For months, national headlines have screamed about the mortgage crisis and the downturn in housing markets. Eugene has for the most part been spared the brunt of this, but still, the national trend has local effects.
University economics professor Tim Duy said that when people can no longer get cheap mortgages, they would be pushed into or remain in the rental market.
Tim Breen, principal broker for Jennings & Co. Property Management, agrees.
The rental market “at least from a landlord’s perspective, is a good one,” Breen said.
Most of Jennings’ properties in the campus area have waiting lists for fall rental, Breen said, and as a result of rising demand the company has been able to raise rents by four to eight percent.
“The last couple of years (prices) have been a little flat,” Breen said. This year there is “more activity.”
Also, as lenders offer fewer low-cost mortgages, people who would have bought a home rent instead. The houses they would have bought – or foreclosed houses – go down in price and become good investments to rental companies, Breen said so these houses become rental units instead of single family homes.
Larry von Klein, a partner in the rental company von Klein Property Management LLC, said “90 percent of our housing is campus or campus related.”
As a result, he said, the biggest effect the economy usually has on his business is how much money students have in their pockets. Rising costs of tuition affect that, as does access students have to money through their parents or jobs, but those usually just affect the type of home students rent.
“In the tough times, you probably rent more two-bedrooms,” von Klein said, whereas in the better times the company rents out more one-bedroom apartments.
ShoreBank Pacific CEO David C.E. Williams said Oregon and Washington are generally about a year behind the rest of the country in economic trends. The housing market has been hit on the coast and on the periphery of the Willamette Valley where people have been buying fewer second homes.
William Conerly, a business consultant based in Lake Oswego,, said Eugene hasn’t been hit “nearly as bad as Bend or Medford” because those cities built too many houses.
The nation has “1.5 million more housing units than we need,” Conerly said. That’s “too much supply by a long measure.”
Bob Nelson, owner of Pacwest Real Estate Investments, LLC and a teacher of investments at Lane Community College, said the crisis arose from people who “should have never qualified (for a mortgage) to begin with” getting financed to buy a home from lenders who “had too much money.”
He said, however, that “if you have protected your credit score,” then “you can still come in with very little down payment” and buy a house.
As far as sale of commercial properties go, last year was Bob Nelson’s “most productive year” in almost 40 years of business; “I knocked the ball out of the park,” Nelson said.
But the downturn for buying buildings like apartment complexes and medical buildings, he said, has “only now been felt in the past month.”
Nelson said he worked through four different recessions in the local market, the worst being from 1980 to 1986.
“That was huge. That was gigantic. That was a nosebleed,” Nelson said.
He said he couldn’t tell how bad the current dry-up was going to be, but “it has the makings of being pretty bad.”
Eugene city planner Lydia McKinney said large-scale development is still strong.
With developers betting that the market will bottom out and bounce back in the next couple of years, proposals for development have remained steady.
“We haven’t seen a dip yet,” McKinney said.
“It’s been surprising,” McKinney said. “Our planning actually is still relatively high.”
The applications may take “a year or two” to become finished construction projects, McKinney said, so “people are planning ahead.”
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