This comment about the store vacancies downtown really caught me.
What's to be done?
What's to be done about anything, really? What's to be done about global warning, about the homeless, about health care?
What's to be done?
It's enough to make you just stop reading the paper, watching the news, or peruse the interwebby thing.
I'm sure you're all pretty tired of the housing bubble story here in Bend. But every once in a while, something someone says, or some statistic catches my attention.
The Bulletin story below has a couple of comments that just leapt out at me. I'm not trying to pick on the person I'm quoting, just trying to figure out her thinking.
Cindy O'Neil of SolAire Homebuilders has a custom-built home in this years Tour of Homes.
"Last year, I was optimistic we were heading toward the end of the downturn in terms of pricing pressure, but I was wrong." O'Neil said. "Now, I definately think we are scraping bottom because it's all anyone talks about. When all you see is how bad this is, I'm pretty sure we're at the bottom."
So...if I'm getting this right....because it so bad that it's all anyone talks about it must be the bottom?
I'm pretty sure that people were talking about how bad the economy was in 1930, and 1931, and 1932, and 1933, and 1934, and 1935, and 1936, and 1937, and 1938, and 1938, and 1939, and 1940. I was around in 1980, and they were still talking about how bad it was in 1988 here in Bend.
"Bend's median home price is now lower than at any time since 2004..."
True. But lower prices don't mean they can't get lower still. Indeed, with all the REO's and Short Sales out there, they are almost bound to.
"Further signaling a bottom may be near, a U.S. Commerce Department report released Wednesday showed sales of new homes jumped 4.7 percent in February when compared with January sales."
I've been trying to point out from the beginning of this blog the uselessness of comparing one month to the next. What counts are same month comparisons, and February was well south of last year's numbers. Not to mention, sales ALWAYS rise from January to February. (Hint -- they'll rise through the spring from the winter, too.)
"Short of a national disaster," (O'Neil said) "I can't see any other shoe to drop...."
Well, that's the thing about dropping shoes. You don't see them coming.
"We've been in this downturn for almost three years, and that's usually how long a down economic cycle lasts."
For normal run-of-the-mill recessions, maybe. But housing drops like this, which have happened in places like California and Texas in the past, have normally taken up to 7 years to play out on average.
"Homebuilders, we're among the first the get hit, and I think we'll be among the first out."
Again, why? Other than optimism, why? That overhang of housing isn't going away fast, not to mention the dark matter, and especially because of the foreclosures and short sales. Shouldn't we sell a few of those before we build more?
I have no more evidence than O'Neil about when this will happen, but my instincts are the opposite -- I believe housing will be about the last segment to emerge from the Big Recession, and that Bend will be one of the last area's.
Anyway, all of this is preamble to the statement that really caught my attention:
"O'Neil said the couple almost built a spec home for the 2006 Tour of Homes but chose not to. If they had, O'Neil they would likely still be holding it.
"We're still standing now because we didn't build it, so we're proud to still be standing but feel bad for the builders that got blindsided by the market...."
Blindsided? Who could have known? There was no warnings! Everyone was caught by surprise!
But, here's the thing -- she's says they're still standing because they DIDN'T build a house in 2006. So the lesson is what -- to build a house in 2009? Huh?
And the statistics that really caught my attention were these two rather contradictory results:
1.) "Only 269 building permits were issued in Bend in 2008, down....80% from 2006."
2.) "COBA's membership, which is open to builders and other related home construction trades, numbers 840, dwon roughly 10%. That retention rate compares with...." 30 and 40 percent drops elsewhere in the U.S.
Which says to me, that the kool-aid drinking is still going on around here.
THE TOUR MUST GO ON
Bulletin, March 27, 2009.
The local housing market may be slow, but it’s not stopping the Central Oregon Builders Association from proceeding with its annual Tour of Homes in July.
A showcase of new and often custom-built homes, the 21st annual tour has attracted 30 registrants for the event, to be held July 17-19 and 24-26, according to Mike Jensen, COBA’s director of communications.
That’s down from prior years, but registration is still open and organizers expect more, Jensen said. COBA expects this year’s tour to feature about 50 homes, compared with 53 in 2006, 82 in 2007 and 73 last year, he said.
“It may not be quite as big as in previous years, but I think the homes showcased on the tour will have the same quality and will be as spectacular as in years past,” Jensen said.
The show comes after a painfully slow year in the building industry.
Only 268 building permits were issued in Bend in 2008, down roughly 60 percent from 2007 when 676 were issued and down 80 percent from 2006, when 1,348 were issued, according to the Bend-based Bratton Appraisal Group’s monthly Bratton Report, which analyzes local real estate sales. 2009 also has gotten off to a slow start.
The show is providing hope for local builders, including Mike and Cindy O’Neil, who own and operate SolAire Homebuilders in Bend, which specializes in custom-built green homes. The O’Neils registered a custom-built home in Bend’s Awbrey Glen neighborhood on this year’s tour. The company normally registers a home on the tour every year, as it’s an “excellent” marketing tool for their business, said Cindy O’Neil.
“People like to touch and feel the homes before they commit to a builder, so the Tour of Homes is a great way for builders to promote themselves,” she said.
But this summer, it’s all the more important, according to O’Neil. She believes people will be paying more attention than in years past, as pent-up demand and low prices will motivate would-be homebuyers to jump back into the market.
“Last year, I was optimistic we were heading toward the end of the downturn in terms of pricing pressure, but I was wrong,” O’Neil said. “Now, I definitely think we are scraping the bottom because it’s all anyone talks about. When all you see is how bad this is, I’m pretty sure we’re at the bottom.”
Bend’s median home price is now lower than at any time since 2004, according to the Bratton Report. The report listed Bend’s median price for a single-family home at $215,000 in February.
Further signaling a bottom may be near, a U.S. Commerce Department report released Wednesday showed sales of new homes jumped 4.7 percent in February when compared with January sales.
Much of the decline in housing prices can be traced to the rise of housing inventory, which has increased as foreclosures have accelerated. However, those low housing prices, coupled with interest rates at record lows and government homebuying initiatives, such as an $8,000 tax credit for first-time homebuyers, are making the market appealing again, O’Neil said.
“Short of a national disaster, I can’t see any other shoe to drop,” she said. “The bank part is unwinding, the pricing problems with overinflated prices for homes and land in Central Or-egon has unwound substantially, so I’m pretty optimistic,” she said. “We’ve been in this downturn for almost three years, and that’s usually how long a down economic cycle lasts. Homebuilders, we’re among the first to get hit, and I think we’ll be among the first out.”
O’Neil said that despite the economy, she and her husband have three separate custom-home projects under way, as well as two remodeling projects.
That’s not to say things haven’t been tough for the couple during the downturn, but they are benefiting from a business decision they made long ago to only build houses that have been paid for in advance rather than building a house on speculation, or the hope that it might sell.
O’Neil said the couple almost built a spec home for the 2006 Tour of Homes but chose not to. If they had, O’Neil guesses they would likely still be holding it.
“We’re still standing now because we didn’t build it, so we’re proud to still be standing but feel bad for the builders that got blindsided by the market,” O’Neil said.
Jensen said COBA’s membership, which is open to builders and other related home construction trades, numbers 840, down roughly 10 percent from 2007-08. That retention rate compares much better with other building associations around the U.S., some of which have seen drops in membership between 30 and 40 percent, he said.
Andrew Moore can be reached at 541-617-7820 or at firstname.lastname@example.org.
6 hours ago