Newspaper Archive of
Hells Canyon Journal
Halfway, Oregon
February 28, 1996     Hells Canyon Journal
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February 28, 1996

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Page 10 Hells Canyon Journal February 28, 1996 Viewpo n (John Bin ford, Pine Valley resident and' Associate Bro- ker with Halfway Realty, pre- sents his views about invest- ing in the local economy.) It's my general observa- tion that where people are looking more and more to grants to find money to do what we collectively believe we should do, it's an indica- tion the community does not have the capital it needs to sustain itself. We're always looking outside the commu- nity for that capital. So my feeling is that those people who are successful here and have a certain amount of resources, need to invest in their own commu- nity. Any time you invest in the stock market or a C/D or a similar investment, that money goes out of the com- munity. So I've wondered how we can get more capital in the community. The comparison-I want to make is between manufac- tured housing and "stick- built" housing. If a person buys manufactured housing -- and I have nothing against manufactured housing; they're probably doing a good job ofbuildingwhat they build -- but if you take $55,000 - $65,000, whatever it costs, and buy a manufactured home outside the community, those dollars leave. On the other hand, if some- one builds a stick-home in the community, the stick- home will probably cost a little more, but the economic ben- efits to the community are astronomical. For example, when we built the duplex on Record Street we tried to buy the materials locally as much as possible. That isn't always possible, simply because sometimes things aren't here, or the cost can be higher than somewhere else. In some cases that cost difference isn't significant; in other cases it's substantial. But the labor is probably the most significant part of the cost. When we built the With the fire department, for example, we can't find enough local capital to do the things we want to do. This may be true of the clinic -- that we can't sustain it be- cause the people aren't will- ing to put in the capital re- quired to maintain a clinic. If we're always taking our capi- tal out of the community, at some point we're destroying the very community we would like to have. So how do we reverse that? Real estate has been a very good investment. If those people who have the re- sources were buying lots in town, for example, building housing for local people, not only would we profit economi- cally but we'd also end up with better housing, we'd be able to provide our own jobs, and those people hopefully would be more interested in contributing to the emer- gency services, to the churches, to everything in the community. So we have to turn this thing around. What I envision is to get more people to be aware of that process. It doesn't neces- sarily have to be real estate :- it could be other things. I think the whole philosophy of buying locally needs to be supported, but the whole idea of capital formulation needs to be understood. We buy lo- cally as much as we can, al- though sometimes things are not available, or the selection is not as great as it might be, so we go somewhere else. Maybe as people invest more in the local economy, those things would be forth-com- ing. During the Depression, the way we got out of it was for the government to create jobs, even if they were artificial jobs, in order to get the money circulating. The same thing holds true here: if we can cre- ate jobs through whatever means, those people tend to spend more in their commu- nity. I said earlier the stick- home probably costs a little duplex we employed carpen- more than the manufactured ters from here, Those dollars, home, although even that is then, go back into the local questionable.Bythetimeyou economy. And if you can buy bixild footings for a manufac- materialshere, thatgoes back. tured home; by the time you into the local economy, put a heavy-duty roof on the III "If we're always taking our capital out of the community, at some point we're destroying the,very omm ityl we would like to have, Building a house is different than most whys of spending, lt's one of the few things you get to enjoy for the years that you use it -- live in it -- and it actually takes on a value greater than when you built it. manufactured home to handle the snow load -- that can run from $10,000 to $20,000 -- and maybe add a garage or carport, the costs may easily be the same. Also, in real estate we generally find that the manufactured home does not have the same appreciated value as a stick- built home. So those factors need to be plugged in. The value of investing lo- cally is the compounding ef- fect the money has in your community. Money spent lo- cally has the potential of go- ing around seven times: the home buyer pays the builder, who pays the grocer, who buys other goods and services, and so on; so if the money for a $60,000 stick-built home could all be spent locally it would represent $420,000 worth of local spending by the time it changed hands seven times. Even if some of that money left the commu- nity, what remained could still have a big impact. On the other hand, when money goes out of the community, that capital is gone forever. So the questionis, how do you get people to invest in their own economy? If we don't do it-- if we continue to send our capital out of the community -- we continue to deteriorate. So, I would like to see people reinvest in their own community. I'd like to see lo- cal people buy any real estate that comes on the market; to buy downtown buildings -- to make that part of their investment portfolio. To tell you the truth it's very diffi- cult to invest in Halfway when you can get a 20% return right now in the stock market. The temptation is to always go where the highest yield is, but that might be a little dan- gerous: the rule is, the higher the reward, the higher the risk. So what I try to do per- sonally is to make local in- vesting part of an investment policy. Because I live in the community, my primary obli- gation is to see that the com- munity prospers. Only as the community is healthy will I be able to prosper. The duplex we btfilt, with the cost of the land, ran about $65,000. We bought the lot for $10,000 and the square footage cost was about $50. In order to get a satisfactory return on that investment we would net~! ~to rent eacl~du- plex. for. about. $350 -per month. That's high rent for here, given the square foot; age. Unless we can provide some job opportunities for people, they're not going to be able to pay that kind of rent, therefore the investor is not going to be able to build it, and he's going to look for other avenues. So somebody needs to take the risk, and who bet- ter than people in the com- munity? I do think in the long run any real estate investment in Halfway will do well. Tradi- tionally it has. Most wealth that I'm aware of is created in real estate. I don't know how a person can go wrong invest- ing in real estate, particu- larly a single-family resi- dence. We've had about a dou- bling in the value of local real estate in the last ten years or less. I think whether or not that will continue has to do with the volume of money involved. It's relatively easy for a $30,000 house or prop- erty to go to $60,000. It's not that difficult tohave a $60,000 value go to $120,000- I'm talking about the local mar: ket -- but when you talk about going from $120,000 to $240,000, probably things start slowing down. As the volume of money in a prop- erty gets to a certain point --- here it's about $100,000 -- it takes a different kind of buyer. So I think local real estate values will continue to go up, but maybe not at the same rate-they're going up nOW. Eastern Oregon as a whole has become a popular area for people who have made money somewhere else and want to escape urban growth problems -- we're seeing a lot of that come into the commu- nity. I think this trend will continue, particularly as the baby-boomers are reaching 50. Some of them have done very well -- we see that hap- pening already in the real estate office, where younger people, who can do work via computers, are coming to this area. There are people who are working in Portland, and have property here. I have read that this gen- eration will see the greatest transfer of wealth from their parents in the history of the world. Probably there will never be another generation that will have that amount of inheritance passed on to them ---there has been tremen- . doua wealthcrea d So.we're seeing some of that inherited wealth show up. Building a house is differ- ent than most ways of spend- ing. It's one of the few things you get to enjoy for the years that you use it -- live in it -- and it actually takes on a value greater than when you built it. Another spin-off in build- ing new housing is the sav- ings in resources. As energy costs continue to rise, living in a newer, more energy-effi- cient house amounts to a sub- stantial savings of resources as opposed to moving into a home that requires a lot of fossil energy to heat it. I don't know how you factor that in to new home construction, but it's significant. The same fac- tor would probably apply to manufactured housing, as long as you're replacing older, less efficient homes. Something less tangible, but still important, is that I know of few things more ex- citing than watching a home go up. To me, it's magic. You have these piles of materials lying around to start with, and before long you have this object which, to me, is a thing of beauty as well as very func- tional, It's fun to do-- I'd like to build a home every year simply because it brings me so much pleasure seeing it happen, aside from whether or not it's economically fea- sible. If we could have even one or two new houses built every year, either as first-time lo- cations or replacing substan- dard houses, that alone would have a substantial impact on our economy --just one or two. If we could build three houses in a year it would prob- ably employ four or five people for the entire year. Two questions people may wonder about are, in the case of replacing existing substen- dard housing, will the owner have any trouble getting the amount of rent needed to pay it back? And, will the owner be able to get the kind of rent- ers who will take care of the property.? The rent in this area will probably not sustain the cost of the project. A person is going to need to feel he's do- ing something for his com- munity -- it can't be a totally economic issue. If investing in Halfway was solely an eco- nomic issue, you're probably betteroffnot toinve~t here Contixmed ~,n,plqge U- ~ ~',,