Waiting for the "new".

A young couple from Arizona comes in the store, and the girl asks, "What do people do for work around here?"

I laughed.

"What?"

"You asked the right question. It's the question that everyone asks. The answer is, pretty much tourism and retirement. But we had a few boom years in building around here, and you're seeing the results of that." I then proceeded to tell her that Bend has had the biggest decline in housing prices in 303 metro areas in the last two quarters.

"Must be a good time to buy, " she said.

I nearly slapped my forehead. "Um....yeah, if you think two quarters of decline are the end of it...."

Thing is, I've been getting the same response now for over 2 years! Prices have declined therefore it must be a good time to buy!

It's like seeing a sinking oceanliner and thinking, "Gee, I bet we could book a passage really cheap."

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Since when does not raising prices make you a hero?

Let's get real here. If Mt. Bachelor was charging 929.00 in '07, it's because they that's how much they thought the market would bear. And if they lowered prices to 799.00 in '08, it was because they found out to their bottomline that in fact the market wouldn't bear it.

Holding the line on prices is what everyone is doing.

**********

I tried to find the source for this information, but I can't. Still, I know the information was as presented, and it came from one of the major economic blogs.

There wasn't a single existing house in this here United States of America that sold for over 750k last month. Nor the month before.

Not one.

I don't know about you, but I find that extraordinary.

All the folks who thought that Bend would be insulated from a crash by 'rich' folk, I wonder what they're saying now?

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I think we've been lucky downtown with our vacancy rates. But I think that may be coming to an end. Let me preface my prediction by saying; while I wasn't one of those who thought downtown would empty out -- in fact, I sort of predicted that we'd get some people using this slowdown as an opportunity to move downtown; I admit I did expect there to be net loss.

Instead, as the Comings and Goings list documents, we've had more people move in than move out.

But I really think that won't continue.

I think we've sucked up the available talent. And the economy isn't really getting much better, in fact, I think it's a double dip recession in Bend by any real measure that matters. (More about that at the end of the month.)

A couple of articles in the Sunday Bulletin dovetail nicely with my thoughts.

One: the basic question that the Arizona couple asked, and which anyone with any common sense is going to ask, "What do people do for work around here?" still holds true. It was always the flaw in our growth.

While the Venture Conference would like to make the case that Bend is rife with high-tech, I wonder if that's true. Anymore than any many other towns. The basic isolation that Bend suffers in the industrial zone, holds true for high-tech, as well, though in a more subtle way.

I've taken to saying, that when one of these high-tech wizards first move to town, they'll ask me about something 'new' I've never heard of: "What's that?" I'll ask, and sure enough within a few weeks I'll come across something that refers to it.

Then six months after they get here, they walk in my store and ask for something 'new' and I'll say, "Why, yes! I just got it in!"

And after about a year, they'll come in and the 'new' thing will be on my counter and they'll ask, 'What's that?"

It seems inevitable and inexorable. Sure, they still have access to the internet and the media and they can still talk to their friends. But what seems to have happened was: when they moved here from San Fran, or Seattle or Portland, they were swimming in the milieu of the 'new', and they picked it up by osmosis.

After they've been wading the shallow cultural waters of Bend for awhile, it simply becomes impossible to stay cutting edge. I suppose if they travel every weekend, they might keep up, but then -- geez, why stay in a town that is at least 4 hours from anyplace they need to be on a regular basis? Wouldn't it be easier to Live There, and Play Here?

(Shallow cultural waters? I still use the examples of Zines and Art Toys, both well established trends in the metro areas, and both still pretty much a mystery in Bend. I see it, with my own eyes.)

So we come back to the real reason for Bend's existence -- tourism and retirement. Which, as I always say, are minimum wage jobs.

So when I look at the lay of the employment land, and the housing situation, and the business climate -- I don't see a whole lot of uptick in the near future...

I think we've had lots of people hanging on.

The Commercial Real Estate situation still hasn't set in: anything built in 2007 or 2008 won't become a problem until a couple more years -- assuming that there isn't a whole lot of "pretend and extending." Which I think there will be. Anything to hold off the consequences of building huge retail buildings with high rent.

Rents have come down, but maybe not enough. And with the astronomical cost of downtown real estate in the boom years, if they come down too far, the whole edifice becomes untenable. There is going to be a huge struggle between rents and vacancies for the foreseeable future.

The Compass Commercial guy in the paper is quoted as saying;

"It seemed like every time we take a step forward, there's a step back that matches it....I think we're hitting a point where we're not going to go any lower."

So I agree with the first part of that statement, but disagree with the second part. Especially downtown. I think we've been lucky to keep picking up willing retailers. I can't see how that is going to continue....

I could easily be wrong. Predictions are risky, and you can throw this back in my face in a couple of years. But I think we're going to see a net loss of retail downtown by the end of next year. Hopefully, not too drastically.