In honor of Paul-doh's reappearance in yesterday's comments (I Hate To Burst Your Bubble) I thought I'd go back to the beginnings of this recession and research some of my predictions for Bend.
The first one I can find is on January 7th, 2007, more than 4 years ago:
"I don't believe there is going to be sudden collapse in the retail environment downtown. Lots of change, yes. Challenges and retreats; surges and lulls. I think downtown is at such a fever pitch, that it would take a complete disaster to bring it down. And if that happens, downtown occupancy rates will be the least of our worries."
This has pretty much been dead on; and I'm proud of it, because my only example was the early 80's when downtown had a compete collapse, so I predicted against that experience because I felt circumstances had changed.
Lots of turnover downtown, to be sure, but the vacancy rate has remained low.
On February 16, 2007, is the first reference to what local house sellers were predicting:
"I always get such a kick out of when Realtors' talk about how the housing prices have hit bottom and will rebound in the spring.
Let me give you a hint. NEVER listen to the maker-- or seller-- of ANY product when they prognosticate. Most them have convinced themselves that things are great, and some are hoping for the best, and the rest-- hopefully the minority -- are cynical liars."
Harsh. But not to anyone who listened to these bozo's...
I don't fully address the housing slowdown until February 18th, 2007. (I was making plenty of comments over on BendBubble2). It's hard to remember now that there was ever any doubt that housing was headed for a long fall. The comments are correct, but still have a tone of speculation:
"I've thought some more about the housing bubble. It seems to me that Bendites were much more vigilant six months or a year ago, when the national statistics first started coming in and it first became apparent the boom was slowing, than we are now. So now we think we've internalized the fact that there is a slowdown, but nothing seems to have really changed. We aren't really feeling it.
I compare it to the moment in the horror film, when the character is certain that there is something dangerous out there, the tension builds.....and a cat leaps out. Of course, the character relaxes. And THAT'S when the monster jumps out."
Later on in the same blog, I say:
"I haven't been paying much attention to the Bubble Blog 2, or the Bend Economy Board. Read a bunch of it last night.
Well, that was bracing! I'd almost forgotten what a terrible state we're in.
No, really. I do believe we have been undergoing a bubble, and I do believe that we are in danger of collapsing housing prices. Once that psychology changes to negative we're in for a long haul.
But here's the thing; you just can't put your life on hold because everything may go south tomorrow. The older I get, the more I realize that you can't keep putting stuff off forever.
So I'm torn. On one hand, I'm convinced that there is indeed a bubble popping. If nothing else, just the steepness of the graph tells me that something is wrong. And I've had long experience with bubbles and fads."
This turned out to be my strategy over the last four years: full acknowledgment of the crash, while trying the maintain the store at a high level.
One last post from February, 2007, because it reveals how when these downturns start, things are still a little murky. This was over 4 years ago, and a good 5 months before Bears Stearns went belly up, but I was paying heed to the danger signs, even then.
"I think we are in the very dangerous moment. I know this intellectually, while emotionally, I'm not quite ready to accept it. Everything I see and read leads me to believe that we are in the same place as sports cards in 1988. The slide has already begun, but not enough information has been released, those in charge of the information are still able to distract us with words; with smoke and mirrors, and we aren't feeling any pain yet. No one we know has lost their job, though a few people have had their hours cut. It just doesn't seem all that bad.
But I can look at the slowdown in housing starts, the lack of good paying jobs, the fact that some of my major customers are in the building business, that prices have gotten so high that we are pushing our luck with out-of-towners, that other places in the country that used to be growing as fast as us (Florida and Las Vegas) are hurting, and that the prices are starting to soften. On a scale of 1 to 10, we are at an 8 in warning signs. We're probably already hurting, but the pain hasn't quite reached our brains yet.
O.K. I think I've convinced myself. Because that's what it takes. The prevailing mood is almost impossible to break through, which is why these booms keep going long after everyone knows its a bit crazy, and why the downturns are so painful and hard to turn around. I can't emphasize the importance of psychology in all this. It may become difficult to sell a house at ANY price, and at some point, prices will stabilize but sales may stay stagnant. I shudder to think of all the real estate, builders, loan companies, title companies, etc. etc. employees we have around here. I cringe at the number of businesses that I think are being supported by the boom town mentality (either as equity businesses, or as businesses that cater to the boom).
And all those rich folk who think Bend is so great? Given the slightest smell of desperation, and they'll move along, with all those people who cater to them.
It may not happen. I think it will. I hope I'm wrong. "
Supposedly, the recession didn't start until December 2007, but in retrospect it was already starting almost a year earlier, and those of us who were paying attention were already getting prepared.
1 day ago