Lane County Oregon Real Estate Blog

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

May 14, 2019

Eugene Real Estate Market - May 2019

Eugene Real Estate Market

May 2019 Update (as of May 14, 2019)

The market continues to soften in May, year-over-year. Even with rates down to the lowest levels we have seen in years, demand is clearly slowing. The National market is slowing, and while Eugene is outpacing the region, Eugene home sales are beginning to slide. Not PRICES, but count of home sales. Prices are expected to climb by 7.3% this year even as home sales remain flat or decline this year.

Rent vs. Buy in this Market

A $300,000 home sold in Jan 2019 can be expected to be valued at $321,900 by December. This represents a net asset growth of nearly $22,000 with a FIXED rent (mortgage) payment. 

In contrast, Oregon just passed a rent control bill that caps rent growth at 7%. This led more than a few investors to flee the State, in some cases mid-transaction. Landlords are expected to increase rents to the maximum amount each year, to the tolerable market level, in order to avoid future risk to their capital investments. For 2019 this means that rents can be increased up to 10.3%. 

In contrast, mortgage rate are FIXED and remain at a near all-time low, hovering at 4%. 

The takeaway is this: Although all logic points to buying over renting, especially given the fixed nature of mortgage payments, and home asset growth, renters in this market continue to choose to rent. 

And Now...Your Market Snapshot

Below are some highlights from various areas of Eugene, for homes up to $400k, and in some cases above.

Contact us for statistics about homes in other price ranges or areas. We can help you time your listing appropriately, or at least give you some insight into what's happening RIGHT NOW in the market. Things can change quickly in certain areas.  

Danebo

We are seeing a FAR more balanced market than last year, through the last 30 days. In April the count of For Sale under $400k climbed 172% while demand remains about the same as last year. That is a huge jump and will favor buyers vs. last year. Sellers that think they can wait, and get maximum value should reconsider. The market will continue to slide towards Buyers, and this will force Buyers to be hesitant, pull offers mid-contract, etc. We are seeing a pick-up in pending and sold for May, pointing to a delayed buying season compared with last year. 

East Eugene

East Eugene looked stronger in April but May brought a glut of new inventory as closings the first two weeks of May declined 71% year-over-year. 

Ferry Street Bridge

Now may be an AMAZING time to list in the Ferry Street Bridge area. In April, Pendings jumped 107% year over year!

As you can see from the chart below, these numbers strongly favor sellers, even more-so than this time last year. Note also how the first two weeks of May continue that trend.

On possible reason: Single-level homes for Baby Boomers are in demand right now. If you are considering upsizing and live in the Ferry Street Bridge area, now is a great time to list with us

 

North Gilham

For the North Gilham area, we chose to focus on ALL prices because many homes in North Gilham sell for well over $400k. April was weak compared with April of last year, but May is looking better so far, with a 300% increase in Pendings the first two weeks of May. 

River Road

River Road is looking very similar to Danebo. It's becoming a balanced market, still favoring Sellers but shifting slowly towards Buyers as home sellers who may have been on the fence last year, decide to list this year. 

Santa Clara

Santa Clara showed a lot of weakness in April, but that has shifted during May although like in Danebo and River Road, the demand is not keeping up with supply as we see the market cool. 

Southwest Eugene

We're seeing a VERY slow start to the Southwest Eugene market for homes under $400k. Some of this may be due to the increasing price and demand in certain areas of Southwest such as the Friendly area. Note the 2nd chart showing demand for homes over $400k in Southwest Eugene. April was bonkers compared with last year, with inventory down and pendings WAY up. If you have a $400k+ home to sell in Southwest Eugene, now is a great time to do it. 

Southwest for homes under $400k:

The same stats for homes over $400k:

Posted in Market Updates
Feb. 19, 2019

Feb '19 Market Update - First-time Homebuyers

Check out this video I made regarding the first-time buyer's market. Enjoy!

 

 

 

Posted in Market Updates
Feb. 11, 2019

Eugene and Springfield Opportunity Zones

Opportunity Zones and Opportunity Funds in the Eugene/Springfield Area

There's a lot of buzz around "Opportunity Zones" (OZ) and "Qualified Opportunity Funds" (QOF), but most investors and homeowners in the Eugene and Springfield area have no idea how much of an impact an OZ can have on the future value of an asset purchased now and held for 10 years or more. 

First time I've heard of OZs and QOFs, what are they? 

Following the bipartisan (crazy that bi-partisan leadership existed, I know) Tax Cuts and Jobs Act of 2017, State Governors were asked to provide their list of Opportunity Zones that should be designated for improvement. These zones needed to fit certain criteria that I won't get into here, with some notable exceptions like Portland's Pearl District Opportunity Zone.

This Act was designed to benefit long-term (buy and hold) investors and impoverished communities, while creating a mechanism by which all investors could eventually pool funds in order to commit to the long-term potential of a community identified as an OZ.

How does it work?

It sounds very complicated, but it's actually a simple process. It applies to ALL property types, not just commercial.

Here goes: 

  1. Sell something that will trigger capital gains tax in the current year (stocks, bonds, you name it).
  2. Find a QOF or create an LLC partnership or Corporation, make it an Opportunity Fund. 
  3. Take 90% of the deferred capital gains $ that you've moved to your LLC or Corporation bank account, and invest it directly into properties located within a OZ, through said OF. 
  4. Drop below the 90% Opportunity Zone property investment threshold and it's no longer recognized as a QOF. That would be bad so maintain at least 90% of investments in an OZ. 
  5. File IRS Form 8896
  6. Hurry up and WAIT 10 years.

When can I sell properties held in the name of my QOF?

Wait 5 years, 7 years, or 10 years. It's up to you. The goal here is not to sell quickly, this is a long-term investment. 

The City of Eugene's website has an Opportunity Zone page that provides some excellent visual examples of how the program works.

Essentially it works like this:

  • Wait 5 years, received a 10% reduction in Capital Gains on the INITIAL BASIS for capital gains deferred.
  • Wait 7 years, receive an additional 5% reduction on the INITIAL BASIS for capital gains deferred for a 15% increase in your initial basis.
  • Wait 10 years, receive the full 15% increase in INITIAL BASIS AND PAY ZERO IN CAPITAL GAINS for the difference between your new 15% stepped-up basis and the sale price at the time that you finally sell it. Patient? Good, you're going to win at this game.

Does it get more complicated?

Sure. Stock in Opportunity Funds can be sold, shares can be issued, all sorts of complicated financial maneuvers can be hatched up..so if you intend on investing in a QOF be sure to do your homework and hire a pro to assist you. 

Who stands to benefit? 

  • Luxury (dream home) buyers looking to build a dream home, but who need to purchase bare land first. If that land sits in in an Opportunity Zone, the improvement of adding a home to bare land counts as "improvements" that will later qualify the Opportunity Fund for ZERO capital gains after 10 years. It's not uncommon to purchase acreage within Lane County for $300-500k, add a $500-800k home to it and net $1.5-2M with capital gains upon sale (unless setup through a QOF)
  • Real estate rental investors pay capital gains, starting with the first dollar of appreciation above basis. This is where the Opportunity Zones shine because there are so many opportunities to improve a property, while attracting higher rents to subsidize the investment. This requires some deep analytics skills and having the right team in place. Note that this INCLUDES properties that are already owned. The properties just need to meet the "standard of improvement" test and be held as an asset fully owned by an Opportunity Fund.  
  • General investors looking to invest in real estate, but not directly. Buying shares in a Qualified Opportunity Fund should eventually become easier, as funds expand in size and the barrier to creating a fund reduces over time. The IRS rules are still a bit fuzzy with regards to moving money in and out of a fund, but that should become clearer over time. 
  • Multi-family and single-family home builders. This group may already "get it" and doesn't need more help or information to leverage their knowledge and experience to reduce long-term capital gains. This may lead to mixed funds where the builder holds a stake through the QOF, even after the purchase. 
  • Tear-down buyers wanting to remove an old manufactured home and replace it with a single family owner-occupied or rental unit(s). There is no better time to buy up reduced price land properties via a QOF, investing to improve it, and reaping the rewards in 7+ years. 

Is there a catch? 

Yes, in fact quite a few complicated rules and hurdles. First of all, most people have no idea how to create an Opportunity Fund and manage it well. There are other important requirements as well:  

  • The investor must actively invest further capital to "substantially improve" the property. 
  • All projects need to be "shovel-ready" within 18 months. If permits or building resources cannot be brought together in time, this puts the QOF opportunity at risk. 

For more information about Eugene's OZs, contact Allie Camp for more details.

To search for all properties (of all types) within Opportunity Zones located in Lane County, visit the predefined Opportunity Zone property search results pages listed below: 

 

Jan. 4, 2019

November 2018 Market Update and 2019 Predictions

Posted in Market Updates
Nov. 15, 2018

October 2018 Market Update

Markets adjust from the top down, and Lane County continued to adjust to an always dynamic real estate market. 

Some highlights:

The Lane County luxury home market of $750k and up continued to experience pricing pressure, and while sales have increased dramatically since early 2017, luxury homes in Lane County remain in a buyer's market.

Luxury home sales trends eugene and springfield

 

The market was very different for home priced under $750,000. In October, more buyers opted for priced-reduced homes between $500k-$750k that were located in the Southwest Hills, East Eugene, and North Gilham.

Below is a chart showing October 2018 year-over-year sales of these homes in Southwest Eugene. 48% growth!

Southwest Hills homes sales growth October 2018

Southwest Eugene real estate months of inventory continued to remain stable: 

The story is very different in Seattle and Portland. This year those markets experienced a very rapid increase in inventory relative to home sales. Here's a look at the Portland market as a whole - it looks very similar to the $750k and up market in Lane County:

Note that listed homes continue to grow at a faster pace than pended or sold homes. In October, the Portland Metro Area experienced a monthly sales decline of 11% and month over October 2017 decline of 3%, followed by a year-over-year inventory increase of 12%. 

Portland metro home sales 

Lane County on the other hand has maintained a stable (and constrained) level of listed inventory, pended, and sold homes. The trends observed in Seattle and Portland could spread to Lane County, but some unique factors are in play with Lane County housing - including a very restricted and slow-moving urban growth boundary and a "sustainable growth" public policy mindset. These factors should continue to apply inventory pressure to the Lane County area. 

Note that all statistics include Townhouses and Single Family Detached homes. Manufactured homes were not included due to their unusual impact to statistical averages. Credits to Windermere Principal Broker Elliott Wood for his Windermere monthly Lane County statistics presentation. 

Posted in Market Updates
Oct. 29, 2018

Flood Insurance in Lane County

On October 4th 2018, Tracy Baier with American Family Insurance dropped by for the weekly Windermere Broker training class.

Here are some takeaways from this training session: 

  • It is a common misconception that FEMA is a substitute for Flood Insurance.
    • FEMA may at times provide free grant money for qualified low-income homeowners that did not have Flood Insurance.
    • FEMA may also provide small, low interest loans to homeowners that did not carry Flood Insurance, in order to repair their homes after a flood.
  • Homeowner's Insurance never covers flood damage. Flood insurance requires a separate policy. 
  • According to FEMA, "If you live in an area with low or moderate flood risk, you are 5 times more likely to experience flood than a fire in your home over the next 30 years."
  • If you have an active policy BEFORE changes to the Flood Plain Map, you may have the opportunity be grandfathered in at the same rate even after the Flood Plain maps change. Your best bet is to compare the different options prior to any flood damage.
  • Oregon Flood Plain map changes are forecasted to update in 2020. These changes may impact the value of more than a few properties in Lane County. 
  • Elevation Certificates are in the cost range of $400-$700 depending on location and complexity of the property and structures.  Elevation Certificates are required for new Flood Insurance applications. Most Elevation Certificates require an engineer. Neil Hibbs Land Surveying is a good option. 

There's a lot more to know if you are in the Flood Plan or near the current Flood Plain in Lane County. Contact us if you have any questions! 

 

Posted in Home Insurance
Sept. 19, 2018

August 2018 Market Update

August numbers are in, and we're seeing a softening in the Lane County real estate market. According to the very experienced Principal Brokers (thank you Elliot Wood) at Windermere, a market shift typically starts in bedroom communities such as Veneta, Creswell, and Cottage Grove.

Let's take Creswell, for example: 

creswell homes for sale stats for August 2018

As you can see, we are moving into a seasonable slow period but the year-over-year numbers suggestion that we may see a softening in the months ahead. 

Note that this is not true for ALL bedroom communities of Eugene/Springfield. 

Here is the same chart for Junction City. The year-over-year picture is different. A more seller-friendly market as you can see from the positive year-over-year growth in sold and pended:

Junction City market stats August 2018

If you are interested in learning more about these markets, or the Eugene/Springfield market in general, contact us today or bookmark this blog to stay on top of the latest real estate trends. 

Posted in Market Updates