Oregon Public Broadcasting

A new national report shows Bend is the most overpriced home market -- not just in the state or region, but in in the entire country.

National City Corporation analysts reviewed housing prices in 330 cities around the country during the final three months of last year.

The report found Bend, and other Northwest cities like Portland and Seattle, were at risk of a 10 percent price decline.

For some these numbers may come as a surprise. But not for those in the regions' timber industry, like the folks at Warm Springs Forest Products Industries. The tribal company has just annouced major layoffs.

Correspondent Ethan Lindsey reports on the latest housing numbers and the effect they're having on Central Oregon.

Before we get to the layoffs, let's talk about that housing market. Local real estate agents are putting on a happy face during this slowdown. The Central Oregon Builders' Association has rolled out a campaign calling it the 'Best Buyer's Market in 20 years.'

Romy Mortensen is the vice president of marketing for Brooks Resources, one of the area's biggest builders and home sellers.

Romy Mortensen: “Now is an excellent time to buy. The nation as a whole will be going into a recession, but the Pacific Northwest is positioned well for several reasons. One being, people still want to come live here. We have all the same traits that we've always had.”

But the numbers aren't as optimistic as Mortensen.

The number of homes sold in Deschutes County in January was just half the number sold last year in the same month. And sales are down even more if compared with the boom year of 2005.

The entire city of Bend issued just 11 new home construction permits in January. The city averaged more than 80 permits every month during the good times. Even Romy Mortensen  concedes, it's slower now than it has been.

Romy Mortensen: “The numbers are a little low, but we know they'll come back. And when they do come back it'll be at a more digestable pace.”

But maybe another way to gauge the housing market - is to look at the timber industry.

Even if real estate agents see a silver living, the fact remains that no one is buying wood to build houses with.

Mark Jackson is the CEO of Warm Springs Forest Products Industries. It's one of the critical employers on the Warm Springs tribal reservation.

Jackson just sent a letter to more than half of his 115 employees, telling them they would be laid off by the end of April.

Mark Jackson: “Part of what's going on today, as the housing market continues to collapse and drag down the rest of the economy in the U.S., there is just a tremendous drag on sawmills.”

The hard part for Jackson and the Warm Springs tribe is that the timber industry was already struggling. Of the past 11 years, only three have been profitable for the tribe's sawmill.

And Jackson says there's a good chance the Tribal Council will shutter the entire mill in June, if the market gets any worse.

Mark Jackson: “The impact on the employees is just a tremendous blow, not only to me, but to the whole community, and I think we need to focus on that.”

Lumber mill layoffs are a weekly occurrence in parts of Oregon now. Just in the past month  in central Oregon, two of the biggest timber-industry employers have laid off sizeable numbers of workers.

The Oregon Employment Department says 28,000 people worked in wood-product manufacturing in January. That's about a 15 percent drop from two years ago.

Mark Jackson: “The mill that we have today is not economically viable. It provides strong employment for tribal members. But the tribe can't continue to lose money."

The real estate agent and the lumberjack agree on one thing.

Things'll turn around. Eventually.

The problem for both sides is that sales are so bad now, even if things turned around tomorrow the good times wouldn't kick in for months.

Mark Jackson: “There's an inventory of 10- to 11- months of unsold homes in the U.S. And mills around the west are holding over a billion board feet. And the wholesalers don't really have a lot of economic incentive to purchase that.”

Jackson says even the most cheery forecasts say we're still heading downwards.

He says he thinks the economy could turn around by next year - but he has no idea if that would be soon enough to save his job.