Let’s talk about the residential inventory crunch.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: Hey, let’s talk a little bit about this inventory situation. We’ve got less than a month of inventory in the city of Eugene. So just measuring that-
Bob Nelson: Before you say that, you’re talking residential, right? Houses?
Marcia Edwards: Right. Residential houses is what I’m saying, when I say inventory standing in the market. If it continues to sell at the rate it’s been selling, we would be depleting our inventory entirely if nothing new came in the market in less than one month. That means there’s very little on the market. A balanced market would be four to six months of inventory. We have less than one.
Bob Nelson: Well, and it’s interesting, with what’s happening with the virus and the fact that a tenant can claim that they’ve been adversely impacted and rent is abated, which doesn’t mean it’s eliminated. It’s just forgone. Sooner or later, they got to catch up, and landlords with mortgages can’t afford that.
So they do have options. They’d be able to sell the property to someone who’s going to be an owner occupant. That tenant now goes away. With notice and 90 days and so forth. But nonetheless-
Marcia Edwards: Where do they go, Bob?
Bob Nelson: I don’t know.
Marcia Edwards: Exactly.
Bob Nelson: And that’s going to be the real tacky part because while we’re attempting to protect individuals, we’re also creating a monster problem much like going up a hill with a snowplow. The further up the hill, the greater the snowball is in front, sooner or later, it can’t push it. And it just grinds to a stop.
That’s going to be when we have an extreme housing shortage. The virus has been vaccinated away to a degree, which is what, two years out I would guess so forth. But this is going to be real tacky than what we’re going through at this particular point.
Marcia Edwards: We say this not to depress you, but to help you understand the problem. You got to look down the road a little further than we think that the state legislature is looking.
Bob Nelson: Yes.
Marcia Edwards: And that is to understand that if we don’t look at long-term benefits and costs, then we’re going to have a bigger problem tomorrow than we do today. A challenge I see in the residential sales market is that the average list price what’s for sale is 536,000. And what the average median, I’m sorry, purchase price is, is 395. I call that the affordability gap.
Bob Nelson: That’s a huge affordability gap. If I were a first-time home buyer, that would be a real sticker shock. If I’ve been a tenant up to here or I’ve moved into the area, and that depends on, I guess, where I came from as to what … If it’s more expensive or less expensive, it is really tacky.
Marcia Edwards: That’s another conversation with the urban growth boundaries, to find some affordable housing. We’ll talk that next program.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.