buster, a lot of people care about Bend, whether renters or owners, Westside or Eastside, MBA or not, or what the fuck ever sort of categorization you want to put on them. OK Bitch, I bought a fucking house right when I got here, and sold when it just got too much for me to hold. I have been renting ever since, and I don't regret it at all.
I missed the bubble, and by my own investment predilections, I ALWAYS WILL. I may own at +2 STD... but never at 3+. EVER. So I ain't buying, and I won't until IT PENCIL'S against renting. And you stupid fuck, I do have an MBA, which neither confers intellectual greatness on me or not. I never ask people what their educational pedigree is, cuz I don't give a shit.
The smartest & most interesting people I know graduated from some ho-hum college or not at all. Probably like you, Buster.
And were I to ever meet you, I'd probably like you, cuz I like crotchety fuckers who made it despite the odds. OK, but just cuz you may be a slightly bigger than average polywog in a pathetically small pond, don't make you the shit. You're just one of the masses trying to scratch out a living, like the rest of us.
And if throwing the rest of Bend under the bus due to some arbitrary division you've made up in your head, and just cuz your old gristle-ly ass has carved out some small scale pile, well, then you're a pathetic fuck. You sound like you're angry & waiting to die.
OK, Buster? As Brucey would say: Flame on, motherfucker. Really. Flame on.
Cuz the larger issue, is that you & me be birds of a feather, bitch. We've both been banished to the netherworld of Bend RE blogging, cuz we outside the mold. And I am just letting you have it once as just a taste of the smackdown you've given me at least 100X, brother. So now it's your turn for another 100 hits on me... and hopefully you appreciate the knowledge that you CAN throw my fat ass under the bus, and I won't delete it. I won't delete it, but you better expect the occasional blowback on this shit.
And, let me tell you what the real root problem is here: It's not that we don't have good ideas, and that we couldn't implement at least some of them. It's that the governing structure in this town is so thoroughly inbred, corrupt, and Boss Hogg-ridden, that THEY are the real impediments to change.
Does anyone think our current, local government leaders are even capable of doing anything remotely right? They haven't so far. We'll NEVER get anywhere with the current City Council. Every single one is bought & paid for by someone, most by Bend RE.
So I'm all for implementing BEM's plan, or at least starting on one of them, but the current local government has got to go. Until they are gone, I don't believe Bend has a chance.
And moving on...
Man, I thought the fucking weirdest, most alarming news of the week was that rice rationing story!
Sam's Club, the membership warehouse division of Wal-Mart Stores Inc., is limiting how much rice customers can buy because of what it calls "recent supply and demand trends," the company said Wednesday.
The broader chain of Wal-Mart stores has no plans to limit food purchases, however.
Sam's Club said it will limit customers to four bags at a time of Jasmine, Basmati and long grain white rice. Rice prices have been hitting record highs recently on worries about tight supplies as part of broader global inflation in food costs.
I saw that piece Wednesday, and figured it was going to stay a little marginal piece that I'd have all to myself. Hell no, it was The Leading Piece on Thursday's nightly news!
Food rationing? In the U.S.A? What the fuck is going on? And the public calls to not stockpile & hoard rice was something out of Rwanda or some shit.
I mean, I knew there would be some strange crap as the result of this housing bust, but food rationing? Shit, even I didn't see that one coming. But I probably should have; the last bout of monster stagflation was accompanied by rationing.
Damn, this is starting to get shades of Soviet Russia before they blew up. Bare store shelves, a government out of control, what's next?
Anyway, this is Yet Another Unexpected Consequence of the Unraveling Of The Biggest Bubble Of All Time. Try to stay ahead, try to capitalize, and not be run over by these things.
OK, now for the headliner. Google will be the death of Bend RE in the long run.
And I should warn you this is more of a personal intellectual exercise, than anything.
I think it's pretty well known that pre-bust, California had some of the most perennially overpriced real estate on the Planet, and it still does. I meekly put forth many moons ago that Cali might actually lead a charge lower in RE prices that would take it to ::gasp:: parity with the rest of the country. Yes, medians in CA within eyeshot of the rest of the country.
I know, this one is still pretty hard to imagine.
Then you'll love it when I say they might go even lower than that.
And what got me thinking this was the recommendation to read Taleb's Fooled by Randomness, as recommended by Timmy. Tim is smart, so I am usually interested in what's on his reading list.
And Taleb's book is actually pretty good, being a rather flowery, and sometimes overly intellectual read about how humans many times underestimate the effects of statistical distributions, how some distributions are different from others, how chance can make life appear contradictory in the extreme, even to the extent of ensuring the survival of the least fit in a species, and so on.
There's more to it than that, but much of it was material I was vaguely aware of, but Taleb is very good at distilling some of the strange & inexplicable aspects of chance, and is especially good at pointing out long term winners are many times in immediate losing positions, and vice versa, and the reality of the now should be very suspect. Holding period returns, whether in life or love or roulette, are strangely bound to the holding period you happen to be in.
And so we come to California.
California may be one of those places that is playing a long-term losing game with extreme distributions in returns, that happens to be having an inordinately lucky holding period return, and that period has just ended.
This may be a fairly tired illustration, but it is quite possible to win huge amounts in a losing game. If you enter a game with a dollar, and a coin is flipped & each time you call it right, your money is doubled, and when you call it wrong, your entire stake is wiped out... you will ALWAYS ULTIMATELY LOSE if you play enough times. Always.
But you can also have a hell of a run. And as Taleb points out, someone somewhere will always have a hell of a run, if the initial population is large enough. And if the lottery teaches us anything, the more skewed & extreme the payoff, the more people will play. And the more people that play, the more fantastic will be the winnings of the outlying winners.
If you can win 100,000,000 times your initial investment, but the chances of you winning are incredibly small, many people will play. It seems they are unable to comprehend that betting $1 in a game having a 1 in 200mm chance of winning $100mm is a Bad Bet.
Change the odds to something comprehendable, like roll a dice & hit 6 and I give you $3, otherwise you give me $1... most will quickly see the poor payoff matrix of such a game. Extreme, almost ludicrous payoffs & chances to win are required to make paupers of the players.
This is what California is.
In all it's incarnations, California is a place of almost unbelievable extremes. The distributions of "returns" is huge.
People go there to hit it big in Hollywood, with almost mind-numbingly tiny chances of doing so. The local restaurants are littered with starry-eyed immigrants who work for next to nothing, just to be close to the action. And what's better, they're intelligent WHITE PEOPLE who will do grubby crap work for a pittance. And like any sharecropper, these amenity business owners are happy as hell to have this vast field of moronic dreamers to choose from & exploit.
Do we see this? No. America does not broadcast losers. We broadcast winners only, and the cruel irony is that a vast swath of losers is the main byproduct of broadcasting winners stories.
But surely, Silicon Valley is different, right?
Hmmm. I don't think so. I would put to you that the current Bay-area "business model" is a horrendous loser, that happens to have had a hell of a holding period runup. So what is this business model?
Well, in short, it is a lottery.
But first, back up, way up... like to Des Moines.
What kind of businesses do you picture being started in Des Moines? Car repair? Maybe a deli? Comic book shop, right?
What do you think of when you think of the Bay? Do you think of it like Des Moines? I don't. I think of the Paris Hilton and Brad-Jolena super powers of the technological World.
Google. I think mainly of Google.
Why? Why do I think of Google, and not Amiga, Go.com, About.com, AskJeeves.com, or even Steve Jobs' neXt, or even O/S 2? Because the U.S.A does NOT broadcast losers, it broadcast winners, and Google is a winner. And what happens to those who start up a winner like Google? Well Sergey Brin & Larry Page get their own Boeing 767's, and a 11 digit net worth, and become kings of the World. We remember Winners & Losers are abandoned to anonymity.
So what is the process by which the Google's of the World are created? Venture Capital.
And what is Venture Capital about? VC's plays a game with companies that is much like the lottery, where the odds of winning are fairly small, but the payoff's are potentially enormous. Again, a situation where the odds & payoffs have become so extreme that there exists the distinct chance of dire investment consequences. And remember that VC is predicated on credit, lots of it, and that game is over.
The situation faced by VC's is this: We have $5 billion, and we can make 100 investments of $50MM each. And there exists a Google-like payoff out there of $25 billion. Do we do it?
Many answer "Yes", without asking the most important question: How many companies are out there to invest in? What are our overall chances of winning? All they see is a HUGE payoff, and they do realize their chances of winning are small, but they don't realize just how small the chances are.
And you might say, "No person would rationally buy a money losing investment, especially those with huge amounts to lose". It happens EVERYDAY. Don't believe me, go look at the lottery payoff. They tell you straight up that they are going to take HALF YOUR MONEY, but many GLADLY buy such claims on future... poverty?
I'll admit it. I have bought lottery tickets. And it is the same reason: My utility for a single dollar is low, but my utility for $100MM is so high, that I am willing to overlook the ridiculously small odds of my winning, and buy one anyway.
VC's can & will buy money losing investments. And what will make them willing to play an even WORSE game? Simple, just skew the odds & payoffs to even greater heights. aka Google.
Google has probably single-handedly kept alive the vast grindings of the VC trade. It's payoff was so spectacular that there again exists, post-NASDAQ bust, enough faith in the monstrous upside of the VC lottery to keep money flowing to losing enterprises for years.
I think the jig is up in Silicon Valley. It certainly did have some true innovative successes in the past. But the VC lottery of today is a long term loser. VC is to Silicon Valley as RE is to Bend. It may not be the entire economy, but it's damn big. And Google, the paradoxical poster child of perennial VC losses, will keep alive the dream for so much longer that, like Bend, the economic demise of the Bay region will be just that much worse & protracted. Mike Hollern & Brooks Resources is our Google. A single beacon of such huge gains that it inspires such a vast army imitators, that the entire game is fucked.
So just exactly how will the success of Google depress the Bend housing market in the long-term?
Google inspires the long-term playing of a losing game, and Bend has long been the beneficiary of the California miracle. The miracle is over. The chain of events, while seemingly convoluted, should be clear:
California plays a coin-fliping game of extreme risk/reward.
They have a good run, as statistics dictates... someone was going to have a good run.
Like LeRoy, they spend like hillbillies in a snowmobile store (Bend).
They lose it all.
Hillbilly snowmobile shop closes
The California economic miracle looks iron-clad, durable, and well-founded in fact & reality. It's something like the 6th largest economy in the World, for Gods sake!
Such is the nature of all losers before their streak abruptly ends.
Google & it's enormous success, ironically, will probably have the effect of prolonging the downturn in CA and, by extension, Bend than just about any organization anywhere.
You know who else we'll lose? People, like me, who are looking for that Undiscovered Gem...Maybe it's my bent for holding "undervalued assets", or some such, but Undiscovered Gems are something I am drawn to, in all forms. Cars, restaurants, towns, etc.
Bend is like a crack whore that's been used up, fucked 50X day, strung out on the cracker, and just vile. She'll NEVER, EVER be the same. Time to go.
Your blogs continue to be great as always, but this again supports those who think you're just talking down the market so you can finally pick up those undervalued homes you want.
You kindly explained your theses about buying stocks after a catastrophic event, and that dealing with bubbles is similar and also takes the form of long cycles, where again the savvy investor buys at the bottom and holds.
This blog is marketing. It is a psychological operation. You want people to be scared into pricing their homes super low, low enough so that they sell and the new lows become a precedent leading the market as low as it can go. Only then will you and the others buy.
Rent and invest the diff; walk away and don't pay; wait until the time you are being paid to enter a transaction; all of this is sound advice. As a buyer you describe accurately the signals of a true buyer's market. I don't question the morals or ethics of this; buy low and sell high is the clear common-sense mantra.
What I don't understand, though, is why you as a writer resist when I or others ask you to just admit you're actively trying to talk down the market. I'd say lots of others here help you do this, some of whom are disgruntled locals, and others are investors like you who immediately understand what it means to talk down a market.
Keep bashing away, though -- I learn a lot here. You have every right to speak freely and you do that very well.
My point is that when you deny your obvious bias and try to present yourself as just a helpful guy, it flies rather in the face of your more passionate posts where you indicate your true motives. You don't need to avoid this concession, and in fact by admitting it I think it adds to your credibility.
There was a recent comment on Bendbubble2 of someone who was suspicious of Paul-doh's motivations. Personally, I think he's just an opinionated bastard who wants to world to hear his opinion. Just like the rest of us.
Anyway, the writer implied that only "disgruntled locals" were reading his blog.
I plead guilty to "disgruntled local" .
But not for the reasons you might think. I'm not disgruntled because of the growth and the congestion and the attitudes. Like I've said before, without all that I probably wouldn't have a business or a livelihood.
No, I'm disgruntled because this growth can't be sustained. Because it was built on hype and promotions, instead of real jobs. Hype permeates this town; from over-blown businesses (and too many of them); to overblown developments with overbuilt houses with unnecessary gates; to a city council who has overreached in public transportation and Juniper Ridge; to residents who have pristine hummers and SUV's that are twice the size they need to be.
Meanwhile, Mirror Pond will be allowed to fill with silt; the roads will be hastily patched; free parking will be taken away; white elephants like the Tower Theater will continue to sit; money is going toward lawsuit settlements instead of police and fire services and so on.
Because the self-important, over blown exceptionalism that pervaded this town, by people who made no real effort to understand the history or ethos of the area.
You tell me every time you sing the praises of Trader Joes that you would really want to live in Bend, California.
Everyone of you who says this is coming from a town that had a Trader Joes. Which means that you want to turn Bend into the town you left. You want to move to Bend, and pull the mass market in here after you.
That's what makes me disgruntled. Brandeis Drugs. Upstairs had the toys.
Owl Drug.
For newcomers: Cascade Stationary, which was called Ericksens' Stationary. And Masterson St. Clair hardware.
I remember a grocery story across from the old Jr. High, (which was the old High School) Wagners? Safeway?
Newport Mrkt. I think was a Piggly Wigglys.
And next to where my wife's store is, in the Mini-Pet mart another market.
And of course, Rollies Market downtown; used to go there every day from my store in the eighties and get jojos and corndogs.
I always figured I'd be like Roger Gunson of Magill Drug (talk about old Bendites) and they'd pretty much find me slumped over my cash register.
(Not meant to be disrespectful, I liked Roger a lot.)
And before that (I think): Piggly Wigglys. No joke. That 100k figure is interesting, though. Is that an automatic trigger? because it seems like they were loaning money up the the actual value of the house, in some cases. (not mine.)
Our house would have to drop more than 20%, after we invested 30k in improvements. "The real point is that they are shutting down all helocs. Doesn't matter how much you could borrow."
Yeah, but he doubted me. Called me fishy!
Interesting, I've noticed in my store too. Despite our vaunted independence as Americans...most people will believe big over small, institutions over individuals, and the internet over the storekeeper.
I call it the unicorn effect. I could sell a unicorn over the internet and you have no way of challenging me.
If I tell you I have a unicorn in my store...well, I have to produce it.
So why would someone assume the story is fishy? Especially since it is under my own name? And I have a store in town?
I have nothing to hide, my mongering friend. Timothy, I just asked my older sister and she doesn't remember a Piggly Wiggly.
Googled it, and it says Safeway bought out the west coast PW in the 20s.
So, this may be a false memory.
And after I made such a big deal about my credibility.
Anyone out there remember a Piggly Wiggly in Bend, say, after 1958 or so. (As far back as I'm likely to remember.) timothy said...
Amazingly, there really was a Bend Piggly Wiggly. I've been in many Piggly Wiggglys but I had no idea that there had ever been any on the west coast.
But sure enough, there are plenty of references to the old Bend Piggly Wiggly. A nice unicorn on the Internet told me so.
>>She really may be the sharpest tack in the bunch up at City Hall.
Bruce, you may as well look for the sharpest marshmallow in a bag. >Until these fuckers man up and stand up to the RE/dev community, this place will always be in trouble, except for that once every generation bubble.
During a city's boom, it MUST attack all infrastructure problems with a gusto. If it misses that rare chance, it's doomed, because it'll built a backlog of trouble that slower, saner cities don't have.
I talked to someone running for councilor at a party once. All she could talk about was subsidized housing. I told her all her efforts along that route would just keep prices high and hurt the people she wanted to help. You don't build new, cheap housing--you keep old shithouses and shitmobilehomes from being torn down if you want affordable houses. I thought I had her pinned down to listen to me, but she escaped before I was finished.
And then she lost anyway. >>The contempt for Bend citizenries IQ rolls on.
Yeah well the citizens are only important as a commodity you use to fill up the buildings you build.
Bruce mentioned commercial. Holy shit, the big money in Bend is in sign making. You can't go anywhere without seeing empty or near-empty office space.
It's as if someone thought we were magically going to have 200 more 10-person Internet startups than we really have. What we really have are a couple strong tech companies, a bunch of weak ones, and then a whole bunch of one-man shows that work at home.
Who the hell is going to rent all that office space? >>"There is a great tradition of furniture-making in our state...
Did I wake up in North Carolina? Looking a Clive's chart, we seem destined to hit what must be an all-time high for inventory in a couple months. Doesn't it also look like we're already at an all-time high for under-$300k, despite it only being April? >>You will make MORE MONEY at lower medians. It's RIGHT THERE, do the math.
Cross your fingers that they are better at math than spelling. >>Can't get on BEBB whaaaattsss upppp?
Free provider for that site has a lot of downtime. Speaking of economy, I know of several more people looking for jobs now. Anything above $40k is getting snatched right up by people used to making a lot more. There's always something compelling about a train wreck. I think that's really why most of us are here. >>Makes it even harder to fill potholes and hire cops and firemen.
Was driving last night. On the radio the DJ was making fun of the city being unable to pave roads and pay for emergency services, but managing to have two more dog parks available by the end of the year. He did his interpretation of the council discussing the issues, making them sound like morons.
It was a dorky point, but it shows how it's becoming common knowledge around here that we're a city of fools being run by a council of greater fools. >>Just went to fill the propane tank to grill some steaks, and the guy filling his alongside me stated he lives off Brookswood, in a house he moved into "because my Dad is a builder and he can't sell them..."
Hmm. The Millstone houses?
Hopefully the builders around here have procreated madly. WTF? Is it old skool or unicode? Marge said...
IHateToBurstYourBubble said... I just counted 1,425 Bend homes on lots for sale this morning (an exercise I think Marge also completed). That's about 6.4 QUARTERS worth of inventory, or 19.25 MONTHS. I count 591 homes on lots for sale in Redmond, and 92 sales yields 6.42 QUARTERS worth of inventory, or 19.27 MONTHS.
For clarification only...I just counted 1440 active in Bend. Of those 66 are contingent and are counted as active. Most of the contingent homes are short sales awaiting lender approval for the sale. That means there are 1374 active. So far April sales numbers are way down YOY. This year 23 sold as of 4.13.08 @ 298k median. In the same period of 07 there were 59 sold @$374k median. Yup sales are up!! They always picup in the Spring. Right now there are 87 short sales as active listings and 1 sold since Jan 1, 08. The median price on active shorts is $299k and $249k on contingent ones. I think it is possible for more than 100 sales a month, but it will be close to 100 for a long time to come. I might be time for some burrito bets on things that will soon happen in Bend. Or at least post some dates, for all to remember, fo likely to happens. Like Cessna leaving in a year! Friedman going to jail this summer! Pape being indicted by the Attorney general for cheating everyone at the Inn of 7th. Large RE offices shutting down by fall. What else? RE offices going down big....
My guesses are: Southeby's Cushman&Tebbs Keller Williams Windermere I bet Remax cuts their affiliation with ReMax and goes back to just Equity Group. There are agents all over town looking for desks at companies that use the OLD split method and not desk fees that they pay every month whether or not you sell anything. In the boom agents were jumping ship to the 2k a month desks plus all other expenses incurred. Now, with lean times, they are paying out more than they are making. They will either quit or split. I can see that the bigger companies are losing market share to smaller non-franchised offices by 2 to 5%. 3 new listings in our office this were calibangers leavin cuz they didn't know we had winter.
Yahoo Skippey.
Hope you find some ice on the way out. Better go before August when we have summer. If we have 5,000 leave this year, there will be enough homes to house the homeless. Maybe we should chip in and buy oneways for them too. 18 years ago, I worked at an office that was in the downtown alleyway from Drake. There was a bathroom that the public could access and the Rice Building occupants also shared it. Shit...I got crabs from it. Dunc, if you meant laundry room that is better than the bathroom! I'd rather not share any room with them. Don't know about the bat however. I think a ticket out of town would serve them well. I should be outside like the rest of you, but I am holed up in the house watching the Masters, windows closed, with the junipers outside going PUFFF with their yellow clouds. Can't breath in that shit. Where is that nice cold weather that keeps the allergies at bay? Actually, Tiger has been to Bend many, many times in the past 5 years. He and Steve go flyfishing down the Deschutes with a friend of mine. No...I have never seen him. I am not a groupie:)
======== Lice really don't ever change. They still make ya itch no matter what. We know what's a comin in the near future. You newbies better take cover and jingle key your way out of C.O. The early 80's are comin back to haunt us. I'm tellin ya plant spuds, carrot, radish, beets, spinach they all grow well here as do garlic and onions and they store well in dark cool areas. Plant garlic now. Actually it should be planted in Oct. but now is better than not at all. Spuds and onions now. The rest should wait til June or when the snow is off Black Butte. Need any more vegi advice? Can't grow corn in Bend...growing season is tooooo short..no rice either...few types of beans and peas. See above for the few you can grow here, without a green house. Limes would be nice to go with the Tequila. Oh well. Anonymous said... St Paddy Don't forget about the rather large Coldwell Banker office in the Mill that bad boy is gonna shut down soon enough.
CB is too well financed to crumble. Ingrained in Bend forever. I would slit my throat if they went belly up...won't happen. they would lease out offices within(as they are now doing) before that happened. Maren opened the Pine Tavern, Wetle had Wetle's Department stor down town and Ray had clothing store next to the Tower Theater. Dunc, Remember when Newport Mkt.. was Green Mindt? Or when Pat and Mike's was upstairs in the Penny's bldg? That was 79ish. I don't remember when Eddies market and tire place opened out on Hwy 20, but those guys put tires on my truck and let me make $20's a month payments on them, in the last recession and bubble burst. Ah..Good one LAVBEAR..I forgot about 3 boys. Our house would have to drop more than 20%, after we invested 30k in improvements. The real point is that they are shutting down all helocs. Doesn't matter how much you could borrow. Bend is a declining market on the maps and they are all getting shut off. If you need a business loan let me know. Private money, now is the better investment. Interesting that our county is the only place in Oregon that is tagged that badly. Guess we should expect it with such a huge runnup. I have a feeling we are going back to 2003-2004 medians in the not too far off future. That's $195-$225k. All we need is one really bad summer of sales and this will be it. Besides what the economy does to us we will be more royally screwed than some. It is hard to get out of Bend without a ticket. With the price of gas most will only get to Weed:) Oh good, stay in Weed at least it's Cali country. Can't get on BEBB whaaaattsss upppp? They are so off base! Even P-land wouldn't pay that. That there is Beverly Hills Billys. Pure Gold..Black Crude. Or is that Krud? Me ( buster ) & Marge, we like the trailer-park lifestyle, I'm happy on horses or dirtbikes. I look forward to pickups again, and dirty streets, dive-bars downtown instead of salons.
Ya got me :) Trailer park will be my next move and I want my 1960 ford pickup back. Will you marry me? Just took another look at home sales this month. BOY have they picked up. ARGGG In March thru the 16th there were 44 sold. April(the hot spring month) stands at 33 today. Summer should be very interesting. Lot o traffic going south today..HUMMM Bruce asked: How many of those home sales are auction sales? ++++++
My answer NONE.
True, we will have more autions, but most won't sell at auction. They will end up as MLS inventory. I guess since the bad news is out of the bag, it's hard to find a few more things to talk about. Had the best clam chowder for lunch at the D&D today. Finally found out what D&D stands for, as I sat with Creak, one of the owners. Anyone out there know this oldie question. Also had a shot of Patrone,,,Yummm The Natives Are Restless said...
Daley & Daley....
Yes, you win the 64 million dollar question. They were brothers. Creak has a picture of the building with a wooden boardwalk out front. bruce said...
CC Budget Work Meeting Update:
36 jobs cut or not filled.
Overtime cut by 22%/$417K
Elimination of Code Enforcement proposed
Building and Planning still sucking dollars, even with huge cuts. Clinton stated they should pay there own way--of course if this had been true three years ago we wouldn't be in such bad shape.
JR dead in water, leaving us $6M in hole, if land not sold this fall. Everybody's got their fingers crossed that Garz can work some magic. (From Sonia) Madras has the prison work sewn up into the foreseeable future, so that's out for now.
Public Safety (fire/police) staffing levels being cut back to 05/06 levels. Fire is planning on closing Tumalo Station about 15% of time. Lots of talk about finding another $100K to keep it open. Finally decided to use half of Mirror Pond money to do so. Even with six stations, we still run out of ambulances at least part of the time two days out of three.
Street maintenance more than halved: $1.7M to $700K.
They finally recognize that commercial fees are too low, "they've been subsidized by residential", but no talk of increasing them. Only grumbling from Clinton that they should pay for themselves.
Question: When was the last time a developer paid his true SDC and fee costs in Bend?
Answer: Never. Feel free to correct me if I'm wrong.
An aside: The new SDC structure is only increasing fees about 30%. COBA has had about 200 contacts with the City staff over increases in construction fees. Five of the seven councilors are directly involved with development and/or real estate in some way.
Back to "news": UGB will be delayed, of someone sues City may run out of lawyer money. Is this bad?
Accessibility, affordable housing take big hits. Transit not so much. Still, Capell talked about killing it.
Planning and Engineering both take huge hits, still far from paying for themselves.
Commercial permit fees for this fiscal year second highest in history--do they really expect this too last? Besides, they are still far from paying for themselves.
Increases? Community Development and Economic Development. Also $250K to airport debt service, $180K to Juniper Ridge debt service. They are trying to build out economic areas with debt in the hope of recouping the outlays...somehow. Not entirely clear. Sonia said "if they sell 50 acres at $5 a sq ft, great! Thats $10M, and I'm even." But then agreed that she didn't know where the $40M for the interchange was coming from, and stated that wasn't really her concern. It's more on Garz and John Russell.
Her not-shovel ready price point seemed like she realized what it was really going to go for, if at all. I mentioned all the current commercial built and in process on the market and she glumly acknowledged it: "it's going to be tough". She really may be the sharpest tack in the bunch up at City Hall.
Also, reserves are being cut back to bare minumums, 1-2 months in many departments, and only two weeks in transit. Scary.
Eric kept coming back to "structural problems". I think this is an allusion to the lack of realistic SDC's and fees, both in the past and present. I sketched a diagram that led from LOw SDC's and Fees-->Planning, Engineering, Street, Utility deficits-->General Fund hits-->Public Safety Cuts. Until these fuckers man up and stand up to the RE/dev community, this place will always be in trouble, except for that once every generation bubble.
Sad. Especially when five of seven are directly involved with said industries. You can see it in their preference to cutting poor peoples' benefits (housing/transit/etc.) rather than cutting Economic and Community Development, rather than mandating realistic SDCs and permit fees.
The fucking head (Mel?) of the Planning and Engineering Departments was stating that the subsidizing of commercial inspections by residential fees was killing us now, and Clinton was the only one who even fucking stated that the developers should pay their own way in fee-based departments. Everyone else maybe thought that was a good idea, but action? Never.
That's all for now, back to taxes, etc.
PS Who ordered the fucking snow today? On the good side, some Cali's may be thinking Tucson ;)
PS That jobs cut number is close but there were so many different layoff and not hired numbers being thrown around it was hard to get a real handle on it. They are cutting or not filling a bunch, though. On another note, both Johnson and Friedman were absent. It's a sunny day in Bend!
"Bend home sales up as prices drop" Houses spend fewer days on the market
"For the first time since September, 2005, the median home price for single-family residences in Bend has dipped below $300,000..."
"...there has been a slight bump in the number of sales month to month and a decline in the number of days properties are sitting on the market..."
Somebody has to post this whole piece of shit.
Also, I posted to new articles to juniper-ridge-info.blogspot.com, and they should also be up at bend weekly.com later this morning. I have a slightly different take on the budget cuts:
BULL-"City services in Bend face big cutbacks"
Bruce"the sharpest marshmallow in the bag" E-"Public safety staffing may be cut to 05/06 levels" Re: Is this police "code" or building "code"?
City codes, not state and federal codes, like building codes. Things like sign ordinances. Re: Just remember, Resident Lush and the GOP are doing this to you. Pay them back in November.
Telfer made a comment about how we need to send someone to Salem (her, I'm sure) to fight for the City's right to fix the "structural problem", i.e. that they can only increase property taxes by 3% annually.
Not much mention of the actual structural problem: the stupidly low SDC's and permit fees are not paying for the new development like they are supposed to. Only mention of the was Oberst's statements on how bad his department is hurting now that residential fees are no longer propping up commercial planning and inspection costs.
Not a word about maybe increasing those fees so they would cover direct costs. But then when you have someone like COBA making close to 200 contacts with the City to whine over proposed fee increases, they just don't happen as needed. This FAA thing could really hurt Gordo if he doesn't man up and get his Repug buddies to bury it. But then, sometime in the not too distant future, the FAA may suddenly change their mind "due to Senator Smith's concerns"... State pledges $8.96M for 820-job plant
A subsidiary of home retail giant Williams-Sonoma will open a manufacturing plant in Hickory, creating 820 jobs and investing $2.7 million over the next five years, Gov. Mike Easley's office said Monday.
Sutter Street Manufacturing, which already employs about 50 people in Hickory, will open a product development, distribution and upholstered furniture manufacturing facility for Williams-Sonoma (NYSE: WSM).
The new jobs will pay an average of $42,000 plus benefits, ahead of the Catawba County average of $33,332, Easley's office says.
If Sutter Street Manufacturing creates the 820 jobs called for in its agreement with the state and keeps them for 10 years, it could receive a state Job Development Investment Grant worth up to $8.96 million.
"There is a great tradition of furniture-making in our state, and I am glad Williams-Sonoma is bringing it back," Easley said in a statement. "I hope this is the first in a long line of furniture-related industries we will be recruiting with better skill and higher pay."
Boy, we sure didn't do very good with LS, spending over $10M for 350jobs... Hey, Marge, there is someone over in BBMLand that needs your input.
http://bendeconomy.informe.com/reasonable-realtor-commission-dt3892.html Re: even if there ARE thousands of cheap places to RENT. Thanks.
Just saw a rental house at Widgi. I thought that was prohibited at those fancy types of places. Of course, if I recall correctly, that house was for sale last summer. Re: Have you had your head in the sand trap? Widgi Creek has had rentals for years, it's like a mini-Sunriver for vacation rentals.
I work there in the summer, and this is the first time I have ever seen a For Rent sign in front of a house. Quite a few For Sale's, though. Where, perhaps, are the signs. I was just there yesterday afternoon, I was there 5 days a week all last summer, we use the roads for shortcuts regularly, I note the signs, and this is the first For Rent sign I have actually seen. I have no idea about rentals through the management or otherwise that are not signed, though, since I'm grounds crew. Re: Bingo, you figured out that not all rentals are signed.
You must live out there or something. Re: You want people to be scared into pricing their homes super low, low enough so that they sell and the new lows become a precedent leading the market as low as it can go.
Actually, the almost daily foreclosure auctions are doing that already. Example: Pinebrook Pahse III, Block 10, Lot 5, a pretty nice 2-story that looks to be about 2500 sq ft, sold for $329K in Oct, 2005, and was sold at auction for $220K last week. Bank took a $45K bath at that price, but sold it anyway.
The one I'm curious to see repriced is at 23163 Switchback Court in Pronghorn. Sold for $595K in Jan 06, $495K owed on mortgage, due to be auctioned next Monday at 11 AM. That will be interesting.
If your curious to see how many auctions are coming up, search for Affidavit of Mailing / Publication at recordings.co.deschutes.or.us
as of this moment, 202 so far this year, including 39 so far in April. Two more today so far.
Ole Ted Himler is taking a beating, with seven of his properties being auctioned in April. There's only a 5-10 day lag from the mailing date to the auction date, so repricing will happen pretty quickly.
There's a lot of pain out there. Re: continuing train wreck theme
Fro this mornings BULL:
"Bend will shell out $275K to settle 3-year-old lawsuit"
Announced with no discussion, according to the article. I didn't go last night, and this wasn't on the agenda, so it must have been discussed in Exec Session. Someone should post the whole article.
The continuing, endless lawsuit losses, water company, pumping station, soon the buses, etc. Makes it even harder to fill potholes and hire cops and firemen. Note the confluence of mine and Marge's posts above: Me: If you're curious to see how many auctions are coming up, search for Affidavit of Mailing / Publication at recordings.co.deschutes.or.us...39 so far in April.
Marge: Just took another look at home sales this month...April(the hot spring month) stands at 33 today.
Will there be more foreclosure auctions than home sales this month? How many of those home sales are auction sales?
This is getting scary. But the quicker we fall, the quicker we get back up.
I've been doing some analysis on SDC's and permits, and things like how our one ERU charge for sewer hookup of $2038 compares to Troutdale's charge of $4426 reveals the true structural problem with the City's finances.
When I get a chance to finish it I'll post the spreadsheet comparing Bend to Troutdale and Ashland. I know Buster will hate me for this, but CPST is off the fucking wall today. Huge volume, and it is close to 4X last summers price. This new CEO they got it is really doing a good job.
I happened to sit next to one of the top Public Works guys on Monday, and we discussed my little project again. I'm waiting on real numbers on the methane being vented, and Paul said they should finally have good sensors in by late June. Rather than venting a greenhouse gas that 20 times worse than CO2, we can use it to create usable energy. I like that.
Capstone, 5yr
Just went to fill the propane tank to grill some steaks, and the guy filling his alongside me stated he lives off Brookswood, in a house he moved into "because my Dad is a builder and he can't sell them..." Re: ...why you as a writer resist when I or others ask you to just admit you're actively trying to talk down the market.
I actually don't think that's really possible.
No, we are merely catologing the totally expected collapse of a bubble. Do you truly think that Bend could actually support median housing prices at eight times median income?
It can't. Meaning a collapse is inevitable. We are just talking about it, unlike most. Funny how quiet things have become. It's like we know the shit has really hit the fan, the "repricing" of local real estate is in process, and there's not much else for us to do.
It's happening.
So let's keep an eye on the CC, and their "ideas". Budget Work Session next Wednesday...I'll be there.
Facts to agree on: 1) We have enough housing to last us ten years, counting platted subdivisions.
2) Our SDC and permit fees need to be raised to a level that actually supports the departments that rely on them. No more General Fund support, no more one-time land sales to provide support.
3) Transparency, especially when it comes to the endless Executive Sessions. They can at least tell us what the topic are talking about. Buster said...
Keep bashing away, though -- I learn a lot here. You have every right to speak freely and you do that very well.
*
Buster just got out of jail for beating that transient with a baseball bat. I got BENDBB to float my $100k bail.
WRT to this assertion, I think 'yellow-beard' is giving ALL these cunts way too much credit.
They're all a bunch of fucking BORING loser renters.
Fact is there were KILLER DEALS last year, this year, and there will be next year.
Talk down the market?? I don't think so, the market here was FUCKED by TEAM Hollern/Capell, &ASS.
99% of the fucking bloggers here are middle age, fat, lazy, blogger-renters. The normal asocial losers.
You think 'Homer' is a fucking marketing guy talking down, no he's just a loser obsessed with his 15 minutes of fame. Look at virtually EVERYONE on this blog, they're a fucking RENTER, even duncan rents his building for his comic shop.
It's all fucking sad.
If these birds had an intention to BUY real-estate they would have already done so when you could still get credit/cash. Now its too fucking late.
I'm simply coming to Homers aid in a twisted fucking way. I'm the only fucking landlord here, and besides BEM, and Dunc&Marge, nobody else here even owns their fucking home.
Talking down the market does nothing here to help the loser's here like Homer & Bruce-Pussy. They're newbies in this town, and by the time it its bottom, they'll be long gone.
If you think the 'bashing' here is about 'bashing bend homes', your wrong, its about 'bashing' the people who created the Bubble, and FUCKED BEND, and those people be Hap Taylor, Dick Borgman ( Les Schwab ), and Mike Hollern; and the people they own.
That's who we're BASHING here, the boss hoggs that OWN BEND.
Nobody here is BASHING Bend RE per-se.
That said, for almost six months PMI has recognized Bend as TOXIC as Sacramento, CA; and HONESTLY I think its MORE toxic.
This is the town that HOLLERN built, and he's going down with it.
Homer & his bruce-pussy, are just minor players; in this kluster-fuck of a town.
- buster BruceyPussy wrote on April 19, 2008 5:10 PM:
3) Transparency, especially when it comes to the endless Executive Sessions. They can at least tell us what the topic are talking about. --------
BruceyPussy will write on June 30, 2011 4:31PM
4) Transparency is really important when it comes to the secretive Executive Sessions. Some day I am going to write up a complaint and submit it to Judy Stiegler on the Ethics Commission. ----------
BruceyPussy will write on May 30, 2018 10:31PM:
38) Executive Sessions. The CC can at least tell us that they are having these sessions. They don't bother sending out notices. Maybe somebody should write up a complaint, since what they do is against the law. ---------
BruceyPussy's grandchild will write on December 20, 2078 10:31PM:
38) Executive Sessions. The CC doesn't hold Exec Sessions anymore. They went the way of Regular Sessions, which stopped happening around 2061. They don't bother sending out notices or nothing. They just publish their decisions without people knowing that any meetings were even held. In fact, they don't bother holding meetings anymore. Hap Taylor's grandson, Hank Taylor (son of Todd Taylor) just makes all the decisions, and doesn't even bother telling the City Council first, they find out along with everybody else, when they read the decisions online.
Maybe I should summarize my 12,346 pages of notes into a complaint form to the Ethics Commisssion? bilbo-bend said... Dunc,
The whole thing honestly is far too negative that said, that said we both know that 'Bend' is 18 months behind.
I saw a complete collapse in sales for most of my businesses back in May of 2007.
In the past week, I got more orders ( all international, and mostly from Australia, Taiwan, and Israel ), more orders than I have seen in the past six months. All in one week!
Why? Because the dollar is now so fucking cheap.
Now back to Bend, I call the recession back in May of 2007, as I know which of my businesses are the best bell-wethers. I don't think that our 'Bend' will really admit 'recession' until this fall, and then it will last two years.
I think that given the order strength I'm seeing right now, and that the past week sales is the same as I saw in the prior six months, ergo I'm now good for the next six months. The INTL folk were the first to bail, on the US scene they stopped doing National purchase orders back in the Spring of 2007, and there was a little in Fall of 2007.
I expect US military to ratchet up spending in 2009.
Bend will be FUCKED big time for the next two years. Our economy as you well know is all tourism, which will ditch as the US tourist does so on HELOC & VISA.
The INTL tourist will NOT come to Bend, not even to see the pregnant man with a beard.
Diversify DUNC, Diversify. SETUP a website, and let the INTL world know what you have, biz in Bend is going to be dry for the next few years, and if you sit and wait for them to walk in you'll starve, I'm sure you'll survive, but why?
Given how much FUCKING time you waste on BLOGGING, if you spent 10% of that energy on a INTL website marketing your 'hard to find product', esoteric shit, ... You would/could sail this recession. Don't put all your eggs in the BEND basket, because they next 2-3 years is going to be fucking Pathetic.
Getting back to 'negative' I have long wanted to go contrarian on Bend, as its now clear that everyone and their chipmunk know its coming down. Trouble is the deer are in the headlight all waiting for non-existant cali's to buy their crapshack, or hot-tub, or TV, ... or comic books. They're NO longer coming.
Do more 'comic' blogging on the INTL level, plug your product, and let folks INTL know you got shit, they got money, and the dollar is cheap. Their has NEVER been a better time to buy USA shit. Explain to people the history, put your creative work into marketing yourself on the INTL level, that is the future, you'll go the way of the dinosaur if you wait for Bend or USA customers. jesse felder said....
PMI Group, one of the largest mortgage insurers in the nation, officially categorized Deschutes County as "highest risk" for future home price declines, along with areas such as South Florida, Southern California, Las Vegas and Phoenix.
Short Sales - Buyers need to be prepared for the long road. We are seeing a lot of short sales hitting our market and many buyers are looking for a great deal. There are a lot of great homes out there, many of them well below the real market value of the home. This week, I personally had a listing lower the listing price to what will be a short sale. Many agents and buyers alike are “beating down” the door to see this great home and offers are starting to come in. It has amazed me to see what agents are putting in their offers. A buyer, buying a short sale is not like buying every other home you have looked at. Everything is subject to the lender’s approval. Timelines are different, and you must be prequalified or be able to provide proof of funds if you plan to pay cash. Most of the time the lender will not approve repairs, maybe the seller will complete a repair as to not have such a big ding on their credit but generally the lender will not. When looking at a short sale knowing if the seller and / or the seller’s agent have a working relationship with the bank is vitally important. Do they have the necessary paperwork ready for the bank? Do they have the additional paperwork ready for you the buyer? Not every agent has the necessary knowledge to help you through your short sale procedure with success… if you need assistance please ask a lot of questions before choosing your REALTOR®. Are you looking for water front property in Central Oregon? You might be surprise to find that most of our waterfront property is actually on the river and not on a lake. Although there are lake properties (see this previous posting) if you are looking for waterfront property in Bend, La Pine, Sunriver or Three Rivers South it will most commonly be found on one of The Deschutes Rivers. The Big Deschutes River is more navigational by boats and is much larger and longer than the Little Deschutes River.
Lots and homes along either of the Deschutes Rivers often sell quickly. Before buying on the river you should be aware of many of the land use rules, zoning, septic and well issues of these properties. Because every property is different having an agent that knows the area can be one of the best choices you can make.
There are many issues to consider when purchasing on the river such as; flood plain, can you build, what kind of septic will be required, how deep will the well need to be and will you need a filtration system for the well? Many lots along the river do not allow building as close to the river as some would like to build. And if you have flood plain on the property a conditional use permit may be required. All of these items can be discovered and most over come with the right due diligence and an agent that knows the area.
Real Estate is local and in Central Oregon, real estate is not just buying property but you are purchasing a lifestyle.
With today’s real estate market conditions, now is a great time to buy and trade up! “What?” you may say. But when it comes to buying and selling homes, I always suggest people look at the big picture when it comes to trading up. Okay, you may not get a dreamy windfall of cash you would like for the house you are selling, but if you have equity in your current house you can use that as a down payment on a better house. And if you need a better house (one that’s bigger, nicer finishes, different neighborhood, more energy-efficient or whatever), you would be crazy not to upgrade now. You have an outstanding selection to choose from and waiting will only cost you more in the long term. Think about it.
Consider the “Loss” on Selling Your Present Home:
For example, say your present house is worth $300,000, but because of high inventory and few buyers, you must reduce your price by 10%. So, instead of receiving $300,000, you would get $270,000 and “lose” $30,000.
Consider Your Real Profit:
Now, consider this. Say you bought this home 7 years ago and paid $100,000. You’re still ahead $170,000, less costs of sale, aren’t you?
Consider the “Savings” on Buying Your New Home:
If you are planning to move up to a $500,000 house, which is located in the same market, you could probably buy that house at that same 10% discount or $450,000. This would mean you had saved $50,000. So you “lost” $30,000 on the sale of your home. But you “made” $50,000 on the purchase of your new home. Doesn’t that put you $20,000 ahead?
Don’t Forget the Impact of Interest Rates:
Which way are interest rates moving? Are they moving up or moving down? If interest rates are near an all-time low and beginning to inch upwards, waiting could cost you more than you would think. You might not be able to afford to buy a home at any price.
• Each 1/2 point decrease in your interest rate gives you $25,000 more in purchasing power. • Each 1 point decrease in your interest rate gives you $50,000 more in purchasing power. • Each 2 point decrease in your interest rate gives you $100,000 more in purchasing power
Right now, you can get real estate in nice areas for prices that we haven’t seen in a while. So what if you take a little less for your current house? In three to five years when the market has fully rebounded you’ll have twice as much equity in the new house as you would ever have been able to build in the old house.
For more on why buying now is in your best interest according to famed money guru Peter Lynch, check out the “Ignore the Headlines” article from Dan Kadlec’s “Right on Your Money” column at Time Magazine. It’s more than just thought provoking.
The Bend Bulletin has a very interesting article about the housing industry in Bend. It’s not about home sales… but the state of the housing rental industry in Bend.
While the article does bring up an alternative to owning a home in Bend… the truth is still there: you’re renting. I’m not going to say that renting means that you’re practically throwing your money away… but it’s pretty darn close to it.
Mr. Moore brings up the point that more renters in the market + more houses for rent = falling rental prices. And this is certainly true. And while there may be some incentives out there to go the rental route (such as a discounted first month’s rental price or even some free work done on the property if you rent for over a year), you’re still renting… and not owning. I’d much rather put money towards property & a home I could potentially own than one I’m just renting for however long.
Anyway, a nice read for sure and a different perspective on the housing market.
If you haven't been following the drama and the outcry surrounding BendBroadband's latest pricing changes, let me sum up what's been going on the last few weeks:
BendBroadband announced they were going give you more speed, but they were going to cap the bandwidth. Needless to say, this caused quite the outrage, and that post now has 100 comments (and counting), many from BendBroadband representatives. Their response to the outcry was to create a new platinum plan with lower speed, but a higher cap. A calculation spreadsheet was also posted so folks could really see how expensive this could get. BendTel was also featured in the local paper, and made a few subtle jabs at BendBroadband.
It's been a week or so since this thing hit the wire on a larger scale, and my sources at BendBroadband say they are watching the conversations here and are listening. They will not say, however, if anything will change, but they are listening (still waiting for the new business plans to come out, folks).
One of my original gripes (one that was putting my bandwidth consumption over the edge of some of the tiers) was that middle-of-the-night consumption shouldn't count the same. But something that was pointed out to me privately was a point I didn't think of that makes a bit of sense: The Net Neutrality advocates say that it's basically an all-or-nothing thing when it comes to bandwidth counting -- you can't consider nighttime data from daytime data (even though that's what the power company does). So you're damned if you do, damned if you don't.
A couple protest sites have been created since this all started brewing. One is FixBBB.com, which has been trying to organize a public protest and get more media attention to this cap. They also make a suggestion as to who you can switch to, but I'd recommend avoiding Clearwire and use somebody like Yellowknife or Webformix instead if you're looking for wireless rural Internet. BendTel also provides DSL, but primarily to Business customers.
Another protest site has hit the wire, being run off a BendBroadband home connection (which is bound to push usage up a bit, considering the site's received a few diggs). According to the site, the guy had 214GB of data transfer last month and 15GB between April 10 and 15. Even if he was on the platinum plan, he'd owe nearly $240 last month.
Since I don't have the foggiest idea if BendBroadband will shut his site down for terms-of-service violations, here's the screenshot off his site:
So it all comes down to this: Knowing what you know, if you're using a BendBroadband connection, what are your plans? Are you moving or are you staying? If you're moving, where to? I'm still exploring my options, and will reveal my decision at a later date, but I wanted to see what everybody else was doing as well.
Update on 4/17: Welcome Bulletin readers. All the relevant posts with all the discussions are linked above. I haven't had time to read the article yet, but will comment here when I have a chance to do so.
Responding to the economic downturn, Central Oregon’s tourism officials plan to refocus their marketing efforts toward an audience that can reach the region by car.
Lodging taxes, which indicate the health of the tourism industry, fell 9.6 percent in December and 1.9 percent in January in Bend, and remained flat in February, compared with those same months, respectively, last year.
In Deschutes County, room tax collections were down 5.7 percent in December from December 2006. But they recovered, showing a 20.1 percent increase in January and a 7.1 percent increase in February, compared with those same months last year. Deschutes County’s room taxes typically come from resort properties that draw visitors who book further in advance than Bend’s mostly hotel and motel properties.
Tourism growth is expected to be flat to moderate this summer, said Alana Audette, president and CEO of the Central Oregon Visitors Association, which promotes the region’s estimated $542.5 million annual tourism industry.
“The first quarter of 2008 was not as healthy as we’d like to see it, and we have a tough summer to beat from 2007,” Audette said. “August was a record-breaker.”
COVA may reduce its national marketing efforts and reallocate some resources to Oregon, Washington and Northern California, Audette said.
“The only shift may be pulling back from national marketing,” she said. “We may pull slightly from the L.A. market, but it’s important to maintain a presence there. We could take a minor portion.”
If COVA shifts some of its resources from the national and Southern California campaigns to the Oregon market, it would use the same movie-trailer concept from the winter TV campaign, and convert it for summer, she said.
The campaign, called “Real Winter,” flooded the Portland market with ads promoting Central Oregon’s snow-capped peaks, ski runs and blue skies as an escape from the dreary, traffic-clogged metropolitan areas. The ads were made in partnership with Mt. Bachelor.
The same concept could be put together quickly and affordably next month using stock footage of summer attractions, Audette said.
Sunriver Resort, one of the region’s largest tourism promoters with a $2 million advertising budget, also plans a greater emphasis on a regional drive market, stretching from southern Washington to Northern California, said Jay Lee, director of sales and marketing.
This summer, Sunriver will place ads in regional newspapers around the state, Lee said.
The resort also will target more niche travel groups to compete with other resorts in the region and the state, he said.
“Our strategy is to send out offers to smaller groups and be more targeted in our direct mail pieces,” Lee said. “We used to send out 10,000 pieces of direct mail. Now we’re sending out five different batches to more targeted groups, such as golfers, foodies and spa customers.”
The Bend Visitor & Convention Bureau, which markets tourism for the city, also will try to draw visitors from within the state.
In May, the visitor bureau will launch new radio spots in the Portland metro area and cable television ads in Salem and Eugene, said Doug LaPlaca, president and CEO of the visitor bureau.
Television ads will feature scenes of fly-fishing on the Deschutes River, mountain biking, kayaking and golf, and a shot of the Tower Theatre.
“We’re trying to position Bend as an idealistic escape from the real world, where people come to have fun in a place where blue skies persist,” said LaPlaca, who became Bend’s top tourism official in August.
He will submit his 2008-09 fiscal year business plan to the Bend City Council on May 7. The plan contains 14 strategies that he hopes will generate increased room tax revenue, despite the slowing economy, he said.
“When looking at the national and regional downturn in the economy, people will still travel, but they will go to driving destinations rather than flying,” LaPlaca said. “That heightens the importance of marketing in drive markets, such as Portland and the Willamette Valley, as opposed to destination markets where people would fly to get to Bend.”
That logic makes sense because Americans are still traveling, but opting for destinations closer to home, according to the state’s top tourism official.
“Individuals still want to take vacations, but rising gas prices and what’s expected to be higher airfares down the road changes how they will take vacations,” said Todd Davidson, executive director for Travel Oregon. “Central Oregon’s tourism marketing professionals are, very strategically, thinking about how they will change their marketing tactics, and responding to consumer trends.”
Another major component of the Bend visitor bureau’s marketing approach will be its completely revamped Web site, which will launch June 1, LaPlaca said.
“Travelers are using Web sites and online resources more than ever to gather information for their travel,” he said. “It will be an ongoing process to establish an industry-leading Web site, which will have breadth, quality and content to convey all the tourism interests in Bend.”
When it launches, the site’s home page will lead into about a dozen sections that will focus on specific tourism content areas, including a history and heritage site, an arts and entertainment site, and a cycling site, LaPlaca said.
Two weeks ago, aircraft maker Cessna told the state of Kansas that it needed at least $25 million on top of local incentives if it was going to build a factory for its new long-range business jet.
Four days later, the Kansas Legislature passed a package worth up to $33 million, and Cessna agreed to build the factory in Wichita.
The multimillion-dollar aircraft company that recently landed here when it bought Columbia Aircraft Manufacturing isn’t afraid to ask governments for loans or tax breaks when it expands.
But other than saying it wants a tower at the Bend airport by the end of 2009, Cessna has made no requests of Central Oregon governments.
Bend city officials say by all indications, the company is in Bend to stay.
“As far as we know they are investing in Bend; they are investing in that plant; they are hiring workers; they are training workers,” said John Russell, the city’s economic development director.
But the city and the county have few economic incentives to offer if Cessna were to come asking in the future.
“I can’t speak for the board on that issue,” County Administrator Dave Kanner said. “I’m hard-pressed to think of a source of money that we could tap into for that purpose.”
Doug Oliver, a Cessna spokesman, reiterated the company’s commitment to Bend last week, but otherwise declined to comment on the company’s plans. Several other Cessna officials did not return calls seeking comment.
Mark Withrow, the new manager of Cessna’s Bend facilities, told the Bend City Council earlier this month that his company has huge expansion plans, but he wouldn’t go into specifics beyond saying he intends to add 100 more jobs to the plant, which currently has 430 employees.
Withrow acknowledged to the City Council that Cessna needs to bring down the cost of the Cessna 400 and increase its production numbers to make it more competitive.
“Our goal in Bend is much bigger than where we’re at in Bend,” he told the council.
Taking flight in Kansas
Cessna’s roots in Wichita, Kan., date to the company’s formation in 1927. About 8,000 of its 9,500 employees are there, according to the company’s Web site.
The company is Wichita’s largest employer and coupled with several other aviation companies, a key part of the state economy, said Kim Young, a project manager at the Greater Wichita Economic Development Coalition.
The city, county and state provide a number of incentives for Cessna and other companies. For example, businesses at Wichita’s airport don’t ever have to pay property taxes on their land or buildings, Young said.
Businesses can get income tax credits for each new job they add and certain businesses can write off up to 10 percent of the cost of equipment they buy.
The city and county also set aside money from their general funds that they can give to companies as forgivable loans. For example, if companies meet targets for new jobs, then they don’t have to repay the loans, Young said. And the state provides money to help train new employees in a range of industries.
“We’re constantly looking at how we can sharpen the tools in our toolbox,” Young said.
Incentives like those can add up to millions of dollars in savings for companies to build and expand in Kansas, Young said.
“Those are just some competitive advantages we have for business, and we certainly make up for it in other areas” like job creation, Young said.
Cessna’s ability to get the state Legislature to bend over backward so quickly earlier this month was “unheard of” and “unprecedented,” Young said.
“That’s exactly the type of thing that we wanted to do,” Young said. “We have to move at the speed of business, which is very fast.”
If not for the Legislature’s action, she said, there was a risk that Cessna would build the plant for the Citation Columbus jet in another state. The plant will bring more than 1,000 new jobs to Wichita.
Central Oregon incentives
Roger Lee, the executive director of Economic Development for Central Oregon, acknowledged that the region has a long way to go if it wants to compare to Kansas’ incentives.
“When we first met with Cessna they made very clear what was available to them in Wichita and other parts of Kansas,” Lee said.
Since Bend Airport is in Deschutes County, the city can’t provide many incentives beyond lower lease rates on land. And the county hasn’t shown much interest in creating aggressive economic incentives, Lee said.
“From our perspective, in many cases the city and the county have not been significant players as far as offering incentive packages ~ for this industry or any other industry for that matter,” he said.
The state currently provides some tax breaks for new businesses, but nothing that compares to Kansas, Lee said.
A special enterprise zone the city and county applied for at the start of the month could provide property tax breaks for businesses at the airport and in La Pine if the state approves it. That would mean businesses wouldn’t have to pay property taxes on new buildings in those areas for five years, Lee said.
The city’s special projects manager, Ron Garzini, said it’s not just about having financial incentives for companies.
“It’s not just a financial issue,” he said. “It’s also, if you’re willing to stretch a bit to show a commitment to them, that means you’re going to stay with them for a long time.”
And ultimately it’s those small steps at building relationships between business and government that matter, Young said.
“Not everybody can right away put dollars on the table,” she said. “But if you’re talking about it and working together, I think you’re certainly moving in the right direction.”
Peter Sachs can be reached at 617-7837 or psachs@bendbulletin.com.
Bye bye, Cessna. First HoltzTek, now this.
Lemme say this with some pretty high certainty: Cessna will be leaving the area within 1 year. That's what this article is; an ultimatum.
The thing you should ask about ALMOST ANY STORY in the Bulletin, is WHY is it there at all, WHO would benefit, and what the hell do they want.
This story came straight from Cessna corporate, and their wants are simple: They want to be subsidized in large monetary terms, or they're leaving Central Oregon & they're taking their jobs with them. Look at the tone of the piece: Strong-arming local governments for millions is Standard Operating Procedure for this company. This article is tenderizing us for the inevitable. It's coming, and unless we acquiesce, they will leave.
I would put to you that they knew this on Day 1. I think they know that any rational government in the circumstances our current local government is in, will be unable to pay this blackmail. Heads or tails, Cessna wins & Bend loses.
Pretty standard shakedown. The question is: Will we shoot our wad on them, or Juniper Ridge... or something else? No matter, whatever it is, the tentacles reaching out for the slim pickins' remaining in this one-horse shithole assure our almost certain destruction.
If we payoff Cessna, we go bust & lose JR. If we don't we lose the jobs, we build some half-assed "facade" out at JR, we go bust & JR ends up a decent wad of blown up lava rock.
Of course, we barely have enough to pay for staying afloat, not withstanding all these bullshit dreams, like JR. This Cessna money-grab is just the vultures starting to pick the Bend carcass to pieces. And sure as shit stinks, our City Council will almost certainly cave to ridiculous demands.
Cessna, a Word Of Advice: Pull a midnight holdup, just like Les Schwab. Roll into a City Council meeting and announce a 1 hour deadline on a series of ludicrous demands, and simply threaten to leave town otherwise. You'll get it. But hurry; pretty soon the pickin's will be to thin, and you won't get squat.
An interesting short, little piece on Marketwatch about The Great Unleveraging:
CHICAGO (MarketWatch) -- No-down-payment mortgages have been scarce lately. But in the past several weeks they've become virtually non-existent. And it doesn't appear they will return any time soon.
While Fannie Mae and Freddie Mac still have products that allow borrowers to finance 100% of their home purchase (albeit at a higher cost), recently the major private mortgage insurance companies have backed off from insuring these loans, said Bruce Brown, a certified mortgage planning specialist with First Security Mortgage Co., in Kansas City, Mo.
Mortgage Guaranty Insurance Corp., for example, changed its guidelines last week to exclude coverage of 100% mortgages. At a minimum, borrowers need a 3% down payment and a credit score of at least 680 to be eligible for coverage. In selected markets where home prices are declining, a 5% down payment is the minimum required.
Genworth Financial is another mortgage insurance firm that recently stopped covering 100% loans. In some cases, it's willing to cover loans with 3% down payments; in all markets it will cover a loan that involves putting 5% down, said Mark Goldhaber, senior vice president of industry affairs for Genworth Financial.
Lenders generally require private mortgage insurance for loans that cover more than 80% of the purchase price.
"It's obvious why they're making these changes," Brown said of the insurance companies. "They have to eliminate the losses they're taking." Mortgage insurance companies have been hit hard by the increasing number of defaults and foreclosures, he pointed out.
At MGIC, the changes to underwriting of low loan-to-value loans -- as well as increases to the pricing on some products -- were made due to the recent performance of loans with those characteristics, said Michael Zimmerman, senior vice president of investor relations. But the changes, he said, also reflect a return to more historically normal underwriting standards.
"The more equity that a borrower has -- or, if you will, skin in the game -- in any investment, the more likely they are to have a higher degree of responsibility toward it," he said.
Goldhaber said that those in the mortgage industry also have a responsibility to put homeowners into the proper mortgage product. These days, it's irresponsible to give people a loan for 100%, he added.
"In soft markets like we have today, with declining home-price appreciation, to put someone in a zero down is really inappropriate," he said. "It's the kind of product choice that gets consumers in trouble."
Many people have been finding themselves upside down on their mortgages when the price of the home drops and they end up owing more than the home is worth.
"Putting a person in a zero-down mortgage means in many cases they will lose value on home before they even have the curtains hung," Goldhaber said.
Other ways to 100%
That said, while the conventional no-down-payment products may have disappeared, there are still ways to buy a home without a down payment, said A.W. Pickel, CEO of LeaderOne Financial in Overland Park, Kan., and former president of the National Association of Mortgage Brokers.
"You have to broaden your definition of no-down payment," he said, adding that loan options are available, if not in the form they were in before.
A gift from a family member or a community grant can take the place of a down payment, for example, he said. And down-payment assistance programs are available to help those seeking loans backed by the Federal Housing Administration, he added.
They're not offered now, but shared-appreciation programs might also be available, where investors share in the appreciation of a home in exchange for assistance at the purchase, Pickel said. He expects companies to get more creative and come up with other solutions too.
"You will see more unique products coming out," he said, as companies search for ways to help down-payment challenged buyers get into a new home.
But as of now, there are fewer options than there were before for would-be buyers who don't have ample cash reserves. And Brown sees that as an overreaction.
He believes consumers should have the option of financing their entire purchase -- even if it comes with extra fees or higher rates. Someone who doesn't have a lot of cash, but is a good credit risk, for example, should have that option, he said.
"In a lot of ways, we're creating an environment for investors," he said, as the number of renters is sure to grow. "Think of how many people would be in the market over the next several years if they could be in a house for no money down. Those people have no option but to remain renters."
A possible return?
In fact, the existence of no- and low-down-payment loans were one of the biggest reasons the homeownership rate rose during the housing boom, said Bob Walters, chief economist of Quicken Loans. Some sought these loans even if they could put money down, Pickel said.
"Everyone bought into the idea that if you can borrow money, it's better than using your own," Pickel said. "I don't think that's completely gone," he said, but added that now people have woken up to a sobering reality that home prices don't always go up and that putting money down might be in their best interest as a homeowner.
No one knows if, when and how these no-down payment loans will return en masse. But many people in the industry think they'll be gone for a good while.
"I don't want to say never, but my gut tells me it will be a long time before we see mortgage insurers pop back into the 100% market," Brown said.
If they do return, borrowers will likely need spectacular credit and the local housing market they're buying in will probably need to be a "prime market," that is, they'd need to have a small percentage of second homes and investor homes, said Anthony B. Sanders, professor of finance and real estate at Arizona State University's W. P. Carey School of Business.
"Markets such as Phoenix, Las Vegas and San Diego have higher percentage of second home/investor loans and viewed as being 'speculative' markets subject to dramatic downturns," he said in an email interview. Lenders still may be hesitant to make no-down-payment loans even after housing prices hit bottom, he said.
"But bear in mind that credit events in the mortgage market move in cycles and we swear to never repeat the same mistakes ... until we collectively forget about the last cycle," he added.
This is why recurring Bubbles usually have a total minimum half-life of around 30 years: People burned in the last one, usually will not jump into a similar one for their adult lifetime.
Note the mention of Genworth Financial, the product of the monster spinoff from GE in 2004. And although they ceased to own any Genworth shares in March 2006, and hence should have minimal financial exposure directly from this unit, GE nonetheless took a severe beating in the market after announcing a surprise drop in earnings that shocked Wall St.
SAN FRANCISCO (MarketWatch) -- Wall Street, recently basking in optimism that the credit crisis may have turned a corner, got rained on Friday after a surprise drop in earnings from bellwether General Electric Co. renewed fears of persistent economic aftershocks.
General Electric, whose activities reach a broad spectrum of business and consumer activity from TV shows and commercial loans to industrial turbines, said that profit fell 6%. It placed a big part of the blame on the near-collapse of investment bank Bear Stearns Cos.
The profit disappointment came as a shock to many analysts and strategists who had been expecting that diversified, international companies as well as the broader U.S. economy were somewhat buffered from the big loan write-downs and trading losses that have rocked brokerages and banks this year. U.S. stock markets sold off sharply, cutting into gains made since mid-March.
"Apparently the suggestion earlier this week that the stock market has turned a corner has proven to be premature," Sherry Cooper, global economic strategist for BMO Financial Group, wrote in a note Friday.
The rebound had been fueled by renewed sentiment on Wall Street that the worst of the credit crisis -- including the threat of spiraling financial bankruptcies -- was past. The Federal Reserve's intervention with Bear Stearns contributed to that improved outlook. Plus, financial institutions in the thick of the credit crunch have been forecasting an end, or at least quantifying the magnitude, of the financial losses clogging up credit markets.
For the broader economy, several private-sector economists are looking for a second-half rebound, a view in line with that of Federal Reserve Chairman Ben Bernanke. "A lot of people are taking the Fed action with Bear Stearns as an inflection point that, with financial problems, we're getting our hands around those. That could be true," said Joseph Quinlan, chief market strategist at Bank of America.
Reflecting some of this good cheer, U.S. stocks had bounced off the mid-March lows set about the time the Fed and J.P. Morgan Chase & Co.
JPMorgan Chase & Co engineered an unprecedented bail-out of Bear Stearns. Stocks in financial companies, which have played a lead role in the credit crisis, have gained 13% including Friday's sell-off. The beaten-down U.S. dollar, for its part, has stabilized against some of its rivals, though it continues to notch new lows against the euro.
But a new worry has gained ground. Even as credit markets loosen up, the aftereffects of wide spreads and tight lending standards -- the hallmarks of a credit crunch -- could further punish an already floundering U.S. economy.
"The fear now in the markets is that we won't only have recession, but we'll have deep and prolonged recession. ... It's the knock-on effect of the credit squeeze," Quinlan added.
General Electric, the largest U.S. corporate borrower, showed that convulsions in the financial world can derail even the most diversified of firms. The conglomerate said that "extraordinary disruption in the capital markets in March" hurt its financial division's ability to sell assets and caused it to take higher losses on the current market value of its assets.
End in sight?
Finance ministers and central bankers from nearly 200 countries will weigh in with their own takes on the length and severity of the global financial system's recent troubles, and the related setback to the world economy, when they meet for the G7 meetings in Washington, D.C. this weekend.
Plenty on Wall Street, though, say further financial stresses like could surprise markets, sending stocks reeling as they did Friday and credit spreads further apart.
"People underestimate the impact troubles in financial markets have on other sorts of companies," said Steven Bleiberg, chief investment officer for Legg Mason's global asset-allocation division, which manages $6 billion. "We still have to deal with all the negative fallout from the collapse of the real-estate bubble."
Renewed optimism about the state of the financial system had been helping the market move higher, according to Bleiberg. But buying stocks based on an expected end to the credit crisis may be little more than wishful thinking. "There's more bad debt probably lying in wait. To say we're almost done is premature," he said.
Nonetheless, the optimists have a growing pool of forecasts and statements to draw on.
Goldman Sachs Group Chief Executive Lloyd Blankfein on Thursday became the latest investment banker to report a glimpse of light at the end of the tunnel, telling shareholders he felt like the financial system was closer to an end to the credit crisis than the beginning, according to media reports.
Morgan Stanley chief John Mack puts the U.S. economy in at least the ninth inning of the subprime crisis, and at least halfway through problems from commercial mortgages, reports say.
Recent outlooks on the broader economy also are projecting relief. Economists at Lehman Brothers, UBS and Nomura Securities all see a rebound in the second half of this year after a mild recession, or a least a contraction, in the first. Bernanke and some other Fed policy-makers are predicting a recovery in the second half, helped by the roughly $110 billion in tax rebates that the U.S. government will send households starting in May.
"We expect economic activity to strengthen in the second half of the year," Bernanke told lawmakers last week.
Meanwhile, estimates for the size of the pain facing the financial system have been trickling out of brokerage houses and research groups. Global financial institutions already have written off nearly $300 billion in bad loans and investments; they could have as much as $900 billion more to go.
The International Monetary Fund projected earlier this week that the potential losses from the credit crunch could top $945 billion globally over the next two years. Analysts at Goldman, which lost $1 billion in mortgage and securities investments in its fiscal first quarter, put the size of total credit losses at $1.2 trillion.
At the other end of the spectrum, on Friday Credit Suisse put a $650 billion price tag on credit-related losses from the U.S. banking crisis. Lehman predicts that the global write-downs could reach $400 billion by the end of 2008.
Putting a cap on the credit problems, even if it's a high one, has helped boost morale among investors. They spent the second half of last year trading without having much sense of the eventual size or severity a wave of subprime-mortgage defaults would have on the overall financial system.
"It's a critical piece of info for investors to chew on," according to Bank of America's Quinlan. "Whenever you can quantify the problem, it helps the investors evaluate the risk still in the market."
The S&P 500 Index has risen along with the improved sentiment, though it took a hard fall Friday on the GE news. The benchmark index is up 6% from its 52-week low reached March 17, one day after J.P. Morgan said it would buy Bear Stearns with as much as $30 billion in financing from the Fed. In a first, the central bank also opened its discount lending to securities dealers.
These moves appeared to assure investors that the Fed wouldn't let big Wall Street dealers go bust. They "put a floor beneath financials," Quinlan said.
Earnings signposts, economic worries
The next slew of indicators will come from the biggest banks and brokerages, which are expected to do a spring housecleaning of their questionable credits when they report first-quarter earnings.
Merrill Lynch & Co., Citigroup Inc. and several regional banks report earnings next week. It's likely to be bloody.
Analysts have slashed earnings forecasts in the expectation that financial institutions will wipe off as much bad loans and trades as they can. UBS AG already have announced a combined $23 billion in write-offs.
An end to that housecleaning is key to turning the credit cycle around. But one problem is that credit is still inaccessible for some, particularly in the mortgage market, and much more expensive for businesses there than it was a year ago. Those higher costs have lingered despite the 3 percentage-point drop in the Federal Reserve's federal funds rate since September.
Rates on Baa corporate bonds, or bonds backed by riskier but still investment-grade credit ratings, have risen to 6.87% from 6.47% a year ago. Their spread to 10-year Treasury notes has widened by 1.6 percentage points.
The costs banks charge one another also have jumped. While mortgage rates for traditional, 30-year fixed rate loans have fallen, the gap between those rates and 10-year Treasurys has expanded.
Even though we have had some good news, "you will have to see the end of write-downs before the fixed-income and interbank-lending markets return to normal," said Michael Moran, chief economist for Daiwa Securities.
Before that happens, consumers and businesses will continue to find it tough to borrow, making it harder for home sales and prices to reverse and exacerbating an overall slump in the economy.
"The consumer is stretched," said Russ Koesterich, head of investment strategy at Barclays Global Investors. "The U.S. consumer will need a long period to repair his balance sheet. It's unrealistic to expect a very quick, robust economic recovery."
Laura Mandaro is a reporter for MarketWatch in San Francisco.
This GE hit is essentially an admission that absolutely NO PART of this WORLD is exempt from the crushing credit collapse.
I had actually just looked at GE in stunned amazement for many months defy any sort of acknowledgment in the stock price that it was being adversely affected. I was just amazed, because GE is an economic behemoth, and they are in everything.
The Fall of GE is essentially a parallel to The Fall of The Have's: It's like the heretofore unaffected Westsider super rich are actually starting to take it on the chin. No one is exempt from this thing. And unlike all the prognosticators who simply cannot believe their eyes, this will be WORSE than anyone thought possible. This AIN'T the ninth inning of ANYTHING.
And I'm sort of surprised that no one posted the full article du jour. I know, I know. The prospect of warm weather kept me from the bloggage as well. Slow week. Here it is:
Median home sales prices in the first three months of 2008 fell almost 12 percent in Bend and 14 percent in Redmond from the first quarter of 2007, according to a report Wednesday from the Central Oregon Association of Realtors.
Bend’s median sales price — the price at which half the homes sold for more and half for less — for single-family homes on less than an acre was $306,500 in the quarter. Redmond’s median was $220,000.
Elsewhere in the region, home prices dropped 15.5 percent in Sisters, 27.5 percent in La Pine and 9.1 percent in Jefferson County, but prices rose 16.5 percent in Sunriver and 8.1 percent in Crook County, the report said.
The number of homes sold in Bend in the quarter dropped 44 percent, to 222 units, and 30.3 percent in Redmond, to 92 homes, according to the Realtors association’s report of data provided by the Central Oregon Multiple Listing Service.
Local real estate officials weren’t surprised by the declines in sales and prices, citing more stringent lending requirements, a lack of buying urgency due to excessive inventory, and concerns about the national economy.
“That’s the market,” said Tom Greene, president of the Realtors association. “Sellers aren’t going to get what they got in 2006.”
Greene expects prices to stabilize during spring and summer but said the market could weaken further in fall and winter.
At the end of March, Bend and Redmond had 12 and 13 months’ worth of homes on the market, respectively, Greene said. That means it would take about a year or more for those homes to sell at the current rate of sales.
The average days a house sat on the market before being sold in the first quarter was 185 in Bend, up 6.3 percent, and 179 in Redmond, up 20.1 percent. La Pine had the highest average days on market, at 288.
The national economy, which two authorities — former Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Lawrence Summers — said this week was in a recession, could pull the local housing market down further later this year, Greene said.
“We’re coming to the realization that the recession is one of the reasons we’re down,” Greene said. “There is some optimism — at least through summer — but it’s not going to be gangbusters.”
The year-over-year declines seen in Wednesday’s report aren’t surprising because the first quarter of 2007 was the strongest quarter last year, said Rockland Dunn, a broker for Summit Mortgage Corp. in Bend. The market started declining last June, Dunn said.
Several issues, including buyers taking their time to purchase and a perceived lack of financing, are keeping the market soft, he said.
The tightening credit markets and difficulty that some prospective buyers have in securing a loan have made it more difficult to close sales this year, said David Block, an appraiser for Bend-based Cornerstone Appraisal Group.
“Lending practices have changed dramatically,” Block said. “People can’t get out of their properties because values have dropped and they can’t get a loan.”
The region’s two highest-priced markets — Sunriver and Sisters — both maintained year-over-year gains in median sales prices, according to the MLS data.
Sunriver’s price gain was based on 11 sales, however, a 65 percent drop from the same period in 2007.
“January and February were not good for anybody out here,” said Mike Riley, general manager and principle broker for Coldwell Banker First Resort Realty in Sunriver. “But for March and April — so far, we’re up (number of sales) compared to the first two months.”
Heavy snowfall this winter contributed to the sales drop — so did people’s reluctance to drop their asking prices, Riley said.
“Sunriver is a second-home market — it isn’t affected in the same way,” Riley said. “A lot of owners haven’t budged in their prices or panicked.”
Jeff McDonald can be reached at 383-0323 or at jmcdonald@bendbulletin.com.
Funny. This is it. This is The Public Admission That Bend Is NOT Different, that the wave of destruction sweeping this country CAN happen here, that we are not the slightest bit exempt, and in fact are suffering through a price drop that is more severe than just about anywhere.
But it really wasn't a reason to stand up & cheer, or other such nonsense. I mean, if there is some sort of validation for this blogs existence, this would be it. Sure, we've had announcements of a severe slowdown is sales, but no really precipitous price drop.
And I guess it should be reiterated that there are some strange inconsistencies: A computation of months-inventory that looks 20-25% low, statements that Sisters is down & up, and the inane statement that March & April sales are up & "looking good!". Your standard retard could have "predicted" the same. It's like every Realtor in town has "discovered" this UNEXPECTED UPTURN in sales in the Spring. If you are a Realtor & are reading this, this is EXACTLY WHY you people are losing massive credibility.
This is it. It's started. The actual dropping of prices, and in a large amount, too. By my guess a 15% evaporation of home values wiped about $4 billion dollars out of the local RE housing equity stock. That ignores the inevitable hit that commercial is taking, and the monster hit on the Extreme Speculative red-headed stepchild: raw land.
But it passed with merely a whimper. And so it will go on.
We'll start to see the real slimey underbelly of just what this thing means soon: Property crimes, Bachelor scaling way back or closing, homelessness, mass vacancies downtown, Arson Fireclosures, and it goes on. It's really nothing to celebrate.
And the real horror is when it starts taking down regular people who participated to no extent. The de-leveraging is already hitting Main St. Even our favorite Mayor-To-Be, Dunc!
Had my Countrywide Home Equity Loan suspended yesterday. Now this shouldn't have bothered me -- I had no intention of doing anything but paying it off. Still, it was nice to know it was there.
Called them, and they said they were doing it to 'everyone' and that the terms could be 'reviewed.'
Asked the girl on the phone. "If someone who has made double payments on their initial loan for 21 months, and double interest payments on our HELOC, isn't worthy of credit, who is?"
This is just a chunk, and you should really read the whole thing. This thing will leave no one untouched. From GE clear down to Duncan, and you & me. I am as "delta neutral" on this thing as a person can be: I rent, cars are paid, I make ALL purchases in cash, my job is pretty removed from housing & credit problems. But I'm sure that I will at some point be adversely affected by this thing. If it's even from lessened quality of life by living here, that just makes me want to move on.
And as proof that you can learn things from the strangest quarters, I actually had a look at a book recommended by Tim a week or 2 ago, Fooled By Randomness. It's a fairly interesting look at randomness & it's effects on daily life, it's focus being largely on financial markets.
I use the term "strangest quarters" not to deride our brilliant Timmy, but the fact that I was reading a book about randomness, made me think about what a "long strange trip it's been" to the actual reading of the tome.
I was thinking about why I am married to my wife, and my conclusion is that it was a far from deterministic endeavor. It actually involved the strange intertwining of losing someone in my family, losing a job, the confusion of someone involved about these 2 events, their subsequent attempts to get me another job out of sympathy, and my subsequent meeting of my bride to be at this new job.
Such million-to-one happenstance is a common thread in the vast majority of my life. I am writing this blog SOLELY because I saw a short piece on the housing bubble many moons ago on KTVZ, I searched out & found BEM's original blog, I began commenting furiously, and started this blog because of the perceived vacuum of the closing of BEM's kick assery. This sum bitch has taken up a lot of my life. And I had no real Grand Plan for EVER doing anything like this. Almost pure chance.
Anyway, it made me distill my 2 fundamental investment thesii (Timmy?): If there does exist any sort of non-random, exploitable investment situation, to me it is these:
1) The stock market is NOT a pure random walk, there is an UPWARD bias. Otherwise we would be just as likely be where we are as we would stand to be at DJIA 30, at the depths of the Depression.
2) The prediction of the ascent of Bubbles is NOT a formula for making money. But the inevitable bursting of one comes as close to an investment sure thing as such things exist.
Now, I KNOW FULL WELL, that both of these statements violate some long-standing financial dogma: my "idea" of a random walk is that an "upward inexorable long-term bias" means that it's not TOTALLY random. And that even defining a "Bubble" is an exercise fraught with peril.
But there are some "rules of thumb" that seem to exist that allow one, on exceedingly rare occasions, to extract long term excess financial returns, by vaguely being aware of these 2 thesii, and they are really mirror images of each other:
1) Following extraordinarily negative volatile events in World Markets, (OK, I said WORLD MARKETS), you should accumulate stocks. This means once per decade type stuff... max.
2) Following"Bubbles" of extraordinarily large scale & magnitude, you can count on prognositcators to call for The End early & often. They will be wrong, and wiped from memory. The unraveling will be long, painful, self-reinforcing, and durable.
I am even more sure about Bubbles bursting than just about anything. Why? Remember the discussion about how almost any Bubble, left to expand without bounds, would soon consume all Earthly resources? And let to grow beyond that for just a few years would necessitate the creation of a solid gold sphere several times larger than the Earth to continue transacting. I'm not not sure of much, but I'm pretty sure that won't happen. Bubbles bursting are an investment sure thing. They will happen.
Notice that Buffett, whether wrong or right, rarely sells. He seems to follow some sort of philosophy based on Rule 1. He just buys when he believes a companies stock is well below some sort of "norm" valuation, and once he owns, he basically forgets about selling. I believe he bought US Air, watched it go higher, subsequently crater to single digits, publicly state he doubted things would get better, and the stock subsequently skyrocketed... and he sold.
He seems to realize that extraordinary volatility & randomness are inherent in owning stocks. He seems to abolish the "trading" mentality from Day 1. And he seems to make money in a way that seems a bit non-random to me. This is something at odds with this book which states flat out that there had to be a "Buffett" somewhere.
It should be noted that Buffett is a fairly extraordinary investor, but by purchasing via insurance entities, he employs huge amounts of leverage. His Super-cat lines WILL suffer a huge loss at some point, possibly after he dies, but he has piled up enough cash reserves, that he can currently swing bets in the billions without a problem.
The "Best Way" to capitalize on thesis 1 is to: 1) Wait for an exceedingly rare event of large negative magnitude. 2) Buy in wanton excess, and 3) Do not sell. Certainly do not be panicked out.
We are in the throes of thesis #2. I, and many on this blog, and the Original BEM foresaw that the bust would come. And if you recall, there were a non-stop litany of "experts" who said that it might come to others, but it sure as hell would not come to Bend. They were wrong.
And to me, it was no real guess that they would be wrong. If I had the slightest doubt, I would not have ever started this blog. Remember: I did NOT go along with CACB Shorters idea about shorting that stock, because I saw all sorts of peril & uncertainty in that particular bet. My margin of safety is quite thick. I did NOT fully understand their situation, and given a similar choice today, I would again decline.
And the nature of this thing gives people precious little way to capitalize. You can't "short" a house, Case-Schiller indices's notwithstanding. All I can do is wait for a bottom.
So capitalizing on thesis 2 is a bit harder, it is 1) Wait for the INEVITABLE bust of the Bubble 2) Do NOT buy when pundits tell you It's Over 3) Only buy when you are literally being PAID to enter a transaction, practically.
Problem there is these things go farther, harder, and longer than anyone dreams possible. And LONG after the rest of the country begins the slow agonizing process of recovery, we will still be mired in a financial quagmire. Bend, believe me, is going broke. It will be DECADES before this place recovers.
You can either leave or wait. And if you choose to wait, you should have 10 years of BURNABLE cash in the bank. But rest assured that at Rock Bottom, way out past 2015, there will be some spectacular bargains of a lifetime around here. Dunc bought Pegasus for $10K(?), only $5K down. It now provides a fairly comfortable living. THAT is a hell of an investment. Took 27 years, and gallons of sweat equity.. but still, not bad. That there is LONG WAVE, buy at the bottom thinking.
Author Nassim Taleb would have you think similarly that there had to be a "Duncan" who capitalized at the bottom, lo those many years ago. And he "may" be right. But if you are aware of such bargains and believe that economic depressions are not permanent, they just feel that way, that you can buy post-Bust at prices that may never be seen again in your lifetime. But today, is not that day.
Remember: Life Is Funny. It is 90% luck, and 90% certainty. If someone told me 3 weeks ago that it'd snow almost every day this past week, and it'd be 80 & sunny by the weekend, well... let's say I'd have bet against it.
Bottom line: This is NOT the ninth inning, it's the second for Bend.. maybe the 4th for the rest of the U.S. We are going below $200K medians. This town WILL go broke. Cessna IS LEAVING. This is going to hurt like hell. This is all pre-ordained, at least it is to the extent that anything in life can be.
Realize you are living in a fairly extraordinary set of circumstances, in a extraordinary place. The type & severity of financial Armageddon that will happen here, won't happen to 99.95% of the U.S. population in your lifetime. But I am equally sure that it will happen again... someday. Probably long after I and my kids are dead.
But at the end, ROCK BOTTOM, you might have the chance to get an asset, investment home(s) or business, that pays for an acceptable lifestyle for a pittance. THAT is what you should stay attuned to, that is what you should look for. But we are nowhere even remotely close to that today, nor will we be for years. Look for owner financing, look for people who will GIVE you money to get themselves out. Because that is all they will care about at Rock Bottom.
Rice shortage fears prompt some restrictions (4/24)
