It's that time of year again...I am ready to lay out our thoughts and forecast for the year ahead. They say "hindsight is 20/20", and looking back, I an quite proud of how my past predictions have held up, especially in terms of interest rates. So crystal ball, Ouija board, and Tarot cards aside, I will do my best to see into the future, and how 2007 might look on some specifics that could impact those looking to to purchase properties or refiannce properties.
The big picture
Let me tart out by looking at the US economy at large. Things began to slow down in 2006, which was not only needed after its former torrid pace, but also exactly what the Fed wanted to see happen. A "soft landing" for an overheated economy is something you often hear the Fed wants, but rarely can achieve...yet so far, the cooling has indeed been gradual and orderly. We expect more of the same in 2007 - a gradual cooling, without the economy crashing.
Job growth will likely stabilize, and unemployment rates may click just very slightly higher as the economy cools. Overall, the labor market in the US remains quite strong. And this is good news for the housing market, since healthy job markets often help housing markets remain stable. The more susceptible areas for increasing unemployment and flat or declining job growth are where manufacturing plays a key role in the local job scene, since the manufacturing sector never fully recovered as strongly as other parts of the US economy.
Drum roll please...
And of perhaps the most interest - no pun intended - where do I see mortgage interest rates in 2007? Last years forecast was incredibly accurate, which called for rates to be above 6% and below 7%, with an average between 6.25% and 6.625%...which is exactly how the year played out. For 2007, I actually see interest rates slightly lower, within a range of 5.75% and 6.75%, with a sweet spot between 6.00% and 6.375%.
Martini
Kevin Martini - 919-274-3700 kmartini@homebanc.com
Comments(0)