Last Updated June 16, 2022
2021 has come and gone, and in Eugene, home prices are now significantly higher than they were a year ago. Inventory, meanwhile, is noticeably lower.
That’s the same story we’ve seen play out every year in recent memory, but 2021 was still a remarkable year for Eugene’s market.
The figures to the right tell you most of what you need to know. Still, if you want to look deeper into the trends that defined Eugene’s real estate market in 2021 – and influence our forecast for what’s in store for 2022 – then read on as we walk you through the data.
We’ll cover all the most important dynamics currently impacting the market before pulling out our magic ball and forecasting what’s in store for the New Year.
So, without further ado, here’s our 2022 Eugene real estate market forecast.
How Unprecedented Buyer Demand Drove Price Growth in 2021
2021 was a year of unprecedented price growth in real estate markets nationwide, with sale prices increasing 19% on average. Low interest rates and supply chain constraints were obvious factors contributing to steep appreciation all over the United States.
Eugene came in just slightly ahead of the national trend, with average sale prices up 20%. Eugene’s median sale price rose 19%, increasing from $352,000 in 2020 to $420,000 in 2021.
“Slightly better than average” might not sound too impressive. Nonetheless, anyone who experienced Eugene’s market firsthand in 2021 can tell you that the competition was brutal.
In case you’re new to the market here, a bit of an overview is in order. Buildable land is extremely scarce in Eugene, particularly in the coveted Southeast quadrant, meaning new construction is also very limited.
Homes with modern (or even relatively modern) finishes in the most desirable locations inevitably draw multiple bidders.
That’s true at pretty much every price point. In 2021, the upper end of Eugene’s market got squeezed just as much as the lower end. We’ll cover activity at specific price points more below.
In 2021, it was relatively common for these homes to sell for $50k or even $100k or more above list price. In the spring and early summer, appraisal values hadn’t yet caught up to the reality of the market, and it was especially difficult for financed buyers to compete against all-cash offers.
Buyers who couldn’t win out over the competition were forced to settle for homes that were lacking in one way or another. To frame it simply, buyers could have either the location or the finishes they wanted, but not both. Homes that drew bidding wars led the way, but the rest of Eugene’s market soon followed.
There’s more nuance to what happened in 2021, of course. Let’s dig into some of the details.
We recently talked about our expectations for Eugene and Bend’s markets in 2022 on our podcast, “Real Estate Revolution.” Click below to listen!
Here’s the Trends that Defined Eugene’s Market in 2021
In 2021, prices went up in Eugene, but that’s actually not the year’s biggest story. Instead, it’s this: Eugene’s overall housing inventory dropped significantly over the past year.
In 2021, closed sales increased 4% year-over-year, while new listings dropped 2%.
Taken by themselves, those numbers don’t look like anything to write home about. But Eugene’s inventory was already critically low heading into 2021. A 6% swing in the direction of buying pressure was therefore enough to move the needle from “frenzy” to “desperation.”
Over the past few years, inventory crunches have impacted the bottom end of Eugene’s market more than the upper-end. But in 2021, that trend reversed.
Below $400k, listing activity was down slightly relative to buyer activity, but the gap was much wider at higher price points. Looking at the year-over-year trendline, the segment of Eugene’s market experiencing the biggest inventory crunch is actually the $700k+ price point.
Premium real estate is scarce in Eugene, but demand is growing due to an influx of buyers from more expensive markets out-of-state. Overall activity spiked in the $700k-1m range, but it was weighted heavily toward buyers. Sales increased 139% year-over-year, while new listings were up 72%.
The sample size is smaller, but there is an even greater disparity in the million dollar-plus range, with sales up 200% year-over-year and new listings up 115%. Buyer activity hasn’t outpaced seller activity yet, but things are heading in that direction.
Of course, the lower end of Eugene’s market isn’t exactly flooding with inventory. Below $300k, new listings are down 54% year-over-year. Between $300-400k, listings are down 17%.
At those price points, buyers are getting a diminishing return for their dollar. It depends on the location and size of the home, but below $300k, cosmetic issues are a near-certainty, and that’s most likely the tip of the iceberg. The outlook is less dire in the $300-400k range, but compromise is still the name of the game.
Our 2022 Forecast for Eugene’s Real Estate Market
It isn’t controversial to suggest that real estate markets nationwide are due for a cooldown. 19% year-over-year appreciation, the highest on record, simply isn’t sustainable.
But that doesn’t mean that real estate markets will reverse course. “What goes up must come down” happens to be the saying, but almost no one is betting against the housing market in 2022.
Instead, the consensus is that inventory will remain low and demand will remain high in the New Year. It just won’t be the no-holds-barred slugfest for buyers that we saw in 2021.
With that said, we expect Eugene’s market to stay hotter than most others in 2022. The bottom-line is that supply is incredibly low, sitting at just 0.4 months at the end of 2021.
New homes will hit the market in the spring, but the overall trend is unmistakable: Eugene’s inventory just gets tighter and tighter year-after-year. Demand is surging the most at higher price points, and that will drive sale prices higher in 2022.
At the same time, we won’t see the exact same conditions that lit the fuse of Eugene’s market in the spring of last year. First of all, the average rate for a fixed 30-year mortgage is 3.22%, compared to 2.9% a year earlier.
That’s still pretty low, but rates are forecasted to go up further in 2022. The New Year could bring as many as four or even more rate hikes.
The promise of higher mortgage rates could lead to more FOMO as we enter this year’s busy spring buying season. Anecdotally, many of our clients are looking at the inventory available right now and not seeing anything they like.
Like last year, once new homes do hit the market, pent-up demand could open a floodgate. But we expect 2022’s buying rush to be a bit more muted than what we saw in 2021. Here’s how we see things playing out.
Here’s the Bottom Line for Eugene’s Market in 2022
At the beginning of 2021, COVID-19 vaccines were just starting to roll out, and there was a lot of optimism that life would return to normal soon. A year later, by contrast, there is collective weariness as yet another variant rolls its way through the population. The broader economic picture is unclear, but there are signs that equity markets are beginning to fray at the edges.
Macro-economic factors aside, Eugene’s market has become expensive enough that fewer and fewer first-time homebuyers can afford the price of entry. In 2022, fewer buyers will want to make the compromises needed to land a home at the lower end of Eugene’s market.
As a side-effect, investors may face less competition than before at sub-$400k price points. Eugene’s rental market remains especially lucrative, with extremely low vacancy rates and rental rate appreciation currently sitting at 10% per year.
At higher price points, buyers should expect plenty of competition. As we mentioned, Eugene’s premium, $700k+ market got significantly tighter in 2021, and that trend will continue in 2022.
Eugene’s market isn’t squeezing quite as tight at the $400-550k and and $550-700k price points. Still, inventory is tight, with new listings in both ranges surpassing sales by just 10% in 2021. We expect similar numbers in 2022.
For Eugene’s overall market, pent-up demand should lead to a surge of activity in the early Spring. Buyers will face steep competition, but those who wait for the energy level to drop a couple notches will be rewarded with more choices in the summer.
That doesn’t mean the market will reward buyers with lower prices if they wait. On the contrary, Eugene’s market should appreciate steadily throughout the year. Prices will likely climb past 2021’s high of $440,000 in the early spring, approaching or even exceeding $475,000 in the summer. That’s the unfortunate reality of Eugene’s tight market.
What buyers don’t need to fear is a real estate bubble, barring any new black swan events over the next chunk of time. All-in-all, we think Eugene’s market is a remarkably safe place to park cash. Our conservative baseline for 2022 is 7% appreciation from 2021’s median sale price of $420,000.
As before, listings with recent updates in the most desirable neighborhoods are the most likely to attract bidding wars and fetch large premiums. Depending on your price point, location and other factors, relatively simple upgrades can have an outsize impact on your bottom-line. Still, it’s worth talking with an expert to go through all the possible scenarios.
That, of course, is where we come in. We are totally ready to give you much more personalized advice about how the state of the market might inform the decisions you make in 2022. Contact our Eugene office, and we’ll provide the context you need to make the right decisions to realize your aspirations in the New Year and beyond.