Real Estate Information Archive

Housing Set to Lead the Economy Forward

Housing matters, and it matters more than most people realize. Yes, money is made on every sale, because sales directly generate commissions and lending fees. Of course, there is so much more to it than that.

Housing has a powerful cascading effect. National Association of Home Builder data show that residential investment averages 5% of gross domestic product (GDP). That's a lot of economic activity when you consider that 5% of $17 trillion is $340 billion. When ancillary services and goods – remodeling, furnishings, appliances, maintenance, improvements, etc. – are factored in, the percentage rises exponentially. The NAHB puts the percentage of total contribution at roughly 17% of GDP. Seventeen percent of $17 trillion is $2.9 billion.

To be sure, existing homes generate more sales transactions and more ancillary demand in aggregate. But new homes provide the biggest GDP bang for the buck. That's why we are always encouraged to read good news on new homes.

The news on home-builder sentiment is certainly good. The Wells Fargo/NAHB Home Builder Sentiment Index continues to hover near a multi-year high. The index remained unchanged at 60 for July. This is the strongest level since November 2005 and signals sustained strength for the new-home market.

Mortgage activity also supports a bullish outlook. Purchase mortgages for new homes continue to trend higher. The latest survey from the Mortgage Bankers Association shows new-home purchase activity was up 1% in June. Year over year, new-home purchase lending is up 8%.

So, housing is looking very stout at the mid-point of 2015. This really isn't a surprise. A strengthening housing market was one of our January prognostications for 2015. At this point, it's just a matter of waiting for the rest of the economy to catch up with housing.

Information provided by Jessica Regan.

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When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

If you follow the stock market, you're aware that there is no shortage of bubble talk. Since the market bottomed in March 2009, stocks have gone mostly up. The S&P 500 Index, the most followed market barometer, has tripled over the past six years. The latest run nearly matches the run during the Internet boom in the 1990s. That boom went bust in 2000, and stock prices were nearly cut in half in the ensuing two years.

Over the past few weeks, Chinese stocks have lost over 30%. This has investors thinking a similar sell-off could occur here. We don't think it will, but the prospect of a stock-market sell-off conjures a question: How would a sell-off impact housing?

A rising stock market increases the wealth effect – a theory that when people feel wealthier they spend more. People invested in stocks have certainly felt wealthier in recent years. At the same time, home sales and construction activity have trended higher. It appears housing and stocks are positively correlated.

It's not so clear cut, though. No doubt that when people feel wealthier they upgrade their lifestyle, such as by trading up to a larger home. But the correlation between stocks and housing can be fuzzy. After the sell-off in stocks in 2000, housing activity actually rose. Many investors burned in the stock market wanted a new asset class; housing was that asset class.

To be sure, stocks might tank, but that doesn't mean housing will tank with it. We think housing is sufficiently sound to stand on its own independently of the stock market. That said, we'd prefer not to find out.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

It Still Ain't Happening This Year

Call us presumptuous, but we just don't see it happening. We don't see the Federal Reserve raising its target range on the federal funds rate.

Since the beginning of the year, we've expressed doubts that a fed funds rate increase was in the cards for 2015. U.S. gross domestic product (GDP) has yet to fully materialized. European GDP growth is even more anemic (which is why the Europeans undertook quantitative easing in March). The turmoil in Greece and the deep sell-off in Chinese stocks has further tempered Fed ardor for an interest-rate increase. Of course, things can change over the next couple months, but we don't think they'll change enough to warrant the Fed raising the fed funds rate. Things are simply too fragile.

The fed funds rate influences short-term rates most, but over time it works its way toward the long-end of the yield curve. Private participants exert more influence on the long end at the moment. These participants have pressured yields to rise. That is until this past week. Due to events in Greece and China, yields have fallen. The yield on the 10-year U.S. Treasury notehas dropped nearly 20-basis points.

As the yield on the 10-year note goes, so goes mortgage rates. The 30-year and 15-year fixed-rate loans were down over the past week, though not much. In most markets, borrowers were looking at only a five-basis-point drop . This suggests to us that the impetuous is for longer-term rates to rise once the turmoil on the world stage subsides.

The good news is that the turmoil hasn't taken any steam out of mortgage lending or housing. Purchase activity is again on the rise. Last week, the Mortgage Bankers Association reported its purchase index was up 7% week over week. Year over year, activity is up 32%. Not surprisingly, the trend in purchase lending mirrors the trend in home sales. Both have climbed palpably since early spring.

We see both continuing to climb through 2015. Home price growth remains robust, thus lifting more homeowners into positive equity. Home-price appreciation has also reverted to a more normalized pace. This is good news because double-digit year-over-year price appreciation is unsustainable. Price growth is getting closer to the “Goldilocks” sustainable rate of 3%.

In short, nothing has really changed since the beginning of the year: We don't see a rate increase, and we're as bullish on housing and mortgage lending today as we were six months ago.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

All-cash buyers continue to retreat into the background. RealtyTrac reports that all-cash purchases dropped to 24.6% of all single-family and condo sales in May. This is down from 28.5% in April. As recently as February 2011, all-cash purchases accounted for over 42% of all sales.

A normal, stable home market is driven by owner-occupied buyers. An owner-occupied market is a market where buyers look to a house as a home, not as a profit center. Stability and predictability rein in such a market.

Stability and predictability extend to price appreciation, which should return to a normalized historical rate in more markets. Normalized price appreciation, in turn, should generate more inventory, particularly for young and first-time buyers. Most investment properties are taken from starter-home inventory. The trend to more owner-occupied buyers is good news for young people entering the market.

We're not disparaging investment buyers. They were vital to the recovery. Without someone – mostly investors – to halt the slide, we'd be a few years behind in the progress we've made to date. That said, normalcy needs to eventually take over to sustain the market. Fortunately, normalcy has taken over in 2015.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Jobs Report Puts Rate Hike on Hold

It looks like September is off the table. Last week, Federal Reserve Governor Jerome Powell speculated that September might bring the first increase in the federal funds rate since 2006. That appears unlikely. Indeed, most Wall Street traders point to December as the “new” earliest date for a rate increase.

Though only one month's worth of data, the June employment report is a contributing factor to the push back. On the surface, everything appears sound. The economy created another 223,000 jobs. It's always good news when the economy creates 200,000+ new jobs a month. It's also good news when the unemployment rate falls, as it did last month. The unemployment rate dropped to 5.3% from 5.4%.

When you did a little deeper, though, you find the news is somewhat less cheery. Average hourly earnings continue to stagnate. For the month, the average rate was $24.95, the same as in May. Year over year, wages are up 2%. This is on par with annual wage growth since the recession ended five years ago. During a recovery, wages usually grow at a much strong rate.

As for the unemployment rate, it's somewhat misleading. Fewer people are in the workforce. The participation rate – the share of working-age people wanting to work – decreased to 62.6% in June, the lowest since October 1977. To be sure, aging baby boomers are leaving the workforce, but there is also a swell of working-age people who've left the workforce out of frustration.

When you take a lackluster jobs report and add to it the events in Greece, December becomes the odds-on choice for a fed funds rate increase. (We still think 2016 is more likely.) That said, the fed funds rate mostly influences short-term rates. Credit-market participants have taken over long-term rates, and they are on the rise.

With everything going on with Greece (namely Greece's inability to meet its debt obligations and its possible expulsion from the European Union), U.S. Treasury rates would normally fall. Investors faced with heightened uncertainty usually pour into U.S. Treasury debt. That hasn't been the case this go-around. The yield on the 10-year Treasury note continues to hold near 2.4%. Because the 10-year note influences mortgage rates, the 30- and 15-year fixed-rate loans continue to hold near 2015 highs.

Fortunately, higher long-term lending rates haven't taking any steam out of housing. Momentum remains strong. The Pending Home Sales Index was up 0.9% for May, which beat most estimates. The latest increase pushes the index up to 112.6, the highest it's been since 2006.

The prospect of even more home sales in the face of higher lending rate is testament to the underlying strength in housing. We expect strength to be maintained into early autumn, and likely beyond.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com

The residential rental market has been on a tear since the housing bubble burst seven years ago. Nationwide, rents have been rising at double the inflation rate. Rent is now a real burden to many renters. Roughly half the renters in the country pay more than 30% of their income to landlords.

This is good news for the long-term outlook for housing. The rental market will push more frustrated renters into homeownership. We don't think it can be any other way. Admittedly, many people like to be free of the responsibility of homeownership, but only to a point. If you are continually subjected to 5% annual rent increases, the benefits of renting quickly dissipate. In turn, the benefit of a stable shelter budget grows significantly in stature.

Young people are getting the message. The percentage of first-time buyers continues to rise and comprised 32% of the market in May compared to 27% last year. The unrelenting upward trend in rents should lead to an unrelenting upward trend in first-time buyers.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Home Sales Defy Conventional Wisdom

Homes sales and mortgage rates are supposed to be negatively correlated: when one is up, the other is down.

That's not always true. The connection between home sales and mortgage rates has frequently been tenuous. Yes, there are times – like a few years ago – when falling rates spur sales activity. At other times, such as the late 1970s, homes continued to sell despite soaring mortgage rates. Many variables in addition to mortgage rates coalesce to form a home-sales trend.

There is no denying that mortgage rates have trended higher over the past three months.Rates were flat over the past week, but they continue to hold near 2015 highs. Despite rates holding near highs, purchase mortgage activity moved higher. Purchase mortgage applications were up another 1% last week. This pushes the year-over-year gain to 18%.

The trend in purchase applications is particularly welcomed news, and not just for selfish reasons. Recent data point to a more-normalized market, with mortgage-financed purchases supplanting all-cash purchases. This means owner-occupied buyers are becoming more prevalent. We've noted frequently that a normalized housing market is marked by a high percentage of buyers who occupy their properties. A normalized market is also a sustainable market.

As for sales themselves, existing home sales jumped 5.1% to a 5.35-million annual rate in May. The year-over-year gain is encouraging, with sales up 9.2%. We haven't seen this run rate of sales in nearly a decade.

Existing home sales are moving higher despite the headwinds of continually rising prices. The median price for an existing home rose to $228.700, and is up 7.9% year over year. The good news is that rising prices are bringing more inventory to market. Homes for sale increased 3.2% to 2.29 million last month.

Though not quite setting a new multi-year high, new home sale s continue to progress as well. Sales were up 2.2% to an annualized rate of 546,000 in May. This is on top of a 27,000 upward revision in April. Sales gains appear to be motivated by some discounting, though. The median price of new home posted at $282,800, which is 1% lower than a year ago. New-home prices will likely pick up in coming months, given that inventory remains thin at 206,000 units.

To be sure, the correlation between mortgage rates and home sales can be tenuous. But if rates rise a enough, they can retard sales growth. Many market participants are focused on the Federal Reserve. The focus sharpened this past week after Federal Reserve Governor Jerome Powel l said that he sees the Fed raising the federal funds rates this September. What's more, this increase could be supplemented by an additional increase in December.

We've been in the minority opinion on the Fed and interest rates. Given recent economic growth, we are still unconvinced a Fed rate increase is in the cards. But if we are wrong, we think we will be OK. Recent moves in long-rates likely reflect a Fed rate hike. What's more, when the Fed moves to raise rates, the impact will be felt mostly on the short end of the yield curve, with short-term variable rates rising and longer-term rates holding near current levels.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

With home prices exceeding pre-bubble highs in many markets, more people are asking: Should we be concerned about another market bubble?

There are no guarantees, but this market looks significantly less frothy than it did in early 2008.

For one, mortgage-debt levels remain reasonable. Bank of America reports that mortgage debt as a percentage of real estate owned was at an all-time high of 63% just before the market-bubble burst. Today, it's down at 44%, which is a normalized and sustainable percentage.

A more obscure indicator also points to a bubble-free market. When markets get bubbly, they induce a tsunami of new participants. Using California as a proxy for the whole,CalculatedRiskBlog.com data show that the number of real estate agents peaked at the end of 2007. Today, the number of salesperson licenses is off 33.5% of the peak. The number is at March 2004 levels. In other words, people aren't blindly rushing into a perceived gold rush. That's a sign of market health.

In short, we don't see a market distorted by bubbles. To the contrary, we see a clearly sustainable market.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

The New-Home Market Leads the Charge

Many commentators were disappointed in the headline number, but they shouldn't have been.

The headline states that housing starts posted at 1.036 million on an annualized rate for May. The consensus was looking for starts to post in the 1.1-million neighborhood. If we compare May with April, we see an 11.1% drop-off in starts.

The numbers appear disappointing, until you dig a little deeper. April, which was already a strong month for starts, was revised up to 1.165 million. That's a 22.1% month-over-month increase when compared to March. Seeing starts throttle back in May after such a strong showing is no reason to sulk. Indeed, it should be expected. To expect continual double-digit monthly increases is to expect the impossible.

The trend in permits is another reason to embrace the future. Permits were up a very stout 11.8% to 1.275 million potential starts. Permits are a leading indicator, and this leading indicator posted its best number since August 2007.

Given the bullish outlook on new-home construction, no one should be surprised that homebuilders are feeling upbeat these days. The NAHB Home Builder Index spiked five points to 59 in June. This is the highest reading since September 2014.

To be sure, sentiment can change and markets can turn. But for the past year, home builders have become increasingly upbeat. Sales and construction activity has generally supported rising optimism. We don't expect that to change over the remainder of 2015.

Of course, the percentage of new-home sales is relatively small compared to existing-home sales. Our bread is mostly buttered on existing-home sales. On that front, sales have trended higher in recent months. Still, they've had a tough time hanging about the important five-million mark on an annualized rate.

The good news is that it appears more likely that sales will hover above five million. A recent report from CoreLogic shows that another 254,000 residential properties regained positive equity in the first quarter. This trend of rising positive equity ensures more supply will come to market, which will lead to a rising sales trend.

What's more, the Federal Reserve appears willing to maintain an accommodating stance.

We've said repeatedly since the beginning of the year that a Fed interest-rate hike was unlikely for June. In the latest Fed meeting, officials showed no inclination to raise the federal funds rates. What's more, it remains unlikely the fed funds rate will be raised before fall. The Fed is still looking for labor-market improvement (mostly wage growth) and more consumer-price inflation. And when the Fed does move to raise the fed fund rates, it will likely do so in very small increments.

That said, let's not take this as a guarantee of low mortgage-lending rates. The market can and has overridden Fed desires. The Fed might not move to raise interest rates; this doesn't mean the market won't.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Given the popularity of rehabbing and flipping houses on cable television, it's important to understand what is actually occurring. It might seem straightforward, but it's less straightforward than many people (novices, in particular) think.

When someone buys a house to rehab and flip for a profit, or to rent, he or she is undertaking a business proposition. In this regard, the house is really an investment. The goal is to increase cash flow: Buy now at one price and hopefully sell at a higher price in the near future. If the house is bought to rehab and rent, this too, makes it an investment.

But when a house is bought to rehab and owner occupy, it's not an investment. The house's primary purpose isn't to create cash flow, it's to provide shelter. In this regard, a house is an asset. Of course, over time an asset can appreciate in price and be sold in the future for more than it cost. Still, it's not an investment.

Noting the distinction between an asset and an investment might seem like an exercise in splitting hairs, but it's more than that. A house as an investment can be used to meet everyday living expenses, but a house as an asset can't. This distinction matters because it properly sets expectations on the economic purpose of that house.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.