Tuesday, June 7, 2011

Three Bad Winters: Real Estate Adventures

In the 1990s, California was booming. Booming too hard. I don't mean in retrospect, with that sage shake of the head that indicates saddened wisdom but is really schadenfreude. The dot.com bubble that burst around 2000 wasn't predictable; don't let anyone tell you so.

Except maybe the Wong brothers in San Francisco. I first met them in the late '70s, when I was living in the Haight and trying to write my doctoral dissertation. Every day I would eat my toast, drink my coffee, and sit at the electric typewriter, listening to the murmur of the belt passing over the pulley and looking at the small white notecards and the larger yellow ones on either side of my desk. Sometimes I'd notice after an hour or two that my fists were clenched in my lap, clenched until they were shaking from the intensity of their inactivity.

Around one, I'd go down the hill to the Wong's grocery to buy something to eat for lunch. At the time, I had a strong belief in magical thinking, and so I tended to buy small increments of foods I'd eaten when I was a happy if nervous, awkward child: Campbell's tomato soup and a can of tuna and a small jar of butter pickles; or a small piece of raw liver and an onion.

Though the Wong's store was small and dark, the meats were excellent and so was the fish. By the late '70s, the Haight was over its heroin and methamphetamine nadir and was beginning to come back a bit; the rents were still cheap but most of the apartments in the three-and four-flats had been fixed back up, the holes in the walls patched and the floors sanded and the trim repainted. Medical students from UCSF had moved back in, and Cole Valley next door was getting hip. The Wong's grocery had survived the bad times, probably in testament to the ironwilled, ferocious, terrifying presence of Mr. and Mrs. Wong, who rarely spoke and never smiled. Sometimes they followed me around the store, even long after I'd lived up the street and bought my lunch from them. I had moved from Austin, and I was still wearing jeans and cowboy boots, and t-shirts with the names of bands and venues on them.

The Wong brothers worked in the store after school. While I was still living there, or perhaps shortly after I moved to take a teaching job, one of them persuaded his parents to let him convert the back storage room into a wine area, and he began to study the subject.

His timing was good, and so was his brother's. By the '90s, the two of them were major forces in the Northern California epicurean craze. They knew the dot.com bubble was a bubble because their high-concept restaurant and their small-batch wine business were epicenters for feats of wilder and wilder excess. Just before the crash, you'd see high-end Range Rovers and Mercedes sedans parked on the sidewalk in front of their places-- $500 tickets prominently displayed under the windshield wipers. It was hard to find a parking spot around there by then-- a legal one, anyway.

The bubble down in Southern California was as big and as airy, but the hot air that filled it came from a different sort of furnace. Down there, it was the entertainment industry first-- the once-booming market for CDs was waning, but the new technology of the DVD was fueling a multimedia production boom. That, in turn, generated a spectacular housing run-up.

In San Francisco, in Silicon Valley and along the northern Coast Highway, the demand for housing resulted in laughable extremes, for there was little or no desirable land upon which to build new housing. Sure, there was Oakland, where Maxis Software's Will Wright had moved up the hills; but if you weren't a tycoon or a startup baby, you were pretty much forced further and further to the north and east, into the parched regions around Antioch, where the lots were cheaper. If you've seen the pictures of Altamont, you know what Antioch looks like. A town like Arbor, or a development like Discovery Bay, where every house had its own dock!: these were places reminiscent of the boom towns of Florida generations ago. On a good day, it only took you an hour and a half to get in to San Francisco. If you were working for Oracle Software in Redwood City, it was two hours-- if you went to work early, say at 4am, and stayed late-- ten-ish.

Topography limited the growth, there and in Southern California, too. Ocean, bay, mountains, desert: all of these conspired to push good houses from pricey to luxurious to unaffordable.

But you didn't necessarily have to be in Redwood City to work for Oracle; you didn't have to be in Universal City to work for Universal. By the late '90s, you could remote commute, and the people who benefited most from the new booms of the postindustrial American economy were ideally suited to this very different way of living and working. For one thing, their very industries were devoted to the hypersprawl of the cybernetic universe; there was a mindset there, and the technology to make that mindset not just hip and forward-looking, but efficient.

And then there were those whose lives had not kept pace with the information economy; the middle managers laid off and left without even a job category under which to search in the Los Angeles Times or the San Francisco Chronicle; there were those given early-retirement "incentives" who saw the future looming without need of them; there were all the others who had lived at the margins of these frothy booms and were ready to cash out.

Here was the plan. You had that house you'd bought in Pasadena or even Silver Lake or even that warehouse around Bunker Hill, where the down-at-heel commercial buildings were undergoing loft and condo conversions. You'd sell it for a million, or two: with capital gains taxes low-- and with a friendly accountant of dubious ethical standards to help you out-- you'd take that money and move where housing was cheap.

That was the logic that drove Las Vegas's housing bubble. And in this case, you didn't have to be prescient to see it wasn't an endless upward vector till the Millennium-- unless, that is, you believed the televangelist who declared the Rapture was due in, say 2008. In Vegas, the spectacular influx of construction workers and Best Buy sales managers and dish-network franchisees fed the housing boom, making it, for a time, self-conflagrating. Still, where else could you take your middle-manager 401-K and your house sale windfall and find a place that looked like it was bustling, a safe bet to park yourself and your cash?

You don't need me to tell you what happened to that class of outward-emigrating Californians, the ones who moved to Las Vegas, to Henderson, to Lake Havasu City.

But there was another class of people who took the money and ran from California. They were the actual software engineers, the actual IPO stockholders, the composers of movie music who were doing it all in software and phoning it in; the story developers and the rewrite people; but also the men and women who had sold their startups and were ready to start afresh. They headed north, and east: to Idaho, to Montana, to Utah and Colorado.

My sister lives in Spokane, Washington. If you're touristing in picturesque Seattle, bored with the Pike Market and through with your sojourn to Vancouver, and you've spent the requisite week in Olympia National Park getting your high-end hiking shoes moldy from the near-perpetual rain and fog, you might decide to head east to the icy mountain lakes around Coeur d'Alene, Idaho, or further. You'll come over the Cascade Range-- that's Mount Rainier on your right-- and down into the scablands. It's not pretty, and it's not entertaining, either, if you're not a geologist. But you'll get to Spokane in about four hours, assuming you are in a rental car with a cruise control and you are not concerned with gas mileage or the unlikely event you'll get a speeding ticket.

Spokane is a pretty town, with a university and a well-maintained system of parks along the river. Coeur d'Alene is just a half-hour further; from there, another two-and-a-half will get you to Missoula, Montana, where the Rockies loom above the espresso-and-gelato places around the University of Montana.

This is the stretch-- from Spokane to Bozeman, and up and down the range-- that took a huge swath of those California emigrants. Their influx didn't hyperinflate the construction industry in quite the same way as their less adventurous, less prosperous counterparts in Nevada and Utah. For one thing, there were fewer of them; for another, they were richer, and their taste turned toward neo-primitive: log cabins, albeit 7,000-square-foot ones, added to the 500 acres of ranchlands down below or, more commonly, thrust into the foothills and the mountains themselves. To get to those sites, they had to carve their own roads, or they used the old logging roads that were already there, in which case they only had to worry about the driveway, the mile or so that wound up to their spectacular location.

Towns and cities like Spokane, Missoula, and Bozeman didn't roll over for the immigrants the way Las Vegas did. In part this was because these places, like the California sites new residents were leaving, were hemmed in by topography, and by the looming presence of the U.S. Forestry Service, which owned much of the land surrounding these communities. There were Chamber-of-Commerce types who railed against the government intrusions in their free right to develop: local neighborhood groups; town and city zoning boards; nature conservancies; the Forestry Service. You could Sagebrush Rebellion those people into submission (coming to zoning variance meetings with four or five of your construction guys, all of you in jeans and boots and with guns strapped on-- that might not be fully legal, but it sure was effective); you couldn't laissez-faire the topography into an inviting desert flatness or the climate into a 12-month construction season.

If you remember Hitchcock's North By Northwest, what probably comes to mind is the wheatfield scene, with the Greyhound bus and the murderous cropdusting biplane, and Cary Grant running; or perhaps it's the archly erotic sleeper-car episode that's etched into your memory. But you may also remember the spectacular modernist house built into the hills around Mt. Rushmore, where the villainous Vandamm supervised his nefarious spy network. In the area I'm talking about, there were a lot of houses that looked at least a little like that one. Then there were the log manses, some of which simply clad the outer walls (where the floor-to-ceiling windows weren't, that is) in American Primitive half-timbering, in modernist revisions of Mary Colter's Western resort hotels for the railroads. These were houses built outside the zones of municipal regulation, often in small gobs of lands that had remained in private hands though surrounded by US Forest Service lands. Every local understood them to be follies-- up there where the winds would get them, up the steep grades that took the life out of even a good American 4x4, let alone an AWD Volvo station wagon or a Range Rover. But if you were from LA or San Francisco, the point was to live up on the hill. It gave you the view-- and it made you everyone else's view. If you didn't know the locals well enough to understand their sense of humor-- irony, really-- you could easily have understood their offhand comments to be compliments, expressions of respect, even envy.

These days, you can still see those houses, if you look for them. Some of them still have the lights that go on as the dusk settles, or when the security service sends the Jeep up to check on things. Those are the places where the emigrants had pockets deep enough to handle the bust. The rest are pretty much dark all the time. Some of them have already succumbed to their own folly and the cold neutrality of the place upon which they were so foolishly dropped. Their roofs have collapsed under the weight of the snow; the implacable blizzards pounding onto their cathedral windows have worried loose the weatherstripping and maybe even shattered the plate glass. The pipes have burst, or the pilot lights for the propane-converted Viking chef's stove went out and the house filled with gas until an freak blizzard lightning strike. Down in the valleys, where the locals know to live, close to the highway, sheltered from the sweeps of weather, people looked up as the house exploded like it was July the 4th in March.

Three bad winters. That's what my sister called the death spiral of those dreams of Westering by heading east.

Most of those houses took up a good deal more of that boondoggle California real estate capital than their builders had planned. It's one thing to sit with your architect in Brentwood or downtown San Francisco or Sausalito, and go over the figures. It's another to get the Moen faucets trucked up to the site; to get the road graveled and the well dug, and dug again, and again, until you find the nearest water is down at the bottom of the hill, and you need auxiliary pumps and underground piping to get it up to the house. There's the stubborn refusal of stone to blast the way you want it to. There's the miles of conduit because you didn't want unsightly poles and wires. There's the leach field, and the issue of the solar roofing material that was such good cocktail conversation a few months before. And there's the driveway. By that time, you're ready to pinch a little, especially when you get the estimate for the drainage system and the gravel loads and the blacktop. When the contractor sighs and says don't say he didn't warn you about penny-wise and pound foolish, you think you've won a small victory.

That first fall-- by which I mean the last week of August and the first two weeks of September-- the place was spectacular. The first winter, though, was a surprise: that's the way you described it to your screenwriter partners in LA, or your design team at Oracle once you got through on the conference call to Redwood City; once, that is, you'd found a way to reorient the satellite dish so you could make contact, or found a guy who'd come in from Coeur or Missoula to do it for you.

If you were smart, your contractor had put in a really really big fuel oil tank, and before you moved in, he'd had it filled to the top. Naturally he'd had it filled to the top, as he was getting his contractor's 30% surcharge on that, too. The fillup was in that last bill he gave you, the one that surprised you so, when you discovered that the fixes on your punch list weren't going to be free, or they weren't going to be done at all. That contractor was a local. His daddy was a rancher, and he was maybe a state legislator in his spare time. Moral outrage didn't do for much and God help you if you were stupid enough to take it to law or even mention it around at the Pickle Barrel or Joe's Parkway Market down in Bozeman.

You made it through the first bad winter ok. You had a long spell where you couldn't get the Range Rover anywhere near the house, so you left it down at the bottom and hiked back and forth-- not easy, you told your friends back where you came from, when it's 25 below and snowing, hard. This was good stuff to talk about; it made you feel you were learning things that would serve you well in your work, or in your dealings with your fellow workers in the knowledge industries.

The second winter was different. For one thing, you were unhappy with the surcharge the fuel oil company was levying to go up the logging road, and the surcharge on the surcharge for climbing up your hill to fill the tank. And you'd looked up the fuel oil prices elsewhere-- they were 20 or 30 % less than you were paying. So when the dispatcher called to tell you they had you scheduled for one more delivery in October, you checked the tank and decided you could hold off for a month or so. When you called in early December, anticipating a rush of Christmas visitors eager to experience the true Western life, it came as a rude surprise that they didn't deliver up in the mountains after the first week of November. You spent the winter with the thermostat set at 42 degrees, praying none of the pipes would burst, but of course they did, flooding out the billiard room when the January thaw came. You got the oil delivered that week, and the plumber came, too-- after you hired your contractor to bring in his road-grading equipment to cut a path through the snowpack. He didn't do it till you paid up that last bill, and paid him in advance for the road work.

By that time, you were pretty much tapped out. Back in LA or Pasadena, back in Santa Cruz or Sausalito, you solved those problems with a sweet little home equity loan against the hundreds of thousands you'd banked in appreciation over the last few years. This time, though, the local banks weren't so sanguine about the uptick prospects on your particular type of project.

The third bad winter may not have hit for three or four years. On the other hand, bad winters go in clusters out there. And for the inexperienced, most every Montana winter is a bad one.

By the third bad winter, the sign where the logging road cut off the main road was already disconsolate; the hanging plate with the name of the realtor, the one that hooked underneath the big sign: that was gone, and so was the one above it, the one with the arrow pointing toward the property. When the first hard snows came in October, the road was undisturbed; a silent white mantle lay over the space between the pines, which seemed darker, stronger, more cruel than ever before.

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