Sunday, February 24, 2008

When my developer friend was in on the 20th of Feb. and told me that only 3 housing permits and 3 commercial permits were pending locally, for a grand total of 6, I figured that was a mistake.

Until this morning, when I pick up the paper to find that only eleven building permits were taken out in Jan.

Eleven.

Can I repeat that?

Eleven.

You know, everyone is so focused on the real estate market and house prices, that I think they are losing sight of the really important numbers.

Like jobs and construction. Eleven new buildings a month isn't going to employ very many people, is it? Hell, my own customer base could pretty much cover that. You other businesses? All your customers have been laid off....

Remember a year ago when someone popped up and argued the 50% drop figure in building permits? And it turned out, we were wrong -- it had dropped 50% over a two year period.

Well, whoever that was, argue this: Central Oregon building permits fell 70.6% from last January to this.

So this will just allow the overflow to be bought up? Hopefully, but it looks to me like anyone involved in the building trade is going to have to hold their breath underwater for a few years. Don't really know anyone who can do that, do you?

These are my customers, many of them. Tourism is the icing on the cake, but I live off of locals.

Meanwhile, we start to hear that office and industrial space is opening.

("Anyway, in "Commercial Property Values in for Steep Drop, Says Loan Liquidator," Financial Week offers up some insights on the next shoe to drop in the great unraveling.

Banks starting to unload distressed real estate loans; some sellers taking 50 cents on the dollar.")

Next shoe will be retail space, folks. And one thing to remember, many of these commercial buildings were built with the same sorts of dubious loans that torpedoed the housing market; the consequences are just going to take a little longer to shake out.

I worked yesterday at the store, on a Saturday for the first time in a long time, and it was very edifying. Lots of tourists, lots of locals on a lark, not a whole lot of sales per customer, but lots and lots of customers.

If you had told me a few years back that I would have 100 people walk in the door on a day in February, I would've asked: what fad took off?

Instead, our store was positioned right in the middle of all the new development downtown.

My observation was that I've done exactly the right thing by bringing in new books and games, and broadening the toy selection, and so on. I wish I had more space to display everything, but the foot traffic nowadays is to die for. Really. I can't complain about that.

Lots of young families and kids; and I find it very amusing how the adults are always surprised that THEY are the ones buying something, and not the kids. While, I'm not surprised at all -- it's how I've redesigned the store. Because the kids just aren't interested. While the parents can't quite resist the stuff their kids ignore. Very interesting phenomenon.

2 comments:

BilboBend said...

Dunc,

Over a month ago I had a beer with a builder bragging to me that he just got a full frame bid on a 3,000 sqft home for $5k, that's less than $2sqft, he told me a year ago it was costing $15k, or $5/sq-ft.

I asked if that was material and labor and he said yes, and I immediately asked, how can they work for less than min-wage, and he said "They have to work".

He told me that when he bid out the job, not a single bid came in for over $5k. Note also that 2-3 years ago people were even paying more than $5 sq-ft.

Here's what I see from my sub-contractor friends, the time-line of the BEND sub-con collapse in wages.

2004-2005: $60/hr NWXC, lots of toys

2006: $45/hr, sold toys

2007: $15/hr, moved into small rental, drive to brasada for work

2008: $5/hr, or un-employment, or leave

Hell the whites are NOW willing to take jobs for less than what the Mexicans were getting too years ago.

We're at the bottom now dunc, there is no lower we can go.

Duncan McGeary said...

People really don't 'get' Bend. One of my first jobs when people get here it to reorient them. This isn't San Fran, it isn't L.A., it isn't even Portland, or....even Eugene or Salem.

The question gets asked every day: Am I the "ONLY" game, comic, card, whatever shop. I always want to say, there are dozens of us, what do you think? Comic shop on every corner.

Just where the hell did you think you moved to?