In his Sunday column, Bulletin Editor John Costa talks to three of Bend's biggest movers and shakers to find out why the Bend real estate market went belly-up and how to keep it from happening again. They offer a number of ideas. Some of them make sense; one is just crazy.
Developer Mike Hollern blames the Doctrine of Bend Exceptionalism - the peculiar notion that Bend is so special that it's immune to outside economic forces.
"We were overwhelmed by the amount of money pouring in," Hollern told Costa. "We thought that we were different from the rest of the country. It turned out that we are not so much [different]."
Hollern and attorney Neil Bryant said Bend didn't do enough to provide roads, sewers and other essential public services as growth rampaged ahead of their capacity. "There was overwhelming growth for sure, [but] city leadership didn't react forcefully enough on [things like] roads, transportation and sewer capacity," Bryant said.
(It would have been easier for City Hall to provide adequate infrastructure, of course, if builders and developers hadn't so stubbornly resisted any attempt to increase Systems Development Charges to a realistic level.)
Hollern and Bryant agreed Bend needs to spend more money to develop a first-rate education system, especially higher ed. They're right - good schools are a more important "quality of life" factor for most folks than bike trails and trout streams.
So much for the sensible ideas. Now comes the crazy one.
Old Mill District developer Bill Smith tells Costa the reason for the real estate bubble and subsequent bust was ... are you ready for it? ... we didn't build enough houses.
"Essentially, [Smith] said we were lulled into our own sense of superiority and did not address land use problems," Costa writes.
"We ended up, he said, critically short of residential and industrial land.
"Because the city government was so slow to bring more land into the urban growth boundary, the real estate bubble was magnified here.
"That makes sense.
"Lots of people want to move here.
"The land laws restrict access, thus creating exclusivity with home prices spiraling upward."
Unless Bill and John spent the last five years in a cave out near John Day, they should understand that what drove Bend home prices to insane levels was not that there weren't enough houses for the millions who were desperate to live in our precious "paradise"; it was a speculative frenzy, pure and simple.
People (from Bend, Portland, California and all over the map) were frantically buying properties in the hope of flipping them to make an overnight killing, aided and abetted by dishonest appraisers who were willing to inflate home values and banks that were eager to lend hundreds of thousands of dollars to anybody who had a pulse. It was a classic speculation-driven bubble, no different in its essentials from the Dutch tulip craze of the 1630s, the South Sea Bubble of 1720 or the dot.com mania of the 1990s.
If Smith's and Costa's Alice-in-Wonderland logic was correct, we would still have people flocking to Bend and snapping up houses at inflated prices instead of having thousands of unsold homes on the market despite plunging prices.
And if Oregon's and Bend's land use restrictions are to blame, how come the bubble-and-bust cycle was even worse in areas - such as South Florida - that have virtually no land use restrictions?
At the end of his column, Costa has a bullet-point list of things Bend needs to do to avoid another bubble and bust. Here's our list: