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Sunday, July 4, 2010

Real Estate: Nothing to Wave the Flag About

Posted By on Sun, Jul 4, 2010 at 8:41 PM

You know the real estate news must be grim if even The Bulletin can't find a way to put a positive spin on it. Bend's daily newspaper reported this morning that a record number of notices of default were filed in Deschutes County in the first six months of 2010.

Happy Fourth of July, everybody.

Through June 30, The Bulletin's Business section reported, 2,053 NODs - the first stage in the foreclosure process - were filed in the county. That was almost 18% more than in the corresponding period of 2009, and we all thought THAT was pretty bad.

As long as foreclosed properties keep piling into the market at fire-sale prices we can't expect to see any rebound in local home values, which are continuing their relentless plunge toward a bottom that still seems to be nowhere in sight.

Zillow.com, a mine of information about real estate prices and trends, has a really cool interactive chart that allows you to visualize how prices have behaved in various cities across Oregon. The line for Bend looks like a ski jump, except it doesn't show any little upturn at the end.

Four years ago, on July 1, 2006, Bend had the spendiest homes in the state with a "home value index" (similar to a median) of $349,000, according to Zillow. (Portland was Number Two, at a mere $287,000.) Then came the dive, and it was a frighteningly steep one: down to $320,000 by April 1, 2007, to $216,000 two years later, and to $168,000 on April 1, 2010. In less than four years we went from the highest home prices among the Oregon cities Zillow tracks to the lowest.

Despite Bend's supposed super-desirability as a place to live, which we heard about ad nauseam during the bubble days, homes elsewhere in the state held their value much better - Portland down 5.9% over the year that ended April 1, Eugene 5.5%, Corvallis 5.4%, Salem 4.8%. The statewide median home value is $209,000, down 7.2% year-to-year; Bend's value is down almost 22%.

And home prices in California, that alleged hell-hole that everybody supposedly couldn't wait to escape to Bend from, actually WENT UP 1% over that same one-year period.

Bend appraiser Dana Bratton paints a somewhat rosier picture in the Bulletin story. According to him, "the median price for a single-family home in Bend has remained in a narrow range since January, perhaps signaling a bottom." Of course this is the same fellow who predicted the Bend market would turn around on April 25, 2008.

According to experts quoted in the Bulletin story, we're now experiencing the second, or maybe third, wave of foreclosures. The first wave was people who bought homes at grotesquely inflated prices that were far more than they could afford; those folks are long gone. Now we're seeing defaults by "investors" (read: speculators) who bought houses at what they thought were bargain prices, only to see their value continue to drop until their equity first disappeared and then went negative. And we're also seeing more and more people who walk away from their homes even if they can afford to make the mortgage payments - so-called "strategic defaults," which may account for as much as 12% to 20% of all defaults nationwide and god knows how many here.

Is there any way out of this real estate death spiral? If there is, I can't see it.


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Friday, July 2, 2010

Waste and Fraud: Walden Goes After the Big Game

Posted By on Fri, Jul 2, 2010 at 6:16 PM

Eastern Oregon's own Rep. Greg Walden and a couple of other Republican congressmen have unleashed their righteous wrath on a federal program that helps low-income folks heat their homes.

Walden and two Texas congressmen, Michael Burgess and Joe Barton, had the Government Accountability Office look into the Low Income Heating Assistance Program (LIHEAP), and it discovered, according to a report by KTVZ, (http://www.ktvz.com/news/24113285/detail.html) that "9% of households in seven states could be improperly receiving" LIHEAP money amounting to $116 million a year.

The GAO discovered that "more than 11,000 dead people and hundreds of prisoners were used as applicants or household members for LIHEAP benefits," said the KTVZ story. "More than 1,000 federal employees whose federal salary exceeded [the] maximum income threshold received benefits and in several cases, people living in million-dollar houses received benefits." (You can read the whole 62-page GAO report here http://republicans.energycommerce.house.gov/Media/file/News/063010_GAO_Report_LIHEAP.pdf)

"LIHEAP seems to be another example of waste, fraud and abuse running rampant and unchecked in government programs, and must be reined in," Congressman Burgess fumed. "Low-income Texans have a hard time accessing their fair share of LIHEAP funding, so to learn that 9% of LIHEAP funds are wasted is astonishing."

(It would truly be astonishing to learn that 9% of LIHEAP funds are wasted, but the GAO report doesn't say that. It says that "about 9% of households receiving benefits - totaling $116 million - in the selected states contained invalid identity information." LIHEAP is funded at $5 billion a year; if 9% of that was being wasted the waste would amount to $450 million, not $116 million.)

Not to be outdone in outrage by his colleagues, Walden declared that the LIHEAP program is "yet another poster child of waste, fraud, and abuse. ... By the way, this is the same outfit" - the Department of Health and Human Services - "that's going to run the $1 trillion government takeover of healthcare. The American people deserve far better protection of their tax dollars."

Since HHS has been such a colossal failure at running LIHEAP, I think Walden and his fellow Republicans should push a bill turning that program - and also the new health care program - over to an agency of the federal government that has NEVER been tainted by waste, fraud or abuse and has ALWAYS meticulously accounted for every penny: the Department of Defense.

Okay, there has been an occasional minor slip-up - like when the DOD's own inspector general discovered in 2003 (http://articles.sfgate.com/2003-05-18/news/17491492_1_pentagon-gao-financial-accounting) that the Pentagon couldn't account for more than a trillion dollars of its spending. Amonrevealed g other things, the Army apparently had mislaid 56 planes, 32 tanks and 36 Javelin missile command launch units.

Or when the Pentagon's chief deputy inspector general revealed (http://www.cbsnews.com/stories/2009/02/01/iraq/main4767378.shtml) that same year that there were "154 open criminal investigations into allegations of bribery, conflicts of interest, defective products, bid rigging, and theft stemming from the wars" in Iraq and Afghanistan.

Or when nobody could figure out what happened to tens of billions of dollars in cash - pallets stacked high with bundles of $100 bills - that was flown into Iraq shortly after the US invasion and vanished as if it had been sucked into the desert sands.

Wrote The American Conservative magazine (http://www.amconmag.com/article/2005/oct/24/00007) in 2005: "The 15-month proconsulship of the CPA [Coalition Provisional Authority] disbursed nearly $20 billion, two-thirds of it in cash. ... Most of the money was flown into Iraq on C-130s in huge plastic shrink-wrapped pallets holding 40 'cashpaks,' each cashpak having $1.6 million in $100 bills. Twelve billion dollars moved that way between May 2003 and June 2004, drawn from accounts administered by the New York Federal Reserve Bank. The $100 bills weighed an estimated 363 tons."

But, as I said, these are just minor instances - nothing to compare with a middle-income family getting over on the government for a cord of firewood or a tank of propane.


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Thursday, July 1, 2010

Bend's Geese Waddle That Last Mile

Posted By on Thu, Jul 1, 2010 at 6:31 PM

Get ready for a major outbreak of wailing and hand-wringing from animal lovers: The Bend Metro Park and Recreation District sent geese to the gas chamber this week.

On Tuesday, Park & Rec rounded up more than 100 of the Canada geese that infest Drake Park, put them one at a time into what The Bulletin’s account described as “a trash-can-sized enclosure filled with carbon dioxide,” and terminated them with extreme prejudice. The meat from the gassed geese will be donated to local food banks to provide meals for low-income people.

I’m being a little facetious about it, but really the executions are not something I’m rejoicing over. The geese are beautiful birds, and it’s a shame they had to be killed.

But what alternative was there? Over the decades, Park & Rec has exhausted every other option.

It tried trapping the geese and transporting them elsewhere. The geese came back.

It tried scaring them away with dogs, people in canoes and cannon fire. The geese barely batted an eye.

It tried contraception, by oiling goose eggs so they wouldn’t hatch. The geese’s powers of procreation proved too much for that strategy.

Meanwhile, the goose population kept growing – and so did the massive deposits of goose guano that made walking through the park akin to picking your way through a minefield, and made spreading a picnic blanket on the grass all but impossible.

Lest anybody lament that the goose executions upset the “balance of nature,” it must be noted that there’s nothing natural about the overwhelming numbers of geese in Drake Park. Canada geese are normally migratory, but over the years they’ve figured out that the park is such a perfect goose haven – no hunters, few natural predators, little kids feeding them bread – that they’ve made it a year-round home.

Bend is by no means the only place with a Canada goose problem, as Wikipedia writes: “In recent years, Canada Geese populations in some areas have grown substantially, so much so that many consider them pests (for their droppings, the bacteria in their droppings, noise and confrontational behavior). This problem is partially due to the removal of natural predators and an abundance of safe, man-made bodies of water (such as on golf courses, public parks and beaches, and in planned communities).”

So, reluctantly, Park & Rec caught 109 of the local geese that had been determined to be “permanent residents” and made them waddle that last mile. Twenty-seven “non-resident” geese were released to return to the park.

Now we’ll see if the goose population stabilizes. If in a few months or years it gets out of hand again, the agency might have to gas some more geese. That would be unfortunate, but Park & Rec’s gotta do what it’s gotta do. Drake Park is a park, not a wilderness area – and parks, after all, are for people.


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