With the huge flood of buyers in our market, things are really working together to keep the market stable.
Many people are concerned that the market is repeating patterns that we saw just before the last market crash. However, I don’t think that we’re headed to that same fate. There were a few key things that were happening at that time that made it different from what we’re seeing today:
1. People were pulling the equity out of their homes for things that lost value. This includes boats, cars, and certain updates on the home.
2. There were poor lending practices in play. People with low or no credit were getting ridiculous home loans for homes they couldn’t afford in the first place.
3. There was a crazy amount of inventory in the market. Right now, we’re seeing about four or five months of inventory in the Rogue Valley. Back then, there was close to 10 months of inventory. A healthy market tends to hover right around five or six months of inventory, meaning we’re on the low side right now.
4. There was a high percentage of foreclosures. Right now, we’re not seeing an issue with foreclosures.
5. There was a high appreciation rate. Back then, people were buying homes for the sake of appreciation. They didn’t even need the homes; they already had a primary home, but were just buying another to turn around and resell it a few months down the line. We’re not seeing that sort of appreciation at the moment. Right now, the rate of appreciation is about 4.8%, which is still higher than the historical average of 3.6%. Back around the time of the last market crash, the rate was 20% at times.
Our current market also has something that the crash-time market didn’t have: a huge influx of millennial buyers. Millennials are the biggest portion of buyers in the market. With the huge flood of buyers in our market, things are really working together to keep the market stable, keep it honest, and keep the people working in the industry. The lenders that were throwing their money out the window before aren’t making that same mistake again.
Overall, the market is in the process of stabilizing. We’re not seeing the rate of appreciation that we used to, which is a good thing. The projected rate of appreciation for 2019 is about 4.8%, meaning that on a $300,000 house, it would appreciation about $15,000 in a year.
If you have any questions about the market or where it’s headed, please reach out to us. We’d love to help you.