Robust Eugene-Springfield Housing Market Subject To Potential Downturns
Eugene is experiencing a solid housing market. Prices are ratcheting up, and demand for homes in Oregon’s second largest city remains high. But while sellers and realtors are enjoying the economic benefits, others say this all comes with risks. KLCC’s Brian Bull reports.
Lyle Jackson plays with his young son and daughter in the living room of their South Eugene home. The orthopedic surgeon helps them count and organize a pile-up of toy cars on the rug.
“How many blue ones?" asks Jackson.
"Two!" answers his son.
"And how many red ones?” asks Jackson, as the child begins moving the cars into a line.
It’s the only traffic Jackson and his wife will put up with. The couple briefly discussed Seattle and Portland before settling on Eugene.
“For us, both of those cities ended up being a little bit too big," says Jackson.
"After dealing with traffic and things like that, while in Seattle, we kinda just realized we didn’t necessarily want to be sitting on the freeway or always having to fight parking, and lots and lots of people.”
Jackson says Eugene’s size and university culture drew him here. They moved into their spacious home in August, after nearly three months of searching. While satisfied with the final asking price for their house, Jackson says he was surprised at what many homes went for.
“From when we previously owned a house in South Carolina, the Eugene market was certainly quite a bit more expensive for the same house that you got. But I think in general, most places we kinda found, had some sticker shock to them.”
Those prices and tight inventory jibe with what realtors are seeing across Eugene…including Jeremy Parmenter, Principal Broker for Keller Williams Realty.
“Right now there’s about 1.9 months’ worth of inventory," says Parmenter, driving through the Ferry Street Bridge area. "Meaning if no other homes were to come on the market, that’s about how long it’d take for the homes to sell that are currently listed.
"Anything less than six months of inventory is considered a seller’s market.”
Parmenter says Eugene has become a viable, more affordable alternative to the Pacific Northwest’s trendier, major cities.
“I think a lot of people have realized that Eugene-Springfield is a great place to live. The Seattle area, prices have gone up so high. You’ll see prices on average of about $600,000. So a lot of people like to come down here, where we have an average price of $263,000 and they can buy the same size house for what they could buy in Seattle.”
Parmenter says a new VA hospital has brought retirees to Eugene’s Chad Drive area, and continuing development at the University of Oregon is driving sales there as well. October data for Lane County shows that the average sales price increased more than 8 percent, and the median sales price rose nearly 7 percent over Cctober 2015.
But some are troubled over the trend.
“We’re seeing kind of a perfect storm of circumstances that makes it very difficult for low and moderate-income families to buy their first home,” says Emily Reiman. She's Executive Director of Neighborhood Economic Development Corporation (NEDCO), based in Springfield.
“The housing market is rising steadily here, it’s very difficult to find houses that are under $200,000 – which is generally where a moderate income, first-time buyer is going to look.
“The second thing that we’re seeing is, the new inventory that is coming onto the market, or that is being built, is not at that price point.
"We’re seeing a lot of homes that are being built at the $300,000-plus range. And we’re not seeing a lot of new houses being built that are affordable for low-income, first-time buyers.”
Reiman says people are now looking outside Eugene , including Springfield, Cottage Grove, or Veneta…though interest in those markets have raised home prices as well. She says all of this can drive prospective homebuyers to put off a major, equity-building purchase…that can cause further challenges.
“If you delay buying a home, you’re delaying the point at which you pay that house that off. So we’re seeing a lot more people enter retirement still with a mortgage payment. Which makes financial security in retirement a whole lot more difficult.”
Reiman says there’s no easy answer. A dip in the market would help many prospective buyers, though that would hurt current home owners who’d like to see values improve, not suffer.
Meanwhile, on an office roof overlooking the city, a 12-foot tall gorilla marks the national headquarters of Eugene-based Gorilla Capital. The company specializes in fix-and-flip homes.
Its CEO, John Helmick, says he’s wary.
“What we’re seeing today in the housing market in Eugene is very similar to what we saw in 2002 to 2006," he tells KLCC. " We saw this incredible exuberance, and this belief that ‘I need to buy a house now because in six months all houses will be more expensive”. That generated an incredible increase in house prices here in Eugene.
"That’s not sustainable. That’s not realistic.”
In other words, Helmick fears this could lead to another housing bubble which could hurt home prices, valuations, and other sectors of the real estate market like one that began roughly a decade ago.
But realty broker Jeremy Parmenter disagrees, due to a major difference.
“Before, one thing we were up against is people were acquiring loans that probably didn’t have any business in getting loans. They were able to purchase a home with no stated income, no stated job, or anything like that. And the government has put a lot of policies in place to keep people from doing that. And a lot of financial institutions as well.”
For now, it looks like prices and demand are holding strong for houses in the Eugene-Springfield market. A good situation for sellers, and developers as long as interest in the area continues.