According to CNN, more homes are being purchased with cash these days. Obviously, if you’re purchasing a house with cash, you’re either well-off or, at the very least, not feeling the crunch of the Great Recession.
I took a look at the recent sales in the Eugene Springfield area as reported by RMLS to see if the trend held true to us. In the preceding month’s time period, about 20% were, indeed, cash sales.
That’s pretty high.
The homes did tend to be lower priced though. The most expensive listing sold during that month was my own listing—weighing in at nearly ¾ million dollars. It was not sold for cash, though; but rather a conventional loan was used.
High-end homes are still selling in Eugene.
Trees are very cool, and Oregon probably has more trees than any other state—except perhaps Alaska. In fact, residents here are probably outnumbered by trees some 30:1*. Even though numerous, the cutting of even a dangerous, diseased tree still makes headline news in Eugene.
Many don’t realize that Eugene has several pages of regulations about the cutting of trees. And while they’re a good idea in principle, compliance does increase development costs, which in turn runs up prices and rent.
*Assume 1 tree per 10’x10’ grid, resulting in about 4K trees per acre. ½ of Oregon’s ~62K acres are forested, resulting in perhaps 125 million trees. The population of Oregon is a little under 4 million people.
Eugene cares about its trees.
Experts are saying the prices for houses are close to the bottom—meaning price increases are just around the corner. And, houses are becoming increasingly affordable. Nationally, house prices are less than two-years’ salary. In Lane County, though they’re still higher than that.
However home ownership is part of the American Dream and the net worth of home owners is some 40-times greater than renters.
Is home ownership in your dreams?
Short sales in Eugene and Springfield are becoming increasingly commonplace. While difficult, both buyers and sellers put up with them. Why? For sellers, short sales damage their credit less than other options. For buyers, they represent great values.
Even expensive homes aren’t immune to short sales. Below is an example of a short sale I recently did. It sold for nearly ¾ of a million dollars. At 8 acres and 1/8 mile of McKenzie River frontage it was a great buy.
If short sales in Eugene or Springfield intrigue you, get a hold of me.
In a recent Wall Street Journal article it was reported that the rate of economic expansion (GDP increase) is expected to be its largest since 2003. And while national unemployment is still high, it is expected to dip below 9% by the year’s end. Currently the unemployment in Lane County is still above 10%.
So what does this mean for housing prices? Housing prices are affected by a number of factors, but fundamentally, it comes down to supply and demand. High unemployment decreases demand; you need a job in order to pay your mortgage. I expect a soft market in Eugene Springfield until our stubbornly high unemployment rate drops.
More jobs will help Eugene's real estate market.
Increased density and more multi-family housing in Eugene is what the powers that be see in our future. We’re still a few weeks off from learning if the Urban Growth Boundry (UGB) will grow. My guess is not, but we shall see. The unintended consequence of a tight UGB is higher land cost, and therefore less afordability, but this is often overlooked.
The National Association of Realtors has a neat site where you can compare the prices of houses sold for different U.S. Metropolitan areas. It also lists average commute times; the value of that is a bit of a mystery to me, but it’s mildly interesting.
In the chart below, I show median single family house prices for some Western cities. The average price drop across the nation for second quarter 2009, compared to the same time period last year was 15.6%. All of the cities listed in California did worse. As did Nevada.
Oregon and Washington fared better than the national average. The average decline for the Oregon Cities was: Portland 14%, Eugene 12%, and Salem at 11 ½ %. While the decreases are notable, the bottom didn’t fall out in these markets. Conventional wisdom is that because the Willamette Valley didn’t see the run up in prices at market peak, we had less of a correction at market bottom.
Median house prices of selected western cities. Q2: 2009.