Where’s the Eugene/Springfield Area Housing Market Headed?
All indications are that the current strength will continue because of numerous factors.
First, while we have always known that as baby boomers age and retire, many would move here from larger cities in large part because of the quality of life and recreational opportunities. But while the local baby boomers are downsizing from large rural 1970s homes to smaller single level homes or condos in town, many of these out of area boomers are finding these older rural homes on acreage desirable. Hence, they are creating a demand for what could otherwise be difficult to sell homes as the younger generations prefer city living close to work and play.
The Millennials are an interesting breed. They are more likely to rent than own and prefer to be in the center of the action. Additionally, they tend to be more hesitant to invest. Perhaps the recession has made them cautious so they prefer cash in the bank rather than home ownership or equities. But this is apparently beginning to change and they are seeing the virtues of home ownership. As this trend accelerates it will be quite positive for housing.
In short, strong demand for housing exists.
Currently, however, our problem is inventory. Home building is still nowhere near where it was at the market’s peak and the tightening in lending standards has made it more difficult for builders as well as potential buyers. And although interest rates are rising they are still extremely reasonable by any standard.
So, the strong demand coupled with limited supply plays out as expected-rising prices. As long as the imbalance occurs home prices should remain firm or rising. Just recently the average sales price reached the average price at the peak of the pre-recessionary market. But inflation has been about 13% cumulatively in that period so prices in inflation adjusted dollars are still well below that peak.
While the December ice storm and subsequent series of storms slowed activity, it has picked up tremendously in the past week with all indications the strength will continue.