You’ve probably already heard the news, but here it is again: the real estate market is doing just fine nationwide as restrictions related to COVID-19 start to ease. But even as Lane County and Deschutes County enter Phase 1 and 2 of reopening, Bend and Eugene’s markets still haven’t quite bounced back to normal.
Across the country, pending sales are up 40% from where they were the previous month, while new listings are up 37.8%. The Spring buying season still hasn’t picked up its normal momentum, with listings lagging 17.8% from where they were in May of 2019. Still, all signs point toward increased activity in the summer.
Nationwide, mortgage applications are up 54% since early April, and 30-year fixed rates sit at a record-low 3.15%. That fact won’t make much of a difference to people who have lost their jobs, but low rates will encourage a certain number of buyers to enter the market.
So, what’s going on in Bend and Eugene? The answer is actually a bit complicated.
In both markets, sellers are still hesitating to list their homes. In terms of buyer activity, April’s numbers presented a rosier picture for Eugene’s market than Bend’s. In May, however, we see signs that Bend’s market is making a faster push toward a normal(ish) summer buying season.
Let’s take a look at the numbers for Bend first.
Bend Market Data for May, 2020
Before go into the numbers above, note that we’ve switched from tracking only detached single family homes to including all residential properties in our numbers for both Bend and Eugene. The numbers you see on our previous reports therefore won’t line up with the numbers you see here.
Doing what we did before simplified the results by introducing less variables. However, the Central Oregon Association of Realtors’ new online system makes it difficult to access statistics for only detached homes. An advantage of the new system is that it shows median days on the market, instead of just averages, providing a more realistic snapshot of how long homes sit on the market in Bend.
With that out of the way, new listings are up in Bend 23% from where they were in April, but that’s still well behind the national average of 38%. The year-over-year gap between May of 2020 and May of 2019 is 43%, about the same as April’s year-over-year gap.
Our expectation has been that as restrictions start to lift, more sellers will feel comfortable listing their homes, but this hasn’t been the case as much as expected in Bend. We’ll examine why this might be later on, but first, let’s look at buyer activity.
Pending sales in Bend were up a remarkable 52% from April’s numbers, above the national average of 40%. What’s really interesting, though, is that there were 6% more pending sales in May of 2020 than there were in 2019.
In other words, more buyers made the decision to purchase a home in Bend in May than did last year.
When we look at the sales figures for Bend, they’re down somewhat year-over-year and even month-by-month. This seeming discrepancy can be easily, explained, however.
Most homes that sold in May went pending in April or March, at the height of Oregon’s pandemic-related lockdown. These home sales depreciated 3% relative to the previous year’s sales, with a median sale price of $462,500.
But this decrease may be more a matter of perception than the reality of Bend’s market. If the trend we’re seeing in the rest of the data for May continues, prices certainly won’t stay down for long.
We’ll go into further analysis of what this all means, but first, the numbers for Eugene.
Eugene Market Data for May, 2020
As you can see above, while new listings in May were up 15% from where they were in April, they fell 35% year-over-year. That’s a steeper drop than April of 2020, when new listings were down 26% compared to the previous year.
With Lane County entering Phase 1 of reopening on May 15, one might expect to see more new listings in the second half of the month. The data doesn’t bear that hypothesis out, however. About as many new homes were listed in the first half of May as the second.
In terms of buyer activity, pending sales in Eugene failed to surge in May compared to what we saw in April. Year-over-year, the difference between May of 2020 and 2019 is about the same as it was the previous month, at -24%.
173 homes sold in May, just an 11% increase from the previous month and a 39% decrease from May of 2019. Homes sold for a median of $335,000, representing a modest 3% year-over-year increase. That’s a 2% drop from April’s record median of $342,125 for all residential properties.
Again, May’s sales numbers mostly represent homes that went into contract in March or April in the midst of Coronavirus-related restrictions. So, pending sales better reflect the current status of Eugene’s market.
Read on, and we’ll take a deeper look at what the data signifies for the future of Eugene and Bend’s markets.
What May’s Numbers Mean for Bend’s Market
You’ve heard it from us before, but we’ll say it again: Bend and Eugene are both low inventory markets. So far, the pandemic and resulting economic fallout hasn’t changed that basic fact. Actually, both markets have become tighter for buyers.
Pending sales numbers for May indicate that buyers are re-entering Bend’s market at a rapid rate, but sellers aren’t following suit. The result should be a boon for those sellers who are willing to get in on the action.
Indeed, homes spent less time on the market in both April and May than they did a year earlier. So why have home prices dropped in Bend relative to 2019?
It isn’t that homes are going significantly below list price, nor are list prices dropping, increasing 6% year-over-year. Instead, May’s sales numbers reflect less activity in the higher end of the market relative to what we’ve seen in the past.
This is no surprise. In the economic uncertainty of the earlier stages of the pandemic, discretionary purchases were bound to fall off.
What we’re seeing in May’s pending sale numbers, however, is that Bend’s luxury market in particular is bouncing right back. 56 $850,000-plus homes went pending in May of 2020, compared to just 26 a month earlier and 33 in May of 2019.
Buyer activity in the middle of Bend’s market has also increased slightly relative to a year ago. As a result, June’s sales numbers will almost certainly reflect an appreciating market.
In June, new listings won’t lag behind pending sales as much as they did in May, but there will still be a significant gap. As a result of tighter inventory, more homes will have multiple offers, and that will drive prices up further into the summer.
The reasons that sellers are hesitating to list their homes in Bend are simple. First, sellers face more COVID-19-related risk than buyers do, assuming they continue to occupy their homes. Second, supply chain issues and economic uncertainty are having a particular impact upon new construction.
Inventory in Bend won’t decrease to the point where would-be buyers will be driven out of the market unless their needs are fairly particular. That, however, brings us to what’s happening in Eugene.
What May’s Numbers Mean for Eugene’s Market
Eugene has had a significant inventory crunch for at least the past five years. Now, with COVID-19 keeping sellers off of the market, the situation may finally be impacting the bottom-line.
In contrast to Bend, buyers are re-entering Eugene’s market only slightly faster than sellers. That’s because there simply aren’t any homes for them to buy.
At 1.4 months, Eugene’s inventory isn’t the lowest it’s ever been. However, a lot of the homes on the market right now are leftovers from before the lockdown.
While statistics have their limits, anecdotally, listings of turnkey homes in many of Eugene’s most desirable neighborhoods lag far behind what we saw in late Spring of last year.
Online real estate portals have reported significant spikes of traffic in the past few weeks even compared to last year, and our site is no exception. But if would-be buyers simply aren’t seeing homes that appeal to them, most won’t be entering the market unless circumstances compel them to compromise.
That was already the reality of Eugene’s market before the pandemic. Now that desirable inventory has dried up even further, we suspect that buyer activity in Eugene will continue to lag behind the rest of the nation.
That’s especially true of those buyers who already own a home in Eugene. Whether would-be buyers are looking to trade up or even downsize, the lack of available inventory will likely encourage would-be buyers to hold on to their present homes and perhaps consider renovations or an addition.
Prices appreciated 3% year-over-year in May. The bidding wars likely to result as buyers compete for a limited number of properties may drive prices up further.
At the same time, if the properties that do get listed continue to be less desirable, price growth is more likely to flatten further in Eugene, even though depreciation continues to be unlikely for the foreseeable future..
The wild card for both markets is if and when a second wave of Coronavirus hits Bend and Eugene. Seller confidence could start to build throughout the weeks and months to come, only to plummet if authorities are forced to backtrack on reopening.
A widespread second wave of COVID-19 could also have broad economic impacts. The stock market may be doing well at present, with unemployment numbers significantly lower than many had feared, but the situation is still tenuous.
For those who were already looking to purchase a home in Bend or Eugene, there may be a sense of “been there, done that,” but the question is how would-be sellers will respond.
The fact that home values aren’t depreciating significantly in Bend and Eugene may encourage some sellers to enter the market. We are expecting June’s numbers to provide further encouragement, particularly in Bend.
Still, much is uncertain. We will continue to closely monitor both Eugene and Bend’s markets, peeling back several layers beyond the most obvious conclusions to help you make the best decisions possible for yourselves and your families.