With a few historical exceptions, real estate markets don’t usually heat up or cool down overnight. Eugene, Oregon’s market is no exception. That’s why each quarter, we take a thorough look at all the available data and see what the numbers tell us about the direction of the market.
Unlike other media outlets, we don’t stop at a bird’s-eye view of Eugene’s entire housing market. (Heck, our local newspaper usually just gives the market stats for the county as a whole.)
Instead, we’ve taken snapshots of the market at various price points, comparing these to the data from 2018 to give you the most accurate window possible into the currents that are driving Eugene’s market. Eugene’s market is seasonal, with things heating up in the summer and cooling off in the winter. A year-to-year comparison therefore tells us more than trying to compare this quarter’s numbers to the last quarter.
Rumors of a widespread housing market slowdown have been all over the national media for a while. The thing is, though, housing markets are local to a degree that surpasses practically any other kind of market. What’s happening on the East Coast, in the Bay Area, or even in Portland won’t tell you much about what’s happening in Eugene.
The story in Eugene’s market, it turns out, has actually been the same for a while, and the most recent statistics don’t exactly reveal evidence of any impending plot twists.
Basically, new homes aren’t being built in Eugene because there isn’t anywhere to build them. The City of Eugene has long resisted any urban growth boundary expansion, and efforts at increasing density are often met with opposition. We wrote an article about that earlier this year.
As buildable ground becomes scarcer and scarcer and Eugene continues to become more and more of a destination for out-of-state transplants, the natural result is that inventory gets lower and prices continue to climb upward.
Our third-quarter numbers show exactly those two things basically across all price points.
Our analysis shows that Eugene’s market through Q3 of 2019 is now tighter than it’s ever been at most price points. At the same time, the numbers reveal some interesting micro-trends. Read on as we dive into the data.
Eugene’s Overall Real Estate Market through Q3 of 2019
The basic story of our Q3 numbers for Eugene is this: listings are down slightly from the third quarter of 2018, but sales are up in proportion to the number of new listings. Meanwhile, sales and listings are continuing to migrate toward the middle and upper ends of Eugene’s market.
According to the most recent RMLS Market Trends report, the median sale price for all detached single-family homes in Eugene was $339,700 in Q3 of 2019. That represents about a 5.25% increase from 2018, when the median sale price through the third quarter was $322,800.
September of 2019, though, broke records with a median sale price of $354,000. The Federal Reserve has cut interest rates several times in the past few months, and 30-year fixed-rate mortgages now average just 3.62% nationwide. (Keep in mind that mortgage rates in Oregon are significantly higher than average–4.29% as of publication.)
The result, of course, is that buyers can qualify for higher loan amounts than before. To compete with the all-cash offers that have become more and more common in Eugene, borrowers have to put more and more money on the table. Here, we see indirect evidence that they’re doing so.
Meanwhile, the average inventory across all price points during the 3rd quarter of 2019 was just 1.4 months. While RMLS statistics don’t track the number of listings that are active month-by-month, comparing the number of homes sold to number of homes listed shows a decrease in inventory.
During the third quarter of 2019, 798 homes were listed in Eugene and 716 homes sold. In Q3 of 2018, 887 homes were listed and 750 homes sold. In other words, the ratio of homes sold to new listings was 90% in Q3 of 2019, compared to 85% a year earlier.
As we will see, this decrease in inventory is concentrated at the bottom of Eugene’s market. Nonetheless, we’re seeing other price points get tighter as well. There’s one exception: the 450k-600k range at the upper-middle end of the market. Read on as we analyze the different price points in Eugene’s market one by one.
Q3 2019 Market Report for Eugene Starter Homes (up to $350k)
Finding a home in Eugene for less than 250 thousand dollars has been hard for years, and it’s getting harder. 137 such properties hit the market in the third quarter of 2018, but in Q3 of 2019, this number dropped to just 83 homes. At this price point, particularly in desirable South Eugene neighborhoods, buyers can expect a fixer-upper, low square footage, or both.
In contrast, the $250-350k range is one of Eugene’s most active price points, with 302 single family homes going on the market in the third quarter of 2019. That’s still significantly less than 2018’s tally of 376 third-quarter listings.
In the spring, we reported that the market for starter homes in Eugene wasn’t necessarily tightening. These latest numbers, however, show a clear squeeze at the bottom of Eugene’s market. The inventory for sub-$250k homes is now a paltry 0.6 months, increasing to only 0.9 months for $250-350k homes.
To put this number in context, anything less than 6 months is said to indicate a seller’s market. So to say that we have a seller’s market here is a vast understatement.
When these properties hit the market, they go fast. The median time-on-market for Q3 of 2019 was 8.7 days at this price point, slightly shorter than the 9.2 days we saw in Q3 of 2018. Properties in the sub-$350k range in desirable locations that require minimal fixes tend to go much faster.
Q3 2019 Market Report for Eugene Trade-up Homes ($350-450k)
At this price point, we start to see a slight uptick in listings compared to the third quarter of 2018–207 compared to 200. Demand for these properties is higher, though, with 183 sold in Q3 of 2019 versus 163 a year earlier.
Tellingly, properties in this range are spending an average of 15 days on the market, compared to 24.3 through Q3 of 2018. While the overall inventory in the $350-450k range is higher than for starter homes, at 1.4 months, this price point in Eugene is basically the story of two different kinds of homes.
We had clients recently make an offer on a property listed at $399k in the desirable Friendly neighborhood. Originally a fairly typical ranch-style home, it had recently been remodeled to include a vaulted kitchen and master suite.
The open house was a zoo, with offers being reviewed the next morning, and we knew the competition would be stiff. Our own analysis indicated that the property was worth closer to $440k, so we encouraged our clients to come in a bit above even that. In the end, with 10 other offers on the table, our client’s $450k offer was the lucky winner.
In other words, desirable properties in this range are subject to the same bidding wars as properties in the sub-$350k range. At the same time, the Eugene market features any number of unremarkable, 2000-ish square foot homes with dated finishes listed at close to $400k.
These properties aren’t flying off the shelves, but most of them are finding buyers eventually, usually after one or more price reductions. If you want to sell your home quickly at this price point, taking steps to properly stage your home and get professional photos are important. More expensive renovations, however, won’t likely translate dollar-for-dollar into a higher sale price.
We recently listed an owner-occupied home in the South Hills at just below $400k and received a full-price offer the day after. Our clients were concerned that several cosmetic fixes they couldn’t complete would detract from the home’s appeal. However, following our advice, they put significant effort into staging their home. Our photographer came in and did his magic, and it paid off with a quick sale.
Q3 2019 Market Report for Eugene Upper-Middle End Homes ($450-600k)
This price point represents the biggest surprise of the quarter, with a significant influx of new listings–134 compared to 97 in 2018’s 3rd quarter. There wasn’t a corresponding increase in sales, however, with Q3 2019 sales (99) right on par with Q3 of 2018 (95). Meanwhile, median time on the market was 25 days for Q3 of 2019, compared to 20.7 days a year earlier.
We can only speculate about what’s driving this increase in inventory, but our intuition leads us to a couple of suggestions. One likely factor, of course, is that homes selling in the low $400k range just a year or two ago are now being listed in the mid-4s.
Anecdotally, as we’ve toured homes at this price point with clients, we’ve mostly been underwhelmed. Homes at this price point sometimes feature certain 80s and 90s-vintage architectural flourishes that suggest opulence but don’t deliver in terms of floorplan and functionality.
In some of Eugene’s most desirable neighborhoods, Amazon, Friendly, and Ferry Street Bridge among them, desirable homes can still be found in the high 3s and low 4s. More money gets you more square footage and may buy you a foothold in some of the nicer subdivisions in the Southwest and Southeast hills or in the Cal Young neighborhood.
But, as a recent headline pointed out succinctly, “millennials don’t want to buy baby-boomers’ sprawling, multi-bedroom homes.” It’s not -just millennials: most of our clients, even at higher price points, simply don’t want 3000 square foot-plus homes or maximalist interior design.
Mind you, inventory at this price point is still low, at 2.8 months. But if you’re planning to sell a home in this range and want a quick, top-dollar sale, a contemporary makeover may net you more bang for your buck than at other price points in Eugene’s market.
Q3 2019 Market Report for Eugene Premium Homes ($600-800k)
Homes in this range and above make up a small but not insignificant portion of Eugene’s market. In the third quarter of 2019, 51 homes were listed between $600,000 and $800,000, and there were 32 sales. In Q3 of 2018, there were 61 such listings and 33 sales, indicating a somewhat tighter market for premium homes this year.
Most revealingly, homes at this price point spent almost 50% less time on the market compared to a year earlier. The median for Q3 of 2019 was 19.3, while in Q3 of 2018 it was 37 days.
Once we get over $600,000, high square footage is par for the course, but these homes also have other amenities that make them more appealing than those a tier below. A higher proportion–nearly half–of these homes were constructed in the year 2000 or later. Nice views, higher-end kitchen finishes, expansive great rooms, and premium landscaping often feature in some combination.
An influx of money from both in and out-of-state means that there are more people looking for premium homes in Eugene. Our buyers at this price point often find, though, that it’s difficult to check off all the items on their wish-lists.
If you’re listing a somewhat older home at this price point, know that you’ll be competing with a certain amount of newer construction. Over the past 12 months, 22 newly-constructed homes have hit the market in this range. Given the lack of buildable land in Eugene, it’s unlikely though that the amount of new inventory will be able to meet the demand.
Q3 2019 Market Report for Eugene Luxury Homes ($800k+)
Properties in the luxury range are especially hard to come by in Eugene. More $800k-plus homes hit Eugene’s market in the 3rd quarter of 2019 than in Q3 of 2018, 21 compared to 16. There were more sales too: 22 in Q3 of 2019 versus just 12 a year later.
Again, we saw a significant decrease in days spent on the market in the third quarter of 2019 compared to a year earlier, 16.7 compared to 30. In a typical market, more expensive homes spend longer on the market. In Eugene’s market, however, homes in the $450-600k range are spending more time on the market than homes in the $600-800k range. Those homes, in turn, are spending longer on the market than $800k+ properties.
From the beginning of 2019 through the end of the 3rd quarter, only 4 new constructions hit the market at this price point. Many luxury homes, of course, are custom built and are never listed for sale. One person’s definition of “luxury” often won’t match another’s. But a premium home demands a truly premium lot, and these are becoming more and more rare in Eugene.
The city government has thus far stuck to its guns in blocking any proposals to expand Eugene’s urban growth boundary. The upper echelons of Eugene’s market therefore seem doomed to follow the rest of the market by getting tighter and tighter and tighter. Money can’t buy everything, and depending on your wish list, it may not be able to buy you your dream home in Eugene.
Pricing your home appropriately is more important in this price range than at any other. It’s also more difficult. Fail to aim high enough, and you could end up losing out on hundreds of thousands of dollars. Aim too high, though, and your home could sit on the market long enough that you’re forced to entertain offers well below list price.
Whatever price point you’re looking at, we feel that our detailed quarterly analysis gives us certain leg up on the competition. Even if you’re not sure about entering the market, it puts us in a better position to advise you whether or not it’s a good idea (and we won’t hesitate to tell if you if we think it isn’t–really!)