Bend: Doomed To Tear Itself To Pieces... Again.

Ahhhhhhhhhhhh, Bend.

I guess I've figured it out: Bend is a town doomed to tear itself apart.

Look at Buster; Here's a Bend Lifer who wants nothing more than The Good Olde Days to return in force. Guns, depression, liquor, downtown vacancies, flatbacking renters. Cowboy Capitalism at its finest.

Just about the polar opposite of today.

Now hbm; Surely there couldn't be someone more Buster's Polar Opposite, right? No.

HBM said:

"What I want to know is why is Bend considered the land of paradise?" Bend isn't "paradise" and never was. When my family and I moved here in the mid-1980s it was a nice, pretty small town. Now, thanks to 20 years of uncontrolled, poorly planned (or unplanned) growth, it's just a sprawling ugly mess with a shitty climate. IMHO.

Bend was fine for me at a certain stage in my and my family's life. It isn't anymore. I've changed, my family circumstances have changed (daughter has grown up and moved away), and Bend has changed -- a lot, and mostly not for the better IMO. Why not move on?

How about Dunc? Surely as a downtown business man, he wants things to somehow right themselves and continue his 3 decade upturn?

Laying out the odds

Scenario Three.

Things really crash, dropping 50% or even 60%. Storefronts empty and aren't refilled. People leave town. I start playing cribbage on the sidewalk with my neighbors, waiting for customers. Ironically, after the worst has hit, probably no more vulnerable than the above scenario, because concessions would be forthcoming, one would think. And I would just cut to the bone.

Tuesday, May 29, 2007

A series of restaurants went into the space the Toomies is now in. Nothing like the haunted look in waiter's eyes, as they stood, tuxedo ed in the window waiting for customers. My neighbor, Jerry from the Sole Shop, and I used to sit out on the sidewalk and play cribbage for hours.

See the common thread? It's that way with everybody.

No one is happy with Bend, because it is never quite what they want. Hell, I got here in '01, and Bend has already become a horrible perversion of what it was then.

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties.

And I'm a fairly conservative, Olde School rePug. But even hard-core flaming liberals, like hbm, are fed up with the place. Why?

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties. Well, maybe not the liberal elitist dicks.

And Bend's anti-Christ, Buster... what's his fucking beef?

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties.

Right? Right.

That's what I see as Bend's main problem: No one will ever be happy with the place.

Papa Bear Buster: TOO HOT (liberal)

Mama Bear hbm: Too cold (conservative) (and too many Busters)

Brother Bear Dunc: Barely supports one store, and yet it always attracts locusts anyway.

No one ever seems to be happy in Bend. When it's growing, it's growing wayyyyyy too fast, at a pace that cannot last, and is doomed to implode at the end

When it implodes, it drives out everyone, and the whole place is economically gutted.

Dunc is a perfect encapsulization of Bend:

• Buys first store at True Rock Bottom Price.
• Does surprisingly well. Thinks it is personal genius, not cresting wave of fad.
• Expands in short order. 4-5 stores
  
• Fad implodes.
• Stores implode.
• Hanging by fingernails. For 20 years.

This is the nature of capitalism in the USA. And the nature of Oregon is the nature of the USA squared. And the nature of Bend is the nature of Oregon squared.

When the USA catches cold, Oregon gets the flu, and Bend gets the fucking AIDS.

And I can tell you EXACTLY WHY THIS HAPPENS. This is it. Are you ready, because this IS IT:

We never diversify.

Think of the US economy as a portfolio of business, because that is essentially what it is. All are, to some extent, interdependent. With some, the correlation is low, like aircraft & BBQ sauce. With some, the correlation is high, like furniture and housing.

OK, here's a graph of the fundamental nature of bonds vs stocks:

Risk/Return space for stocks, bonds, and riskless T-bills.

You want low risk & high reward, right? That's the upper left of this graph, and the maximum return per unit of risk lies on that brown line. It assumes there is some "optimal" mix of stocks, bonds, gold, and everything else, that lies right where that brown line touches it. What's that brown line? It's where the Ultimate Uncorrelated Asset (T-bills) intersects the Y-axis.

Strangely, you'll note that if T-bill rates go UP, that modern portfolio theory indicates you should buy more stocks. Imagine grabbing that brown line by it's left side & pushing it up... it "rolls up" that curve towards 100% stocks. Conversely, pulling T-bill yields down indicates more bonds should be bought. This is where we are now, extraordinarily low short yields.

I have to say, I spent a fortune on higher education, and this was about all I got out of it.

But maybe it was enough. Because while this graph illustrates that you can ALWAYS do better by buying a mix of stocks & bonds for maximizing your risk-adjusted return, it illustrates this fundamental truth for many assets classes in a huge variety of situations.

It's why there are Swim & Ski shops in town. Hiking shoes & snowboards.

When one is up, the other might be down, and vice versa.

But, by and large, there is a general ebb & flow to the economy as a whole, and everything either is doing OK, or everything is sort of doing crappy.

But the good thing about diversification, is that IF YOU PROPERLY REBALANCE, you can weather almost any storm.

Cuz think about it: What if you buy, say 70% stocks and 30% bonds. In 1933. Well, by about 1966, your stock portion is wildly overweighted. And on that graph above, you'll be off the optimal investment weighting, which is always that straight line that is resting on the risk/reward curve.

You can see on that curve, that the optimal mix is somewhere around 30% stocks, and 70% bonds. And it gets better when you can mix it with T-bills. The ability to buy T-bills, as well as sell them (buy optimal stock/bond mix on margin) is what constitutes this brown line. The brown line is ALWAYS the best investment. ALWAYS.

Same goes with a Swim/Ski store. What if your "Ski" section starts to overwhelm your "Swim" section? What if there is a Big Upswell in skiing for some reason?

Or closer to home: What if your Breakout Comic Section seems to justify opening a new comic store? And another. And another. And another.

What happens when you're "All Comics" (ie stocks, timber or ski's), and no "Games" (ie bonds, tech, or swimsuits)?

Your portfolio becomes unbalanced.

You become too tied to the whim & weft of One Thing. Too many comics, so when comics crash, you crash harder. Especially if you "averaged in". ie: You "bought" 4 stores at the top, borrowing to do so.

Solely Buying Buffett, while sensical from almost any rational backward looking perspective, NEVER makes sense from this perspective.

Diversify OR DIE.

Now, this doesn't mean Start An Aircraft Parts & BBQ Sauce store.

It means start with comics. Add games. Add used books. Add new books. Add things that "add value" to the other things.

So diversify intelligently. But also realize your Inherent Lack of Diversification. Realize you are in Bend. Realize you are selling a very targeted set of goods. Realize your customer base may have a high correlation to some sector of the economy (ie construction).

How to fix? Internet? I don't know. That space is already saturated. Start an "Awe Shucks" blog, and see where it goes? Maybe.

I guess that's my point: Success BREEDS it's own failure. Comics, Dunc's bread & butter, almost begat his collapse. Timber, once Bend's economic mainstay, very nearly put this place in a 20 year depression.

Then we made the jump to Real Estate. Ahhhhhhhh, yes. Surely Real Estate will be our savior. It never Goes Down!

And so it came to pass that RE, via a series of well-designed, planned & executed strategies using local government & media as puppets, has come to completely dominate this little towns economics.

Once again, Bend is a completely unbalanced business portfolio, ripe for a fall. We have almost nothing else to rely on to soften the blow.

This is why, and maybe you'll remember, I've said ad nauseum, that we should have taken our RE lottery winnings and Put Them Somewhere Else. NOT RE.

We should have charges $60K SDC's, and slowly but surely diversified into a number of POORLY CORRELATED investments: A 4 year college, tech, aerospace, medical, I-97 4 lanes, whatever.

Get us the fuck out of RETAIL, RESTAURANTS & REAL ESTATE. OK, we have MORE THAN ENOUGH OF ALL 3.

We have more than enough "life style" bullshit to last us a lifetime.

But no. We doubled down on REd. Just like a lot of my friends doubled down on tech around March 2000. Borrowed to buy, borrowed as much as they possibly could.

Should have taken their early winnings, and bought something Very Poorly Correlated.

"You mean IHTBYB, they should have bought Losers? Cuz they were winning up to that point, and boring stuff like BRK was going down the drain! Why diversify into a Loser?"

Cuz, as Dunc illustrates, as Bend timber illustrates, as Japan RE illustrates, as dot-com-2000 illustrates: It is the nature of things to undo themselves. It is the nature of booms to bust.

Success begets more investment. More investment begets concentration. Concentration begets lack of balance. Lack of balance always fails.

Far worse than a bad investment, is ALL IN as an investment ethos.

When comics perform well, buy more games (or books, or pogs, or...)

When stocks perform too well... buy bonds, NOT MORE STOCKS.

When RE explodes, get tech, a 4 year college, medical, a 4 lane highway... NOT MORE RE.

But that is, in fact, what we've done. From all timber to all RE.

And it's NOT that RE is itself inherently bad, it's the timing. We went ALL IN so late in the game, we're DOOMED.

"ALL IN" as an investment theme has a 100% FAILURE RATE.

Dunc went ALL IN on comics late in the game. But really, that's the nature of the game. ALL IN AT THE END is almost ubiquitous, whereas ALL IN AT THE START is essentially unheard of.

How many failed comic stores did you say there were Dunc? Something like 80-90% have failed in the past 20 years?

It's not so much a bad Industry, as it was Bad Portfolio Management. ALL IN AT THE END. Again, ALL IN has a 100% FAILURE RATE.

So Dunc went ALL IN AT THE END 20 years ago in comics, just as Bend went ALL IN AT THE END 2 years ago in RE. Expect similar results.

Where are we now? Funny, but we are exactly where all my friends were about 90 days after the NASDAQ bubble topped. They'd mindlessly bought some Swedish telecom something for $220/sh, watched it literally go to $280/sh overnight, but then mysteriously fall to a harrowing $125/sh.

They were shaken, but Very Hopeful. Very HOPEFUL. VERY, VERY HOPEFUL.

"It's going to bounce back. I know it. It'll be back at $300/sh before you know it."

And this keeps up, as it seesaws its way to $2/sh, where it flatlines for a decade.

That's where we are. Very hopefully sitting on something at $125/sh that we averaged in at $220/sh. It'll NEVER get there again, but we don't know that. We're HOPEFUL.

So it is too late to change things. RE runs the show via City Council & COBA, COAR, and God knows what other acronyms. It's not like we can call a stock broker & bailout. It took us years (decades) to get here, it'll take decades to get out.

So what should we do, once this thing has played out, and The Hope Is Gone (15-20 years) sufficiently that people in unison shriek "NEVER AGAIN!"?

Easy, diversify. Start building a Real Economy With Real People And Real Businesses. Does it mean BEM's "5 Things Bendites Should Do Now"?

Yes, that's a start. But it should be diversification within some rational bounds.

Realize that untrammeled growth into natural areas is shooting the Golden Goose. I don't see eye to eye with hbm on a variety of topics, but even I understand that mindless growth into places like the Metolius is pathological.

Realize that people come here to LEAVE THE URBANE. They are trying to ESCAPE. Making this place more like your favorite Frisco hood is just idiotic.

I guess there should be some rational guidelines, and hope that minds greater than mine can figure out what that means, and implement it. I can only say it IS NOT BEING DONE NOW.

But the primary objective should be to DIVERSIFY our economy to the extent that is achievable. Not only is this NOT BEING DONE NOW, all measure of force, time, money and effort is going into EXACTLY THE OPPOSITE.

Our local government is 100% made up of RE stool pigeons. Bought & paid for for 5 cents on the dollar. Doing all in their power to keep the gears of RE grinding along. Wiping out SDC's, building "affordable housing" and God knows what else.

This is why I said there is "nothing to be done" to save Bend. It is owned. And it'll be owned until the local RE interests are 100% wiped out. And that'll take decades.

Then, AND ONLY THEN, will Bend be ready for a rebirth. people will have had it with RE, even RE, and they will start to rebuild. When they do, unlike after the timber bust, they should NOT let one industry come to completely dominate this town. If they do, it'll simply happen again.

Diversify. It's the only free ride out there. And it is the key to Bend's future.

Geez! 9:00AM! Geez, this time change stuff is death. Time to look for the boobies....

I diversified into both jugs!

IHTBYB Comes Out Of The Closet!

OK, I'd bettter come out and admit something that may well affect the future of this blog:

I am an Olympics Junkie.

Now you know.

When the Olympics are on, I can do little else than pee, eat, sleep, and watch the Olympics. I can barely form coherent sentence, I show up to work in a sleep-deprived fog, I sometimes don't shower for days.

Why do I have this problem? I don't watch football, baseball, or basketball, or any other professional sport, except on rare occasion. I think watching sports on TV is actually pretty lame.

But I can't help but enjoy what are for the most part, fairly regular-World people, gather together & compete in events that largely define these peoples entire lives. It's really more a real-World drama than sport.

And I don't have a particular favorite sport, person, or team that I am watching, or cheering for. I like ALL of it, I like watching everyone, winners & losers alike. American TV is naturally slanted wildly towards American athletes, so it's hard to get unbiased coverage on this or any broadcast really.

And the Olympics have been sort of commercialized & overrun with "Pros" like Kobe, etc., who you KNOW are going to win. Even the Grama swimmer Dara Torres employs a small scale army to get her in shape. This is probably my least favorite thing about watching the modern Olympics. Too commercial, and loaded with country-switching Pros. Yuk.

But I still love watching. I remember watching the US beat the Ruskies in 1980, one of a precious few things that stays with me after that many years. I remember watching & thinking, "I am watching a historic moment here, and it'll be recounted till I am dead".

And it was. And it is still easily the Greatest Thing I have ever seen on a TV screen. Maybe that's when I contracted this addiction.

Anyway, if you've wondered here I've been, I've been glued to my TV. Can't help it, and I offer no apologies. OK? Sorry.

So it may be for a week or two that you guys have to carry the day. I'm going to try to limit my Olympic fever to a few hours a day. Try.

OK, that said, I busted out of my myopic Bend-addled fog last week, and went for a long drive last week in points beyond.

And I guess it was curious to see this RE problem from a different perspective. I figured it was at it's worst here, and existed in far milder versions elsewhere.

No. Well, yes & no. It is damn bad here. But it is Really Bad All Over.

The truly strange thing that caught me off-guard was the "Commercial Development" seller. You know, because Bend is absolutely chucked full of them: The useless hunk of ground, butt-ugly, too ugly for homes in fact, in some semi-industrial Death Zone, with a For Sale sign on it declaring it fit for "Commercial Development".

My God, this sort of thing is EVERYWHERE. It's along empty highways, next to schools, in neighborhoods, everywhere.

I saw several worthless plots declared fit for Commercial Development in some of the most bizarre places. Empty grasslands, with not a soul for miles. It's like these people paid a few hundred bucks for scrub MORE USELESS than the badlands East of Bend, and all of a sudden decided that it's worth $2,000,000.

Of course none of it is selling, you can tell by the weathered appearance of the signs. This stuff has been for sale for a few years.

And then there is the VAST inventory of acreage properties. I guess living in Bend, and watching the stratospheric take-off of acreage properties made me think there is some sort of shortage, or groundswell in demand for these properties.

No. Well, there may be decent demand, but there is a wave of supply. And it seems to be the same root cause. People either HAVE TO sell for some reason, or there is a gold-rush mentality to it. They think they can get 10-20 fold what they paid a few years ago.

I suppose it was just strange to see that Bend is not that different. We do have a lot for sale, but the problem is far larger than I have ever seen it. I got a new appreciation for how mired in a quagmire the nations RE market is.

It's hard to see how large the problem is until you actually lay eyes on the hundreds & thousands of properties that are out there, and are clearly not moving. Bend is not alone in its inventory problem.

Oy, now for the tech-dregs. I got this from Buster or one of his clones:

BESIDES it being fucking stupid, the CUNT must spend ALL his time looking at the fucking analytic data points, but then again, he's a fucking MBA, he can spreadsheet this generated data, and beat-off.

Note one of the worst that HOME-BOY has enabled is urchin, this SHIT is really NO fucking different than what BENDBB does, its just that homer gets away with it like HBM says, about the masses BEING FUCKING STOOOPID.
...
127.0.0.1 imageads2.googleadservices.com
127.0.0.1 imageads3.googleadservices.com
127.0.0.1 imageads4.googleadservices.com

As I thought, this are /etc/hosts entries so that certain domains go to your local loopback address. This is perfectly fine with me. Disable any or all src or href attributes you want, that is fine with me.

You'll find, if you take the time to View Source & search for the above terms ("googleadservices", for instance), you'll find they don't exist on this site.

I'll go one better: Go find an anonymous proxy somewhere & only surf this or other "suspicious" sites using anon-proxy. I'd give you the one I use to surf BendBB, but then it'd be banned... this happens on occasion when they figure out that they are not getting your real IP.

So go ahead & mislead, redirect & generally fuck with the system, it's all good with me. Some of these comments seem to imply that I give a shit about the identity of commenters. I have no unilateral way to convince anyone unambiguously that is not true, but I can urge you to take measures to keep your identity private.

There also seems to be this implication that I somehow "profit" from posting youtube, or other "off-site" crap on here.

Oh yes, I shall soon retire on the vast wealth I am accumulating from my youtube embedded videos. Oh yes. I'm really watching the money pile up from that. That & the craigslist RSS feeds. Woof. You have no idea how many mansions & Lamborghinis that has paid for.

OK, now for the non-borderline schizo's: OK, I just blog for my own enjoyment. I don't make dink, I DO have googles Urchin web analytics on the home page, something I check about never. I looked after I got "Pat-dotted", and got many thousands of hits out of nowhere. But that's about it. I don't care about IP's. I don't censor based on the offensiveness of anything. Hell, I encouraged people to go look at BendBB's "outting" post, cuz I knew that'd be gone before long.

This is just a little blog for posting what Bend media won't regarding Bend RE, and business in general. That's it.

I agree with the commenter, "Only the paranoid survive", and if you feel you are being "outted" here, you can modify your /etc/hosts file, or surf this site anon proxy. I NEVER go to BendBB except via anon proxy because it has been made clear via IP-banning policy that he IS keeping track of IP's over there. I HATE that.

This thing is meant to be open, free, yet respect individual privacy. So I am more about obfuscating your identity than anyone. Type "free anonymous proxy" into google, and find one you like, and bookmark it.

We ALL have a duty to Stick It to The Man in this regard.

Speaking of Sticking It To the Man, it seems the Al Haig moment sprouted some other Bend RE-bubble blogs.

http://benddenial.blogspot.com/

Of course it is impossible for me to assert anything absolutely about who is doing what, but this appears to be a site fired up by our own dearest marge! Good going marge. Keep it up, and feel free to copy/paste stuff over here, URL's and all.

http://angrybendbitch.blogspot.com/

OK, I think this was started by Buster-Clones, as some sort of marge-proxy weirdness. Seems they didn't post since last March, until recently. This one is good if only for the horrible picture on the sidebar.

The top one is classic Cali-Banger. My Lord. That is a real person, not animated horror. And almost certainly of Cali origin.

http://bendbubble3.blogspot.com/

Yup, this one is pretty good, featuring Post WWII apocalyptic pics. Anyone know who this is? Buster? In my Olympics-addled state, I'm finding it hard to keep up.

Anyway, I've been saying for some time that I am all for someone else taking over the reins (reigns?) of this thing, so that we can get a new perspective. I hope one or all of these blogs does well, and someone can take the lead on the Bend RE issue.

My primary objective has been "outting" Bend media as horribly slanted towards Bend RE, to the point of simply being PR whores. Some have not sold out so entirely. But if they are big & in broadcast or print, they almost certainly have.

Finally, before I head back to Olyimpificating my life:

tim said:
I thought we had seasonally peaked on inventory a couple weeks ago (like every other year), but looking at Clive's chart, I'm beginning to wonder if 2008 doesn't mark the emergence of a new kind of desperate late-summer seller.

anon said:
Could be we hit the sweet spot in GREATEST FOOL THEORY, remember it was supposed to come back for two years no. I think that all but the BEND-DEAD know its NOT coming back, sell now while you have a prayer, that is what's going on.

Yeah, I'm starting to question the validity of many Long Held Beliefs regarding the Bend RE market. Used to be you listed early Spring, sold in the Summer, and hibernate in the Winter. Easy, predictable.

But we're entering a new phase here: Forced Selling. People are not going broke according to the seasons around here. And if you go to RealtyTrac.com, you'll see that foreclosures are what is fueling the local market. NOT the seasons.

I figured the local inventory situation would look like a fairly gently rising sine wave, higher peaks & higher valleys. But I'm wondering if the coming valley fails to really materialize. And turns into more of a flat plateau. And next year begins a new wave up from there.

This market is coming apart. It's hard to even predict things that have held for decades, like Bends yearly cyclicality. It think it'll remain, but it'll flatten & ramp up into a monotonic rising wave.

My own view of the RE market outside Bend tells me that NO ONE is coming here to save us. They CANNOT sell what they have. As blindly myopic as I thought Bend sellers were, the rest of the country is pretty close. EVERYONE in this country is selling, or trying to, and they are not succeeding.

The RE market seems well & truly screwed for many, many years.

One more quick thing:

Rent & Invest The Difference still rolls on as my favorite investment theme for Bend.

There were occasional cries of "Invest in what?" several months ago, a legitimate question.

Hopefully, I've answered this criticism. I DO NOT believe RE is a prudent investment for what may well be the rest of my working life. Medians would have to fall to parity with rents for me to become interested, and we're NOT EVEN CLOSE.

Bonds, whether gov't or corporate, are an unknown quantity. Read the comments and you can see that these things are based on the re-payment capacity of some very marginal borrowers. And I believe there will be a cascading effect that we haven't even seen the beginning of.

And as Buster said, Price Ain't The Problem. Banks are ONLY loaning to FICO 800, 75% LTV, pristine borrowers. That's a rare bird these days, and getting rarer. No one borrowing, no one loaning, and everyone throwing around homes like hot potatoes, dropping prices to no avail.

It Ain't Price. We are tapped out or BK as a country. Every last dollar that could be borrowed, was borrowed and now we're coming to find that we can't pay it back.

It'll take a few more years, but RE will hit & drag bottom for a few years. But don't buy it yet.

Personally, I plowed into some spec stocks in July, and am doing OK. I think stocks are the Last Bastion of Safety, which is just strange. Stocks have traditionally been the Flight FROM Safety investment when things get uncertain.

But the usual Flight TO Safety instruments (bonds of all maturities) are suspect. The Full Faith & Credit of the US is now MORTGAGE BACKED. OK, WHY we are BUYING this crap is beyond me. Bear Stearns gets KILLED in the mortgage-backed market & the US Gov't decides NOW is the time to JUMP INTO THE MORTGAGE MARKET.

I don't get it. The outcome seems simple: INFLATION. More specifically, STAGFLATION.

We will print our way "out of this thing". Of course this NEVER WORKS. And maybe sometime I can show graphically why I think that as interest rates go up, stocks actually become the Best Investment Bet.

OK, so I must now return to my butt-cheek carved place on the couch, and watch the Olympics. I promise I'll try to comment more this week, and actually dedicate a brain cell or two to thoughts of RE and the like.

But meanwhile.... Phelps awaits.

IHTBYB Outted on BendBB? I Can't Believe It's Not Butter!

Well, we knew it here first from marge, and The Bulletin reported it Friday that medians in Bend got killed last month.

Median prices, sales mostly down in July

Bend's median sales price for a single-family home in July dropped to $287,000, down nearly 9 percent from June, according to the latest Bratton Report, released Thursday.
July's median was about 16 percent less than the July 2007 median of $343,000.
The number of sales last month also dipped almost 9 percent from June, to 104. There were 152 sales in July 2007.
The median sales price per square foot, considered by many real estate experts to be a better measure of value, dropped to $152 in July from $166 in June, the lowest since July 2005.
...

Of the homes sold in Bend in July, the majority -- 29 -- were priced between $200,000 and $250,000. And additional 23 homes were priced between $250,000 and $300,000. Two homes sold for more than $1 million.
In Redmond, the median price in July dipped to $215,000 on sales of 42 homes. The median price per square foot rose nearly 8 percent, from $127 in June to $137 in July.
In other areas of Deschutes County, the median prices for July were $327,000 in Sisters, on sales of 7 homes; $564,000 in Sunriver, on sales of two homes; and $160,000 in La Pine, on sales of two homes.


You can see that the high end stuff is hardly selling at all. It looks like the mix has definitely downshifted. Sunriver has all but dried up. La Pine as well.

This was supposed to be our swan song, the time after we had hit rock bottom back in April. Supposed to be doing great, right?

No, well after this month, you will quickly watch things go to hell. How far? I found this piece regarding rent-to-value ratios:

Rent or Buy: Craigslist and Realtor.com
by Brent Wilson
Reochronicle.com/blog

Home ownership is a deeply ingrained desire for most Americans. Who wants to brag about how nice their rental house is? Besides, home interest is tax deductible, so it isn’t really money, right?

Normally it’s a good idea to buy if prices are in line with rents, but in many areas prices have shot way ahead of rents, although things are coming back into line.

To compare rents and home prices, what follows is a comparison of home prices from Realtor.com and rental prices from Craigslist. This study is very unscientific, since it isn’t normally possible to compare the exact house for rent with the exact same house for sale–normally a house is either for sale or for rent.

However, I’ll try to include similar sized and similar looking houses within a given city, at least based on descriptions and pictures.

Thousand Oaks , CA

http://ventura.craigslist.org/apa/776302660.html. This listing on Craigslist is going for $3900 per month, which includes gardener and pool service. The house
is 3000 square feet, 3 car garage, etc. This works out to $46,800 per year.

Realtor.com lists houses with 2700+ square feet in Thousand Oaks starting at roughly $675,000, on up to above $900,000. At the lowest price of $675,000, the total cost to own would run roughly $67,500 per year (7% mortgage, 1% property tax, 1% maintenance, 1% for insurance and general upkeep). A house more comparable to the one on Craigslist would probably run around $750,000-$800,000, or around $75,000 per year to own. Tack on $4000 a year or so for gardener and pool service for a total of $79,000 per year.

Ventura, CA

http://ventura.craigslist.org/apa/776165804.html. This house on Craigslist is renting for $2250 per month, 4 bedroom, 2 bath with a 2 car garage. Works out to
$27,000 per year.

Realtor.com lists a number of 4 bedroom, 2 bath homes in Ventura which look fairly similar, in the $400,000 price range. This would work out to roughly $40,000 per year to own.

Santa Rosa/Rohnert Park, CA

http://sfbay.craigslist.org/nby/apa/776298792.html. This house is in Rohnert Park, just next to Santa Rosa, CA. 4 bedroom, 2 1/2 bath, 2 car garage, rents for $2300 per month, $27,600 per year.

Realtor.com lists a number of fairly similar looking houses for $375,000-$450,000, or roughly $40,000 a year.

Reno, Nevada

http://reno.craigslist.org/apa/776371760.html. $1600 a month will get you this brand-new looking house in Reno, 3/2/2. $19,200 per year.

Realtor.com lists a number of similar looking houses for around $200,000, so this might be one place where it could pay to buy.

Minneapolis, MN

http://minneapolis.craigslist.org/apa/776338785.html. Just for variety, here’s a split level 4 bedroom in the Minneapolis area for $1500 a month, or $18,000 per year.

Realtor.com lists a number of similar looking houses for around $200,000, so this might be another area where it could pay to buy (if you can handle the winter heat bills).

Roseburg, Oregon

http://roseburg.craigslist.org/apa/773994070.html. OK, so Roseburg is out in the boonies, but this house rents for only $850 a month and looks like new. $10,200 per year.

Realtor.com lists a number of fairly similar houses for $175,000-$200,000 or so in the Roseburg area. Annual cost $18,000 or so annually, so it seems better by far to rent around there.

Do Your Own Comparison

You can do your own comparison in your area by just multiplying your rent by twelve, and dividing the purchase price by ten, to get a very rough figure to compare.

This is assuming you have a good landlord who performs repairs on a timely basis, and that you are considering buying a well built house that doesn’t need much work.

Realtor.com is a good place to look for comparable houses for sale, since it normally includes the local multi-list. Craigslist has a good selection of rental properties, although it has been my experience that you can usually find a place for less than on Craigslist by driving around, calling yard signs, local newspaper ads, etc.

If you really want to compare prices, it’s probably best to just compare cash outlay between renting and owning. Over time, if you own, you will probably end up spending unexpected money on furnaces, air conditioners, sewer lines, water heaters, etc, and this amount of money will probably about equal whatever tax benefit you might have gotten from the mortgage interest deduction (if you are lucky). Have you checked lately what it costs to replace a roof? Or a furnace? When you rent, you don’t have to worry about what it costs–the landlord does.

Lots of people rush into a home purchase without thinking about how long they might stay in a place. In general, if you think you could move within 3 or 4 years, you might just be better off renting. When you rent, you don’t have to pay 6-10% to move (Realtor’s commission plus a fee to every real estate service provider within 5 miles). When you rent, you just pack up and go.

Overbuilding

In many areas, way too many homes have been built and can’t be sold, so property owners are renting out brand new houses to at least get something coming in.

If you can work it, you might be able to get a great deal on renting a brand new house for a few years, maybe for less than 2/3 of what it would cost you to buy. It might pay to drive around some areas where new houses have been built recently to see if you can find a rental.

Landlords Provide a Real Service

Landlords provide a valuable service–they provide you with a suitable place to call home, without you having to go into debt for decades to buy it. They also repair everything that needs it (at least most do), pay the taxes and insurance, and sometimes even take care of the yard and pay the water bill.

When you get ready to move, you just give notice, pack up, and move! Some landlords will even rent to you for less than their house payment! Renting isn’t for everybody, but it makes sense to lots of people, especially if you can rent a place for considerably less than it would cost to buy, without tying up your money or going into debt.

Regardless of what you do, it can pay to do a little off the cuff comparison of costs before you buy or rent, just to see how things stack up in your area.

Incredibly, rents in Bend compare closest to Roseburg, where they advise Not Buying. And that's for homes in the $175-200K range! That bodes ill for Bend.

This all goes back to ROI that is far below comparable investments. ROI on Bend homes while starting to rise recently, is still far below almost anything in the US.

Don't think that $287K is a bargain, just because we haven't seen prices like these since Summer 2005. It is looking more & more like sub $200K medians will ultimately happen here.

The Outrage of The Week has to AGAIN source from Don Bau-humper:

“We had a lease-back program on our project out at Eagle Crest,” said Pennbrook founder Don Bauhofer. “With the downturn in the market, the company just ran out of money.”

Nevada investor Chad Osorno purchased two homes from Pennbrook in January and February 2007.

He entered into a lease-back agreement with Highland Investors in February, according to his suit.

The companies stopped paying the $3,279 per month rent in November, Osorno’s suit says, and he’s seeking $69,158 in rent, late fees and interest.

You wonder what the THOUSANDS of incorporations that spiraled into the stratosphere over the past 5 years, that's what this is. Sleazeballs like Bauhofer enter into these agreements with almost NO ACCOUNABILITY for paying you.

Should have asked WHAT Highland Partners is? What happened to that MONEY? This thing SOLD you the houses, got a big wad of cash, and then shortly after DEFAULTED.

Where's that BIG WAD of money? That should have remained in the partnership that sold those houses, and it was almost certainly bled out to Bau-humper himself.

This guy was 100% scammed.

Of course, these are some Nevada investors who had no business swimming with the Cent OR sharks. A Sale-Leaseback of a $500K house? WTF? Here's the Humper:

But Bauhofer said the agreements ceased to make sense as the homes’ values dropped from more than $550,000 to less than $400,000. The companies, out of money, stopped making payments, Bauhofer said.

Huh? He sold a $500K house to the guy, he's GOT THE MONEY. Now, he says since the house he SOLD has gone down in value... no wait, it's not that, it's because the shell company that engaged the transaction has run out of money, that he cannot fulfill the transaction.

That's like Dunc saying he can't make his lease payments cuz the building has gone down in value. But then later flip-flops claiming poverty.

See, I have a feeling if some "normal" tried this stunt, and they were hauled into court, they'd LOSE BIG. If some shopkeeper downtown tried this, they'd declare the rent + damages DUE & PAYABLE before they even walked in the court room.

But Bauhofer will probably get away with it. It was a 100% SCAM SALE. There was NO LEASE BACK. Bau-humper had about 2 shits worth of intent to pay this guy his money. He inflated the price, with a commensurate PACK OF LIES about money he was going to pay the dude.

Standard Ponzi Scheme. 100% lies about a HUGE PAYOFF to get your money up front.

OK, moving on.

Lookie here! Little old BendBubble2 is getting some play in the Source:

Real Estate's Dead, But Weeds Look Healthy

Is it just our imagination, or is Bend looking weedier (and seedier) than usual this summer?

A month ago the BendBubble2 blog commented on the proliferation of weeds around town, attributing it to the real estate bust.

“Problem is Bend is hucked-full of empty houses,” wrote “I Hate to Burst Your Bubble.” “These things aren't getting minimal maintenance, they're getting none. And you'd think that after a long, cold winter, things would brighten, and all would be well, and that at the very least, the landscape here would ‘stage’ itself. After all, many front yards are meant to mirror desert scrub. But it's not working out that way.”

IHTBYB proves his point by posting a bunch of photos of really butt-ugly weed-filled yards (plus a lot of colorful, funny and obscene comments).

Why can’t the city do something about all this unsightly – and potentially dangerous – overgrowth that threatens to make Bend look like some 1930s Oklahoma dust bowl town? We spoke with Bend Deputy Fire Chief Gary Marshall to get the straight skinny.

The city has an ordinance requiring property owners to cut down weeds if they become a fire hazard, he explained. The problem, as always, is money.

If the fire department finds high weeds growing within 10 feet of any building, tree or fence it will give the property owner 14 days to cut them down, Marshall said. If the weeds are still not cut after two weeks the owner generally will get “a few more days” to do it.

Finally, the fire department can ask the city public works department to send out a crew to cut the weeds and bill the property owner for the work. The city also can slap the owner with a $250 fine, Marshall said. Trouble is, budget cuts resulting from the real estate collapse mean there aren’t enough city crews to get the job done.

There’s another problem, Marshall said: “We have so many property owners that don’t live in the state. We send them certified letters [telling them to cut their weeds] and we don’t get a reply. We really have no way to go after these people.”

The Eye has no way of knowing how many of those out-of-state weed scofflaws are former real estate “investors” (aka speculators, aka flippers) who just took off for points south, north, west and east when the Bend market went belly-up – but we suspect there are more than a few.

Anyway, if you spot a weed problem you can call the city’s weed control hotline, 541-317-3002, Ext. 3. Good luck.

This exacerbates the problem of selling. It's like a foreclosure in your neighborhood; it brings down the value of your house, even if you're down the street a ways.

Head over to Forum Meadows, and there aren't even fences to break up the sea of weeds. Head over to mapbend.com, and look at Forum Meadows; listings are so thick, you can drill down far enough.

From Nov 18, 2007:

How builders plan to face housing slide

Some aren’t waiting to find the bottom before they jump ship.

Buena Vista Custom Homes, a Lake Oswego-based company that billed itself as one of the nation’s fastest-growing builders when it moved into the Bend market in early 2006, announced Thursday that it will put all 200 of its unsold homes in Oregon up for auction next month, including 29 in Forum Meadows, its brand-new east-Bend subdivision.

“We were overaggressive and too slow to react to the changes in the market, and that has created an oversupply of finished homes,” Buena Vista President Roger Pollock said in a company press release. “Buyers are going to get amazing deals, but we simply have to reduce our inventory.”

Then March 20, 2008:

Bend subdivision faces foreclosure

Elsewhere in Bend, Buena Vista Custom Homes has rented 18 of the 29 homes in its Forum Meadows development near St. Charles Bend since efforts to sell the homes in mid-December at auction failed to produce a single sale, said Mike Higgins, a spokesman for the Lake Oswego-based builder.

“It was done in a loss position, but it was better than the alternative,” Higgins said. “If we can’t sell them, we’ve got to do something. We looked to auction the homes, but it didn’t work. Builders right now are just trying to make the mess go away.”

Lemme guess: Buena Vista Homes WISHES they had SOLD these dogs at auction way back when. Remember, he accused bidders of trying to "steal" these homes with their PATHETIC bids.

Now these shit-tacular STD's have gone to seed. There should be some sort of Weed Formula for calculating how the height & thickness of weeds in a neighborhood discount area home prices.

By my reckoning, Forum Meadows & several other places will be nearly invisible soon, swallowed up by an onslaught of weeds.

Another interesting stat I ran across this week. Go to Realtytrac.com, and click on Oregon on the map on the home page.

Yes, you see that "1 in 398 homes in foreclosure" gradient, The Highest Foreclosure Rate In the State?

Yes, that would be Deschutes County. More foreclosures per 1,000 homes than anywhere in Oregon.

The Source: Why don't you cover that? I ask you because I know full well The Bulletin would NEVER cover that.

For perspective, the lowest foreclosure rate is in Lake County, with a mere 1 foreclosure per 12, 138 homes. The Meth-ford market is in 2nd place, with a still mild 1:559 ratio.

And of course, we are nowhere near cycle bottoms.

OK, moving on to Rent & Invest The Diff: Well, it had a pretty good week.

I bought Lithia Motors several weeks ago, a little Medford-based car dealership with 110 locations. My own rationale was pretty simple: If these dealerships are worth about $5MM, then they might have rock-bottom cycle-low valuations of $500-600MM, net of debts & S/T payables.

Well, Lithia announced earnings Friday, and they were horrendous. Right?

Then why was the stock up 20%?

Lithia Motors Announces Second Quarter 2008 Results

MEDFORD, Ore.--(BUSINESS WIRE)--

Lithia Motors, Inc. (NYSE:LAD) today announced that net income from continuing operations in the second quarter of 2008 was ten cents per diluted share, excluding after-tax adjustments for asset impairments of $243.4 million (or $12.27 per share) and a net loss from discontinued operations of $2.2 million (or ten cents per share).

Then down in the dregs:

Under SFAS No. 142, "Goodwill and Other Intangible Assets," the Company is required to perform a goodwill impairment analysis on an interim basis if certain events or circumstances indicate that it is more likely than not that an impairment loss has been incurred. Recent restructuring actions taken, including the placing of stores up for sale, an adverse change in business climate, reduced earnings forecast and the significant decrease in the Company's share price required goodwill to be tested on an interim basis in the second quarter. The Company performed the required steps for impairment analysis and concluded that the entire balance of goodwill was impaired. The Company recorded a non-cash impairment charge to write-off the entire balance of goodwill of $210.6 million after tax in the second quarter, of which $24.8 million is classified in discontinued operations. In the quarter, the Company also recorded a non-cash asset impairment charge of $32.8 million after tax related to certain indefinite-lived intangible assets (franchise value) and other long-lived assets, of which $10.0 million is classified in discontinued operations.

They recorded a HUGE $210MM loss from the goodwill on their balance sheet. Did they actually lose $210MM this quarter? No, just an accounting entry.

But it creates a HUGE tax loss carryforward, essentially making most if not all of Lithia's earnings from now on, virtually tax-free. And you can see that they are in small-scale liquidation mode:

On June 2nd, 2008, the Company announced restructuring plans that would generate annualized savings of $18 million. Additionally, the Company outlined a list of steps it is taking to right-size and realign its business. Mr. DeBoer continued, "Those cost savings have all been completed, and we are now on track for $22 million in total cost reductions - as we have recently added an additional $4 million in planned annualized cost cuts. Since the beginning of the year, we have reduced the outstanding debt on our credit line from $184 million to $138 million. We have sold one domestic store and have agreements on six of the thirteen remaining store divestitures. An additional two domestic stores are pending sale as a result of an unsolicited offer, showing a demand still exists for domestic auto retail stores. These store sales are estimated to generate over $35 million in total net cash proceeds."
"Through the second quarter, financing of real estate has raised net proceeds of approximately $65 million. The depreciated value of our real estate portfolio in continuing operations has book value of over $300 million, and we are confident it would appraise for significantly more; we have real estate debt of approximately $220 million - leaving substantial room for additional financing to be completed throughout the remainder of the year. This does not include $22.8 million in development properties and our airplane which are held for sale - many of which have pending buy-sell agreements."

It's not entirely clear whether he's saying that Lithia will clear $35MM on six store, or 7. Either way, it looks like they are being forced to sell at cycle-low valuations of about $6MM/store.

And these stores are fairly decent sized operations. Lithia grosses $3.2BB on these 110 stores, or about $30MM per. So that $6MM sale price is actually a bargain... maybe.

So Lithia created a HUGE tax loss carryforward Friday, announced $.10/earnings after severe cost reductions, and showed they can sell dealerships at prices that put a valuation on the whole shebang at around $500-600MM, about half of it distributable tax free.

The market value of Lithia is $108MM.

So why do IHTBYB tout his stock? Well, I have said repeatedly that Rent & Invest The Diff is THE DOMINANT investing theme for Cent OR. Can't buy RE, you'll get killed. Can't buy bonds, you'll end up with toxic shock with the crap being sold (and now bought back) by Citicorp, USB, and others.

That leaves stocks & commodities. I faded the oil frenzy hard, because I saw $150 crude hitting a demand wall. I personally am consuming FAR LESS. people are engaging in some wholesale behavior changes that will be tough to undo in the S/T.

We're still consuming to much, and I still think inflation is a Big Problem, but commodities as an investment medium is black hole to me. I know me, and I would be easily scared out of a position. Besides, it's leveraged to much. Commodities is too much like pure gambling.

So I am buying small-scale, workout-situations that are negative delta on oil. But their real, and required feature is Deep Value. I saw stocks that hit 80-90% discounts from fair value in mid-July. And I bought several, not in huge amounts, and I scaled down.

I missed a few, such as US Airways & Six Flags which had a One Day Wonder implosion.

But I remain with what I've got, they are situations that I've studied to the extent I am able, and I still feel like they have a rough row to hoe, but they seem very undervalued in some instances.

This is what works for me. It may not be good for you. I can only recommend a widely diversified domestic & foreign blend of stocks & bonds (corp & gov't) for people who want minimal risks per the highest unit of return. This works.

Finally, some are saying that I have been disrespectful to recently deceased Cent OR RE participants. Really?

OK, use your browser search feature (Ctrl-F) right now and look for these people's names.

There is NOTHING derogatory about any of these people. NOTHING.

Have I said the RE game they were involved with is full of sleaze, slime, scum, Ponzi Scheme con-men? Well, maybe not, but it is. These guys were playing with sharks.

But I never disparaged these guys. I disagree with their choice of investments. But I never said anything against them. Look for "Audia" on this page:

• This McDonald guy buys Meyers chunk of the Shire for an unknown amount in May, and not even 2 months later, jumps over Benham falls? Really? That's an awful long distance to cover from doubling up on REd, to committing hari kari, in such a short time.
• And Jay Audia shot himself? This is another vulture job in the works that seems to have driven it's principle to his grave awful fast.
• It's getting awful strange. Start combing the obits. Audia supposedly shot himself, a crime so easily done by someone else, a 2 year old could have planned it. McDonald's story just doesn't add up at all.
• Anyway, be concerned about your privacy. I'm not AT ALL convinced the Audia & McDonald deaths are suicides. There's a LOT of money being lost, and it would not surprise me in the least that deluded RE speculators would approach some seedier types to do a refi, to bridge the financing gap & keep a project alive.
• I don't know who this Jay Audia guy is, but he swooped in on what is now the Mirada parcel, bought it at a pretty good discount, and was going to make low-end laborer shacks. We've talked about this in the past actually. I've actually put pictures of Mirada right here in this blog.
• Apparently Mirada, at steep land price discounts, still did not work out. And this Audia guy took it to heart. Too bad. But it illustrates a point.
• Jay Audia, I'm sure was a nice guy. But he bought into The Bend Dream, like thousands of others. But it's a DREAM folks. This place doesn't really have a sustainable economy.
• And it's because the media WON'T let us BURN. Audia in the papers as a WARNING? No. Put out that fire. What's after Audia then? Someone going postal?
• See, Jay Audia is the collateral damage of this firestorm. There will ALWAYS be losses. Anyone whose been in Cent OR for the Summer season KNOWS there's always going to be a spark.
• But no one wants anyone to know that. They think that ARTIFICIAL CONTAINMENT is a sustainable practice, it is not. Jay Audia killed Jay Audia. But in some measure John Costa killed Audia. KTVZ killed Audia. Hell, even Alan Greenspan had a hand in it.
• Jay Audia would be alive today were the NASDAQ recession allowed to run its course. But no, Greenspan had to resurrect the Cali-Banger ASAP. Who cares about Round 2, that's Not My Watch.
• Drugs. Business Closures. Murder. Suicide. Speed traps. Bank failures. Homocide. Fannie. Freddie. Foreclosures. The Plaza. Meth dens. Robbery. Embezzlement. Fraud. Jay Audia.

Here's someone's reaction on BendBB:

Up until a few weeks ago, I thought a person had every right to be anonomous on the web, but seeing IHTBYB's writings about Jay Audia changed my mind. When anonymity is used to cause unneccessary and unwarranted pain to a family, it is much like using the right of free speech to yell FIRE in a crowded theater.

Huh?

You know, whoever you are, if Audia is a friend of yours, I'm sorry for your loss. I know people who knew him, and I heard he was a nice guy.

But there is NOTHING in this blog disparaging the guy.

"Jay Audia, I'm sure was a nice guy."

I don't know the guy, but I assume the best.

You are missing the point. I want people to WAKE THE FUCK up. Is it worth KILLING yourself over a RE deal gone bad? I would say HELL NO.

It WAS a warning shot that there may exist the possibility that there are some unscrupulous types who will attempt to engage you in a transaction. That is what happens when the money starts flowing, it attracts scammers, grifters, and in some cases much worse.

This is a person who wanted to distort the FACTS as much as possible, and try to take a punitive action against me. Of course, I would never confirm or deny such silliness.

But you might want to consider the idea that outting someone will be done erroneously. Certain situations can develop in situations like that, and they can have fairly unfortunate circumstances for those involved. These people own arms in abundance, and they don't take kindly to unpleasant strangers at their door.

The Eastside don't abide that shit, motherfucker.

I guess what I find most unbeleivable about this, is that people at first blush seem to believe this! Personally, I would take any such pronouncements with a HUGE grain of salt. My skepticism would be nearly 100%. Besides, what if it is correct? How will I ever KNOW that? What would I do anyway?

If you want to "out" someone using some sort of warped logic, that is your business. I guess all I can say is I disagree with it. Fuck, Buster has equated me & Dunc, me & Tim, and basically me & most other people on this thing. Fuck, it's like it's me talking to myself on this thing.

The only thing that worries me about this? Comment from BendBB:

It's very dangerous to believe an address posted on the Internet. Someone can be trying to get back at someone and post an address.

And if anyone gets hurt or harassed, the lawmen will be looking at IP. If you hid your IP, they'll be looking at ISP records.

Posting someone's address in this context can easily be construed as some sort of retaliation. Why else would you do it? Try to imagine the following scenario:

1) This person is NOT ME.
2) They are well-armed.
3) They are not pleasantly predisposed to a hostile visitor on their doorstep spewing bullshit.

Your little outting WILL come back to you. You'll need to be explaining to a Judge why you felt you needed to initiate a series of events that may have an unpleasant outcome. Think about it.

And whoever did this will almost certainly construe such statements as a threat of some sort. Of course it is not. It is a POSSIBLE consequence of YOUR ACTIONS, not mine.

"Outting" someone is an action so idiotic & fraught with negative consequences, you have to wonder about person doing it. I actually encourage people to go read BendBB's thread on this (anon proxy, of course). The comments are, as usual, the most interesting part.

Anyway, I guess stuff like this is inevitable. All I can say is I have respect for the dead, no matter the circumstances. Audia & McDonald and others MAY have made choices in the investment arena that contributed to their demise. MAYBE. If so, I just disagree with their decision to kill themselves. IT AIN'T THAT BAD. My Lord. It's just fucking real estate. Your life is WAY more important than that.

All I am saying is If You Are About To Invest In Something That Could REMOTELY Cause You To Kill Yourself:

DON'T.

Bend's Newest Landscaping Craze? Weeds!

Well, here was the suggestion, short of anyone actually accepting the Guest posting challenge, that I thought was the most interesting:

The other thing cuz obviously homer doesn't need to work so fucking hard, is to post questions every sunday, and comment highlights, and then let everyone respond, and then the following week post conclusions, and MOVE ON. ( More of a socratic method )

This will be tough, because I have an absolutely awful memory, and this will require that I actually try to write a lot of stuff down during the course of the week, that I can write about. There's no shortage of material, it's just a shortage of mental goo that keeps it held together until the weekend which is lacking.

I suppose the highlight of the week locally, was the centraloregonrealtors.com quarterly summary was released. There were a few points of interests.

First, dollar sales are below 2004 levels. There was $92MM at this time in 2004, and there is only $85MM so far this year. That is down 47.24% from 2007, and down even more from the peak in 2006.

If you recall, the real signals that Bend was not exempt from the slowdown came in the Fall of 2006. That's back when I was on BEM's board, and we all watched in amazement as inventory went ballistic. If you don't recall, well then click on Clive's inventory counter to the right.

We are, of course, at all-time highs in inventory, this place is awash in it.

It seems like just about every "superlative" has been exhausted describing the depths of Bend's RE problem. And it is clearly getting worse. But call me crazy, but DOWN 47% is starting to sound... OK.

"Down 50%? Eh. I've seen worse."

I don't know about you guys, but I am actually becoming accustomed to The Horror. Down 20%?... I mean, damn that would be reason to celebrate!

And actually, local Bend media did EXACTLY what I said they'd do: They celebrated the 100% PURELY SEASONAL UPTICK in Cent OR RE as The Turning Point. As a reminder, here is what I wrote way back on March 3 of this year:

February in Bend -- The Real Estate Calamity Continues

The Good News? Well, Deschutes County traditionally "bottoms" in February. Things usually get better from here, for about the next 6-8 months. Sales will pick up, things will be declared "OK", and such. But if you really need to sell, realize that this yearly game of musical chairs ends as predictably as it starts, and if you Need Out, this is Your Time.

And so we had Yet Another In A Long Line Of Stories declaring Things Are All Right:

June uptick ‘good news, but barely

June produced a glimmer of hope for a Bend real estate industry that reached its lowest depths in early 2008, according to a report this week from Bratton Appraisal Group.

Ah yes, Bratton Appraisal Group, the RE Genius' who brought us the April 25th Low In Cent OR Real Estate.

What's really great about this, is The Bulletin PRINTS stuff from Dana Bratton AD NAUSEUM, and they PRINTED his "tongue-in-cheek" April 25th Rock Bottom Prediction. This was, of course, RIDICULOUS, so ridiculous that lots of people sort of chuckled an uncomfortable chuckle, and said "Well, maybe... maybe... maybe..."

But you know, LOTS OF PEOPLE, including Dana Bratton were hoping beyond HOPE that he was right. I mean, The Bulletin & just about everyone else in town PRINTED this little "joke". No, it was NOT really a joke. It was what just about every other thing printed in this town regarding RE is: A 100% hope-based puff piece meant TO SELL HOMES.

Don't think Bend media had pinned their hopes on this little "joke"? Here's The Incredible Hulce from her most recent editorial (OK, there is no link, because Hulce keeps her piece of shit website about 2 months behind the print edition. Wake up White Peepul. Geez.):

While we all wanted to believe that Dana Bratton was right and the housing market turned on April 25 -- it didn't happen. It is more likely throughout 2008 that housing prices in Central Oregon will drop more, that gas prices will continue to go up, that the stock market will be tedious and no one will suddenly solve the healthcare crisis or end the war in Iraq.

Yeah. See? It was NOT a joke. You think Bend media remembers a "joke" told back in Feb-Mar, only to reveal the "punchline" on July 2? No. This entire area is founded on the idea that The Perpetual Motion Machine is REAL. And if we can just BELIEVE ENOUGH, that The Perpetual Money machine can be fired up again.

Always Cause, never Effect. "I'm not responsible for the consequences.." Complete disconnect, 100% Selfish. Californicated. People here have become so delusional from the Kool-Aid they don't even realize what they're saying is INSANE. Again, the Incredible Hulce in the SAME EDITORIAL:

So we ask: what would you do? Would you make gas prices go down, the housing market boom again? Of course you would, but how?

My God, this woman is INSANE.

I WOULD NOT make gas go down, and I MOST CERTAINLY WOULD NOT "MAKE" housing boom again. Why? For the love of Christ...

OK, first oil. We need go NO FURTHER than The Incredible Hulce herself to hear the problem; Again, same piece:

We all know America is addicted to oil. This addiction plagues our health, our environment and our society. Given that two-thirds of our oil comes from foreign nations leaves us open to the whims of potentially hostile foreign governments and the combustion of oil in our vehicle chokes our skies with smog and contributes greatly to global warming.

Oh yeah, this "oil" shit sounds great. The Incredible Hulce, earlier in the same fucking piece, advocates DROPPING THE COST OF OIL, such that we might feed this addiction, because it seems to have SO MANY positive side effects, such as turning this planet into an Easy Bake Oven & placing our collective cocks on an Iranian chopping block.

Seriously, is it just me, or is Bend media run by infantile, selfish lunatics?

Hulce actually wants RE to go into another BUBBLE. She wants it to BOOM again, and ASSUMES that EVERYONE with half a brain would obviously want the same thing. Yet, here is a piece that made THE FRONT PAGE of her moronic rag (Oct 3, 2007):

Affordable Housing Expert Adderesses Key Issues Facing Region

The most significant workforce recruitment and retention challenge for local businesses in Central Oregon is predicated on the shortage of housing affordable to workers, according to a survey by the Central Oregon Workforce Investment Board.

That is the first sentence, front page piece.

So the NON-AFFORDABILITY of housing is THE WORST problem for employers in Cent OR, and HULCE wants it to get WORSE. And what's worse, she sees NO CAUSATION between BOOM & BUST. The BUST we are now seeing is in NO WAY connected causally to the BOOM.

And OIL, which causes INTERMINABLE HEALTH & ENVIRONMENTAL PROBLEMS & MAY WELL KILL US ALL, yeah, she says in the same fucking breath that she wants it cheaper so we can consume MORE OF IT.

What a fucking myopic lunatic. Only a complete nut would run a front page piece (Sept 19,2007):

Deer Ridge Welcomes First Inmates.

For the love of Christ. I'm sure it was a joyous time for all involved.

Pamela Hulce Andrews: So Warden, how is opening day?

Deer Ridge Warden: After being confined to prison buses all day for the trip to Deer Ridge , many of the large black inmates convicted rapists celebrated their reunion with deep expressions of love for the smaller White convicted child molesters, by embracing them with the deepest penetrating act of love a man can give another man. It really was a touching sight. And Pamela, the guards were so happy to be reunited with these convicted felons, that they tear-gassed the lot of 'em on Day 1 out in The Yard.

Pamela Hulce Andrews is INSANE.

The point? This place is SEASONAL. My God, it's so fundamental to anyone who's been here for more than 5 minutes, it's not even worth repeating. But Bend media wants you to think WE'RE TURNING A CORNER. No. We are NOT.

Sales up? Of course, but anyone who can fog a mirror knew that back in Feb. Feb 1947, that is. We ALWAYS turn up from a bottom in Feb, and get smacked RIGHT BACK DOWN in Oct. Always have, always will.

YoY is THE ONLY COMPARISON THAT MATTERS.

"Hey Pat, I'm predicting that this December is going to be strong! And I'm going out on a limb here, but I'll predict right now, it'll be stronger than November!"

Oy. If ordinary businesspeople actually RELIED on the media & their CONSTANTLY
INTERVIEWED EXPERTS in this town to run their businesses, they'd all be dead.

Six months ago, in the garage of his west Redmond home, Carl Ylvisaker started tinkering with a tire, a trailer hitch, an alternator, car batteries and a power inverter.

The result: a device with the potential to complement alternative power sources like solar panels and windmills. And if everything falls into place, something that could help resolve the world’s energy crisis, says Ylvisaker, a retired physical therapist.

“We’re in an energy crunch right now,” Ylvisaker says. “This will certainly help defray that.”

My God. You hear that Timmy? We're in a fucking energy CRUNCH here! And this motherfucker has got a gopher wheel, a rubber band, fucking fishing line, and the complete McGyver DVD series that is going to DEFRAY THAT.

I read things like this, and it pushed my Recovery Date farther out, and my estimate for the bottom DOWN.

Ok, moving on...

Stocks got roiled this week, officially entering Bear Market territory for the first time since the NASDAQ crash.

I still find this one of the strangest things about this Housing/Credit bust: Not that it happened, but that it happened so late. This countries markets are populated by vultures that would hurl their mother under the bus to scalp an eighth. These guys are smart & they are motivated by making money before the next guy & that's it.

And I don't know about you guys, but this thing seemed clear WAY OVER a year ago.

I haven't bought stocks in many moons. Last time I bought was 2002. I thinned my meager holdings in 2005-2006 on housing fears. And subsequently watched IN HORROR as things continued ever upward.

I got that confused feeling that I got in the late 90's; I just did not understand why people were buying. Quagmire-war, gas going up (although it was still in the $2's back then), rising inflation, and a housing crash seemed inevitable to me, at least. Worst of all Worlds.

Not for the S&P. Ever upward.

And my hard-won experience has taught me to stand aside when I don't fundamentally understand pricing on the upside, and to also jump in when I similarly don't understand why things are so cheap on the downside.

And then Bear Stearns when bust in March & I got some measure of vindication. But still, things were very good, and they bounced really strong after that, and The Bottom was declared from every corner.

Every corner but here. I said sell the rallies, cuz the Most Catastrophic Destruction Of Wealth Ever Recorded doesn't end in one day. And I'll say it again: Sell rallies.

But I have started to find bargains. And these are not slimly underpriced, fundamentally strong issues. They are deeply & obviously troubled. Big RV sellers, car dealers, and big pharma with weak pipelines.

Are we at "Fair Value"? Well, for me, we haven't been there almost ever. Why? I am a cheap bastard. I only really like buying individual issues that look underpriced by 80-90%; ie: potential 5-10 baggers. Many times these things are headed from $50 to $.50, and I will pick them up at $2, thinking I am King Of the World.

No. Most of the time the Market is Dead Right, and these things get killed. But occasionally the market is wrong, and these things end up as Huge Winners. My approach very much reminded me of the Taleb interview where he advocated buying small amounts of many extremely speculative issues, and also keeping a big wad of cash in reserve.

To date, it's been my selling discipline, not my buying, that has been my fatal flaw. After sustaining short term, excruciating losses (30-50%), I always swear I'll sell at breakeven & NEVER DO THIS STOCK THING AGAIN. And so I do. Right before the 10 bagger hits.

But I hope to have solved it this time with this bit of knowledge:

KNOW THYSELF

I know I am HORRIBLE at selling, so I simply will not sell. And it's funny, but once I truly accepted that I was going to hold this litany of lottery tickets, I became much calmer & less involved in the daily machinations & price movements. I could actually think much more clearly about the markets than I ever have. I have simply eliminated the option of selling.

And I also understand why Buffett advocates that The Optimal Holding Period Is Forever.

It clarifies, and makes buying a much more thoughtful process. I finally understand that to CAPTURE a 10 bagger REQUIRES that I hold stocks for The Long Haul, Thru Hell & High Water. The last near 20 bagger I bought took 5 years to get there & got almost cut in half 3X on the way there.

It is impossible to hold a 20 bagger when your concerned with selling at breakeven.

Second stock-related question is the Freddie-Fannie collapse.

Now, on Friday, after a heinous drubbing in the morning, both FNM & FRE staged pretty impressive rallies. Freddie actually dropped as low as $3.89, before recovering to almost $8! That's like 4-5 years of appreciation in 1 day.

And consequently, The End Was Declared as having come and gone Friday morning. My Lord, they trotted out Bernanke, Bush and a litany of minor Senators to jawbone this thing higher. And to good effect.

But this changes NOTHING. Fannie & Freddie are some of the most leveraged companies on the planet & the Tsunami of credit contraction & The Great Deleveraging will take them down.

People, the Federal Government is FLOODING our financial intermediaries with money, and it does not matter. It simply delays the inevitable. Bear Stearns was not The End, and neither is this. It is simply a short-term Band Aid that lets the inflation genie out of the bottle. Last time this happened, it took the most severe medicine The Fed had ever dished out, 20% interest rates, to end it. Worst recession since the Great Depression followed, as is expected.

We're digging our own graves, and bailing out Freddie & Fannie should simply tell you that oil, food, and everything else EXCEPT YOUR SALARY, is about to do a quick double.

I am, nevertheless, buying auto dealers & big RV makers & fading this hysteria. The Worst Of All Worlds seems like it's already priced in.

OK, I'll end it this week with the headline! Yeah!

Don't know if you've noticed, but there seems to be a little landscaping problem in Bend.

Cali-bangers brought with them this sort of minimalist idea of small grass patches, surrounded by rocks & these sparsely scattered "plants"; they look like really tall grass and small shrubs, I guess. Sort of a Japanese-ish theme. Seems low-maintenance, I guess. Not a lot to mow, and the scattered stuff sort takes care of itself, mostly

Problem is Bend is hucked-full of empty houses. These things aren't getting minimal maintenance, they're getting none. And you'd think that after a long, cold Winter, things would brighten, and all would be well, and that at the very least, the lanscape here would "stage" itself. After all, many front yards are meant to mirror desert scrub.

But it's not working out that way. Let's take a look at The Eastside first:

Darnel & Moisha Estates, Tumbleweed Field

Right next to the sub $100/sf Darnel & Moisha Estates, where Bends rich, black pimp elite have chosen to "crib out", you see that The Bleeds like ta bust out they ho's more than they like to water the yard.

Sheeeeet Nigger! I want my fuckin money, you Ho bitches! I don't ho you bitches out to water the motherfuckin YARD!

Another Darnel Estates grow operation

Yeah, yet another vacant STD used as a weed-grow operation. Someone need to call Joshua Grossman to get his ass out there with a weed-whacker. Motherfucking weeds are actually growing out of the garage here.

Paul-doh buys RV makers cuz they slowly being consumed in weed bogs

I expected Swamp Thing to come out from under this fucking RV, which is being consumed by weeds.

Now moving on to Desert Skeeze:

Desert Skeeze Field Of Dreams

Besides being The Home of $50/sf Abandoned Hulks, Desert Skeeze got the Weed problem. I can only imagine the woman of this house got a motherfucking humungous bush, look like she got Buckwheat in a leg-lock.

Classic Desert Skeeze backyard. Or is it Forum Center?

Drive by The Skeeze & Forum Center you'll see an entire block of vacant homes being consumed by weeds. It's a sea of weeds that runs the entire block at Forum, uninterrupted by fences or other impediments to offend the eye.

Hay fields in Bend?

Yeah, this Coldwell broker might wanna hire a band of illegal methers to come out and whack down the fucking hay field that sprung up here. What'll happen if they don't?

Notice on yo front door when you don't trim the bush

NIGGA PLEEZE! Nigga know you gotta keep that bush trimmed, or you be scarin' away Whitey.

Holy Shit, Buckwheat spotted on The Westsiiiiiiiieede!

Yup, they be weeds sproutin on the Westsiiiiieede as well. You drive by Newport Market, and you can see that these Westside macro-shacks be in need of illegal landscaping. White bitches: You just need go to Madras, pick up 'bout 200 illegals (even millionaire methers will cut yo mutha fuckin yard for 5 bucks cuz dem bitches done communicated with Jeebus when they out dying in the AZ desert. He toad 'em "You Mexican bitches will go forth & cut Whitey's yard for 3 bucks plus tip, and you'll like it, or I smite your asses with NO MORE tiara's for graduation and no more humungous pink fake silk square-dancing dresses for bridesmaids. Now Go!"), and get them fuckers to trim your yard.

Eco-Modern Whorehouse

Yup, guess we should have known the Eco-Modern Soviet-designed whorehouses across the street from Newport market would go to seed. This is where they really get you wondering if this is landscaping or fucking weeds.

Yeah, it's weeds. But they mix it with that 12ft tall grass & the weediness is actually muted some.

Fuckin Cracker be Pimpin'

Yeah, here you got a flop house, run by Cracker Ass Cracker. Clearly Cracker don't know that Whitey like a mowed field.

Yup, I got more, but you get the idea. The Vast STD fields have finally been abandoned to the elements. Ain't got the cash for upkeep. Fuck, ain't even making the mortgages anymore.

THIS, my friends, is why Bend is headed to $50/sf.

Bend Oregon real estate: "Worst of the worst"

OK, this time I really will keep this short. I did the PPP yesterday, and I think I blew an O-ring.

Well, not really. But it sure as hell was the hardest exertion I've done in awhile. And a hell of a lot of fun. It's things like the PPP that makes me really like Bend, and makes me start to overlook what have started to seem like fatal, insurmountable flaws.

It's really odd. I see a lot of what's wrong with Bend, and link it to the Amenity Locusts that populate this place. And to date, I haven't had to interact with people like that much, for the most part. I don't "do" things like the PPP. And there is a certain "crowd" that does that. I think.

Oy. If you haven't figured it out, I'm just a person riddled with self-doubt (except when it comes to Bubbles bursting). And when I participate in something with people who I perceive to be the bane of Bends existence, and then they turn out to be all right... well, I just get a little guilty about throwing these people, as a group, under the proverbial bus.

I start to think Bend has a chance. That the people who in many cases participated in the Bubble, and in many cases fueled it, are actually within eyeshot of "normal".

And I got up today & watched "Houses of Sand and Fog", which is a really great movie about a real estate situation gone horribly wrong. And it is very hard to watch this thing, because the parallels between what happens in the movie, and what will happen to Cent OR resonate very strongly with me.

I encourage you to watch it, because it brings home something that a lot of people seem to overlook when the are grave-dancing or scavenging for busted situations; and that is that peoples homes are not just investments, they many times become objects that people imbue the whole of their self-worth in, their lives.

It's pretty easy to be cold about this stuff when it's not happening to you. And sometimes it's easy to be dispassionate when you think it's happening to people who "have it coming". And a hell of a lot of people around here "have it coming".

A way out with the short sale

More local homeowners who face foreclosure are turning to a rare option to avoid that fate

By Andrew Moore / The Bulletin

Published: May 18. 2008 4:00AM PST

The short sale.

In real estate, it’s the sale of a home or property for less than the amount owed the lender. The owner nets nothing on the sale and until recently, it also meant a tax liability, as the IRS considered the difference between the sale price and outstanding loan amount as income.

It’s not a favorable option, but a short sale can be the best way for a homeowner to get out from under a loan and avoid foreclosure, according to local real estate representatives.

Trouble is, a successful short sale is entirely dependent on the lender’s authorization. A seller may find a willing buyer, but unless the lender agrees to take a loss on the property, the sale won’t happen.

And as more homeowners near foreclosure — in Deschutes County, there were 528 notices of default, a precursor to foreclosure proceedings, filed between Jan. 1 and Thursday, a 303.5 percent increase over the same period last year — more homeowners are pursuing short sales.

Tom Greene, the president of the Central Oregon Association of Realtors, said roughly 7 percent of the homes currently listed in Deschutes County are short sales. That represents a huge jump, he said, as short sales used to be exceedingly rare.

“This is a new phenomena,” Greene said. “You used to run into them once every six months.”

Short Sale 101

The reason most homeowners ask a lender for a short sale — be it hardship, a job transfer or a bad investment — is to avoid foreclosure, said Cat Zwicker-Grant, principal broker with Desert Sky Real Estate in Redmond.

The upside of a short sale is it doesn’t negatively affect a homeowner’s credit score, the way a foreclosure would. The downside is the homeowner surrenders their investment in the home and has to certify he or she has not profited from the sale in any way. In addition, most lenders want proof a homeowner doesn’t have other financial means to pay for the loan, Zwicker-Grant said.

“You are asking the bank to accept a loss on your behalf, so if they do that, they want to know you are worthy,” she said.

In other words, if it’s a second home a homeowner is trying to short-sell, the chances a bank would accept one are slim, Zwicker-Grant said.

Filing for bankruptcy won’t help, either. If you can’t make mortgage payments, you can’t keep your home, said Deidra Cherzan, a Bend attorney who specializes in bankruptcy filings.

Bankruptcy law does provide exemptions for primary residences but only if the mortgage is in good standing and the filer can continue to make payments, she said.

The key to a successful short sale is to start the process early, Zwicker-Grant said. Contact the lender, and begin the application process. The next step is to list the house and find a buyer. If one is found, the buyer submits the offer to the lender, which approves or rejects the sale.

The trick is timing, Zwicker-Grant said. Most homeowners don’t begin the short-sale process until they are behind on payments. This often puts homeowners up against the clock.

A notice of default is generally sent out after 90 days of nonpayment, and a house can be put up for auction by a lender 90 days later. If no one bids on the home, it is foreclosed on by the lender and the lender assumes ownership.

Banks or lenders typically don’t want to own real estate, so even though they may take a loss on a short sale, it’s often less costly in the long run, considering the amount a bank would pay for title fees, to maintain a home, cover its taxes and pay real estate commissions when it sells, Zwicker-Grant said.

Zwicker-Grant said banks can be choosy when it comes to approving short sales and accepting bids. Like other sellers, they often hold out for the best possible deal.

“Just because the first offer came in, (the lender) looks at what’s going to close the quickest and get them the most money,” Zwicker-Grant said. “The bank is really in the driver’s seat.”

As of Wednesday, there were 131 short-sale homes listed in Bend and 68 in Redmond, representing roughly 9 percent and 7 percent of the listings in those markets, respectively, Greene said. Since Jan. 1, 17 short sales have closed in Bend and 34 in Redmond, according to Greene.

Valerie Hunter, principal broker at H & H Preferred Real Estate in Redmond, said she has helped close nearly 40 short sales in Central Oregon in recent months, the most she’s seen in the eight years she’s specialized in them. But as banks back up with short-sale applications, Hunter said the process is getting harder.

“Seventy-five percent don’t get successfully negotiated,” Hunter said. “It’s a lot of work to do a short sale, and I try not to do them anymore because they are becoming more of a headache.”

If a short sale is approved, and a buyer purchases the seller’s home, the seller is not completely out of the woods. In past years, the amount of the loan forgiven by the lender — the difference between the outstanding loan amount and the sale price — was considered taxable income by the IRS.

That changed in December when President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007. The act excludes income derived from debt forgiveness on a principal residence from taxation, but only for debt forgiven in 2007, 2008 or 2009.

For that reason and because of market conditions, Zwicker-Grant is seeing more homeowners take advantage of the process.

“Short sales have always been around, but we’ve never seen it so prevalent,” Zwicker-Grant said.

Andrew Moore can be reached at 617-7820 or amoore@bendbulletin.com.

It's pretty easy, especially in a forum like this one, to take this as the greatest news in the World. Short sales & foreclosures mean that for those of us who stayed responsible and held back from the insanity, we will get much better deals, and perhaps fulfill a life's ambition.

But these people who are going through this mess, whether responsible or not, are in many cases going to end up in terrible straits. They might be homeless, they might have kids. They might be unable to own a house again for many years. And to add insult to injury, many around here are losing their jobs.

I don't want to come off like a bleeding heart woosie (too late?), but ALL involved, whether owners losing their homes, or "vulture" buyers looking to capitalize on this deteriorating situation, and ESPECIALLY the intermediaries who MADE IT HAPPEN, should stop and take stock of this:

I said from Day 1 that there would come a day when ALL INVOLVED would WISH THIS THING NEVER HAPPENED. Even those who stand to capitalize, should step back & really think about what is happening here: People are losing their homes & jobs, and are faced with interminable and extremely uncertain circumstances. Again, some have kids & will be living in their cars.

There but for the grace of God...

Houses aren't stock certificates. We live in these things. We grow up in them. We make our lives here. And God knows MANY of those who fanned the flames of this thing are selfish asses, and no one wants to see them go down hard more than I.

But there are some who are not in that camp, who are simply caught in a bad situation. And in virtually every case I rationalized, "Hey, these are just rich Cali jerks who totally deserve to suck fucking air, because they caused this thing". And in a lot of cases this is exactly the case.

But I hope to retain some sort of respectful dignity about the situation, and remember that many of these people are going through horrendous circumstances, whether low-life Cali's or not, and human misery no matter the source should not be a source of glee.

Speaking of glee.

It is getting harder & harder to write this blog. I don't think I'm about to quit imminently, but this thing was started to first Convince People that there was in fact a bubble in the bursting. I know. Reading that sounds moronic, but Yes, I do remember that there were MANY who scoffed at this blog & it's predecessor & their commenters that Bend Is Immune, Bend Is Different, Bend Will Go Forever Upward.

Geez, and for awhile it seemed like they could be right.

We now know of course that Bend IS normal. Bend is a working town. Bend is NOT Aspen, and never will be. Bend must normalize. And unlike David Foster, who seems to intimate at times, that "normalize" means "plateau at the current level, with a steadily increasing volume, such that I might actually make a living again", I do not define it so.

Normalize to me means hitting some sort of parity with respect to local incomes.

And that means medians far, Far down from here, probably near $200K, or less.

And that means financial hardships unlike anything anyone has ever seen around here. At least not in the last 25 years.

And this just means a lot of personal despair. People going hungry. Sleeping in cars. Just misery.

So maybe I should grave dance a little less. Maybe you should not gleefully cheer a bubble ever higher (you know who you are). And maybe we should all try to avoid these sort of things in the future, if possible.

Because the end result is always human misery. That's it. Some get rich, many get poor, but the game is not really zero-sum because human misery is always produced in abundance.

I'll finish with bashing what became crystal clear to me this past Wednesday, but first a question:

What do YOU think best measures the economic impact of tourism in Central Oregon?

OK, I have my own answer, and I simply look for a parallel to the impact of a company.

But actually try to come up with your own answer before reading on.

OK?

My own personal answer is "revenue". Is this the perfect answer? No.

There are some non-profits that have no real "revenue" to speak of. There are wholesalers that have enormous revenue, but have little in the way of real net profit. There are banks whose revenue may not really reflect their local influence.

So my answer is revenue, although I realize it is not perfect.

COVA's answer to this question, with respect to Central Oregon tourism, is also revenue.

Plus Wages.

Yes, that is local Revenue Plus Local Wages.

Stop. Think.

If you were trying to sell your business, would you in any circumstance list your revenue as Revenue PLUS wages? No. Not unless your crazy. You'd just post revenue. You might also post wages as a separate item. But you would NEVER SUM THEM TOGETHER.

Wages are of course paid out of revenue. Summing them in any way is almost pathologically deceptive, if you were to try to describe "influence", or Economic Impact.

But this is exactly what COVA does.

This is an obvious falsehood, so what is the motive?

That should be clear, COVA has a clear motive to wildly overstate the economic impact of tourism to the area. It is after all a taxpayer funded boondoggle. And the dollars COVA receives are in direct proportion to Economic Impact it can show to local incompetents manning City Hall.

So what to do?

Step One is take a page from the lottery system: Wildly Overstate The Jackpot. If you ever take a close look at lottery payouts, you realize that the $100 MILLION dollar stated payout, is never so.

It is paid out over 29 years. It's like summing up your mortgage, and stating that as the principal amount. That's just dumb.

So COVA does the same, and they do it in such a blatantly wrongheaded way, that I never even thought to question what they would have ever meant by Economic Impact. I straight up assumed that it was revenue, based on room taxes, and other mechanical means.

No, there is a massive double counting. It's like a bank that counts not only loans among its assets, but ALSO IT'S DEPOSITS. Which are of course liabilities.

COVA's figures for Central Oregon Economic Impact are a 100% Fraud.

And I mean that 2 ways. First is the aforementioned egregious double counting. Next is the figures themselves are 100% manufactured.

Now I and probably others have long had their doubts, especially given the surgical precision of the "revenue", when if you can even operate a calculator, you now is 100% impossible. But this past Wednesday, COVA conspired with the Bulletin to put your fears to rest with their piece, "Tourism for the whole family".

I won't reprint it here, because you can view it in it's entirety online. But it seems like it may be in response to BEM's initial suspicion that COVA's figures were so old they must be very stale, and that their inherent precision made them extremely suspect.

They promptly INCREASED their figures a few weeks later. That was a few weeks ago. In this current piece, they have INCREASED the figures yet again, with the standard surgical precision.

Audette on Tuesday released the tourism agency’s 2008 Annual Report, which showed the impact of tourism in Central Oregon increased 5.2 percent in 2007 over 2006, to $570.7 million.

Ahh. Up 5.2%. Like clockwork. Just a smooth ride upward, ever upward. How relaxing. How enjoyable.

How wonderful in securing more taxpayer funding.

COVA MUST show a smoothly increasing trajectory of IMPACT or there may exist the possibility that, God forbid, their funding might be **gasp** reduced.

And so there is a large impact. Always.

The impact is Very Large (due to double counting), and very.... smooth. Huh. Up 5.2%, you say Alana Audette? Interesting.

As I look across each of the components of the Economic Impact Of Tourism In Central Oregon, Accommodations, Eating/Drinking, Food stores, Air/ground transportation, Recreation, and Retail sales, I am struck by two things:

First, What else is there! "Retail Sales"? I mean, my God, you included everything, then you threw in the kitchen sink for good measure.

"Air transportation"? What about the endless tales spun by The Bulletin about how the Redmond airport is almost overwhelmingly dominated by BUSINESS TRAVELERS?

"Eating/drinking"? My Lord. So when I take my kids to Baldy's, I 'm having an "Economic Impact" on Cent OR Tourism?

I thought Revenue + Wages was a recipe for double counting. What COVA "defines" as tourism related, is just inane.

Now I realize that they probably DO take some percentage of local eatery receipts... but how much? They've already shown a strong predisposition to inflating things for their own benefit, can we possibly assume they've done any different here? I don't think so.

Secondly, I looked close at the SOOTHING increases in EACH AND EVERY category. To paraphrase Sir Arthur Conan Doyle:

Gregory (Scotland Yard detective): "Is there any other point to which you would wish to draw my attention?"

Holmes: "To the curious incident of the dog in the night-time."

Gregory: "The dog did nothing in the night-time."

Holmes: "That was the curious incident."

You'd think that maybe the 5.2% increase we can so confidently depend on (Did I mention that Bachelor was DOWN sharply on the season?), seemed to be accompanied by each of the component REVENUE + WAGE impact rising almost as smoothly. Very smoothly. Each one.

Dunc, when your store is up 10% on the year, what are the chances that EACH AND EVERY CATEGORY IN THE STORE IS ALSO UP 10%?

Seems slim to me. Real slim. But this is Bend. A fantasyland where all your dreams come true, all trajectories are forever up, and by God, when they aren't, the fractions are adjusted the estimations are re-jiggered, and every little thing has an almost scarily perfect Stepford Wives precision to it.

Look closely at this graph. The ONLY down local area is Jefferson County. And each and every component is down in lockstep with the total drop there. The ONLY place you find MIXED results is in useless Wasco County, where retail sales fell $100K, and all else was flat or higher.

Not Bend. All is up, and each is up. Nothing left behind, all beneficial. Fantasyland. Xanadu.

The spice must flow...