As the market slows down a bit, a lot of people in the industry are saying we’re headed for another crash circa 2007-08, but is that true?

Thankfully, no. During the last recession, Tucson home valuations dropped roughly 40% to 45%. As the economy recovered, we came out of the recession at a pretty steep incline the first couple of years. Now, however, conditions are simply leveling off. Nationwide, appreciation is right around 6%, and in our area, it’s at 5%. As we continue recovering from the recession, a  market slowdown is inevitable.

During the last quarter of 2018, there were more price reductions than we saw in the last several years combined. This means our market is changing, but how? According to a recent poll, 94% of the top 100 real estate analysts in the country predicted that the market would continue to appreciate, while 4% predicted that it would go flat, and 2% predicted a slight decrease.

Despite the slowdown, there are some notable bright spots on the horizon in 2019.

First, there’s been a softening on the upward pressure of interest rates, which has softened the cost of mortgages. The National Association of Realtors predicts that 2019 will be a better sales year than 2017, which was the best sales year on record. The only reason 2018 wasn’t as hot as 2017 was the rise in interest rates and the lack of available inventory in most markets.

“As we continue recovering from the recession, a market slowdown is inevitable.”

Also, the pool of millennial homebuyers has outgrown the number of baby boomers, and their top priorities are safer retirement, buying a house, and getting married. That’s a tremendously large segment of the population looking to buy a home.

Cash-out refinances are another reason a market crash isn’t imminent. Between 2005 and 2007, cash-out refinances accounted for $824 billion being taken out of home values. Basically, leading up to the crash, everybody learned how to use their houses as piggy banks and used that revenue to buy toys for themselves.

Year to date, cash-out refinances only account for about 21% of that $824 billion accumulated between 2005 and 2007. Not only are there not as many cash-out refinances, but the ones that do happen are being used much more conservatively. Instead of buying toys for themselves, people are putting their kids through college or funding their startup business.

Here’s another statistic for you: 48% of all homeowners have 50% or more equity built up in their home right now. Additionally, 23% of all houses don’t even have a mortgage on them. Not only is there a lot of equity in our current market, but there’s also a lot of security.

If you’re a buyer, this means you’ll have more homes to choose from in 2019 and you’ll be able to take your time making a decision. If you’re a seller, I suggest you list sooner rather than later, because buyers will only have more leverage the longer you wait.