"Bend is in a depression..." -- Bob Thomas

Well, there you have it, folks.

Reputable business man telling a house subcommittee, and then printed in our local rag:

BEND IS IN A DEPRESSION

Wow. THAT makes it official. Although, we've been saying that for over a year.

I thought that was pretty stunning, to hear someone say that, much less have the Bully print it.

And not to belabor the point, and in case you've been in a cave for 2 years, the CAUSE of our current DEPRESSION is the REAL ESTATE INDUSTRY. Pure and simple, endlessly promoted and pumped and dumped on us, it was the real estate bubble, and it's inevitable collapse that is THE CAUSE of our current problems.

I feel like I have to say this sort of thing, because it's starting to spread & manifest itself in all sorts of collateral effects. Like Bob Thomas losing his dealership.

Almost any industry fueled by credit is getting it's ass waxed.

So you might think we're suffering a "credit bust", which we are, but it's primary vehicle for expansion was RE. We're not in a Depression because of zero down car deals.

The rest of the article about Thomas is standard self-serving tripe, standard issue when the Bully does it's usual BS. Even Greg Walden hops on the bandwagon, questioning the "wisdom" of closing ANY dealerships.

I just have 2 observations about this:

1) I still DO NOT understand why Gary Gruner in Madras is still alive.

I would have guessed they'd be The First GM dealership closed in Cent OR, GM bankruptcy or not. Gary Gruner? WTF?

2) Driving around auto row, and Bob Thomas' lots, there are NO CARS for sale in Cent OR.

Well, not "NO CARS", but a hell of a lot less than there were just a year ago. You could go to auto row on the East side, and see a ridiculous number of cars over there. THOUSANDS and THOUSANDS.

That was one of those businesses that was so irrational, I simply could not understand how any of those dealers survived. There are STILL too many.

And that doesn't count the innumerable used car dealers, whose numbers are now being swelled by new car dealers losing their franchises & joining their ranks.

I think you'll see a winnowing in the numbers of dealers, especially on auto row. There is just a ridiculous number of them. And the number of cars sold has already plunged, probably far worse than most people think. Ask Bob Thomas.

---

Proably the most amazing piece I've read since this whole RE Implosion began, is a piece posted in the comments by PopGoesBend. Excerpts:

Median home prices drop below 1989 levels in some parts of Southland

Properties in several areas are selling for less than they did 20 years ago, and that's not even counting the effects of inflation.

John A. Beatrice, 55, bought his spacious two-story Spanish-style house there brand-new for $120,000 in 1989. But he never imagined his neighborhood would drop off the charts. In April, a slightly larger home two doors away sold for $66,500.

That's just over half the $130,000 it went for new in 1992. In 2005, that house sold for $330,000. ...in 14 Southland ZIP Codes, mainly desert communities in the Antelope Valley and Inland Empire, median prices have fallen below levels recorded in April 1989, according to MDA DataQuick, a San Diego real estate information service.

That means thousands of homes in those neighborhoods -- even houses barely 20 years old and in decent shape -- have lost every dime of their appreciation, giving back not just the gains of the recent bubble but steady increases logged over a generation.

The April median price in Beatrice's Lancaster ZIP Code of 93535, for example, was $87,000. That's down 74% from a $334,500 peak price in 2007.

Even worse was the 92410 ZIP Code in the city of San Bernardino, which covers several older neighborhoods. Its $61,000 April median represents an 84% drop from the peak of $370,000 in 2007.

Prices also tumbled below 1989 levels in neighborhoods in Palmdale, Hemet, Barstow, Desert Hot Springs, Victorville, Highland, Santa Ana and Oxnard, according to DataQuick.

Several other inland communities, including parts of Moreno Valley, Banning and Rialto, had median prices that were only slightly above 1989 levels and below the April 1990 median.

I always thought that Cali-Bangers would take it the hardest. The California Miracle was just that; a mirage, a figment, a dream.

I honestly had no idea where Palmdale was, and come to find it is in the barely commutable quasi-desert outskirts of LA's Northern suburbs, if you can call living 2-3hrs from LA in gridlocked traffic a "suburb".

Sound familiar? Out in the fucking desert? 2-3 hours from any real metro area?

Although I was sort of surprised about Oxnard having fallen below 1989 levels. What the fuck is next? Santa Barbara?

I wouldn't give a handful of my own shit for a house in cracker-ass Victorville. But Oxnard? I've been there, and it was OK. Ocean's just right there. Oxnard falling below 1989 levels is pretty strange.

And it's happening elsewhere, including the central valley:

Back to the future home prices

Real estate bargain hunters in Stockton can buy property for less than the sticker price of a Cadillac Escalade in today's market.

San Joaquin County real estate listings contain at least two dozen homes priced less than $50,000 and at least one as low as $15,900. These are prices not seen in California since the 1970s, a decade in which home prices climbed from $23,000 to $84,000.

The 1,300-square-foot house is priced at $15,900, a 92 percent discount from what property records show as a $180,000 selling price in August 2005.

My main takeaway on this piece is NOTHING IS SACRED. "Rationality" least of all. Prices staying above some price point that "makes sense" is 100% Grade AAA Bullshit.

Prices can AND WILL go to INSANE price levels. Prices will slice right through the "Rental Arbitrage Point" like a hot knife through butter. People will start questioning EVERYTHING when all sorts of "logical" arguments start to fall.

You'll soon be able to BUY A HOUSE IN BEND FOR LESS THAN THE RENT. Why?

Because "prices" are always based on CREDIT. Credit is valuing a STREAM OF MONEY, NOT A PILE OF IT. Credit is "If I give you this PILE OF MONEY, you will give me 360 payments of $X EVERY MONTH".

THAT is what's going away. Not for everyone, but for a hell of a lot of people. THAT is the "rational assumption" that will fail. No CREDIT means people will go back to paying for stuff with PILES OF MONEY, not streams. And there ain't much money left.

For now.

I think, FOR NOW, the primary economic theme is DEFLATION.

But our government is altering the natural course of things by throwing TRILLIONS OF DOLLARS at an essentially stagnant economy.

Not today, but soon, there will come a day of STAGFLATION. And it will boggle the mind. Money in this country will be worth nothing.

Houses probably WILL go up at that point. Well, at least compared to holding cash. Better to have your cash in some shack losing 5%/yr, than in the bank losing 15%. A 5% LOSS will actually feel like a good deal. People will treat cash like Ebola.

But not now. But folks, watch the dollar, and watch long government bonds.

The dollar index, after a long plummet from 120 in 2002, fell to as low as 70 last year. It had a dead-cat rally to 90, but has now fallen back to the high 70's. The World is getting nervous about the Obama Jeebus Printing Press.

Similarly, 30 year government bonds, declared DEAD a few years back when the US Gov't was never going to borrow money again (man, that never gets old), has fallen from it recent EUPHORIA DEFLATION FUELED all-time highs over 140 (My God!), clear back to pre-panic prices, around 115.

I would watch this. The dollar has long been signaling an incredible devaluation in our currency. But luckily, the Chinese & others have seen these losses counter-balanced by recent huge gains in treasury prices.

At least till recently. Now the double whammy of declining dollar and treasury pricing could cause a Worldwide credit panic, as the US has to print its way out of bankruptcy.

And that means STAGFLATION.

---

Portland is finally starting to really hurt in the current RE Depression. There were some good pieces recently.

Stalled Portland luxury development shows depths of recession

(Tom) Moyer's four decades of empire building smacked into a wreck of a recession April 10, when he halted construction on his $170 million Park Avenue West tower.

That morning, Moyer paid 100 workers in the pit spiked with rebar. On Wednesday, the final three workers climbed out of the hole for the last time.

Commercial lending has gone net negative.

I thought that graph was interesting. Lenders have gone net negative on commercial RE, taking more out in payments than they are lending. Again, the whole concept of STREAMS OF MONEY, is dying.

In another piece, we see that residential in Portland is also moribund:

Portland housing market still gloomy

Portland-area home owners continued to weather a gloomy market in May, another sign that talk of a economic recovery is premature for the region's housing market.

The Regional Multiple Listing Service reported today that the median price for homes sold in May was $250,000. That's down 13 percent from May 2008 and 17 percent from the August 2007 peak.

But the number of closed sales in May lagged last year by 23 percent. Pending sales, seen as a predictor of future closed sales, was down 7 percent from a year ago.

The inventory of unsold homes -- the time it would take to sell all homes on the market at the current sales paces -- dipped, but remains high at 10 months.

Portland is actually holding up pretty well since it does have... stuff. Unlike Bend, which only has RE, and nothing else.

Folks, don't believe the calls of a "RE-bound", and "we've GOT TO have hit bottom, it can't go any lower!", and such. We've heard both ad nauseum from RE "experts" (Bratton, DuBois, et al) quoted in the Bully going on 2 years.

It CAN go lower, and it WILL go lower.

Look at the price reductions in the cracker-ass middle of the desert in Cali: DOWN 90%+!

I don't think we'll see that, but 75-80% DOWN from the top is VERY POSSIBLE.

I mean, Holy Shit, we had $396,000 MEDIANS for the love of Christ! We're in the middle of ASS NOWHERE!

We'll hit $125K medians. If you DO CARE about capital preservation, and can tolerate renting, DO SO. Do it for 5-10 years. You will be able to make good money in 5-10 years from now.

Work, pile up your money, and shoot your wad in a few years. You'll have to pay cash, or nearly all cash, but there will be good money to be made.

NOT in cap-app. NO. RE isn't going to "go up" in any appreciable manner for 2 decades. BUT you can get a cash-flow positive shit-shack, that pays you a few hundred every month, and that will KILL what you could get elsewhere.

---

Finally...Any hbm sightings recently? Is he actually gone? Was the coincidental exodus of he & Brucey part of a Mormon love triangle?

hbm, come back! With you gone, there is no one to twist our nipples!

Look! In the sky! It's a bird! It's a plane! It's hbm!

hbm, please come back! My leather bras have shrunk to just B-cup! I need you!