Bubble news, redux.

Timothy mentions that there is 'no one to argue against.'

That's never stopped me yet. But I also don't think that's quite true. There is the general unawareness, there is the real estate community, and not least, there is the Bulletin.

Today's Oregonian has an eye-opening article on a local builder that everyone should read. I suspect that this is just the tip of the iceberg. A short excerpt:

"Bend developer's problems leave losses, questions in wake

Desert Sun Development is beset by liens, unpaid creditors, big employee losses and a federal inquiry

Sunday, May 18, 2008

JEFF MANNING

The Oregonian Staff

BEND -- As central Oregon's long real estate gold rush gives way to a grim new era of falling prices and foreclosures, few companies have crashed to earth harder than Bend-based Desert Sun Development.

The upstart operation, led by its intense 29-year-old founder, Tyler Fitzsimons, is under siege from lenders, suppliers and contractors who say they've been stiffed for millions of dollars.

But Desert Sun's problems go well beyond clamoring creditors, The Oregonian found in its examination of the company. It offered a homeownership program to more than 30 people, mostly employees, that has left many participants deeply in debt for houses that aren't complete or even started."

Meanwhile, the Bulletin does one of it's summations. What's terribly interesting to me is the way the quotes from the U of O economist Timothy Duy are framed in this article.

And a completely different tone in the way Tim Duy is quoted in a blog, Economist's View. Sample from the blog:

"The local story is that the Bend area will always attract a steady stream of wealthy California retirees with plenty of wealth. If this were true, I cannot understand why so many of these recent migrants are desperate to leave. Consider the 55 price changes on just one day, Friday May 16.

"While there is truth to the underlying story that Bend is attractive to retirees, and is a very pleasant place to live, work, and play, that story clearly does not justify median home prices at six times median incomes. Bubble, plain and simple, and now there is a rush for the exit.

"What strikes me most in these charts is the massive misallocation of capital during the last six years. The housing stock in Bend was twisted in a direction that is fundamentally misaligned with the community income profile. True, this happened in many places – I would argue that home prices in Eugene are also misaligned, although to a lesser degree. But the magnitude of the misalignment in Bend is quite remarkable, and in my mind represents a complete failure of social policy. This is especially the case when policy has turned homeownership into a moral imperative, creating a culture that equates renting with failure and granite countertops with success."

The Bulletin, on the other hand, has him saying this:

"But some aspects of Central Oregon's economy -- including its aircraft, technology and medical sectors -- are progressing well and could potentially supplant real estate as the region's economic drivers, Duy said."

Love the word: "Potentially." Potentially, all my lesser selling product well sell better in the future and supplant comics....

But it actually might happen in my store, because I've been very, very diligent at plowing profits back into development of slower product.

Whereas, I think in Bend, we just doubled down on growth and real estate.

Anyway, what's really noticeable about Duy's comments is that the actual quotes are almost all negative, even if the way they are framed aren't:

"I get this feeling that we've reverted back to 1997 or 1998."

"Once they pop, bubbles tend not to be reignited. People have to come to grips with this."

And so on. Most of the positive slants are paraphrased, which makes me a bit suspicious.

Meanwhile, much of the article is taken up in quotes from Real Estate Agents. After Duy says that he wouldn't be surprised to see prices drop to 200,000 medians in the next year, he is immediately contradicted by Sandy Garner, of Garner Group Realtors:

"I don't see it going there. That's what it feels like for me working with buyers and sellers. I think it could go down to 250,000, but it's become much more stable."

Gee, by all means, let's go with a real estate agent's 'feelings.'

Tell you what. Don't even read the article. Look at the graphs.

People need to look at those graphs with their own two eyes and their own one brain and figure out that 1997 levels of business for Bend ain't going to be pretty.

(POSTSCRIPT: Jesse over at My Back Pages thought Duy was quoted in a 'good and balanced' way. But I still think his comments were slyly slanted by the Bulletin, so that they looked candid. Could be, though, the Bulletin is edging toward a bit more realism.)