Buying and selling real estate in Eugene Springfield is never easy. Houses are big ticket items and getting it right is important. How do you get it right? I think the best way is to find a good Realtor who’s honest and understands the market. Bell Real Estate is 100% local and has been serving clients in Lane County for over 45 years. How do you stay in business that long? We think by doing it right.
Bell is a full service firm, probably best known for its property management, in which we’re a market leader. We also have Realtors, of whom I’m one, doing a brisk business buying and selling property for clients. If you have questions about buying or selling real estate in Lane County, I’d be glad to help.
Bell Real Estate’s Main Office at 630 River Road
The new year makes a convenient time to look back and also pull out our crystal ball. 2012 may have marked the bottom of our real estate market in Eugene & Springfield. Prices have trended up in the last few months. Mostly, this is brought about by lack of supply, that is too few houses actively for sale.
In real estate’s boom years, before 2008, supplies of houses for sale dipped below two months, which was a strong seller’s market. At the depths of the Great Recession, supplies greater than a year were seen around Eugene Springfield, indicating a strong buyer’s market. Lately, we’ve been at 6 months or less, which is a mild sellers market.
Eugene Springfield January 2013
Why the lack of supply of houses for sale? One reason is Senate Bill 1552. This good intentioned Bill had the effect of decreasing the rate of completed foreclosures, so fewer of them are on the market and more are still in the process of foreclosure. The Oregon Supreme Court is scheduled to take a look at this in January 2013. My guess is that they or the Legislature will change something.
Fundamentally, the prices of real estate are affected by things like inward migration and unemployment rate. We’ve had fewer immigrants to Oregon in the last few years, and unemployment rates are stubbornly high, although decreasing.
My prediction for house prices in 2013 for Eugene Springfield is flat to mildly increasing. I’ve been wrong before, though, and we’ll have to wait and see.
New home construction fell to an all time low in February 2011, with an annualized national number of building permits at 517K. In Eugene Springfield new residential building is very slow right now. New building permits issued in January were reported to be 27, down 13% from January 2010. 466 building permits were issued in Eugene Springfield for all of last year.
Distressed properties are often cheaper than replacement cost, and there’s a lot of inventory of all types of houses to be sold; until both of those change, I don’t expect new house building to pick up much.
It’s still a great time to buy, though. Prices are down in Eugene Springfield and there are some great values.
There are fewer homes being built in Eugene Springfield in 2011
We don’t often think about the Railroad in Eugene, unless there’s a problem–it’s just one of those things we take for granted. We are on the main-line between Seattle and Los Angeles, and local manufacturers still ship and receive product by rail car, a very efficient transportation method. (A train can move a ton of freight over 400 miles on 1 gallon of fuel, some three times more efficient than trucks). And, shooting up to Portland or Seattle via Amtrack is popular.
Gone, at least for now, are the major switching operations in the Eugene railyard. After Union Pacific bought Southern Pacific, many of the Eugene yard’s functions were consolidated to Roseville and elsewhere. When I was growing up here, S.P.’s yard was a significant employer. In the necessary drive towards efficiency, those jobs seem to be gone. Interestingly, rail shipping rates in the U.S. are the cheapest in the world.
On a brighter note, the elimination of the Eugene switching yard has made the adjoining neighborhoods in Santa Clara, River Road and Bethel more desirable. Train noise was a perceived problems when switching was occurring, but that’s been largely made a non-issue.
Eugene is connected to the U.S. by rail
Eugene thinks of itself as a Green city, but it sounds like Reno may be beating us on this front. They recently installed nine different wind turbines so that the City and the public could evaluate their performance. Reno also has solar power helping to generate electricity. One thing that’s cool about their system is that you can go on-line and look at its power generation real-time. Looks like Eugene has some catching up to do.
Looking at real-time power generation in Reno
High quality commercial real estate is in demand, and prices are edging up. Both in Eugene and nation-wide. Why? The lack of alternative investments. Even 6% or 7% cash-flow coupled with appreciation is good compared to minuscule interest paid by banks or bonds.
For instance, a year ago the Mortgage Bankers Association sold it’s glass-walled office building to real-estate data firm CoStar Group Inc. for $41.3 million (they purchased the building in 2007 for $79 million–ouch). Now, a German real-estate fund is buying the building from CoStar for $101 million. Seventy million in a year–that’ll get your attention.
Woodfield Station in South Eugene (Willamette Plaza on 29th and Willamette to old-timers) recently sold for over 25 million dollars to Iowa PERS. The previous owner, an insurance company, purchased the property in 1971 and subsequently redeveloped it over the years. Cap rates weren’t disclosed, but I’d guess they were low.
High quality is back in fashion again. Contact me for your commercial real estate needs in Eugene.
Woodfield Station in Eugene, OR
Not much of a picture, but the best I could do under the circumstances (fog and on Christmas.) This is somewhat analogous to Eugene in 2009–not much of a year, but we did the best we could. We started the year with a terrible real estate market, with inventories close to 2 years. Fear and gloom were palpable with record unemployment and the greatest recession in many of our lifetimes.
While not spectacular, 2009 ended up better. Housing inventory shrank drastically, to around 6 months, and we even had a bit of a seller’s market in some areas. Distressed sales, namely foreclosures and short sales, were prevalent. Record low interest and the first time buyer’s tax credit helped pull us out of the slump.
My forecast for Eugene in 2010:
1) Housing prices will trend up slightly. Median price in Eugene will hover around 200K.
2) Interest will remain low for the first half of 2010, and be in the sixes by year’s end.
3) Unemployment will decrease to 8-9 %.
4) Distressed property sales will continue to play a major role in our housing market, with probably 1 in 10 sales in this category.
2009 Christmas was Foggy in Eugene Springfield.
The WSJ recently ran an article that had more specifics about the home buyers tax credit, which can be used on homes up to $800,000 and has a maximum income limit of $245,000. The credit does have to be used for the purchase of your principal residence, but you no longer have to be a first time home buyer!
I recently sold this move-up house in South Eugene for 342K, on short-sale, down from the original listing price of 539K. There are plenty of good deals to use the tax credit on.
Short sales are some of the best bargains in Eugene.
FHA capital reserves have fallen to ½ %, short of the 2 % minimum required by congress. In part this is due to FHA insured loans gaining in popularity, and in part it’s due to a higher default rate. FHA backed loans are one of the few ways of getting a home mortgage with less than 20% down payment.
So, what’ll happen? Most likely, at least in my opinion, will be an injection of capital from the Treasury. Alternatively, the minimum down payment may be raised from 3.5%, although this would chill the fragile housing recovery, and may be less politically tolerable.
I recently sold this house on short-sale, or pre-foreclosure, to buyers who used FHA for financing.
Down Payments as low as 3.5% are available through FHA.
Home prices are projected to rise between 3 and 5% in 2010. Inventories of houses have fallen recently, nationwide, because new home buyers are snapping up houses. About ½ of all the sales have been by folks who haven’t owned a home in 3 years. The government’s tax credit is undoubtedly fueling this first-time buyer’s frenzy.
Around Eugene, we actually have a bit of a seller’s market in some areas, as measured by inventories of less than 6 months, which is in sharp contrast to the prolonged buyer’s market we’ve experienced. Prices tend to rise in a seller’s markets.
Inventory below 6 months is a Seller's Market