The Collapse of Bend, Continues...

Well, it's coming fast & furious now, Folks.

A seeming swarm of layoffs from all corners. Epic Aircraft & Jeld-Wen should come as no surprise. But Cascade Heatlhcare? That stuff is supposed to be immune, right?

No, seems when you do not have money, that visit to the doctor that used to be required can become "elective" pretty quick. You won't see a lot of folks out China Hat Road way clogging St Chas waiting rooms.

Nope, nothing is immune, not healthcare, not recreation, nothing. We've seen store closings of little guys (Westside Video, Bond Street Market, childs clothing seller Bonkerz), big guys (Office Depot, Linens N Things), and we'll see more in the near future of all kinds (Gottschalks, Cessna, City of Bend, The Bulletin, Les Schwab).

Retail is just the "face" of a slowing economy. There's plenty of "back office" type businesses closing; little public face, but quite a few jobs lost just the same. Even our little local Gubmint is in a constant state of layoffs.

We're at 10% unemployment, businesses are closing so fast it's hard to keep count, we've watched our local medians drop from $396,000 to $226,000. OK, this is the shit storm this blog has been yammering on about for 2 years as INEVITABLE. It's here. This is it. And NO, it is not even close to ending. The damage is not even close to being done.

So what would you do, if your own personal life looked this shaky? Do you fall back on (hopefully) saved up reserves? Do you keep piling up the money in a Federally Insured bank account, if you're lucky enough to still have a job? Do you scale back your eating out? Do you scale back the wine from $40/bottle to $15? Do you actually, God forbid, start cutting some of this stuff out entirely?

Or, do you borrow to the last of your ability and buy a new SUV? Do you expend the last of your reserves on building a fence around your back yard? Do you go for broke, and throw it all down on a new investment house with negative cash flow for as far as the eye can see?

See, to me, the answers to these questions are just ridiculous. It's pretty obvious. You STOP spending. OK, you do that whether you still have an income source or not. There are some people who do this innately. They're called Rich People. Well, they are at least financially insulated. People I know who are doing well right now have been saving their pennies. And I mean pennies. They don't make a King's Ransom. But they do save, quite a bit more than most people. They aren't really "cheap", they just have "lean" tastes.

But not our City Council. Not our local Paper. No.

No, they are advocating that we all spend as much as we can as fast as we can.

Yeah, we'll get great stuff, like a shed to house our broken down bus fleet. Or some blown up rock out in the Juniper Ridge badlands.

Costa is trying to convince us that we should run out and BUY cars with incentives that actually don't exist West of the Rockies. And by gum, with medians in the low $200's, "Some interest rates also at historic lows, could drive buyers back into Bend market".

Uh huh. Read the piece, and you'll find that "Some" interest rates applies to Bill Gates' FICO, not yours. Costa just doesn't get it.

Brucey posted in the comments that we're getting 100+ NOD's a week. That's 100 people (well, maybe not quite, but you get the idea) who will not be able to buy shit on credit for 7-10 years. You can lower the rates to ZERO (or less), and these people WILL NOT get extended one cent.

The Fed can (and has) pushed the interest rate/monetary policy string as far as it can (rates at 0%), and nothing has changed. What's funny is that this country is simply returning to "normal". We're returning to fairly "normal" credit restrictions.

But there's the rub. For about 7-8 years we extended credit to "non-normals", people who could NOT afford it. No income to afford the debt service. So how did it go on for all those years? Easy, simply "co-mingle funds", ala Summit 1031. Make "refi" money your New Income Stream. All that nasty old loan debt, is replaced by an even bigger loan, and what's great, is I Get Paid To Do It! Old $350K loan replaced by $500K refi loan and 2 years from now with a crooked appraisers help, I get another $175K, ad infinitum. Presto, Huge Income, No Work, Forever.

Well, the Minsky Moment arived on this Enormous Teetering Edifice, and the whole thing began toppling the middle of last year. And NO WHERE did it stand taller, grander, more magnificently than Bend Oregon. No where. It literally DEFINES this place. Scam piled on graft piled on deceit piled on fraud piled on schemes.

No where in the USA is the local economy more exposed to the crushing forces overwhelming our national economy than right here. I've said it before, Sit Back And Witness The Horror, Ladies And Gents. You are about to see an entire small city rip itself to pieces.

The Hollern/Moss/Costa Triad is crumbling. Hollern drank the Kool-Aid and bought Ironhorse & Yarrow. Moss financed that, and much, much more. Costa is in a 100% Dead industry, and is desperately trying to hold the buggy-whip edifice that is The Bend Bulletin together.

Again, you are about to witness a town completely implode on itself like nothing that has happened to any major town in the USA in 80 years. It's going to happen right here. This town will be the stuff of Legendary Collapses. This town will be the stuff of future editions of "Extraordinary Popular Delusions & the Madness of Crowds".

You're seeing it now. Our unemployment rate is at 9.9%. That's just amazing, but it will get Far Worse. It's going to get worse than you or I thought possible. The Viscious Cycle of the Great Deleveraging will take down HALF this town.

Of course, Costa will tell you with the Last Dying Breath of The Bulletin that Aspe... errrr uh, sorry, Bend is made up almost completely of multi-millionaire transplants from Saudi Arabia, Dubai or somewhere, and so employment doesn't really apply to this place.

Ummmm, OK, a little test. I work for a living. Do you work for a living? Do most of the people you know work for a living? Of course, I do know retirees around here. But not many, certainly not many in proportion to the number of people I know who Have To Work For A Living. This is a WORKING TOWN. Employment DOES matter.

And Bend has NEVER had a decent employment base. This place is built on low-wage shit jobs. And those are being lost in waves. No big deal, it's always been that way. But now we're losing the small, core base of family-wage level jobs. Fuck Gottschalks, we're losing jobs at St Chas & Les Schwab corporate.

Head over to BendBB (anon proxy ONLY!), and check out recent price changes. Used to be that you'd see only a few price cuts in the double digits. Now their practically ALL double digit percentage cuts in price. And it's worse than it appears. Some of those homes have been flipped between Realtors like the crack-whores of RE that they are. Desert Skeeze listings can be counted on to have changed hands several times.

When you look at the DOLLAR CHANGE in prices, you are looking at INCOME REDUCTIONS. These reductions USED to be INCOME GAINS, and these gains fueled Deschutes County growth for the better part of 30 years. This place slowly but surely went from one of the most undervalued to The Most Overvalued RE market in the country. The whole REFI-AS-INCOME game was played NOWHERE more intensely than it was here. And it was played far, FAR longer. In fact, a very precious few can attest to even pretend to remember the Bad Old Days of the laste 70's. This Game has been going on for 3 DECADES in Deschutes County. Not 5 years. Not 10 years. 30 YEARS.

Don't think the Great Unwinding will be over here when the rest of the USA is done, it won't. Here's the point:

There won't be a recovery here. Not in the way you think about it.

Remember last year, early, when the market started cracking here? People who dodged the bullet renting (Timmy, etc) started talking about buying at fantastically lower prices? Like "$250K"?

OK, so we all know NOW that is a suckers game. It's become clear. But that Speculative Mindset is STILL HERE. The idea that I will BUY AT THE BOTTOM in Bend.

And what? What comes after? It's unspoken, but it's there...

Yes. That little SPECULATIVE VOICE that tells you that YOU will make a great deal on a house... and then... the market will recover... AND YOU WILL GET RICH! Yeah!

OK, this very vague and almost unspoken mindset subtley infects EVERYONE HERE. Everyone reading this blog probably has some deep-seated desire to scoop up the bargain of a lifetime at what seems to be a ridiculous bargain prices.

BEWARE. OK. This is NOT going to happen.

Here's a little chart from the Jap Bubble:
You can see that once the collapse began, it was still going strong 17 YEARS later. Bend is going to have a Hockey Stick decline. It'll fall for years & years. And then it'll just flatline. Dead as a doornail, no Big Recovery, no Return to Normal, no Speculation, no Good Times.

The malls will be half empty, as will downtown. Most of the STD's ringing the Eastside will have been sold off piecemeal, and will have weed-infested half-built shitshacks sitting on them. HALF the retail will CLOSE. HALF the restaurants will close, at least. Cascade Business News is GOING TO CLOSE. The Bulletin is GOING TO CLOSE. Either Lowes or Home Depot will close. All these consumerist fueled nightmares are going down.

There isn't going to be a recovery here. It'll be like living in a depressed little version of Detroit, where the Heyday is over. Never to return. You will need your little shit job to pay for the little shit house on your little shit lot. And you will not make any money EVER on it. EVER.

I'm telling you folks, you will NOT recognize Bend in 10 years. Many, if not most won't be able to recognize it, cuz you'll have left.

OK, if you are thinking of buying RE, I ask you to think again. We're NOT EVEN CLOSE to fair value. Values are PLUMMETING. Rent-to-own ratios are STILL ridiculous. This town is going to go bankrupt. Industry & retail are being GUTTED as we speak. We're in a precarious period where it looks like a place you'll "want to be" for the long haul. But it's not going to be for long. Would you want to live in inner city Detroit at any price?

Because that's what Bend is becoming. And medians BOUGHT at $225K will seem like a HORRIBLE, TERRIBLE ERROR in judgement 7-10 years from now. Medians aren't going to $125K for no reason. They are going there, and they will STAY THERE, for abundant reasons.

No local incomes to support anything more. Burns-style entertainment. No restaurants. No fun places. Completely uncertain job prospects. No opportunity. Just straight depression. You WILL NOT want to be here.

What to do:

• Keep renting. Do NOT buy.
• Pile up the cash. Don't BUY ANYTHING.
• Cling to a paycheck as long as you can. If it's already gone, YOU LEAVE town.
• List your EXCESS RE Now. And you mark it down BELOW MARKET. It'll be 20% lower in 12 months.
• Start looking for INCOME PROSPECTS outside of Bend. Keep your eyes open.
• Sell your cars. Sell your other toys. Sell your crap. Keep the money.

Speculative Bend is done. Over. We're in Survival Bend now. No one makes DEALS anymore. No sexiness, no flash. What 's befallen Summit 1031 will BEFALL THIS TOWN. Utter collapse, with NO HOPE OF RECOVERY EVER.

It's time to HUNKER DOWN.
DO NOT BUY ANYTHING
CONSERVE YOUR CASH.
REMEMBER THE FOUR B'S

IT IS OVER
"I just come from Bend Orygun, where they done titty fucked me atop Volo till I couldn't take it no more! I'm certainly glad I stayed as long as I did, with no visible ill-effects!"