When the Bend Bubble Blogs first popped up, one of the arguments used by the real estate promoters was that we were getting wealthier inflow, and these -- dare I say, rich?-- newcomers wouldn't be affected by a pesky little thing like a Recession.
There is a new article in the New York Times that, in fact, the rich are walking away and defaulting from mortgages without a glance backward....
"Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent…"
I was always doubtful that we were getting quite as many "rich" folks as all that; I felt there were more aspirational overreachers than really wealthy. My joke was, if you saw a real estate agent and a millionaire at a downtown restaurant, guess which one paid the bill?
I've actually changed my mind about that -- I think we have indeed attracted a wealthy group of people to Bend. Driving around town, looking at all the mansions and the fancy cars -- it seems pretty clear, though I'll hold to my contention that many of them are living an illusion.
Will they stay?
Most of them, of course. But if we do indeed have an abundance of 'second' homes, it doesn't bode well for the future of housing. If rich are walking away from underwater homes, who's more underwater than Bend? Who has more second homes than Bend?
But Bend was immune, right?-- especially the West Side; ah, yes, the West Side, where 100K former mill houses were turned into 500k 'bungalows.' No danger there. Where every vacant lot was filled with a new house, shaped to fit the triangular or octagonal or whatever weird shape the lot was in. Where expensive houses were built next to each other like townhouses.
My doubts about this came from what I've seen in small business. Over the years we've gotten plenty of outwardly 'wealthy' people opening businesses downtown. My observation was that not only didn't they last, they usually were the first to go.
I've always thought there were two sturdy legs to a business -- profit and motivation. They aren't always the same thing -- you can accept a small profit if you have a strong enough motivation; and you can accept a lower motivation with a higher profit. But they are equally important, and eventually they merge -- lower motivation will bring about lower profits and vice versa.
Anyway, what I noticed was that those of us who actually DEPENDED on our businesses to make a living were much more likely to hang in there in good times and bad.
I was sometimes astonished by the caviler way another business owner would fold up his tent. "Oh, it wasn't fun anymore. " "I want to move to Montana, Bend has gotten too busy." "My former boss offered me more money."
O.K. Good. See you.
I'm here to live in Bend, thick or thin, inconvenient or not. You're out for....a good time? An easy life? Hell, I don't blame you.
But not a completely dependable, reliable motivation, in my eyes.