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.
This article appears in Nov 11-17, 2010.
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This is one of the few times that I agree with H.B.M.
one of the few times I agree with the guy too.
Central Oregon needs to bring in jobs instead of trying to tax all of the “evil corporations” that provide jobs out of town and out of the state.
What? But my realtor just told me this is the absolute bottom! Now is the time to buy buy buy! How can she be wrong? After all, if we all re-inflate housing prices and buy and sell them over and over, the realtors will make money and viola, good paying jobs are back. Wasn’t that easy?
So, depending upon who you ask, it really is a world of laughter, a world of fear, a world of hope or a world of fears? Which one is it, HBM?
Bend sucks…grumble, grumble, grumble………300 days of sunshine……grumble, grumble, grumble…….globalization, China….grumble, grumble, grumble…dirty realtors…..grumble, grumble, grumble
Only one interesting item in this post:
“In the case of Bend, the good jobs were lost when the timber industry left town.”
As if the timbermen simply collaborated with one another and decided to voluntarily close the mills. Lets not forget it was environmental extremists, whose viewpoints are mirrored by this paper, that shut the timber industry out of the woods to “save” a bird nobody cares about.
“it really is a world of laughter, a world of fear, a world of hope or a world of fears? Which one is it, HBM?”
Yes.
“Lets not forget it was environmental extremists, whose viewpoints are mirrored by this paper, that shut the timber industry out of the woods to “save” a bird nobody cares about.”
Bogus. The spotted owl doesn’t nest in the Ponderosa forests east of the Cascades.
Absolute bottom maybe, maybe not, either way I am sure that five to ten years from now today's price will seem quite attractive. Despite the doom and gloom preached today Bend will not be the dregs that Tim Duy and Bruce forecast.
A large piece of the economic fabric of Bend continues to be those folks who wish to escape the life they have elsewhere. Towns like Bend will remain alluring to those who visit and play. They retain the dream of escape from the trudge of commuting to a job that sucks the live out of them. They bring their savings with the dream of finding a job or creating a business that allows them to pursue the dream. For most it takes about three to five years before they realize the how difficult and compromising it is to live the dream. It is then they then pack up and head for the next green horizon. The cycle is continuous; it has existed since long before this last real estate bubble and collapse, it will continue long into the future.
Bend will always be at a disadvantage for manufacturers and the jobs they could provide due to the lack of an interstate freeway(s) to move their goods efficiently. The future for Bend is the development of small companies with that do not rely on traditional methods of transportation. Visit Bend has recently started a campaign that touts the lifestyle that many in Bend enjoy as motivation to bring companies to the region. A lifestyle that everyone but Bruce seems to enjoy.
It is unlikely that Bend will ever be insulated from demises in the economy but for those who learn how to make Bend work live is good.
P.S. The truth lies somewhere in between these two. Which has used their intuition and research to be more financially successful, Tim Duy or Jeffrey Auxier?
“Which has used their intuition and research to be more financially successful, Tim Duy or Jeffrey Auxier?”
So if Auxier makes more money than Duy, that means Auxier knows what he’s talking about and Duy doesn’t? Is that what you’re trying to tell us?
Auxier essentially is a salesman; his job is peddling blue skies and rainbows to investors; Duy’s job is objectively studying economic data and trends. To my mind that gives him a hell of a lot more credibility.
If an asset managers job is merrily “peddling blue skies and rainbows to investors”, I would suppose that we should discount advice given by asset guru's like Warren Buffet and put more trust into bean counters in the government because they are more objective?
I prefer to put my trust in the one who has used his research and knowledge and put it on the line to produce positive results for their clients and themselves.
Comparing Chris Dudley to Warren Buffet is like comparing James Polk to George Washington. The were both presidents, but…
I think he was comparing Jeff Auxier to Warren Buffett. Still quite a stretch.
Even worse…
I still plan on coming up (I can’t say from where 😉 to buy in. I’m retired with the option of on-line work.
I always figure that when I’m thinking some way I’m not the only one. So, you could probably expect a few.
(Since I’ll be buying an empty house I figure you’ll hate me less than if I was building one.)