Jeffrey Auxier thinks great things are just around the corner for Bend.
Auxier, president and CEO of Auxier Asset Management and Auxier Focus Fund in Lake Oswego, spoke at the Central Oregon Economic Forecast Vision 2011 meeting here Tuesday. According to The Bulletin’s account, he said he thinks the real estate market will rebound faster in Central Oregon than in the rest of the country “because it is one of the best places on earth.”
Déjà vu all over again, eh?
Auxier told the crowd at the Riverhouse Convention Center: “You live in the greatest part of the world, in my opinion.” He also “compared the positive atmosphere in Bend to Disneyland.”
Yes, I love waking up in the morning and looking out to see Bambi prancing in my backyard as the sun rises over Sleeping Beauty’s castle and Mickey Mouse, Donald Duck and Tinker Bell go skipping down the street.
Painting a somewhat less fanciful picture, Tim Duy, a University of Oregon economist, said he doesn’t see a rebound here any time soon, and “a full recovery may take up to 25 years, based on a long-term decline in wages and other economic trends.”
What happened in Bend was the same thing that happened on a larger scale at the national level, Duy said: Good-paying manufacturing jobs disappeared, and nothing has been found to replace them.
In the case of Bend, the good jobs were lost when the timber industry left town. In the case of America, they were lost because they were shipped to other countries where wages were low and regulations were close to nonexistent.
During the big push for globalization in the 1970s, ‘80s and ‘90s, we saw the same sort of frothy optimism that pervaded Bend during the bubble years. Globalization was going to take away some jobs, the globalizers admitted, but it would generate millions of new jobs.
They were right, of course. Globalization did destroy millions of jobs in the United States, but it created millions of other jobs … in China.
Here in Bend, the bubble boosters blithely assured us that real estate prices would keep soaring forever because of our glorious “lifestyle,” which would make everybody in the world want to move to our little Magic Kingdom. What they overlooked was that for most people, a desirable lifestyle starts with being able to afford things like food, clothing and a roof over your head.
Echoing that point, Duy said that “livability is only a factor when people can afford it, and with the fall in housing prices, declining wages and potential reductions in retirement incomes on the horizon, there's likely to be fewer people with the financial means to move here, move their businesses here or retire here in the near future,” The Bulletin reported.
“It took 20 to 25 years to get where we are, and it is going to take us 20 to 25 years to get out of where we are at,” Duy said. I think he’s being optimistic.
Bottom line: The “prosperity” of Bend’s bubble years, like the “prosperity” of America from the 1990s to 2008, was an illusion, a house of cards built on easy credit and speculation – like a movie set, an impressive façade with nothing real behind it.
Disneyland is a fun place to visit, but you can’t really live there.
Addendum: Business Insider reports that Zillow has released its third-quarter numbers on home prices, and it's devastating: "Basically every major indicator is crashing." Says Zillow economist Stan Humphries: "The length and depth of the current housing recession is rivaling the Great Depression's real estate downturn and, with encouraging signs fading, will easily eclipse it in the coming months."
Business Insider presents a slide show of 12 major cities that are "crashing," most of which are either in the Sun Belt or the Pacific Northwest, including Portland (home values down 9.1% year over year) and Seattle (down 10.6%). Miami had the worst year-over-year decline, at 15.2%.
But two small cities have shown an even steeper decline. One is Ocala, FL, which is down 19.8% and has 37.8% negative equity. The other one is ... hey, I bet you can guess ... our own Disneyland on the Deschutes, down 17.4% year over year and with negative equity of 38.8%.
HT to local blogger and financial adviser Jesse Felder for these items.