Sunday, May 26, 2013

Central Oregon Business Index.

We had a couple of horrendously slow days in the week after PPP.  Don't get me wrong -- if I had a little red button with the nuclear option, I wouldn't push it.  The Pole, Peddle, Paddle, Puddle, Perpetual Motion event has become part of the Bend scene.  It gets a pass in my book, like the 4th of July parade and a few others.

Just pointing out that contrary to common opinion, these events do not spread their benefits evenly.  I'd say I got little or nothing out of it.

It ain't about you, I hear you say.  OK.  Right. Anyway, this Memorial weekend has helped make up for it. 

Speaking of events, there was an article in the Bulletin about Bend Film.  I've got to tell you, I barely noticed this event last year, in fact, I remembering wondering if it was even going to happen.  Very different from those first couple of years.  I'll always remember the inflatable screen that was almost wider than the street.  Because someone thought it would be a great idea to completely block off the street -- as well as place it in a notorious wind-tunnel.   (I noticed they replaced the canopies on the building across the street for the umpteenth time last week...)

It does feel as though the constant mindless boosterism of Bend has toned down overall. 

Which brings me to the quarterly University of Oregon Central Oregon Business Index which the Bulletin publishes.

I love that these are objective observable statistics that have a track record.

What the graphs appears to show is an increase in business, but it's not the steep bubble-like increase of 2003 to 2009.  It's more like what the graph might have looked like in those years without the bubble.  A more sustainable growth rate.

If you look at the graph for the state over all, there never was a bubble --

I'm amazed that as many houses are selling as are selling, though it doesn't look like the days on the market have declined much.

The biggest factor for good job growth, to me, are the building permits, which are still in the doldrums.  It appears to me that these houses must be selling to people who don't need jobs -- in other words, retired or wealthy folk.

So, more or less slight increases overall.

What shows the least downturn from the peak and the most recovery is the tourism gauges.

But that's what I've always thought about Bend.  We are a tourism and retirement economy, with all that implies, both good and bad.  Notoriously low paying jobs in service.  Restaurants continue to open and close.  Downtown continues to cycle through businesses, though the rate of failure seems to have slowed down.

Overall, considering the huge bubble we had -- I always say, Bend had a bubble within the housing bubble -- we weathered it better than we had any right to.

What I thought would happen was that tourism and retirement monies would bridge the gap, and I think that is exactly what happened.  The rest of Oregon saw a decline, but not a bubble pop, so they just kept coming to Bend for recreation.

So settle in for being a tourist destination.

P.S.  I may have spoken too soon about the mindless boosterism.  I just read the editorial in the Bulletin about the urban growth boundary.

Really?  That again?

Hey, tell you what.  Find a couple of more businesses for Juniper Ridge and I'll reconsider my position.  If you can't even do that, why bother?  Look again at those Building Permit statistics.

What are selling are existing houses, and I'm still firmly convinced that there is a huge shadow inventory in Bend -- and rising prices will unlock more houses.  We'll have a ready supply for years to come.


Bend Economy Man said...

Overall, considering the huge bubble we had -- I always say, Bend had a bubble within the housing bubble -- we weathered it better than we had any right to.

Dunc let's transport back to mid/late 2006 and the discussions we had on my blog. I said with hesitation that I thought median house prices could come down as much as 50% from the 2006 peak. Even a lot of bubble recognizers thought that was just crazy talk. And that's what happened - they don't come out with the median house price stats as much as they did during the bubble but last time I saw them it was at least -50% from the peak.

But the point is taken, esp. if you're looking at it from the point of view of a Downtown Bend merchant, that if you compare to the early/mid '80s Bend malaise when the mills closed, this hasn't been as devastating for downtown in particular. There are some reasons for this:

- an asset price crash is different from an income crash. House prices are irrelevant if you're not selling your house and you can afford the mortgage. Don't have stats but a good portion of the town worked at the mills when they closed and it was a sudden shock to the system whereas the real estate crash was felt unevenly.

- the people who lost their jobs were more transient / mobile. People who made their living as small-time contractors - many of them have left town. There was nowhere to go to for millworkers.

- Downtown Bend is different now. In the early '80s Downtown Bend was oriented towards local commerce - Wetle's, JC Penney's, banks, travel agencies, record stores. It wasn't a tourist hub, and the mill shutdown probably just exacerbated a general American trend of moving department stores and general commerce out of downtowns and into malls. The bars were local dives where a tourist would feel unwelcome. Now Downtown is brew pubs, coffee shops and specialty stores. And the sidewalks are nice, the park is nicer - it's a more pleasant place to be and more oriented towards spending a day Downtown than it was in the '80s when it was more about getting your purchases done and getting out. Plus Bend now has a lively night scene now which it didn't have in the '80s unless you were a local. The scene at Pat & Mike's or the Woolen Mill or the Ore House was distinctly local but the scene at the Downtown brew pubs is distinctly non-local.

- The real estate industry hasn't fared as badly as we'd thought. At the end of the day, real estate agents make money off of volume. Real estate has continued to sell / lease / otherwise change hands. RE professionals are perhaps making less money, but in contrast to the mill closures they're not making NO money like the millworkers were in the '80s.

- newcomers are better-educated and more nimble than the old-timers of the '80s. No stats but I'm pretty sure that the average education level of Bendites has gone considerably up since the 1980s and locals are more entrepreneurial than they were then.

- although Bend has probably failed as a national tourist destination, it's a more attractive regional tourist destination. The pipe dream of getting people from all over the country to descend upon Bend is still a pipe dream, but Portland and the Willamette Valley have continued to do reasonably well - if you're looking for a local tourist destination Bend is a good one with recreation plus a lively night scene.

Anonymous said...

I wish Bend Film would just go away. What a waste of resources. An event for a bunch of has-been and/or wanna-be Hollyweird groupies, that's had what now... 5 or 6 Executive Directors? In ten years? And that's in the years when it's been lucky enough to have one at all!

Hey let's have some fun and go eat a $50 a head din-din at Cock on the Rock, and watch some black and white foreign film at the Tower Theater. Oh wait, I forgot, it's Theatre. Yeah, a real hoot.

Duncan McGeary said...

As usual, right on, BEM.

I figured a 50% drop, or even more, based on what I knew about bubbles.

But it was pretty hard to believe at the time...

Duncan McGeary said...

Yeah, BEM, you must have been here during the '80's. It was way worse than even this Great Recession, at least for Bend, and most of all for Downtown Bend.

Tourism is all right by me. I've tried hard to position my store to pick up some of that...

Duncan McGeary said...

Well, the Film Fest came in pretty overhyped, I thought.

It has become one of those things, and a couple years without someone to pick up the tacks and...trouble.

Bend Economy Man said...

I was a little kid in the '80s but my parents bought my saltwater sandals at Wetle's and when I was left with a sitter (post-mill Bend had "babysitting coops" with coupons given for services rendered in a post-cash, nearly apocalyptic poverty society) my parents were partying at the Ore House,Pat & Mike's or the Woolen Mill.

Anonymous said...

"an asset price crash is different from an income crash"

Except much of the spending came from cashing out equity gains.

So the local boat, car, RV dealers etc. suddenly had zero business when house prices fell.