ya just can't make this stuff up
BEND -- Once upon a time not so long ago, developers seeking magic money poured $4 million into a "Lord of the Rings" subdivision here complete with hobbit holes and thatch-roof houses.
This month Umpqua Bank, which foreclosed on The Shire, unloaded the moribund development for just $750,000.
It's hardly the storybook ending J.R.R. Tolkien might have written for a project that symbolized the extremes of Bend's legendary boom. But central Oregon has become the Middle Earth of unemployment -- at 17 percent, Bend suffers the second-highest rate among metro areas nationally -- as retirees scramble for work and homeless people supplant outdoor enthusiasts.
"Bend is going to get tarred with this brush as a symbol of greed and excess," says local lawyer Michael McGean, who once worked real estate deals and now represents victims of development scams. "I don't think it's really fair. It's not all carpetbaggers."
Fair or not, Bend -- the nation's sixth-fastest-growing metro area early this decade -- soared the highest and crashed the hardest of any community in Oregon. The city's volcanic housing market of just a few years ago has collapsed into a sea of foreclosures, bankruptcies and plant closures.
Joggers range through overbuilt subdivisions that resemble upscale ghost towns. Evicted homeowners turn in pets at the Humane Society. A 9-year-old boy named Joseph finds refuge with his family at the Bethlehem Inn, an EconoLodge converted into a homeless shelter.
Julie Tapia holds her son Mojave Bain, born in December, as his father, Matthew Bain, organizes furniture with her son Joseph Logan in their storage unit. Tapia and Bain, both unemployed, have found refuge with the children at Bethlehem Inn, a Bend motel converted to a homeless shelter.
"We've been on the spiral down to homelessness for about a year," says Joseph's mother, Julie Tapia, who praises the shelter's staff. "They have worked to alleviate the stress so I can concentrate on finding a job and a place to live."
Bend, a high-desert hub built on timber and farming, quadrupled its population since 1990 to surpass 80,000. New residents from California and beyond flocked to central Oregon for its sunshine, rivers, mountains and outdoor activities from skiing to golf.
Developers made fortunes as real estate prices soared. Bend's median home-sale price shot from $240,000 in February 2005 to a peak of $396,000 in May 2007, according to Bratton Appraisal Group. By April, it had plummeted to $195,000.
Renaissance Ridge, an upscale subdivision in southwest Bend, had grown to 64 houses by last spring when the bank filed notice of default.
New investors staved off foreclosure. But houses along streets named for Harvard, Princeton and Dartmouth remain for sale at 40 percent below their original prices in what developer Randy Sebastian calls "an extreme buyer's market."
Couple file suit
Some Bend homeowners say they're victims of scams.
Dottie Robertson, a human-resources recruiter, says she and her husband, Jack, borrowed about $350,000 to build a house in south Bend. The couple had made money before with local developer Don Loyd of Aspen Tree Homes, building or buying houses to rent out before selling.
Dottie Robertson prepares dinner for her dogs Lucy and Sadie in the Bend home that she and her husband planned to replace with a new house. She says the developer drew money from the bank and failed to pay subcontractors before abandoning the house project and disappearing.
This time, the Robertsons planned to build a house and move into it, pasturing a horse or two on the acre lot. Dottie Robertson contends Loyd forged her signature to withdraw money from West Coast Bank for work on the house that never was done. Bank personnel were lax inspecting construction progress, she says.
Subcontractors filed liens, which the bank paid off, she says, adding about $35,000 to her mortgage. Now the house sits unfinished and empty.
Robertson and others have sued Loyd, Aspen Tree, the bank, the mortgage company, the title company and appraisers. She recalls her reaction when she realized she would lose the house.
"Initially it was disbelief, and then it turned to absolute devastation," Robertson says. "We not only saw our bank accounts going away, but we saw our credit being ruined."
The couple have been able to hang onto their current house, even though he was laid off and her pay was cut. Loyd and West Coast Bank Chief Executive Bob Sznewajs could not be reached for comment.
Bend foreclosures have exploded. Deschutes County had 59 default filings in the first quarter of 2006. This year, the first-quarter number hit 827.
Many are staying put
Yet Bend is hardly emptying out. Residents talk proudly of their region and say they're ready to endure hardship to stay.
About 14 percent more people have rented U-Haul trucks to move out of Bend than into the city so far this year, the company reports. That's twice the percentage of last year, but hardly a mass exodus.
Instead, people economize. Jeanie Lampert, laid off from her hospital job as an operating-room assistant, spends her food stamps at Grocery Outlet, a bargain store.
"It would have to get real bad for me to move away," says Lampert, 39, a Bend native. "This is my home."
Down the road, more bargain hunters cruise the aisles at Gottschalks, an apparel chain that's liquidating six months after opening its newly built Bend outlet. Along the same highway, the Westward Ho Motel promotes a $29 "stimulus special."
Restaurants have closed, ranging from Fireside Red, a tapas lounge in the trendy Mill Quarter, to Deep and Merenda downtown. But former Merenda employees and local investors are opening a restaurant on that site. Brewpubs remain packed, even on weeknights.
Instead of sponsoring a job fair this year, the Oregon Employment Department office in Bend will offer a boot camp for the unemployed. Topics will include how to live on unemployment benefits, manage finances, get retraining and shine in interviews.
"Businesses are getting 200 applications for a job, so they're not able to get back to people," says Carolyn Eagan, an Employment Department regional economist.
Bend Mayor Kathie Eckman remembers hard times in the area after she moved to the community of 15,000 during the late 1970s. She paid about $45,000 for a house that lost a quarter of its value in the 1980s recession.
"It was just timber then -- we didn't have the tourism -- and when we lost the lumber mills, it was extremely difficult," Eckman says. "When people couldn't move out of here back then, the expression was, 'It was poverty with a view.'"
Looking ahead, carefully
Eckman watched the region rebound as the economy diversified. She's preparing now for another recovery. She'd like to recruit new industry, a task she says will be easier if the state doesn't ax Bend's hard-won four-year college, Oregon State University Cascades campus.
The city is raising fees to install new water and sewer lines for the next boom. "We have to do it very carefully," Eckman says, "because if you tax people too much, there's going to be a revolt."
Eckman and others believe Bend will learn from the latest boom and bust.
At the hobbit-themed Shire development, Greg Steckler, the lone homeowner, yearns for an economic recovery that would give him some neighbors. "I want some help mowing these lawns," he says.
He may get assistance. Castle Advisers, a Hood River vulture fund, has bought the development, which will likely undergo a "re-branding" effort.
"Real estate in central Oregon provides profound opportunities at these pricing levels," says Scott Baklenko, Castle general partner, who believes in Bend. "The current correction in real estate prices simply does not change what makes a place great."
Steckler, 62, serves as unofficial greeter at Ringbearer Court as half a dozen carloads of gawkers show up each day. A Japanese newspaper and the British Broadcasting Corp. featured The Shire during better times.
Steckler works at home designing log houses. He says business is picking up after lagging for a year.
Bend "is going to come back hard and strong," Steckler predicts. The sunshine, fishing, bicycling and kid-friendly communities haven't gone away, he says. "People are going to come back a lot wiser than they were."
-- Richard Read; richread@aol.com
http://www.oregonlive.com/business/index.ssf/2009/05/after_storybook_boom_bend_face.html
This month Umpqua Bank, which foreclosed on The Shire, unloaded the moribund development for just $750,000.
It's hardly the storybook ending J.R.R. Tolkien might have written for a project that symbolized the extremes of Bend's legendary boom. But central Oregon has become the Middle Earth of unemployment -- at 17 percent, Bend suffers the second-highest rate among metro areas nationally -- as retirees scramble for work and homeless people supplant outdoor enthusiasts.
"Bend is going to get tarred with this brush as a symbol of greed and excess," says local lawyer Michael McGean, who once worked real estate deals and now represents victims of development scams. "I don't think it's really fair. It's not all carpetbaggers."
Fair or not, Bend -- the nation's sixth-fastest-growing metro area early this decade -- soared the highest and crashed the hardest of any community in Oregon. The city's volcanic housing market of just a few years ago has collapsed into a sea of foreclosures, bankruptcies and plant closures.
Joggers range through overbuilt subdivisions that resemble upscale ghost towns. Evicted homeowners turn in pets at the Humane Society. A 9-year-old boy named Joseph finds refuge with his family at the Bethlehem Inn, an EconoLodge converted into a homeless shelter.
Julie Tapia holds her son Mojave Bain, born in December, as his father, Matthew Bain, organizes furniture with her son Joseph Logan in their storage unit. Tapia and Bain, both unemployed, have found refuge with the children at Bethlehem Inn, a Bend motel converted to a homeless shelter.
"We've been on the spiral down to homelessness for about a year," says Joseph's mother, Julie Tapia, who praises the shelter's staff. "They have worked to alleviate the stress so I can concentrate on finding a job and a place to live."
Bend, a high-desert hub built on timber and farming, quadrupled its population since 1990 to surpass 80,000. New residents from California and beyond flocked to central Oregon for its sunshine, rivers, mountains and outdoor activities from skiing to golf.
Developers made fortunes as real estate prices soared. Bend's median home-sale price shot from $240,000 in February 2005 to a peak of $396,000 in May 2007, according to Bratton Appraisal Group. By April, it had plummeted to $195,000.
Renaissance Ridge, an upscale subdivision in southwest Bend, had grown to 64 houses by last spring when the bank filed notice of default.
New investors staved off foreclosure. But houses along streets named for Harvard, Princeton and Dartmouth remain for sale at 40 percent below their original prices in what developer Randy Sebastian calls "an extreme buyer's market."
Couple file suit
Some Bend homeowners say they're victims of scams.
Dottie Robertson, a human-resources recruiter, says she and her husband, Jack, borrowed about $350,000 to build a house in south Bend. The couple had made money before with local developer Don Loyd of Aspen Tree Homes, building or buying houses to rent out before selling.
Dottie Robertson prepares dinner for her dogs Lucy and Sadie in the Bend home that she and her husband planned to replace with a new house. She says the developer drew money from the bank and failed to pay subcontractors before abandoning the house project and disappearing.
This time, the Robertsons planned to build a house and move into it, pasturing a horse or two on the acre lot. Dottie Robertson contends Loyd forged her signature to withdraw money from West Coast Bank for work on the house that never was done. Bank personnel were lax inspecting construction progress, she says.
Subcontractors filed liens, which the bank paid off, she says, adding about $35,000 to her mortgage. Now the house sits unfinished and empty.
Robertson and others have sued Loyd, Aspen Tree, the bank, the mortgage company, the title company and appraisers. She recalls her reaction when she realized she would lose the house.
"Initially it was disbelief, and then it turned to absolute devastation," Robertson says. "We not only saw our bank accounts going away, but we saw our credit being ruined."
The couple have been able to hang onto their current house, even though he was laid off and her pay was cut. Loyd and West Coast Bank Chief Executive Bob Sznewajs could not be reached for comment.
Bend foreclosures have exploded. Deschutes County had 59 default filings in the first quarter of 2006. This year, the first-quarter number hit 827.
Many are staying put
Yet Bend is hardly emptying out. Residents talk proudly of their region and say they're ready to endure hardship to stay.
About 14 percent more people have rented U-Haul trucks to move out of Bend than into the city so far this year, the company reports. That's twice the percentage of last year, but hardly a mass exodus.
Instead, people economize. Jeanie Lampert, laid off from her hospital job as an operating-room assistant, spends her food stamps at Grocery Outlet, a bargain store.
"It would have to get real bad for me to move away," says Lampert, 39, a Bend native. "This is my home."
Down the road, more bargain hunters cruise the aisles at Gottschalks, an apparel chain that's liquidating six months after opening its newly built Bend outlet. Along the same highway, the Westward Ho Motel promotes a $29 "stimulus special."
Restaurants have closed, ranging from Fireside Red, a tapas lounge in the trendy Mill Quarter, to Deep and Merenda downtown. But former Merenda employees and local investors are opening a restaurant on that site. Brewpubs remain packed, even on weeknights.
Instead of sponsoring a job fair this year, the Oregon Employment Department office in Bend will offer a boot camp for the unemployed. Topics will include how to live on unemployment benefits, manage finances, get retraining and shine in interviews.
"Businesses are getting 200 applications for a job, so they're not able to get back to people," says Carolyn Eagan, an Employment Department regional economist.
Bend Mayor Kathie Eckman remembers hard times in the area after she moved to the community of 15,000 during the late 1970s. She paid about $45,000 for a house that lost a quarter of its value in the 1980s recession.
"It was just timber then -- we didn't have the tourism -- and when we lost the lumber mills, it was extremely difficult," Eckman says. "When people couldn't move out of here back then, the expression was, 'It was poverty with a view.'"
Looking ahead, carefully
Eckman watched the region rebound as the economy diversified. She's preparing now for another recovery. She'd like to recruit new industry, a task she says will be easier if the state doesn't ax Bend's hard-won four-year college, Oregon State University Cascades campus.
The city is raising fees to install new water and sewer lines for the next boom. "We have to do it very carefully," Eckman says, "because if you tax people too much, there's going to be a revolt."
Eckman and others believe Bend will learn from the latest boom and bust.
At the hobbit-themed Shire development, Greg Steckler, the lone homeowner, yearns for an economic recovery that would give him some neighbors. "I want some help mowing these lawns," he says.
He may get assistance. Castle Advisers, a Hood River vulture fund, has bought the development, which will likely undergo a "re-branding" effort.
"Real estate in central Oregon provides profound opportunities at these pricing levels," says Scott Baklenko, Castle general partner, who believes in Bend. "The current correction in real estate prices simply does not change what makes a place great."
Steckler, 62, serves as unofficial greeter at Ringbearer Court as half a dozen carloads of gawkers show up each day. A Japanese newspaper and the British Broadcasting Corp. featured The Shire during better times.
Steckler works at home designing log houses. He says business is picking up after lagging for a year.
Bend "is going to come back hard and strong," Steckler predicts. The sunshine, fishing, bicycling and kid-friendly communities haven't gone away, he says. "People are going to come back a lot wiser than they were."
-- Richard Read; richread@aol.com
http://www.oregonlive.com/business/index.ssf/2009/05/after_storybook_boom_bend_face.html