Yahoo Finance 5 ways your personal finances will change in 2017
By Vera Gibbons, Gasbuddy.com
Welcome, 2017! Here are some of the things you — and your wallet — can expect in the New Year:
Better Jobs
While 2016 was a remarkable year for the labor market — with low unemployment, rising pay, and a near record number of unfulfilled jobs — the good news is that the momentum will continue in 2017, says Dr. Andrew Chamberlain, chief economist at Glassdoor.com.
Unemployed? “Strike while the iron’s hot — this expansion won’t last forever,” says Chamberlain. “Right now, there’s a near-record number of job openings (some 5.5 million) across all pay scales, and they span the spectrum—from health care and professional services, tech roles to leisure and hospitality.”
If unhappy in your current job, get the feelers out, says Chamberlain. “A lot of people are voluntarily quitting—that rate is rising, and that only happens where there are better jobs available.”
The wage premium for switching jobs is 10%-20%, says Chamberlain, but if you’re willing to pick up and move, you can likely do better than that. “Being geographically mobile is the single best (and fastest) way get a big pay raise.”
Rising Mortgage Rates
The seven-year run of historically low mortgage rates may have encouraged home buying, and helped boost prices, but the party is coming to an end.
Mortgage rates have been rising post-election due, in large part, to the market anticipating Trump policies and continued Fed tightening (Expect three more interest rate hikes in 2017.).
In fact, the 30-year fixed rate is now over 4% — the highest level in more than 18 months.
Many economists expect rates may reach 4.75% to 5% by the end of 2017. And while stronger economic growth (jobs and income) will add to demand, higher rates could counter that, ultimately pricing some buyers out of the market, particularly in areas where affordability is already an issue (Think: coastal markets).
FYI: Each 1% change in interest rates affects affordability by roughly 10%.
More Affordable Rents
Since incomes are growing faster than rent prices for the first time in several years, renters will have an easier time in 2017, says Zillow’s chief economist, Dr. Svenja Gudell.
“New renters may have more leverage and wiggle room in terms of price/concessions—something we’re already seeing in some markets—and those already renting won’t see the kinds of rent increases, if any, that they’ve seen over the past several years.”
That’s not to say rentals are going for giveaway prices, Gudell cautions. “Affordability is still going to be a ‘thing’—it’s not going away—but it’s just not going to get worse.”
Zillow predicts rents in 2017 will rise at only about 1.4%, nationally, due in part to increased supply (more multifamily rental units are being built) and less demand (many renters, of all ages, are now living with roommates; the number of young adults living with their parents is at a 75-year high).
Higher Gas Prices
After OPEC’s production cut agreement was announced, oil spiked and when oil spikes, prices at the pump (usually low this time of year!), also rise. “They went higher almost immediately – in 41 states,” says Patrick DeHaan, a Senior Petroleum Analyst with GasBuddy.com. “It was the largest December rise in national average gas prices in six years.”
And you’re feeling it. “Most states have seen prices rise by the double digits in the last month; in some cities, motorists are paying $5 to $10 more for a tank of gas.”
Currently averaging $2.32/gallon nationwide, prices are continuing to rise.
Plan accordingly. “The national yearly average will be 20 to 30 cents higher this year and this means you could spend an additional $120 at the pump, if not more,” says DeHaan.
Lower Taxes
While the exact impact of Donald Trump’s tax reforms is yet to be seen, almost all taxpayers will pay less under his plan.
The top tax rate would fall from 39.6% to 33%; the lowest tax rate would fall from 15% to 12%.
In terms of savings: The average American household would save about $1,600 under Trump’s plan; the wealthiest 1% could save over $200,000, according to the Tax Policy Center.
Vera Gibbons is a financial journalist and Senior Consumer Analyst with Gasbuddy.com. A former analyst with MSNBC who appeared regularly on the “Today Show,” Gibbons was previously a Financial Contributor with CBS News. Prior to CBS, she worked as a Correspondent for CNBC’s “High Net Worth”. Gibbons has written for Inc., SmartMoney, Kiplinger’s, Real Simple, The New York Times, Fortune.com, CNN Money and CNBC.com. Today, she writes for FoxBusiness.com, Bankrate.com, and Time.com. She appears regularly on Fox News and Fox Business News.
