U.S. Housing Market Conditions, First Quarter 2003: National Data

Eugene-Springfield, Oregon
The Eugene-Springfield metropolitan area is coterminous with Lane County. The area’s two central cities are separated by the Willamette River and together are Oregon’s second largest housing market. The University of Oregon is located in Eugene and has a current enrollment of 20,444 students. With a payroll of more than 3,000 faculty and staff, the university is the second largest employer in the Eugene-Springfield area. Annual direct spending by the university, including all of its programs, has a $600 million impact on the local economy.

Employment growth in the Eugene-Springfield metropolitan area economy has been steady and broad based. Total nonfarm employment increased by 1,100 jobs, or 0.8 percent, during the 12-month period ending March 2003. Job opportunities have been most plentiful in healthcare services. The strong housing market has also increased employment in the financial sector, but job losses were reported in publishing and telecommunications. The high-technology sector is expected to benefit from plans by Hynix Semiconductor, Inc., maker of DRAM semiconductors, to spend $100 million upgrading its local plant.

The unemployment rate averaged 6.5 percent over the 12-month period ending March 2003 compared with 7.1 percent for the previous 12 months. This rate is likely to increase over the next several months because of impending layoffs at a lumber mill and recreational vehicle manufacturer, in addition to the expected closing of Sony’s compact disc manufacturing plant that will result in the loss of 800 jobs.

The population of the county increased from 322,959 to 328,150 between April 2000 and July 2002, according to Portland State University’s Center for Population Research. The average annual rate of growth during this period was 0.7 percent compared with 1.3 percent between 1990 and 2000. Population growth in the city of Eugene has outpaced the metropolitan area’s growth since the 2000 Census at an average annual rate of 1.2 percent.

Low interest rates and the relatively healthy local economy have supported an 11-percent increase in total homes sales (new and existing) in the metropolitan area during the 12-month period ending March 2002, according to the Residential Multiple Listing Service. The median price of a home during this period was $139,300, up 3.5 percent from the same period in 2002. As of the end of the first quarter a 4-month supply of homes was listed compared with a 6-month supply a year earlier. Some of the most active submarkets were Danebo in northwest Eugene, southwest Eugene, and Springfield. These three areas accounted for 40 percent of home sales and 43 percent of the new listings in the Eugene-Springfield area. Median sales prices in these submarkets were $111,000 in Springfield, $124,400 in Danebo, and $175,000 in Southwest Eugene.

Single-family building permit activity in the first 3 months of 2003 totaled 319 houses, just 2 more houses than for the same period in 2002. Single-family permit activity in 2002 totaled 1,401 issues, up 15 percent over 2001 and 22 percent higher than 2000. The Home Builders Association of Lane County reports that a lack of large, vacant land parcels has been confining new development to small subdivisions and infill sites. Land prices are in the $60,000–$65,000 range for readily developable 6,000- to 7,000-square-foot lots. New entry-level three-bedroom/one-bathroom homes typically sell in the $180,000–$190,000 range.

Rental market conditions are tight in the Eugene-Springfield market area. The appraisal firm of Duncan and Brown surveyed the rental market in spring 2003 and found the rental apartment vacancy rate was just under 4.5 percent, slightly lower than their spring 2002 survey. Record high levels of University of Oregon enrollment for the past 2 academic years combined with low apartment construction have kept the rental market tight. From 2000 through 2002 multifamily construction in developments with 5 or more units averaged approximately 100 units annually compared with 600 units annually from 1997 through 1999. Current plans for new multifamily rentals include only 2 projects totaling 73 units. With so little construction activity in the pipeline, the rental market is expected to remain tight for the remainder of 2003.

Apartment rents in the Eugene-Springfield metropolitan area increased on average from 1 to 2 percent over the past year according to the Duncan & Brown Spring 2003 Apartment Report. In Springfield only studios built prior to 1988 and newer, two-bedroom units exceeded this trend, increasing by between 4 and 5 percent over the year. In Eugene rents for three-bedroom units built during or after 1988 increased by 3.9 percent. Average rents for two-bedroom apartments in the Eugene and Springfield areas for pre-1988 units were $600 and $527, respectively. For apartments built in 1988 or later, average two-bedroom rents were $792 in Eugene and $676 in Springfield.

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