The second quarter of 2019 has come and gone, and we’re now firmly into the summer months. Despite some cooler weather heading into July, this is the time of year that the housing market typically heats up in Eugene. Thus far, 2019 has not been an exception.
The winter months of 2019 saw a significant but not huge decrease in the number of new listings compared to Q1 of 2018. Earlier in the year, a sense of economic uncertainty was starting to spread, with sellers perhaps lacking confidence that their homes would sell as easily or for as much as they did the last several years.
This decrease in listings corresponded to a decrease in buyer activity, with homes sitting slightly longer on the market than they did in 2018. At the same time, Eugene’s available inventory didn’t increase at all: buyers were still purchasing homes at the same rate sellers were listing them.
The real marker of a slowdown in the market is an increase in inventory, and basically speaking, Eugene’s inventory has remained incredibly low. The sale price for homes across all price points in Eugene has therefore continued to rise at a steady clip, with the demand for homes well-exceeding the supply of high-quality listings in desirable neighborhoods.
In the first quarter of 2019, we saw signs that buyers and sellers were waiting things out a bit but not that there were any real fears which might signal a major shift in the market.
So, now that we’re heading into the summer, what do the numbers show?
What the Numbers Show Overall about Eugene’s Real Estate Market
Our philosophy at LOHR Real Estate when it comes to market reports is that numbers by themselves don’t mean much. It’s essential to contextualize the data. That’s why we take snapshots of the market at a number of different price points to look for signs of the more subtle currents that drive real estate markets.
With that said, overall sales numbers for Q2 of 2019 are right in line with those of 2018. Everyone loves an exciting headline (“Housing Bubble Due to Burst!” “Real Estate Market Through the Roof!” “Impending Economic Meltdown has Sellers on Edge!”) but Eugene’s market through the spring has been short on big surprises.
Sales for April, May, and June of 2019 total 649 across all price points, virtually identical to 2018’s total of 667. News delivered in late March that the Fed would cap interest rates for the foreseeable future likely factored in to an uptick in buyer activity compared to the first quarter.
Meanwhile, listings of new properties in 2019’s 2nd quarter are likewise in a dead heat with those of 2018, 944 compared to 964. That means–you guessed it–available inventory has been identical through the Spring of 2019 compared to Spring of 2018. In other words, it’s low–at present date just 1.6 months, indicating a very strong seller’s market.
The median sale price for homes at all price points through the 2nd quarter of 2019 was around $330,000, which actually represents only a modest increase from a median of $326,000 through the Spring of 2018.
Some context: June of 2018 was a record-smashing month, with a median sale price of $345,000 which hasn’t been topped since. In fact, it dropped to $316,500 in July of 2018, marking a minor statistical bubble. Since that number is a bit of an anomaly, it’s safe to say that Eugene’s market is continuing to appreciate at a rate significantly higher than the national average of 3-5%.
Q2 Market Report for Starter Homes in Eugene (less than $300k)
Before we dive into the numbers for the different segments of Eugene’s market, we’d like to point out something that may be obvious but bears mentioning: a lot of the homes at the bottom and even the middle of Eugene’s market are pretty funky. A significant number of listings at these price points sit on the market for several months or more, while homes in decent neighborhoods with maybe less square footage but minimal work required go fast.
With that said, the average inventory for this price point during Q2 of 2019 was still a low-low 1.4 months, with homes spending a median of 7.5 days on the market. Those numbers do represent a slight increase in inventory from Q2 of 2018, when we saw an average inventory of 1.3 months but the exact same number of days spent on the market.
With the price point for Eugene homes increasing across the board, we would expect to see less listings at this price point over time, with homes that would have sold in the high 200s a year or two ago now selling in the low 300s. The dip between 2018’s Q2 numbers (333 listings) and 2019’s (321 listings) has been minimal, however.
What has changed since 2018 is the average amount that properties in this range have fetched over list price. During 2018’s 2nd quarter, starter homes fetched an average of more than 5% over list price, from which we can infer that bidding wars were taking place. During Q2 of 2019, however, this figure drops to just 1.5%.
The conclusion we can draw from all these numbers is that, so far, the bottom end of Eugene’s end hasn’t gotten more tight, contrary to our prediction headed into 2019. Still, it isn’t like there’s much room for it to get more tight than it already is. Sometimes it’s good to be wrong.
Q2 Market Report for Trade-up Homes in Eugene ($300-450k)
Here again, sales numbers and inventory for trade-ups were virtually the same in Q2 2019 as they were a year earlier. 2019 Q2 sales totaled 285, just a slight drop from 2018 Q2’s 299 sales. Average inventory during the spring months both years was the same, at 1.3 months.
That means that the market for properties in the $300-450k range is just as tight in Eugene as it is for starter homes. Naturally, there are less outright clunkers to be found among these properties, but even into the 4s you’ll still find plenty with funky floorplans, mediocre finishes, and cosmetic issues.
In particular, we’ve seen some mind-boggling prices lately on homes in the Friendly neighborhood, particularly the area around its central hub on Friendly and 28th. Fixer-uppers close to 1,500 sq ft are being listed above in the low or even mid 4s–and then they’re sitting on the market until the price eventually gets reduced.
We don’t see these kinds of listings as a sign of things to come anytime soon, even in Eugene’s trendier neighborhoods. In our opinion, a more telling indicator of the state of Eugene’s market can be found in the 50s and 60s-vintage ranch homes that are selling on the outskirts of the Friendly neighborhood.
Most of these homes are pretty similar, ranging from 1100 to 1600 sq ft, and in a more normal market these would all go for around $300-320k. But the ones that have updates which set them apart are sometimes selling for far higher than list price.
Last year, we started to notice some of these homes selling in the 350s or 360s, 30 or 40 thousand dollars above the value that comparable sales would indicate. In this past few months though, we saw one Friendly-neighborhood ranch go for $380k and another go for a staggering $408k.
Per square foot, that’s some of the most expensive real estate you’re likely to find in Eugene. What set the later listing apart was just that it had vaulted ceilings, a rarity in the Friendly, and had an all-cash buyer eager to move into the neighborhood.
It’s a similar story in the Ferry Street Bridge area in the Cal Young neighborhood in North Eugene. It too is seen as an up-and-coming neighborhood, but many of the homes are older and lack contemporary finishes. When homes do pop up that have been updated to a contemporary standard, they tend to go fast, for well above list price.
We had clients recently put an offer on such a home, and though they offered $20k above list price, another buyer came in at $45k above list. Incidentally, we encouraged our clients to wait it out in a back-up position, and when the higher offer fell through due to financing issues, theirs was accepted.
All of this is somewhat anecdotal, but the point is just to show that the market for trade-ups is pretty darn tight in Eugene unless you’re willing to take on a project or settle for a less-than-desirable neighborhood. A lack of new construction in Eugene through the past few decades has meant that the kind of homes people are looking for once they get into the trade-up range simply aren’t available.
Sellers who can stand apart from the crowd (in a positive way) could potentially reap the benefits of multiple-offer situations. Conversely, there aren’t any guarantees, even in Eugene’s market, that project homes at this price point will sell, unless they have other unique features that make up for it.
Q2 Market Report for Premium & Luxury Home in Eugene ($450-600k and $600k+)
The $450-600k range is where we finally start to notice a significant difference between the 2018 Q2 numbers and 2019 Q2 numbers. Listings were slightly lower in the Spring of 2019 (147) than they were in Spring 2018 (159.) Sales, however, increased from 79 in Q2 2018 to 91 in Q2 of 2019, representing a decrease in inventory from 2 months to 1.6 months.
While much has been made of a steady uptick in the average sale price for Eugene homes, inventory in Eugene is weighted heavily toward the middle of the market, meaning that there aren’t too many homes available for significantly more or significantly less than the June 2019’s median sale price of $335k.
There certainly isn’t a glut of inventory in the premium range. In Q2’s data, we see hints that demand is increasing in the $450-600k range faster than supply. Again, we can attribute this to a lack of new construction in Eugene throughout the past several decades. People who already live in these homes have even fewer options when it comes to “trading up” into the luxury range, so there aren’t many premium homes entering the market.
Listings in the $600k+ range did, however, increase in the 2nd quarter of 2019 compared to Q2 of 2018, with 95 compared to 79. Sales have also increased, with 47 compared to 38, and inventory has actually dropped (a 2 month average through Spring 2019 compared to a 2.1 month average through Spring 2018).
It’s possible that fears of a slowdown are, in part, driving an increase in the inventory of luxury homes in Eugene. But with an increasing number of buyers willing to make the investment, there’s no sign that the higher end of the market is reaching an equilibrium point, much less cooling off. Available lots suitable for luxury construction are in extremely support supply, meaning that competition will continue to be stiff for available properties.
Looking Ahead to the Third Quarter of 2019
During the 3rd quarter of 2019, we’ll be watching to see whether the leveling-off of Eugene’s starter home market will continue or not, and whether inventory will continue to drop in the premium and luxury range. Local, national, and global economic conditions will of course a factor, but the Eugene market has continued to show remarkable stability in the face of ever-shifting economic currents.
All of these facts and figures aside, it’s important to know how the condition of the market affects your own purchasing or selling power. We’re happy to have a much more personal conversation about how you can meet your own real estate needs in Eugene’s current market. Just contact our Eugene office today!