Tuesday, February 17, 2009

Report from the Eye of the Hurricane

Forbes magazine columnist Joel Kotkin took a peek this week at the outlook for the Oregon economy in general and Bend's in particular, and what

Posted By on Tue, Feb 17, 2009 at 12:00 PM

Forbes magazine columnist Joel Kotkin took a peek this week at the outlook for the Oregon economy in general and Bend's in particular, and what he saw ain't pretty.


"A year ago, things seemed very different," he writes. "Sunbelt boom states like California, Arizona and Nevada were already heading into deep recession, but green Oregon seemed oddly golden. Both its small cites and one big town, Portland, were outperforming the national norms. Oregonians saw their state as better--not only in terms of green and good, but also in terms of basic job growth.

"But since last winter, Oregon's unemployment rate has soared from barely 5.5% to well over 8%, the sixth worst in the nation. Indeed, according to a recent projection by the University of California at Santa Barbara (UCSB), Oregon's jobless rate could reach close to 10% by the end of the year."

Kotkin blames Oregon's "greens" and liberals for driving the semiconductor industry and business in general away (this IS Forbes, after all): "Always a political bellwether state, Oregon has moved inexorably left, increasingly dominated by both its public sector and the particularly strong green movement. Semiconductor expansion soon started to go south - or in this case, further east (to Idaho) or across the Pacific to Asia.

"Only one thing remained to drive the economy: housing," he goes on. "A torrent of Californians were heading north - cashing out of the overpriced Bay Area, Sacramento and Los Angeles - and buying new homes in Oregon. Some sophistos sashayed their way into trendy places like Portland's Pearl District, but many others looked to the charming smaller towns of the Willamette Valley and central Oregon. ...

"This dependence turned into a debilitating addiction. When in 2007, the great California housing bubble collapsed, the inflow of people and dollars dropped off. Meanwhile, the remnants of lumber industry fell victim to the housing bust."

And then our own little Paradise in the Cascades gets its lumps:

"Nowhere are the effects of this clearer than in Bend, a spectacular town of 75,000 located amid volcanic peaks in the center of the state. Californians had considered Bend a favorite spot for second homes and relocation. About a year ago, notes real estate appraiser Steve Pistole, prices were rising 2% a month, while those in Portland were "only" rising 8% a year.

"But to visit Bend now is to be in the eye of housing hurricane, with nearly deserted housing tracts, woefully empty hotels and residential second-home developments. Unemployment in the housing arena, according to the UCSB, could reach 15% next year."

Kotkin wraps up with a few quotes from Michael Taus, 38, a recent California émigré who sees young entrepreneurs like himself as the foundation of a reborn Oregon economy:

"A recent arrival from Los Angeles, Taus made it big as one of the founders of Rent.com, which was sold to eBay in 2005. He's only lived in Bend for a few months, but he has already launched his own start-up and consults for several other local firms.

"Taus believes others of his generation will want to establish businesses in Oregon, lured by both its lifestyle and affordability."

Now where have we heard THAT before?

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