A new Capital Economics report shoots down worries over Fed rate hikes putting a dent in the housing market.
First American economist Mark Fleming said as much in August, that higher rates will just moderate the market, not bring on a bust, Housing Wire reports.
Plus, rate hikes are the result of a strong labor market—a boon to housing in itself. Even with higher Fed rates, mortgages are only projected to reach a relatively low 5.25%.
In fact, the report warns of a housing boom as—after years of a slow economy—Millennials leave their parents’ nests to cause price increases. Overvalued houses could create a bigger bust when the bubble bursts.
But Capital Economics says most likely the housing market will stay "in Goldilocks territory—not too hot, not too cold—for the next few years." [HW]
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