Over 50% of 105 experts cite monetary policy as likely recession trigger
Fed signaling at least three rate hikes
Home value forecast: 5.5% rise to $220,800 median in 2018
Previous forecast was 3.7% appreciation
Fannie Mae expects 3.9% home price rise over 12 months
Geopolitical crisis was top recession risk in previous survey
Opinion
The survey results show deeply troubling signs about monetary policy risks. The shift in recession concerns from geopolitical to monetary factors suggests growing fear that Fed tightening could trigger a downturn. Most concerning is how housing prices are expected to accelerate despite rate hikes, indicating potential for a painful correction when monetary tightening finally impacts the market. The divergence between Zillow and Fannie Mae forecasts suggests significant uncertainty about market direction.
Core Sell Point
The combination of aggressive Fed tightening plans and accelerating home prices suggests increased risk of a policy-induced housing market correction that could trigger a broader recession.
More than half of the 105 real estate experts and economists in the quarterly survey by housing data provider Zillow and research firm Pulsenomics LLC point to “monetary policy as the likeliest cause.”
Fed officials have signaled at least three rate increases this year. A year ago. a geopolitical crisis was seen as the most likely cause of the next recession by survey panelists.
In the meantime, the housing market is expected to see stronger price appreciation than forecast a year ago with home values rising 5.5 percent to a median of $220,800 in 2018, according to Zillow and Pulsenomics. Last year, forecasts called for a 3.7 percent gain.
A separate Fannie Mae survey forecasts home prices will rise 3.9 percent over the next 12 months.
