Both of the markets we serve have continue to see a lot of buyer activity heading into the summer, while seller activity still lags behind last year’s. The result is an inventory crunch and rising prices.
That’s not the news would-be home buyers in Bend and Eugene might like to hear, though record-low interest rates might be helping to ease the sting. Sellers, of course, still stand to benefit from the increase in buyer activity and decrease in new inventory.
The medium-term future is less clear. Read on for the full story.
June Market Report: Bend
When restrictions related to COVID-19 first hit Oregon, Bend’s market took something of a dive, with both buyer and seller activity significantly decreasing. In May, however, the floodgates opened and buyers came in riding the tidal wave, with pending sales outstripping May of 2019’s by a significant margin.
The same trend continued in June, and not surprisingly, prices have caught up to the reality of buyer demand outpacing new listings. June’s median sale price of $490,000 for all residential properties was 10% higher in June of 2019.
Interestingly, in spite of all the energy around buying, properties spent significantly longer on the market than they did the previous year–a median of 27 days, compared to a median of 11 days in June 2019.
Given the disparity between new listings and pending sales, one possible conclusion is that buyers are looking for the perfect home, not finding it, and then making due with what’s available. Homes that have sat on the market for months and months are finally getting bought because there just isn’t anything else available.
In June, 1.25 homes went pending in Bend for every home that was listed. If a second wave of COVID-19 forces new lockdown measures, recent history tells us that seller activity is likely to diminish more than buyer activity.
In other words, Bend’s new inventory crunch is here to stay for now, and sellers are likely to recognize that they can start pricing their homes even more aggressively. Indeed, the median list price in June was up to $650,000, 13% higher than a year ago.
Will this direction be sustainable? Perhaps not.
We’re seeing varying prognostications about what’s in store for the economy. Some people who are currently receiving mortgage forbearance will eventually need to put their homes on the market.
It’s really a question of when and how many. Even if an influx of new inventory comes at some point, if there’s already a severe shortage, it might not impact the bottom line of Bend (and Eugene’s) market too much.
June Market Report: Eugene
In June, Eugene’s market experienced pretty much the same dynamic that Bend’s did, albeit a bit less pronounced. The number that stands out here is 329 pending sales, marking the first time since the pandemic hit that buyer activity outpaced 2019’s.
The ratio of pending sales to new listings is 1.13 to 1. That means the deficit in new inventory is not as severe as Bend’s, but it’s also important to keep in mind that Eugene had significantly less inventory going into the pandemic.
Part of what’s happening, we believe, is that there are more people who want to move into Eugene than move out of it and not enough new construction to accommodate them.
The pandemic may actually be exacerbating this imbalance. With remote work increasingly becoming a new norm, a number of our clients are choosing to relocate from states like California and Texas and continue their old jobs long-distance.
We are working with a number of would-be buyers in Eugene, and the going has been a bit rough. That’s particularly true for our clients who are looking to purchase in South Eugene.
The statistics bear out a reduction in inventory mainly at the lower end of the market, with sub-$350k listings down 47% in June from the previous year. Still, there seems to be a tangible difference in the quality of inventory, even at higher price points.
June’s median sale price of $350,000 was 10% higher than in June of 2019. In Eugene, homes spent a median of 15 days on the market compared to 10 days the year before.
Again, we think the dynamic is similar to Bend’s, where buyers are being forced to settle for homes that have been on the market longer.
Questions We’re Asking Moving Forward
As we get further into the summer, we’ll be watching closely for signs of how broader economic currents might affect the bigger picture in Eugene and Bend.
The main question in the shorter-term will be how both markets react to continuing drops in inventory. There’s certainly the potential for prices to go up even further, particularly for homes with modern finishes in the most desirable locations.
Some sellers may be encouraged to list their homes because of the prices they’ve started fetching. The continued spread of COVID-19 may discourage others, however, causing inventory to tighten even further.
Lane County and Deschutes County aren’t yet the site of a second wave. In reality, the spread of the virus was quite limited throughout April and May, but it may only be a matter of time before COVID-19 starts to spread through the area.
The result could be more furloughing or layoffs, and meanwhile, options for mortgage forbearance or augmented unemployment benefits might start running out. That will impact Bend and Eugene’s markets, though it’s hard to say just how.
We have our eyes on the ground, and we’re also alert to what might lie around the corner. Stay tuned for our next update.