Over the years we’ve worked in Bend and Eugene, we’ve seen the market climb higher and higher. We’ve also heard the same story repeated again and again: It’s tough to find a home here.
By the time you lay eyes on a listing, dozens of other interested buyers probably have as well. A handful of them have perhaps made offers already, and chances are decent some of these offers are higher than the asking price.
It’s a process that leads quickly to heartbreak, and further down the road, perhaps resignation, either settling for less or giving up the search altogether.
Many are asking the question: is now even a reasonable time to buy real estate in Eugene and Bend, period? Both markets have never been hotter. Especially for those of us who’ve spent many years in the area, it may seem like things are bound to cool back down.
But betting against the market here is a risky gamble.
Is Now the Time to Buy in Bend or Eugene?
Maybe you’ve decided already that either Bend or Eugene is the place that you want to call home. We can hardly blame you–we certainly wouldn’t want to live anywhere else. (Thinking of relocating to Bend or Eugene and need more convincing? Then check out our articles on moving to Bend and moving to Eugene.)
But if you’re feeling priced out now and decide to wait for the market to open up, you may find yourself even worse off later.
Economic forces are, to be granted, somewhat difficult to predict. We’re not saying just to go for it blindly, nor are we suggesting that you flip a coin or dial a phone psychic. Do your own homework, and make an informed decision.
At the same time, we feel very confident that Bend and Eugene’s markets aren’t set to cool off anytime in the foreseeable future.
Why You Shouldn’t Bet on a Housing Bubble
Recently, you may have read that inventory in some markets is starting to increase and that the real estate price bubble might be about to pop.
But we think rumors of a more widespread housing bubble are greatly exaggerated. In any case, these indicators aren’t really applicable to the Bend and Eugene markets.
(Update: click here for our more detailed analysis of recent murmurings of a housing bubble.)
The old adage in real estate is location, location, location. In Seattle, Portland, and San Francisco, the signs certainly point toward an impending bubble that will have to pop.
But we’d urge caution in conflating these indicators with what’s going on in Eugene and Bend. Although other cities throughout the U.S. have experienced a recent increase in inventory, new inventory has been slow to come in both Eugene and Bend.
On April 14, 2018, Eugene’s Register Guard reported that the city’s home inventory had fallen to a record low: just 1.4 months. That’s significantly lower than the average inventory for 2017, which was 1.9 months. The average sale price in March of 2018 was $303,800, up almost $40,000 from the previous year.
Meanwhile in Bend, after seeing a modest increase in inventory through the spring, figures for June show a drop back down to 2.3 months.
Many folks here in Bend are anticipating higher inventory as a result of an expanding urban growth boundary. But daunting infrastructure improvements are necessary before there can be any meaningful impact on current inventory levels.
So although there is plenty of new construction, we can certainly expect a tight market in Bend through 2018 and into 2019. What happens after that is uncertain.
And, there’s another important consideration for buyers seeking affordable housing in Bend. As we noted in a previous article, new developments are weighted heavily toward the luxury end of the market. The average sale price in Bend for June 2018 was a staggering $522,000. Affordable starter homes are an increasing rarity.
Let’s put some of these numbers in perspective. Less than six months inventory is considered “low.” So Bend and Eugene’s numbers (2.3 months and 1.4 months respectively) are low-low.
These figures may trigger recollections of the Great Recession of 2008. But the reasons for 2018’s robust market are completely different.
Reckless lending practices coupled with a gold rush of speculative investment, particularly in Bend, resulted in the housing bubble bursting in 2008. But these factors simply do not apply to today’s market. Folks buying homes in Eugene and Bend are coming from out of area to live in these markets rather than invest in them.
Basically, the housing market in Bend and Eugene is climbing through the roof simply because demand is high and supply is low. There is no simpler or more dependable economic rule of thumb than that.
The current situation is less like a fragile bubble than an ever-expanding balloon. It’s not so simple, unfortunately, as “What goes up must come down.”
So Bend and Eugene’s red-hot housing markets are simply a reality that us old-timer Oregonians are having to get used to. With their robust economies and cultural perks, Bend and Eugene are now attractive destinations for people all across the country.
What’s a Frustrated Buyer to Do? (Hint: Find a Good Realtor.)
Buyers have an impressive array of options these days for viewing listings online. But this unprecedented access does not help when inventory is low and the competition is fierce.
As the Internet becomes more and more integrated into our day-to-day lives, people can tend to think that if it’s not online, it doesn’t really exist. But this is a perilous attitude when it comes to low-inventory markets like Bend and Eugene.
The old adage “It’s not what you know but who you know” could not be more apt than it is here. The fact of the matter is that in Bend and Eugene, many homes never even hit the market. Even with all of today’s technical advances, real estate is still very much an industry about relationships.
Zillow, Trulia, Refin and other online listing services offer a kind of low-hanging fruit, and there’s bound to be a lot of competition for those properties that check all the right boxes.
Well-established and well-connected Realtors, on the other hand, get access to inventory quicker than the big national sites and in some cases exclusively. So if you’re trying to identify homes you like on these national sites and then contacting a Realtor, it’s quite possible that you’ll be left in the dust.
Knowing When to Settle for Less in a Low Inventory Market
It’s unfortunate but true: buyers seeking affordable housing in low-inventory markets can’t be too picky. Knowing how to manage your own expectations and knowing just when to pull the trigger is a difficult art. It’s one that few people, let alone first-time home buyers, can manage well.
First-time home buyers in Bend and Eugene must often navigate a market where prices are on the very edge of what they can afford. It can be a race against time, with twin pressures of rising home prices and interest rates.
So it’s crucial to know just when to stop looking and make an offer. But the battle isn’t over, of course, once you’ve pulled the trigger. It’s crucial to know exactly what you’re up against and how to put your best foot forward.
In strong seller’s markets like Eugene and Bend, negotiations have to account for the weak position of buyers. Sellers have a lot of leverage, and many traditional strategies don’t apply.
Making an attractive offer doesn’t always come down simply to price. Sellers are also looking closely at the terms of your offer, such as all cash, quick close, 20% down, and so forth. It takes an extremely skilled agent to ask the right questions and understand what is important to the seller, crafting an offer that speaks to their particular needs.
To put it bluntly, buyers need a trusted advisor.
It certainly helps if this advisor has access to deeper channels than your average Joe or Cindy. But this advisor also needs to know how to balance a multitude of concerns: price, condition of home, location, changing market conditions, a seller’s willingness to sell, and a buyer’s particular needs. And they need to know not only how to act but when to act, down to the hour.
The whole process can be like walking on eggshells. The stakes are high when you’re already walking the razor’s edge of what a lender will finance.
Preapproval is an important step in today’s market, but it doesn’t guarantee a loan. Fail to get financing, and you could be out a big chunk of change for inspections and appraisals, not to mention all the time and energy you’ve thrown down the drain.
Bottom Line: In a Tight Market, Find a Realtor You Can Trust
We’ve said it before but we’ll say it again: it’s hard to put a price tag on trust.
For home buyers, some of the items that factor into trustworthiness are more tangible. Your Realtor needs to be experienced and well-connected. He or she also needs to have the tenacity to knock on doors and create opportunities for you.
Other factors are less tangible, though. It should go without saying, but interpersonal connection is a huge part of trust.
Upon meeting a potential agent, listen to your intuition more than whatever sales speak you might hear. If your Realtor knows and cares about who you are and why you’re buying a home, they’re that much more likely to find you a keeper and steer you away from the lemons.
In a low-inventory housing market, it’s necessary to act quickly.
Quick decisions, of course, are risky. Second-guessing is natural, especially if you’re having to settle for less than you’d originally hoped for. But the last thing you want is to jump into a purchase that you later regret making. (Check out our article on the phenomenon of Buyer’s Remorse.)
Bottom line: do as much research as you can before you begin your home search, but understand that some adjustment will be necessary. Know where you are and where you aren’t willing to compromise, and communicate that to your Realtor. Be open, though, for the opportunities that might appear straight out of the blue.
Above all, find and agent who knows you and can create those kinds of opportunities for you. There’s no magic involved, and as with so many areas of life, there’s more than a little luck involved. But if you know you’re in good hands, than the whole process is bound to be that much smoother.