The bubble in Bend

A New York Times story from last week (hat tip DM) carried the photo shown below, offering yet another reminder about the state of the deteriorating local economy and the stunning beauty of the local mountains here in Bend, Oregon.
Naturally, the trouble with the local economy had nothing to do with our decision to relocate here, though the downturn apparently did gather pace about six months ago when we began contemplating a move that was finally carried out just three weeks ago.

Hmmm...

Anyway, the subjects in this story hail from the Central Valley of California and appear to have approached things very differently than we did. Methinks they actually believed what real estate agents were telling them a few years back.

Susan and Mike Telford had a plan back in the boom years in California. They would sell their house outside Fresno at a solid profit and take their equity to this sunny mountain city to build a better life, a fresh-air future in Oregon.

“We wanted to lose the commute, to lose the smog,” Mrs. Telford said. “We wanted to lose California.”

They moved here in 2006, when Bend was one of the fastest-growing places in the West and money and migration from California fueled that growth. Now the Bend area’s unemployment rate, at almost 16 percent, is one of the highest of any metropolitan area in the nation. “For sale” signs dot desert-toned, unfinished subdivisions. Luxury furniture stores downtown are going out of business. San Francisco chefs have fled.

The freefall has made Bend a succinct symbol for the economic perils of “lifestyle destinations” in the so-called New West, recreation-heavy communities where jobs have been heavily tilted toward construction and services and where many of the new residents were self-made exiles from California cashing in on their overpriced real estate. Bend, a former timber town that now has 80,000 residents, was particularly popular among those drawn to the often rainy Northwest because it is located on the sunny side of the Cascade Range.

Now the Californians who contributed to Oregon’s growth are in some cases adding to its economic struggle. As of May, Oregon had the second-highest unemployment rate in the nation, at 12.4 percent, behind Michigan. California, which has not released its May figures, ranked fifth in April.

While some other states with high unemployment, including Michigan, have seen their labor forces shrink, Oregon’s labor force has grown. Economists say some of the growth appears to be driven by people who moved here with money they made in California, whether from real estate or stock market investments, and expected to get by but now must look for work.

“It’s just so depressing to hear them because they thought they had life handled and they don’t,” said Bobbie Faust, an employment counselor who works for the state in Bend.

Yikes!

We think we have life handled. Hopefully we do...

At least we've known enough not to own any real estate for the last few years, opting largely for dumb 'ol (but very shiny) gold coins instead.

The thought of applying for any job other than as part-time golf course marshal around here is actually quite depressing.

The story continues and - surprise! - real estate is the Telford's downfall.

The Telfords are among those facing trouble. They had presumed they would be able to sell their house in Fresno for more than $300,000 to help pay the mortgage on the new house they bought near the Deschutes River in Bend for $475,000. But the Fresno house has yet to sell, and Mrs. Telford, an accountant, has lost a series of jobs at small firms here that she said had downsized. The couple’s only income now comes from her unemployment checks and her husband’s salary as a high school teacher.

“The cash flow is negative,” Mrs. Telford said. “This will be the first time we’ve had to go into savings.”

They go on to talk about the mixed reaction by locals to California transplants, the area where we now rent apparently referred to as "Little California" (I guess we landed in the right spot), how San Francisco chefs are moving from here to Australia, how a glossy real estate magazine has had to shut down, and how the economy is ultimately unsustainable.

Sounds pretty grim...

For those of you who might be interested, another New York Times story has a much more positive outlook for the area, something about the city being the sixth fastest growing region in the country.

Of course, it was written in 2005.

ooo

This week's cartoon from The Economist: