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39 » VISIT US ONLINE @ DSNEWS.COM POLICY UNCERTAINTIES INFLUENCING GROWTH EXPECTATIONS In the February 2017 Economic and Housing Outlook from Fannie Mae, there are moderate growth expectations for the market in 2017, as experts continue to debate on developing policies and regulations from the Trump administration. According to the report, the full-year economic growth forecast remains unchanged from January's projection of 2.0 percent, which is slightly above the 1.9-percent growth registered for all of 2016. Doug Duncan, Chief Economist at Fannie Mae, noted that timing will play an integral role in the positioning of policies and regulations from the Trump administration. "Last month, we revealed our theme for the year: Will Policy Changes Extend the Expansion? at question still hovers as the month-old administration begins enacting its agenda," he said in February. "Timing effects make it unlikely that we'll see materially positive impacts stemming from any fiscal stimulus or deregulation this year, while immigration and trade policy pose downside risk." Although job growth was one of the highlights in January, wage growth hindered people from re-entering the workforce. e unemployment percentage rate decreased to 4.7 in January from 5.0 in January 2016. ere was also an uptick in home sales, with new single-family home sales seeing an increase of 552 from last year and total existing home sales increasing from 5,300 to 5,437. "Mortgage rates have moderated slightly but remain 60 basis points higher than before the election. Still, leading indicators of home sales are encouraging with pending home sales rebounding and purchase mortgage applications holding up," the report stated. Duncan remarked that although a multitude of factors are preventing the economy from moving forward, expansion is on the horizon, and it is coming sooner than expected. "We expect the housing expansion to continue, albeit at a more moderate pace than last year given continued pressure on affordability," said Duncan. "Depressed inventory, particularly in the more affordable segments, will likely constrain sales and push home price gains that outpace income growth. A faster pace of monetary tightening, unless accompanied by a stronger increase in household income, also poses downside risk to housing." HOME VALUES SEVERELY IMPACTED BY ENVIRONMENTAL HAZARDS Recent studies have shown that homes located in areas with significant environmental hazards are more prone to foreclosure and decreased property values. ATTOM Data Solutions released its third annual Environmental Hazards Housing Risk Index on February 16, which stated that one- fourth of 68.1 million single-family homes and condos located in 8,642 ZIP codes are located in high- or very-high-risk areas for at least one of four environmental hazards. ese hazards include Superfund areas, brownfields, polluters, or poor air quality. Homes located in these ZIP codes have a combined estimated market value of $4.9 trillion, according to the index. "Home values are higher, and long-term home price appreciation is stronger in ZIP codes without a high risk for any of the four environmental hazards analyzed," said Daren Blomquist, SVP at ATTOM Data Solutions. "Corresponding to that is a higher share of homes still seriously underwater in the ZIP codes with a high risk of at least one environmental hazard, indicating those areas have not regained as much of the home values lost during the downturn." A risk index for each of the four environmental hazards was calculated for each of the 8,642 ZIP codes, and the indices were each divided into five categories of risk: Very Low, Low, Moderate, High, and Very High. ZIP codes with the 10 highest Total Environmental Hazard Index values are located in Denver; San Bernardino, California; Curtis Bay, Maryland (in the Baltimore metro area); Santa Fe Springs, California (in the Los Angeles metro area); Fresno, California; Niagara Falls, New York; Saint Louis, Missouri; Mira Loma, California (in the Riverside- San Bernardino metro area); Hamburg, Pennsylvania (in the Reading metro area); and Tampa, Florida. Over the last 10 years, median home prices have risen the most in "Very Low" risk ZIP codes, with the rise in prices lower in each subsequent category of higher risk. Median home prices in "Very High" risk ZIP codes are down 1.5 percent from 10 years ago. Nevertheless, Blomquist said that investors still seem to buy properties in higher-risk areas. "Environmental hazards likely impact owner- occupants more directly than investors, making the latter more willing to purchase in higher- risk areas," he said.

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