Saturday, December 6, 2008

Housing bust PLUS recession.

Sure one can be the cause of the other, but if you view them as separate events, it's becomes a much more dire situation.

Paul-doh has already mentioned that there are still people coming onto the Bend Economy Bulletin Board touting this as a 'great' time to buy.

Because prices have dropped.

Florida and California have been on this downward slide in housing prices for a couple of years now.

WELL BEFORE THE RECESSION.

You could make the case that the credit crisis arose because of the housing problems, which then precipitated the recession.

But if that's true, the places where housing has already been in bad shape now have a recession on top of what's already happened. That is -- all those bad, horrible, rotten things that have happened to Stockton have now had a big steaming load of recession dropped on top.

People have been trying to make the case that housing sales are on the rebound in California. Sure...if you count foreclosures. Which is sort of like telling me a store is doing really well because they have huge sales on the going out of business SALES.

But now the recession is here, acknowledged even by Bush, and you have to wonder if even those sales are going to go by the wayside.

Bend, on the other hand, won't even have the luxury that California and Florida had of a year or two of the national economy still being O.K. while our house prices drop. Our house prices are dropping right into the crater the recession has created.

4 comments:

BeyondGreen said...

We need to get on about the business of becoming energy independent and using alternative sources of fuel. The high cost of gas this past year seriously damaged our economy and society. While we are doing the happy dance around the lower prices at the pumps OPEC is planning further production cuts to drive prices back up. We have the knowledge, we have the technology, what America lacks is a plan. Jeff Wilson has a new book out that is beyond awesome. The Manhattan Project of 2009 Energy Independence NOW. He walks you through every aspect of oil, what it is used for besides gas, our depletion of it. The worlds increased need ie 3rd world countries becoming more modernized and consuming more. He explains EVERY alternative energy source and what role they can play to replace oil. His research is backed up with hard data and even includes a time frame and proposed legislative agendas to wean America off oil. www.themanhattanprojectof2009.com

BilboBend said...

Come on Dunc.

1.) BEM is entertaining, and writes very well, but says little to nothing in this event, other than we need more high-paying jobs, which the legal biz ain't going to get, and we don't need more doc's in Bend, doing more un-necessary surgery. Bend is what it is an old washed up resource town, with the resources exhausted.

2.) We lag, you know that, I know that. We have both been here forever. Cali ( Stockton ) plummeted two years ago, but hell dunc, they were selling $750k homes to Mexicans making $7/hr, even in BEND we didn't have that racket. In Bend the mexicans were buying the roach-shacks that the old timers who lived in the mill houses moved-up to Shevlin and paid $750k, on the $300k they made selling the mill-house to the mexican. Too many people in Stockton, bought too many homes they couldn't afford.

3.) Bend always lags on the all phases, that said the winter of 2006 saw the decline even then housing prices were weak. 2007 all hell came, and 2008 it was so over that even the PR&MARKETING RE folks of Bend gave up saying it was coming back anytime soon. Resets don't end until 2012.

4.) Endless bubbles, dot-com ( stock ) dot-RE ( homes ), easy-money, easy-credit, negative US savings since 1998, it was always a ponzi scam. People spending 50% of their gross on housing, never happened in history.

5.) Nothing down, one to five homes for all. Like Jim Rogers say's, Not in HUMAN history had you been able to buy 1-5 homes for zero down. NEVER. Ever in human history.

We have already talked recession, I saw it in May 2007, you saw it over a year ago. Given that depression is 10% unemployment, regionally we're already in a depression.

Today our region has anything from 10-30 years of inventory, and they're still building.

Easy-Money was stopped in the Spring of 2007, that is what started the 'recession'. The housing bubble ended in 2006, you can look at TOLL Brothers stock to see that they always lead as a bellwether to RE sales historically.

It was over in BEND, in September 2006, that's when Wall St, first declared that Bend, OR was over-valued, thats when CACB started its decline.

Where now? Much like 1992 I would say, $120k medians, and people doing what always did here, cut fire wood, and heat the little mill-house.

The good news is that all promoters, and con-artists, and hustlers, and grifter's will be moving on.

There are no high paying jobs coming to Bend, OR. We still have the same problem we have always had, we're a small desert town, in the middle of no-where 3hrs from a major city, by roads that generally aren't passable in winter, unless you got 4by4 and studs.

Men have always built ships in glass bottles in their leisure and a few idle rich men will continue to throw good money away in Bend, but sadly not enough to feed BEM's dream of high paying jobs.

BilboBend said...

On energy, ...

Portable energy, .e.g. is petroleum is/was the greatest densest form of energy in human history.

To date all the substitutes for diesel oil don't match the cost/btu. Alt-Fuels don't pay below $80/barrel, and syn-fuels don't pay below $40/barrel. There will never be cheap portable energy once the oil is gone.

People will simply have to cut back on their mobility.

Efficiency? A bicycle is probably the most efficient BTU/$ you'll ever see.

The Manhattan Project was great, millions of private acres were seized, and the government went on to create the most toxic waste in human history, and I say that as a physicist.

No place in the world is as wasteful as the USA, that is where our energy problems start and end.

In Europe a family might have one tiny auto for the entire household if they're lucky. In China a well-to-do family might have a moped to share.

In the USA everyone in the household has their own auto, this will end, which is why the whole premise of keeping Detroit alive is absurd. The USA was once a young rich nation with vast mineral & oil wealth, today that can no longer be said. During the depression of the 1930's the USA had vast oil reserves, forest reserves, and wealth. All the wealth post WWII was exploited today the USA has only debt.

Today the USA is a military machine that prints paper. Our military is who needs the oil, a military that runs on oil. If we as a nation MUST continue to police the world & force them to trade in our worthless US-DOLLAR, then the OIL must all be consumed by the US Military, which still leaves little to none for the US public.

On the other hand the US can end its imperialism and its people can return to horses or ride bikes on its interstates.

Certainly a small solar panel can meet all the minimal needs of a family with respect to electricity. But the average US citizen thinks he needs 1000X beyond this minimum per person. So we continue to bring siege on the world like locusts. But even our 'cost per kill' is now in the Millions of dollars. Our military spends trillions for a few billion in Oil, our populace spends trillions on junk that is sent to dumps and buried.

Only a fool would not know where this is going.

The only way a few can survive in this country is a vast change in lifestyle.

We don't have an 'energy problem' we have a lifestyle problem.

blackdog said...

"There are no high paying jobs coming to Bend, OR. We still have the same problem we have always had, we're a small desert town, in the middle of no-where 3hrs from a major city, by roads that generally aren't passable in winter, unless you got 4by4 and studs."

Yep. And we can't sustain an economy of 75,000 people by selling recreation and "lifestyle."

We might be able to sustain a nice little town of 30,000 or 40,000 with that "industry." Maybe that's what Bend will shrink down to. I wouldn't mind.