As renters in Eugene have renewed and sought out new rental agreements for the next year, one question may have come to mind – even before the ink was dry on the contract – wasn’t this town a cheap buy?
The answer, is still yes, but economist David Helton said that is changing rapidly. Helton, who works for ECONorthwest, a regional economic consulting firm with offices in Eugene, said the market for rental housing is always in flux and shifts constantly between a surplus and a shortage of available housing.
“Just a few years ago they were talking about a glut; now there’s not enough housing to go around,” he said.
Rental rates change to meet the demand, but the University exerts an influence on the market, often keeping demand high – even for less desirable low-end rental units.
“The standard economic model is called filtering,” Helton said. “New buildings would attract people who have the money to go up to nicer apartments, and older apartments would become available and cheaper for low-income renters. Students will go into any funky apartment and that means high rents for relatively low-end markets.”
Rick Duncan, co-owner of the Eugene-based Duncan and Brown Real Estate Analysts, said the tight rental market around campus is also because the student population rarely drops significantly, but presently vacancy rates are close to non-existent.
“The market has tightened a lot. We’re looking at a 3 percent vacancy rate, and that’s typically a transitional rate, typical of a full building where some apartments are in-between leases,” he said. “Literally, people are moving in the same day people are moving out.”
Duncan said that low vacancy can be attributed to a steady increase in local population, coupled with urban growth restrictions that are intended to produce high-density redevelopment. The supply of units has not increased at the same pace and as a result residents have less options and are forced to pay more for more of the same apartments.
“I think this is only the beginning,” he said. “It’s only going to get worse.”