Tis the season – for hearing from all the experts about
what we can expect the coming year to bring. Today it is CoreLogic’s Senior Vice President
and Chief Economist Frank Nothaft’s turn.
Nothaft, writing in the company’s December MarketPulse magazine, says economic growth will be key for the
housing market in 2017 and projects that growth will be between 2 and 2.5
Along with that growth he expects we will see five
Interest rates will be higher. He is looking for fixed rates to average just
over 4 percent for the year for both single- and multi-family loans. The Federal Reserve’s rate hike last week and
the three additional increases they have projected for next year will increase
the cost of loans tied to short term rates such as home equity lines or HELOCs.
rates will remain low for rentals and decline for owner occupied homes. The low level of construction will mean a
continued under-supply of available homes for sale.
tight for-sale inventories will support continued home price appreciation. CoreLogic’s forward looking Home Price Index
(HPI) is expected to rise about 5 percent although there will be areas with
double-digit gains and areas where prices will drop. The low vacancy rate will put upward pressure
on rents, but the rate of growth there will moderate. CoreLogic’s Repeat Rent Index saw 3.3 percent
growth in rents year-to-date through October but that should decline to 3.0
percent in 2017 as the large number of multi-family units started this year
mortgage rates will reduce the incentive to refinance so there will be a drop
in those originations. This will be
offset, at least partially, by higher purchase mortgage originations and by
second liens – HELOCs in the case of single-family lending and mezzanine debt
loans will continue to have relatively low credit risk. According to CoreLogic’s Housing Credit
Index, single family originations made during the first half of 2016 had lower
risk attributes than loans made 15 years ago.
Nothaft cautions however that the change-over to a higher share of
purchase loans could increase the incidence of fraud “even though the
attributes continue to look favorable.”