Peering into the Future of Housing: Predictions for 2017
WalletHub recently announced its 10 financial predictions for 2017, forecasting several economic to-bes in the coming year. Many have implications for housing, including:
Two Rate Hikes
WalletHub is seeing double in 2017, pegging the Federal Reserve to raise the key rate twice—a quarter point each—to bring the target rate to 1.00-1.25 percent. Interest rates, including for mortgages, will follow suit. (Case in point: credit card interest rates went up 24 basis points in the beginning of 2016, after the Fed raised the key rate 25 basis points in December 2015.)
…but Higher Home Sales
WalletHub forecasts existing-home sales to hit 6 million next year, fueled by—wait for it—rising rates.
“If interest rates rise slowly, we may see a nice bump in home sales and mortgage availability as buyers see low interest rates slowly fading and banks have higher rates to buffer against risk,” Dr. Robert Eyler, director of the Center for Regional Economic Analysis at Sonoma State University, told WalletHub.
WalletHub’s estimate is more optimistic than the 5.52 million offered by the National Association of REALTORS® (NAR).
More Time for the CFPB
WalletHub senses the Consumer Financial Protection Bureau (CFPB), which was ruled unconstitutional by a federal appeals court this fall, won’t get the boot, even with the “You’re fired” administration taking office.
“[The CFPB’s] good work will be undercut by some politicians, even further than it already has been,” Jeffrey Frankel, professor at the Belfer Center for Science and International Affairs at Harvard University, told WalletHub. “I hope and guess that it will not be abolished outright.”
…and for Credit Scores to Improve
WalletHub has a sunny outlook for credit scores, anticipating the average score to rise to 675 from 668 next year. The reason? Millions of homeowners will see foreclosures and short sales—black marks from the crash—drop off their credit reports, helping their case for a new mortgage.
To learn what else WalletHub sees in its crystal ball, click here.
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Reprinted with permission from RISMedia 2016.