Bend: No More Bloody Marys, Let The RE Bubble Hangover Commence

Welp, you know how when you wake up a little "salty" from an especially brutal month-long bender of hard partying, and go straight to the hair of the dog that bit you? But then there even comes a time when that isn't enough to get rid of the pangs of reality that the party is over, and even the hangover treatment is over, and now things are just horrible. Right?

Yes, that time arrived this week.

There seemed to be this mass realization all at once, that Bernanke's Bloody Mary The Morning After, while potent & temporarily alleviating almost unspeakable horrors, has itself run out of steam. Here's a quick view of the hangover's hangover, via a 5 day snapshot of the DJIA:

DJIA - last 5 days

We got whacked for just over 500pts this past week. Probably not seen as a big deal in the context of the almost 1,500pt rise from bottom to top since March. But I think this is the beginning of Yet Another End. You can see the progression of "Ends" here:

DJIA - 2 years

You can see the initial Subprime Surprise way back in February 2007. That was brushed off as a Tsunami False Alarm, and the party went on like nothing happened.

And so it went with all-time stock market highs being made as recently as last Fall, with nary an interruption. Until early this year when Wall Street Wonks figured out that it wasn't just "us" anymore, it was "them" too, when Bear Stearns went belly up.

And you might wonder just where Bend is with respect to the rest of the country.

CACB - 5 years

Yes. Here we are at fresh new 5 year lows on Cascade Bancorp, The Little Bubble Bank That Could.

As bad as things are in the rest of the country, they are orders of magnitude worse in Bend. And they are awful bad everywhere else, now that Bernanke's Bloody Mary has worn off:

Fed lowers growth forecast, raises inflation view

By Mark Felsenthal and Glenn Somerville Wed May 21, 4:39 PM ET

WASHINGTON (Reuters) - The Federal Reserve on Wednesday slashed its 2008 U.S. economic growth forecast and signaled that mounting concerns over inflation would make further interest rate cuts unlikely.

"Several members noted that it was unlikely to be appropriate to ease policy in response to information suggesting that the economy was slowing further or even contracting slightly in the near term," the Fed said in minutes of its April 29-30 monetary policy meeting.

Fed officials said that cutting benchmark interbank lending rates by a quarter percentage point to 2 percent at their last meeting was "a close call," reinforcing the impression that they may be on hold with any further interest rate moves.

"If you had any doubt that the Fed is signaling a pause, that doubt is gone," said Christopher Low, chief economist at FTN Financial in New York.

In an accompanying forecast, the Fed cut its projection for growth to a scant 0.3 percent to 1.2 percent in 2008, down from the 1.3 percent to 2 percent it estimated three months ago.

At the same time, the Fed -- the U.S. central bank -- said it expects inflation to remain "elevated" and unemployment to increase "significantly."

Stocks tumbled, with the Dow Jones industrial average closing off 227 points, or nearly 1.8 percent, and Treasury debt prices pared losses on the Fed's forecasts. The dollar fell against the euro and the yen.

U.S. short-term interest rate futures expect no imminent change from the Fed but point to rate increases in the final months of the year.

The rate cut on April 30 was the seventh in a series that has taken the interbank lending rate down by 3.25 percentage points since September as the central bank moved to buffer an economy battered by the housing downturn and a credit crunch.

The economy has expanded at a sluggish 0.6 percent annual rate in both the last three months of 2007 and the first quarter of this year.

At the same time, however, record high oil prices have pushed up energy and food prices, raising the consumer price index by 3.9 percent in the 12 months to April.

Policy-makers felt at their April meeting that the risks that growth could slow were more closely balanced by the risks that inflation could spike higher.

"Members were ... concerned about the upside risks to the inflation outlook, given the continued increases in oil and commodity prices and the fact that some indicators suggested that inflation expectations had risen in recent months," the Fed said.

Participants at the Fed's meeting were roughly evenly divided as to whether the risks to the inflation outlook were balanced or were tilted to the upside, the minutes said.

The Fed boosted its forecasts for inflation to 3.1 to 3.4 percent in 2008 from its January 2.1 percent to 2.4 percent projection for the personal consumption expenditures index. It expects unemployment to rise to 5.5 percent to 5.7 percent for the year. The jobless rate was at 5 percent in March, but employers had cut jobs for the fourth month in a row.

The Fed warned that the risks to its scaled-down growth projection remain to the downside, particularly if house prices continue to slide lower.

"Participants saw little indication of a bottoming out in either housing activity or prices," minutes of the meeting said.

Fed officials took some comfort from signs that fragile credit markets, which were severely shaken by doubts about bad credit, appear to be on the mend.

"The generally better state of financial markets had caused participants to mark down the odds that economic activity could be severely disrupted by a further substantial deterioration in the financial environment," the minutes said.

Yup, that there says it all.

No more rate cuts (ie Morning After Bloody Marys). Higher unemployment. No more credit. Higher inflation. Lower growth.

See, that last one still shows they have a sense of humor. "Growth"? Yeah, right.

Worst Of All Possible Economic Worlds, that's what that is. Everything going straight into the crapper simultaneously. That's what we call STAGFLATION. Everything costs more, but you get fired anyway, and you are ultimately rehired at dreadful Illegal Alien Wages.

And let there be no doubt about the source of all this, it's The Housing Bubble. I know, to many on this board, that's so obvious it's literally retarded to think otherwise. Ahem:

Deschutes home prices see further declines in first quarter (excerpt:)

Despite Deschutes County’s recent declines, home values have grown 74.96 percent over the last five years, the report said.

Linda Williams, a co-owner of Tamarack Homes, one of the four builders developing the 458-lot RiverRim subdivision in southwest Bend, said the softening of home prices in the last few quarters was inevitable, adding that price declines are due to downward pressure from people who have been forced to sell.

Nevertheless, as the traditionally strong summer sales season is about to begin, Williams believes real estate prices will hold steady, perhaps even climb.

“Until we get through the summer season and to the end of October, we’ll have a better picture, but I don’t see there will be further declines in the near future,” Williams said.

Yes. It DOES continue. In a story about the DECLINES in Deschutes County home prices, there is, AS ALWAYS, a plug by local RE wonks telling us to buy, and this whole temporary bubble nonsense is over, at least locally.

And there are people who BITE on this crap. They actually go out & look for homes & BUY THEM.

Just a flashback folks: These are the same people who tried to PANIC US INTO BUYING because if we didn't WE WOULD NEVER, EVER OWN A HOME EVER AGAIN.

THAT was actually more plausible than the idea that Bend RE is headed up, up and away from here. It ain't. From the same Bulletin piece:

The last OFHEO report, for the period ended Dec. 31, 2007, said home prices in Deschutes County depreciated 1.44 percent in the final quarter of 2007 compared with the year’s third quarter, and 2.84 percent when compared with the fourth quarter of 2006. That report ranked Deschutes County at 236th in the nation for appreciation — meaning 235 MSAs had better rates of appreciation or lesser rates of depreciation — out of a total of 291 MSAs.

Remember the Top Spot? Bend was Numero Uno? Then we were Top 5? Then Top 10?

Then it got awkward, cuz we had to do stuff like, "Bend, We're Still Top Quartile!", and such?

Right. Now we are square in the LOWEST 20% of appreciating MSA's in the U.S.

People DO NOT come a running to invest in the LOWEST 2 DECILES from my own experience. I don't know, maybe we should call the Mayor of Flint, MI and ask how it's going.

So what's the Big Picture Summary?

1) We've got runaway INFLATION. Do not believe the U.S. Government, they do all sorts of stuff to convince you that we're sitting around 3-4%. 2 words:

Got Gas?

Right, we are RIGHT NOW in a state of runaway inflation. That's BAD. But it gets worse.

2) U.S. homeowners, probably the largest amalgamation of wealthy people on Earth, are getting poorer at an rate UNTOLD IN THE ANNALS OF RECORDED HISTORY. Case-Schiller will be out Tuesday, and it will almost certainly show some of the greatest losses we've had so far.

And as an aside: We're starting to take for granted these little 1 and 2% declines, as small or insignificant. But a 1% drop in US home values is a loss on $20 TRILLION. 1% is a measly $200 BILLION. And given the ~70% ownership rate in this country, that's $1,000 loss for each person inhabiting an owned home.

Fannie Mae, and others have predicted total losses of 25%. Maybe more. In Bend the losses will be greater. FAR greater.

3) Unemployment is exploding locally. It's marching steadily higher nationwide, but it's already at Bad Old Days levels in Bend:

Bend Unemployment - Jan -Dec. MAX, AVG, and MIN values, 1990 - Date

Here's a graph of Bend unemployment, as viewed through a "seasonal" filter. That middle line is the overall AVG unemployment for each month throughout the year, and this chart covers every month from Jan 1990 to now.

The purple and yellow lines are the MAX and MIN figures ever recorded for each respective month, in that entire period. ALL unemployment figures since 1990 lie between that MAX & MIN range.

The lowest unemployment ever recorded was in Oct 2006, at a scant 3.8%. That 11.1% high mark was recorded in Feb 1994.

And it's plain to see the high cyclicality of Bends economy. The best months are May -Oct. Things get worse from there, usually bottoming out in Feb. This is why I said "Things will get better", last Feb. They always do.

But take a look at how things are going once you factor OUT the cyclicality. Here is a graph with the AVG subtracted OUT of the figures:

Bend Unemployment, Cyclically smoothed, Aug 2006 - Apr 2008

Yup.

See where we just jumped up above 0? That means, after a run that brought us as low as 3% below normal yearly trend unemployment, we have actually entered the unhappy side of Bends average unemployment.

And that's "STATED" unemployment. As anyone who's been here more than 5 seconds knows, Bend is the home of the Independent Contrator, and our unemployment is ALWAYS better on the Good Side, and much worse on the unhappy side of the unemployment grind.

Note that although nominal unemployment peaked in Feb this year at 8.2%, as it almost always does, and it has since gone down to 6.8% for Apr, that in cyclically smoothed terms (ie subtracting out the AVG unemployment rate for each respective month), things are getting worse by the day.

We're in a near-unbroken uptrend in "real" unemployment around here. And it shows NO INDICATION of slowing down, much less reversing.

So where was I? Runaway inflation, massive loss of wealth, unemployment.... oh right

4) Bernanke has said "no mas" to rate cuts. This means the pick-me-up, day-after Happy Hour is over. This means the Main Street can't look forward (always forward) to ever lower rates, that make the number of craptacular ROI-positive projects expand ever wider. That means this extremely marginal source of growth is done.

It was only ever a figment that this would help, but it was a figment that Wall St seemed to cling to, to the point of myopia.

What this "no mas" statement really seemed to raise the specter of was No More Bear Stearns Bailouts. AKA: The Fed is out of The Game. Heads will roll, banks will fold, nothing is Too Big To Fail. THAT is the sort of thing that gets the stock market down.

5) Finally, it is just Quagmire Time. Nothing moving, nothing happening, economic activity just grinds to a halt. Maybe this is best illustrated through example:

Here you see MLS listing 2802501.

View Ridge STD, 2,156/sf, 4 bed, 2.5 bath, $299,900

It's your standard STD nightmare, thrown together by Triad Homes, over on the Eastsiiiieede.

Then, literally next door, you find a clone (MLS 2801622) for sale, of course:

View Ridge STD, 2,156/sf, 4 bed, 2.5 bath, $389,900

Yup. The Triad Borg Mothership crapped these two STD's out at varying times during the Bubble, and has left at least one of these people in a totally untenable position to sell their house.

I should note that both have been on the market quite awhile. Both are overpriced, it's just a matter of degree.

This is the state of RE all over Bend. Identical homes in every way, differing in price by 30%!

You might think, "Hey! That $299K shack is a Great Deal!". Maybe. But I think it's much more a signal of an Extremely Unhealthy Market. In the macro-view it's just a signal that many home values in Bend are being "made up" by the sellers BASED ON THEIR OWN CIRCUMSTANCES, and not the "market price", whatever that means.

That is what is truly scary around here. Prices, due to the vacuum of financing, lack of historically dependable comps, and a market that has literally siezed up, are almost impossible to figure out.

What's the "real value" of these 2 homes? They are almost certainly within 1-2% of each other, because they are within about 100ft of each other. It certainly seems that they are NOT worth $389K. And even $299K seems doubtful, as that home has been on the market quite awhile, without a taker. The only place to even come remotely close to a market bid is this airdropped number at $259,000 (MLS 2713223):

View Ridge STD, 1,859sf, 3 bd, 2.5 bath, $259,000

This STD nightmare briefly went pending for Assist-2-Sell, but promptly fell apart, and is now back on the market.

So we have sellers, in vast, VAST numbers simply making up prices in Bend, based on NOTHING but what they paid. Identical homes, wildly different prices; that just means an incredibly inefficient market. That means a High Cost Market.

This is a big problem everywhere in the U.S., but it is a near-crippling problem for Bend. There's no indication of where the bottom is.

Now... I can't help but re-print a recent blog post by Dunc:

Article on KTVZ.com of Bend being the 'new' Boulder, with this comment:

"Isn't that awesome?" Alana Audette, executive director of the Central Oregon Visitors Association, said in reaction to the article. She echoed one theme: "A predominance of new business startups here is largely from people who came here on vacation" and liked what they saw.

Oh, my God. I've told this story before, but it bears repeating. A few years ago, a lady opened a Mystery bookstore in the Brooks Alley, facing Mirror Pond Parking lot. I won't call it Brooks 'Street' because there is no vehicle access. Anyway, it was a very nice store, especially for us mystery readers. She really knew her stuff.

But I thought it doubtful that she could cut the customers down to such a small portion; and I especially doubted her location. Finally, I asked her why she had opened on that spot. "When I used to visit, this alley was absolutely packed. I'd come for the Market."

In other words, she had come on probably the only days in the entire year when Brook's Alley was super busy, and thought that was normal. Unlike the COVA director above, I don't think luring tourists into opening businesses in Bend is "awesome." I think it's a recipe for disaster.

1.) They most likely visited on Peak days and hours.
2.) They most likely moved from a bigger town for the small town feel.
3.) They haven't lived in Bend long enough to really get a handle on it.

There seems to me to be only three ways to understand local business conditions: either you do a heck of a lot of accurate research. Or you live here for awhile. Or you have extensive experience in the field you choose, and can make educated guesses.

The most important thing a business needs to do to survive is to calibrate as closely as possible what the most likely sales levels are going to be, and to carry the proper amount of inventory to get there and to have overhead low enough to be covered by that level of sales. How the hell do you know that? Especially if you are from out of town? Especially if the business is a dream business and you've never done it before?

Lets say you open a restaurant that does an average of 50 tables worth of business a night after 3 years. If you opened with 75 tables for peak hours, and you can still survive with 25 tables business, than you guessed accurately. But if you opened with 100 tables, you overreached. And every business has the same strictures. The problem with doing demographic research for Bend, it that it will probably mislead you.

Bend really is different -- most people have been here for five minutes, for instance, which completely changes the whole marketing dynamic. If, as is likely, you come from a more populated area and you've seen what you perceive as successful businesses and that Bend is lacking such a business -- your conclusion might be that Bend needs such a business. When your conclusion might ought to be -- that Bend doesn't have such a business for good reasons.

That if you actually knew any better, you'd know that several such businesses have already come and gone. And so on.... I've seen many businesses open that had great presentation, great inventory, great service-- and still failed, because there just weren't enough customers. Bend's population is rather dramatically higher during the peak season, when most business opening tourists are visiting.

But that's like visiting a restaurant on a Saturday Holiday night and expecting that to be average. They need to come back in February and November. Take a clicker and stand on the street corner and count how many people walk by, something like that. So by all means, open a business in Bend. But live here for a year or two or three, first.

Yup. Good Old Bend. Market 'em, reel 'em in, net 'em, fleece 'em, and leave 'em for dead.

That's our modus operandi. Fleecing Noobs For The Bend Dream. And have no doubt that the RE bubble here had a strong self-reinforcing effect on parting these Noobers from their cash. Untold numbers of Amenity Businesses have opened, and will close the second their 3 year leases are up, or the owners completely run out of cash, whichever comes first. Do not underestimate the number of people who have gone this route.

Bend: The Biggest Equity Sink Hole In America. There will almost certainly be more money lost per capita in this town, than anywhere, over the next decade.

And in a similar vein, you can start to see the beginnings of the Inevitable Commercial Property Implosion now sweeping this town. Just a short hop between 3rd & Wall on Greenwood, shows an astronomical vacancy rate already shaping up for downtowns Eastside corridors.

I'm sure the piece in todays Bulletin, while sprinkled with the usual false hope, explains this problem at least in part:

Too many commercial buildings, few tenants

Tighter market poses problems for landlords, but some businesses see an opportunity

(Anyone have a copy/paste of this one for the comments?)

Remember: Commercial in Bend was supposed to be TOTALLY IMMUNE to the residential downturn. Dunc & others called bullshit on this long ago, and of course, were dead right.

GDP & homeowner wealth are literally joined at the hip. No consumer spending, and business goes to hell. And much of consumers disposable income has come from their homes over the past decade. It is hard to overstate the importance of Mortgage Equity Withdrawals, and their effect on GDP:

Mortgage Equity Withdrawals Effect on GDP

Without home equity lines being drawn down, our last "slowdown" would have been a full fledged 2 year recession. As it was, it was just a little bump in the road.

But now, We Owe. And we owe for YEARS & YEARS of spending. All them Hummers, fake titties, snowmobiles, and all the rest did not come free:

Consumer Debt

We owe just TRILLIONS, and ALL OF IT is either collaterallized by assets FALLING IN VALUE, or by nothing at all (credit cards).

So we are going to suffer. But the Real Losers will be banks, as they always are. And business in general will suffer. It's really an unheralded event taking place. Even George Soros doesn't think we've seen anything like this:

Seeing Signs of ‘Systemic Failure’

“This is not a normal crisis,” George Soros, the hedge fund pioneer turned philosopher, said today to a group of reporters he had invited to lunch at the World Economic Forum. “It is the end of an era.”

It was the “era of superleverage,” he said, and regulators have not appreciated how serious it is. “Systemic failure,” he said, may be taking place.

This is exactly what's happening. If I had to put this in "movie-terms", I would equate it to "Escape From New York". We are entering some sort of post-apocalyptic nightmare scenario. If this doesn't put to bed Dunc's idea that I'm "not negative enough", I don't know what will!

Remember: Each 1% decline in home prices equates to a loss of about $200 billion. They've estimated that banks & other financial intermediaries are expected to face worst-case scenario losses of a trillion dollars.

We've already LOST THAT, and more. Bernanke has groggied us up with unlimited Bloody Marys, and has blurred our vision for just a few more months. But the losses have done NOTHING BUT INCREASE DURING THIS MORNING HAPPY HOUR. The problem is NOT over, and in fact, it has gotten worse with our Speak No Evil, See No Evil, Hear No Evil Fed policy.

Have no doubts through the Realtor-based rosey-palm, Buy Now bullshit, the DJIA respites, and all the other blather, that we are entering a state of financial Armageddon, and absolutely NOTHING can stop it.

And Bend will go down harder than ANYWHERE on this Planet.

OK, to end this thing on a lighter note, this piece from Slate was a great commentary of home buyers remorse. If you've EVER owned a home, you KNOW that it is fraught with problems, and this author does a pretty good job explaining how bad things can go:

Flip this house. Please!

After two decades of renting, I finally bought my own home. What the hell was I thinking?

By Steve Almond

May. 23, 2008 | Thanks to the mortgage crisis and the inevitable mortgage crisis legislation, we have heard a lot of bloviating recently about what Rep. Sander Levin, D-Mich., calls "the American Dream of homeownership." Yes, along with shopping and invading countries that pose no military threat to us, homeownership is now part of the American Dream lexicon, to be invoked as a single compound noun -- like a German word, only uplifting. There is only one problem I can see with the equation of homeownership to patriotic bliss, and that is homeownership itself. How vastly overrated and costly and crazy-making an enterprise it turns out to be.

I am qualified to say this, mind you, because I entered the holy circle of homeownership two years ago. To say that I was naive about the ensuing realities would be fair, but inadequate.

But then, I had a wife who was six months pregnant and needed a nest to call her own and I, too, figured I was ready to stake my claim after more than two decades spent renting (my nadir being the dungeon studio in El Paso, Texas, whose bathroom had no door). And besides, as I was assured by the panting chorus of fellow homeowners who take it upon themselves to advise you in such situations, real estate never-ever-gabever goes down, so I wasn't even spending my money, I was just "investing" it.

Thus, in the spring of 2006, my wife and I invested in a small cape bungalow in a suburb outside of Boston. As to the exact figure we invested, or promised to invest, I would prefer not to disclose the sum for the sake of privacy, but also because mentioning it causes my testicles to do that thing where they retract into my abdomen.

I mean this as no offense to the home itself, which has, on balance, given us both much pleasure. It is not the house's fault that I failed to buy it sooner. This we can safely blame on my own protracted adolescence and undependable income.

Nonetheless, it bears mentioning that our purchase served as a bellwether for the ensuing housing market collapse. It was as if the keepers of that market were saying, "What? Even Almond has a house now? Time to bail!"

This first shock of homeownership (that property values sometimes go down) was followed by a second: hidden costs. And by "hidden" I mean, of course, "those costs I was too lazy or negligent to consider beforehand."

Property taxes, for instance. My annual bill amounted to half what I had paid in rent. There were fees for water and garbage collection and heating oil and insurance. As a self-employed person working at home, I lost that fat tax deduction I used to receive for rent payments. If only someone had told me -- or pointed me to the right book, perhaps "Homeownership for True Dumbshits" -- I would have at least tried to scare my wife into a cheaper house.

But all right, too late. The check cleared. Now we owned this cute, if somewhat cramped, domicile. The appliances were newish and the yard was immaculate and we each had an attic office, even if they were built to scale for leprechauns. I figured we could coast for the next five years.

Then it was high summer and we needed to install air conditioners, to prevent my wife from perishing. She needed other things, too -- drapes, a dresser, a new filing cabinet. And because my own household know-how maxes out at the stage known as putting together a lamp from Ikea, I had to beg my friend Billy to come over and do all this stuff for me, which he did, for free, if you don't count the retail value of verbally emasculating me for hours on end.

And so we proceeded through fall and winter. The paint continued to peel and the driveway asphalt cracked and the bricks bordering our garden came loose and the insulation in our attic crawl spaces began to congregate in toxic, cotton-candyish tufts. These were all fairly manageable -- by which I mean, fairly easy to ignore -- until the structural engineer arrived.

The structural engineer arrived at the behest of his client, who was considering buying the house two doors down. The problem was he'd seen some "step cracks" in the foundation and wanted to see if we had the same damage. (Spoiler alert: We did.)

"Is it bad?" I said.

"That depends," he said.

"On what?" I said.

The structural engineer squinted.

"Should I be worried?" I said. "Can you at least tell me that?"

"I'm really just doing a purchase consult," he said, and scurried off to sow fresh structural doubts in the mind of his client, who did not, alas, become our neighbor.

The cracks in the foundation (about which I could do nothing) quickly led to cracks in the cement wall and granite stone path that abut our garage. I decided, after a brief consultation with a contractor, that we could do nothing about these for the time being, short of prayer. I refuse to go into detail about the water damage. It's already been a long day.

I will mention, though, that my wife is fond of telling friends of ours that if we ever "come into money" she hopes to knock out a few walls in the basement and create a second bathroom with a Jacuzzi tub.

When she says these things it calls to mind those reality TV shows whose central myth of transformation centers on the home. "Extreme Makeover: Home Edition," "Trading Spaces," "Flip This House" and so on. These programs are the new pornography of the landed middle class, and they are, in their own way, as cruel as the old pornography. Just as the libidinal 13-year-old will someday discover that not all naked women look like Playboy centerfolds, so too, the first-time homeowner will have to learn that refurbishing your den, even on national TV, does nothing to heal the cracks in your foundation.

Also: the yard. By our second spring, the neighbors had begun to notice that we were somewhat laissez-faire in our approach. We are blessed with very nice neighbors, by the way, all retirees, and it pleases them to landscape with ferocity. Such is the ornamental fervor of suburban culture.

My wife claims she understands this. Still, as she gazes upon their iridescent lawns and geometrically perfect flowerbeds, it is hard for her not to feel a twinge of shame.

"Our lawn is eroding," she informed me recently.

"I don't think that's the right word," I told her.

"What would you call it, then?"

I looked out at the scabs of browned sod and dandelions. "Eroding is when the soil disappears," I said, professorially.

This exchange is characteristic of my overall attitude when it comes to home improvement. I am both self-righteous and incompetent, a truly American combination. The result is a kind of flustered inaction familiar to those who have lived in tenements. Last month, for instance, my daughter dashed out of my office and nearly plummeted down the stairs. I managed to snatch her up, but in the process fell backward and knocked a crater into the flimsy wall of my wife's office.

I have refused to hire laborers to repair the crater, arguing (somewhat plausibly) that we don't have the money and (somewhat less plausibly) that I will do it myself. My stopgap solution has been to push an end table in front of the crater.

In a sense, our political leaders, in tandem with the retail sector, have offered the same cheap coverup. They've portrayed homeownership as a birthright and a breeze. Just plunk down your 10 percent, zip over to Home Depot, and you're home free.

But maybe it's time to admit that many Americans are like me: unfit for the privilege. We buy homes we can't afford, we treat them like piggybanks, and often we lack the aptitude or interest required to care for them. Would it really be such a heresy to return to the good old days of, say, early last century, when fewer than half of all Americans owned their dwellings, as opposed to the nearly 70 percent who do today?

I suspect, as the cheap oil era dwindles and the price of upkeep surges, we'll see a return to collective living spaces. Greater density will mean less privacy. But it might also rescue us from castles we were never truly ready to rule.