Monday, July 2, 2007

I don't know why the Bend Housing Bubble intrigues me so.

I bought my house in the first couple of months of 2004; a month or two before prices started skyrocket. Even with the worst case scenarios,(78% overpriced) my house is worth about what I paid.

I got in on some of the lowest historical 30 year rates, and have done well enough over the last year to double down on my payments.

Was reading Bendbubble2 analysis of 5 towns, Bend; Naples, Fl; Wichita, Dayton, and Charlotte. Hard to argue with his facts or his conclusions, except to mention that because we are a smaller town than any of them except Naples, we probably have even less adaptability. I agree with his conclusion that Dayton and Charlotte probably represent reality. It seems damning and inescapable.

And yet.....and yet....

I have three really good customers who are sub-contractors, and one really good customer who is a developer. The developer has started a brand new project, convinced that HIS idea is new and workable.

All three of the sub-contractors are not only working hard, but tell me that they have jobs lined up into the future.

None of them are stupid or delusional. They acknowledge that they have co-workers who are cutting back. All are convinced that they are different, mostly because they are working for the 'high-end'.

Anecdotal evidence, to be sure, but it doesn't look like I'm going to lose any of them as customers for the near future.

Then again, I have two adjacent neighbors with houses for sale, and I almost NEVER see anyone looking at them, even on nice weekends in June.

4 comments:

IHateToBurstYourBubble said...

The developer has started a brand new project, convinced that HIS idea is new and workable.

His he building a Lord of the Rings style development? Maybe a giant waterslide?

The ONLY "workable" development that I can see doing well is dead-basic, low-end "Adaptive" style homes... the sort of crap that Bend was built on. But it's not the homes that are the problem, it's land prices. Until land prices fall hard, there won't be any way to build affordable homes in Bend.

And if homes stay high, industry will continue it's exodus. One day we'll all wake up without jobs. And then we'll take anything we can get to sell our homes.

IHateToBurstYourBubble said...

I almost NEVER see anyone looking at them, even on nice weekends in June.

The first Summer in many moons without:

1) Floods of equity-rich Cali's
2) Historically cheap rates
3) Huge flocks of flippers
4) Biggest RE Bubble of all time

We're seeing the first "normal" market in Bend in many many years. May was proof that when homes are in the mid $300's, there are damn few who can really afford them. No one here makes that much.

Could you have bought your house in 2004 for what your neighbors are asking today? I bought my 1st home here in 2001, and there is absolutely NO WAY I could buy it today. Not even half!

Duncan McGeary said...

Can't talk about my developer friend. Just to say, interesting that you mention land prices....

Hell, I couldn't have bought my house two or three months later. For once, my timing was lucky. Buying a year or even two before would've saved me, maybe, 10%. Buying when I did, saved me 100%. We bought at slightly under the median, and our house is still slightly under the median.

IHateToBurstYourBubble said...

I think stuff on the Eastside will hold up fairly well in coming years. It's that Flipper Bait on the Westside that'll just get murdered. Stuff that served no purpose but spec material. There are just miles of vacant homes over there. Can't get rent that'll even pay 1/3rd of the mortgage.

I didn't really want to hear about specific developers! Just to say that EVERY developer is impaired by the idea that THEIR project is The Project that will fly. Even developers who are fully aware that we're in rareified air up here, and admit many projects will bomb... don't think their project will bomb. We're building waterparks, work/live condo complexes, Frodo-town and a bunch of other weird concept dev's that would be mocked into the ground during normal times. My God, the condo count is enough to show that people have taken leave of their senses.

I just hope downtown isn't destroyed. Everyone is catching Landlord Fever, and is convinced that they can get $3/ft & we'll just have block upon block of Merenda & deep type restaurants. Those places will bust when no one can afford to eat like a king every meal, and we'll just have tons of vacancies AGAIN. No more Super Burrito or Mondo & none of the businesses that make downtown a place that I'd actually want to go to. It's already somewhere I go less & less.