Last Updated January 4, 2024
It’s a New Year, and that means it’s time to dust off the old crystal ball again and offer our Eugene real estate market forecast, this time for 2024.
As usual, much is uncertain about 2024. We won’t let that stop us, though. from going back over the market data for the previous year and seeing what it might tell us about what’s in store for the coming year.
2023’s real estate market was defined by soaring mortgage rates. Even the most pessimistic folks weren’t expecting 30-year fixed rates to climb all the way to 8%, but that’s just what happened.
But, while high mortgage rates impacted our local markets – Eugene’s included – in some ways, in other ways they didn’t. Chiefly, prices basically stayed flat compared to 2022. But, there were some important caveats.
Mortgage rates should also have an outsized role in determining what happens in Eugene’s market in 2024. They won’t be the only factor, though. Read on and we’ll offer our prognostications.
The Year in Review: How Eugene’s Market Changed in 2023
To the left, we’ve covered many of 2023’s highlights. In spite of lower activity across the board, Eugene’s market held remarkably steady even in the midst of significant mortgage rate increases.
When we zoom out, looking at Eugene’s price action over the entirety of 2023, it looks like the market stayed pretty flat. Homes sold for a median of $450,000 in 2023, only about a 1% decline year-over-year.
With that being said, there were a lot of ups and downs month over month. Sale prices reached a record high in May when Eugene homes sold for a median of $485,500.
Prices cooled off of in the late fall, though, bottoming out at $405,000 in November. But that month’s sales were somewhat of an anomaly. By December, were selling for a median of $445,000.
What’s a would-be Eugene home buyer or seller to make of that?
Well, it’s probably best not to place too much stock in the month-by-month fluctuations. Lower activity means a lower sample size. Eugene’s luxury market is particularly inconsistent.
Buyer activity was down 19% year-over-year in 2023. Compared to 2021, home sales were down 33%.
New listing activity declined significantly too, 14% year-over-year, but overall, Eugene’s housing inventory increased in 2023.
Eugene began 2023 with just 1 month of inventory. In September, iventory of residential properties peaked at 2.2 months, falling back down to 1.5 months in December.
That’s still extremely low. Once upon a time, 6 months of inventory was considered a balanced market. Eugene has been an extreme seller’s market for years now, and that didn’t really change in 2023.
In fact, Eugene’s market for sub-$400,000 homes became more competitive in 2023, with inventory dropping by about 5%. It makes sense that in a higher mortgage rate environment, more buyers would seek affordable housing.
Sellers probably took notice of another important shift in 2023: on average, homes took about twice as long to go off the market as they did a year earlier. 14 days is still relatively fast. However, as Eugene’s weather has turned, more homes are spending longer than a month on the market.
That, perhaps, has led more sellers to make concessions, though aggressive list prices do play a part. In 2023, homes sold for an average of 97.2% of their original list price, compared to 99.9% in 2022.
Again, that number doesn’t exactly represent a firesale. If anything, it’s actually a testament to the resilience of Eugene’s market under less-than-favorable conditions.
It is important, though, for sellers not to aim too high straight out the gate. Buyers do still sometimes offer higher than list price, particularly in Eugene’s more desirable neighborhoods. But if you overprice your home and it ends up sitting on the market, buyers will start to feel like they have the leverage.
What’s the Overall Picture for Eugene’s Market at the End of 2023?
Nationwide, sale prices dipped in the earlier part of 2023 but rebounded in the third-quarter, essentially remaining flat year-over-year. That’s basically what happened in Eugene, albeit with prices lagging behind near the end of the year.
We can chalk that up, though, to the seasonal nature of Eugene’s market. Homes don’t show the best in the winter here, and sellers aren’t eager to list their properties unless they have to.
The past several years have been an anomaly, with Eugene’s market staying hot even through the rainy season. 2023 represents a correction from the craziness of mid-2020 through mid-2022.
Fewer homes are going off the market in just a couple of days. Most of the bidding wars have died down, and the market is no longer appreciating at a crazy rate.
But that doesn’t mean Eugene’s market is on a crash-course. There isn’t a bubble about to pop – it’s more like a balloon that was just a bit too full and is now slowly deflating.
The market here will be relatively cool here in the winter months, but what’s in store for the rest of 2024? We know that’s what you’re really here for, so read on.
What Factors Will Impact Eugene’s Market the Most in 2024?
We’ve mentioned mortgage rates already, and there’s really no way around it: whichever direction the Federal Reserve goes, real estate markets will follow, Eugene’s included.
Luckily for buyers (and for sellers who may want to make a move) the Fed has been hinting at lower interest rates for 2024. In mid-December, Federal officials indicated that they might cut rates by 0.75% in 2024.
The relationship between the Federal Reserve’s benchmark and mortgage rates is not exact. However, following the Fed’s announcment, mortgage rates did take a noticeable dip. At the end of December, average rates nationwide were lower than 7% for the first time since August 2023.
Rates could continue to decrease heading into the spring of 2024, and that could have a noticeable impact on Eugene’s market and other markets across the country. We’ll offer more concrete predictions below.
First though, one other factor could impact the direction of Eugene’s market in 2024. First, there is still the lingering threat of an economic recession.
Such predictions were actually more widespread at the beginning of 2023, with most economists putting the risk of a recession at below 50%. The possibility is still very much on the table, though.
The impacts of a recession upon Eugene’s market should be minimal, though, short of a global economic crisis on par with the Great Recession. We’ve outlined our reasoning in another article, When Will the Housing Market Crash (and Housing Prices Drop) in Oregon?
In the event of a recession, some Eugene homeowners will be forced to put their homes on the market, and some buyers may be forced to stop looking for a home. In Eugene, though, there will be plenty of buyers waiting to grab up any excess inventory, especially if they can get a discount whether through price drops or lower mortgage rates.
We’ve said it before, but it bears repeating: Eugene’s inventory is so constrained that it will take something drastic to lead to anything approaching a housing surplus.
So, What’s the 2024 Real Estate Market Forecast for Eugene?
The future is always uncertain, but just based on overall vibes, there’s a lot less doom and gloom in the air than there was a year ago regarding real estate markets nationwide.
For better or for worse, the drastic appreciation many markets saw across the country wasn’t an anomaly. Low mortgage rates in 2020 and 2021 were certainly an important catalyst, but the market that came out of the buying frenzy of those years has proved more sustainable than most people thought.
The reason isn’t so complicated: housing supply is still low, especially in hot markets like Eugene’s. Eugene has always had a shortage of new construction, that’s more true right now than it’s ever been. The housing that is getting built certainly isn’t on the affordable side, with the exception of a few innovative middle housing developments such as those underway by our friends at Cultivate, Inc.
If mortgage rates continue to drop heading into the spring buying season, a new wave of buyers could hit Eugene’s market. At the same time, people who have been stuck in homes that aren’t really fitting their needs could finally be inspired to trade up (or downsize, as the case may be.)
That could lead to somewhat more inventory, but we’re expecting it won’t outpace buyer demand. Rates won’t drop enough to convince anyone who bought at 3% to list their home, unless they’re moving out of area.
The question is what impact all of this will have on prices. Eugene’s market could certainly appreciate in 2024. Market conditions in the spring should set the tone for the rest of the year. If lower mortgage rates stay on the table, we could see homes selling for a median of around $470-480k in 2024, representing about 6% appreciation year-over-year.
That may not seem like the greatest news for buyers, but we think it’s time to face the reality: homes are very unlikely to get cheaper in 2024. A recession could lead prices to flatten, similar to what we saw in 2023, but if you’ve been waiting for the bubble to pop, it’s probably time to stop waiting.
It might make more sense to wait for mortgage rates to drop. With that being said, buyers may also find themselves in a more competitive market in the spring and summer, with prices higher across the board.
If you do find your dream home now, you may certainly regret passing it up if you decide to wait. Rates are already lower than they were just a a month or two ago.
At the end of the day though, the decision about whether to purchase or sell a home is a completely personal one. That’s one thing that won’t change regardless of the market. And it’s also why we’re here: to help you understand all the factors that could impact a decision that ultimately is up to you to make.
Click the button to the right and we’ll be happy to start a conversation. In the meantime, Happy New Year!