Real Estate Information Archive

Prices Heat Up… And So Do Sales

Home prices appear to have caught a second wind. Through the second half of 2014, the rate of price appreciation was slowing in many metropolitan markets. Lately, though, the rate has picked up pace.

The S&P/Case-Shiller Home Price Index posted another month of uplifting prices. Specifically, Case-Shiller's 20-city index rose a strong 0.9% in February, posting its best monthly performance since late 2013. February's strong showing lifts the year-over-year rate to 5%. More impressive, the index wasn't lead by a few outliers.

To be sure, San Francisco and Denver lead the way with 3.3% and 2.2% price increases, respectively, but none of the 20 cities in Case-Shiller showed a monthly decline. Given the dearth of existing-home inventory, no one should be terribly surprised that home prices are on the upswing.

Today, housing appears to be the key economic driver. Residential investment increased at a 1.3% annual rate in the first quarter of 2015. This is despite the lousy weather, which took a bite out of overall economic growth. New revised numbers on first-quarter gross domestic product (GDP) show the economy grew a mere 0.2% in the first quarter – a full two percentage points less than the fourth quarter of 2014.

But it's not just investment driving housing forward. Sales on the retail end have picked-up pace. The Pending Home Sales Index was up a third-straight month in March. Month over month, the index was up a stout 1.1%. Sales of existing homes appear to have finally established an uptrend. Strength in existing home sales will hopefully portend strength in new home sales, which have been weak the past couple months. 

Given the weakness in the GDP numbers, the Federal Reserve is less likely to move to raise the federal funds rates. In the latest meeting of Fed officials, economic weakness was the overarching theme. The minutes of the meeting were peppered with words like “moderated” and “slowed.” That said, Fed officials stopped short of scotching any possibility of a rate hike in June.

If we were forced to place a bet, though, we'd bet against the Fed raising the fed funds rate in June. In fact, we've stated in the past that we wouldn't be surprised if the Fed didn't move to raise rates this year. The Fed continues to hang its hat on low inflation and further improvement in the labor market (even though the official unemployment rate is down to 5.5%).

In short, we remain in the low-interest-rate camp, but it's worth remembering that the Fed isn't omnipotent. It can influence interest rates; it can't dictate them. Therefore, it's dangerous to take the current low-rate environment for granted. Things can change, and they can change in a hurry.

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.

Recent housing data also give the Federal Reserve reason to pause on raising interest rates.

The trend in negative equity appears to have turned and is on the rise. CoreLogic reports that negative equity increased to 10.8% of all mortgaged properties in the fourth quarter of 2014. In the third quarter, the percentage was 10.4%. Roughly 200,000 more homeowners find themselves in a negative-equity position.

Home builders are also growing more cautious. The NAHB sentiment index dropped two points to a 53 reading, an eight-month low. The traffic component of the index showed particular weakness, falling two points to 37, a nine-month low.

Lower builder optimism is reflected in fewer starts. Housing starts dropped to 897,000 annualized units in February. This is 17% below the revised January estimate of 1.081 million units and is 3.3% below the February 2014 rate of 928,000 units. Single-family housing starts were particularly disappointing, falling 14.9% to 593,000 annualized units.

Of course, one month doesn't make a trend and the national numbers can be meaningless to any local market. That said, the Federal Reserve does pay attention to national numbers. If housing slips into a funk on the national stage, you can be sure the word “patient” will reappear in Fed meeting minutes.

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.

What the Latest Fed Statement Means to Us

Housing and mortgage markets are supposed to be the focus, but a lot of time is spent vetting the Federal Reserve. We have no choice. The Fed is the guiding light of all financial markets these days.

Look no further than Fed Chair Janet Yellen's comments on Wednesday. For most of the day, financial-market participants were on the edge of their seats, anticipating somewhat anxiously how she would guide: Is an interest rate hike imminent or not?

We mentioned last week the importance of the word “patient.” The Fed had used that word as a way of telegraphing that no rate increase was imminent. In the latest meeting minutes, “patient” was removed, but no need to fear. The lack of “patient” does not imply impatience.

Despite strong monthly job growth over the past year, the Fed is still unsatisfied with economic growth. In fact, the Fed lowered its 2015 and 2016 outlook for gross domestic product (GDP) growth. At the same time, inflation remains muted. In other words, the Fed has the leeway to remain patient when it comes to raising interest rates.

Markets were somewhat impatient in their reaction to the good news. The major stock market measures spiked higher. Conversely, bond yields spiked lower. The yield on the 10-year U.S. Treasury note fell 10 basis points. The 10-year note now yields less than 2%.

As the yield on the 10-year note goes, so goes mortgage rates. Rates on both the 30-year and 15-year loans were significantly lower on Wednesday (though on Thursday they began to drift higher).

Now the question is, should we expect these lower rates to hold?

If you talk to mortgage-rate watchers, most still anticipate the Fed to raise the federal funds rate this year, possibly as soon as June. We are somewhat more circumspect. We would not be surprised to see a rate hike postponed until 2016. We say that because the U.S. dollar remains strong on the world market. An interest rate increase would make the dollar even stronger. (A strong dollar is a mixed blessing: imports are cheaper, but some exports are more expensive.)

Easy money everywhere also mitigates the odds of a rate increase. More than 20 central banks have implemented easy money policies since December. If the Fed moves to tighten its monetary policy – which an interest-rate hike would do – that ensures an even stronger dollar.

In short, there is no overwhelming reason for the Fed to begin raising interest rates. This tells us that sub-4% on the 30-year fixed-rated loan will be with us for a while.

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.

Employment is a key variable in the Federal Reserve's interest-rate equation. The lower the unemployment rate, the greater the chance the Fed will target higher interest rates. But there are a few mitigating variables, and a few are unique in the annals of recent history.

For one, we have low consumer price inflation. Oil and gas prices are as low as they've been in the past five years. This helps keep consumer price inflation below the Fed's target rate of 2%.(Inflation has actually been running below the Fed's target rate for a few years now.)

In addition, central banks around the world have embarked on their own version of quantitative easing. Last year, Japan's central bank announced it would swell its monetary base by $712 million. This year, the European Central Bank announced it would swell the European Union's monetary base by $1 trillion. Both Japan's central bank and the ECB are buying bonds (much like the Fed did) to accomplish their mission.

More yen and more euros has caused the U.S. dollar to appreciate relative to both currencies (and many of the world's currencies). If the Fed would raise interest rates, the dollar would become even more attractive compared to most currencies because dollar-denominated debt will offer a higher yield. (Demand for dollars would rise to buy this debt.)

Finally, the job market might not be as strong as the unemployment rate leads us to believe. In the past, the labor participation rate was consistently above 63%. The participation rate remains below that level today. It's possible an excess of potential labor remains on the sidelines, which makes the official unemployment rate appear better than it is.

Interest rates are tough to predict, but we wouldn't be surprised to see June come and go with no interest rate increase from the Fed.

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.

Will They or Won't They?

Another month and another strong jobs report.  

Payrolls increased by an impressive 295,000 in February. This follows a healthy 239,000 gain in January and an eye-popping 329,000 surge in December. Continued strong job growth has dropped the official unemployment rate down to 5.5%.  

Way back in early 2014, we opined that 200,000-or-more new jobs per month would be a sign the economy was in full-growth mode. That's been the case. If we go back to January 2014, we see that there has been only one month of sub-200,000 monthly job growth. Business activity has certainly picked up over the past 15 months. (This is key. It's not so much job growth that matters, but business activity that creates value that requires workers to produce.)

With the latest employment report, more economists are talking interest rate hikes. History has shown that when job growth is strong and the unemployment rate is below 6%, odds rise that interest rates will rise. Everyone now is looking to June for the first Federal Reserve federal funds rate hike in eight years. Since December 2008, the Fed's target fed funds rate has been held at zero.

The fed funds rate is a short-term rate. It's the rate banks lend to each other overnight. It does influence longer-term rates, though. In short, the fed funds rate can be viewed as the base rate that determines the level of all other interest rates.

All eyes will be on the Fed FOMC meeting announcement this coming Wednesday. Specifically, market watchers will focus on one word – “patient.” The Fed has leaned on this word over the past six months to divert attention from a fed funds rate increase. Many pundits and commentators believe if “patient” is no longer in the press release, the Fed will raise the fed funds rate in June.

So does this mean mortgage rates are on the rise?

Mortgage rates have been rising since early February. They actually spiked higher on the February jobs report, but they've since drifted lower, and are actually slightly lower than they were this time last week. This isn't all that unusual. There's an old saying in financial circles: “Buy the rumor, sell the news.” This suggests many people were expecting a strong February jobs report, and when they got it, rates moved lower.

Despite another strong jobs report and unemployment at 5.5%, we still don't believe the Fed raising rates in June is a sure thing. There is a chance rates could remain low for longer than many people think.

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.

Markets are interconnected. What occurs in one market will influence what occurs in another.

Consider the stock market. Most of us have some exposure to stocks, either through direct ownership or though a mutual fund or an exchange-traded fund. Anyone with a retirement account very likely has some stock-market exposure.

Stocks are at an all-time high. Therefore, many of us are feeling wealthier these days.

There is an actual phenomenon known as the “wealth effect” that is influenced by a rising stock market. When our portfolio values rise, we feel wealthier. When we feel wealthier, we are more inclined to spend, particularly on large-ticket items like cars and houses. With the stock market at an all-time high, the propensity to consume should rise as well. This bodes well for housing.

Of course, the question is, can the stock market continue to rise? We're not stock-market prognosticators, but there is reason to expect stock prices not to backside. Income is the reason.

Dividend-paying stocks are attractive alternatives to many fixed-income investments. With savings accounts yielding mere basis points and certificates of deposit yielding a percentage point or two, a quality dividend-paying stock with a 3% or 4% yield looks pretty attractive in comparison. Stocks relative attractiveness to other income investments should help keep demand, and, therefore prices, high.

Again, there are no guarantees, but the “wealth effect” is yet another reason why we think housing will keep moving forward.

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.

Inflation Remains Muted, But Rates Are on the Rise

Inflation is an important variable in the interest rate lenders charge borrowers. Over time, inflation erodes purchasing power. A dollar in an inflationary environment won't buy as much tomorrow as it will today. To compensate for lost purchasing power, inflation is factored in to interest rates. An inflation premium ensures lenders are able to maintain purchasing power over time.

Today, consumer price inflation remains muted. Thanks to falling oil prices, the aggregate consumer price index has actually declined. When energy and food are stripped from the equation, consumer prices are rising at less than 2% annually. Inflation by Federal Reserve standards is a non-issue.

Private market participants appear to have a slightly different take, though. They appear to be less sanguine on inflation than the Fed and other government data collectors.

In recent weeks, the yield on the 10-year U.S. Treasury note has risen to over 2.1%. In early February, it was below 1.7%. As the 10-year note goes, so, too, goes the rate on the 30-year fixed-rate mortgage. Bankrate.com's survey shows the national average on the 30-year loan above 3.9%. That's a 15-basis-point increase in the past month.

Though we believe interest rates and bond yields will remain low for the relevant future, there are no guarantees. Inflation is an insidious thing. It can appear out of the blue; mostly when it is least expected. When inflation appears out of the blue, so do spikes in mortgage lending rates.

The good news is that rates are still very reasonable across the board. Better yet, these rates are available to a wider swath of borrowers. Thanks to more-accommodating FHA and Freddie Mac and Fannie Mae guidelines. More people can capture rates unavailable to them even a few months ago.

Low rates are an obvious factor in home affordability . Here, we find homes are still a good deal in many metropolitan markets. This is a point we've been emphasizing over the past few months.

More than anything, though, we've been emphasizing the risk of waiting. In a normalized housing market, which we believe prevails today, prices persistently rise over time. The house that cost $200,000 today will likely cost $205,000 next year, and $210,000 the year after. What's more, the rate to finance that purchase could easily be higher too.

So again, we ask, what's the point in waiting? We simply don't see one in today's 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.

Over the past year, we have on occasion highlighted the advantages of owning compared to renting. Zillow has given us reason to highlight the advantages once again.

Specifically, Zillow focuses on rising rents and slowing home-price appreciation. Zillow reports that monthly rents have grown at roughly twice the pace of wages since 2000. Americans are spending a greater share of their income on rent these days – roughly 30% versus 25% in the past. Home-price appreciation, on the other hand, continues to slow. At latest count, 5.4% year over year.

Zillow doesn't necessarily think that rising rents will drive homeownership rates – at a 20-year low – higher. We respectfully disagree.

If you are paying 30% or more of your income for rent, and that percentage continues to rise, owning becomes a more attractive alternative when future costs are factored in. After all, the key advantage of owning is that a price is locked in, especially when the purchase is financed with a fixed-rate loan.

We think the advantages of owning compared to renting will become even more apparent as the year progresses. Rent increases show no signs of abating, while home-price increases do. This is yet another reason we continue to cheerlead in favor of homeownership.

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.

Still No Traction

The wait for an up trend in existing home sales continues.

Despite a year of strong job growth and low mortgage rates, sales of existing homes continue to languish. Indeed, sales fell a steep 4.9% to 4.82 million units on an annualized rate for January. The drop in sales made for a sizable rise in inventory relative to sales, to 4.7 months versus 4.4 months in December.

At the same time, the median price of an existing home dropped 4.1% to $199,600. This is the first reading below $200,000 since March 2014. Oddly, if not disconcertingly, price concessions haven't helped lift sales. Given the uptick in inventory, we would not be surprised to see more discounting in February's report. Generally, that would be a positive for sales, but we will see.

Because it is taking so long for existing home sales to gain traction, we have to wonder if there is a fundamental shift occurring. The NAR reports that homeowners are remaining in their homes 10 years on average these days. This is three years more than the long-term average of seven years. Are homeowners more nervous? Are they more interested in rehabbing than moving? Is job mobility an issue? Perhaps all the above; all we know is that more people are staying put.

Then again, it's also possible a stronger foundation is forming. If total existing home sales are moving sideways due to fewer distressed sales, that's obviously a good thing. This suggests that declining distressed sales are being offset by more conventional equity-driven sales. In other words, the composition of sales is improving.

Though the overall sales market is much smaller, new home sales are at least trending higher. Sales of new homes came in at a better-than-expected 481,000 units on an annualized rate in January. Unlike with existing home sales, discounting appears to have helped new home sales. The median price for a new home dipped 2.6% to $294,000 in January. If we go back to January 2012, we see a healthy long-term trend line that moves up linearly left to right.

Of course, we are always quick to note that all housing markets are local markets. What occurs at the national level might or might not reflect what occurs locally. Mortgage markets, on the other hand, are much more consistent across the country. Mortgage rates in Boston aren't much different than rates in Los Angeles.

Rates across the country have risen in recent weeks. Despite the rise, purchase mortgage activity has come to life. The Mortgage Bankers Association reports that its purchase index ended six weeks of declines with a 5.0% rise in the February 20 week. We are hopeful for further gains, but we've learned from experience not to hold our breath.

One week doesn't make a trend, but if price growth continues to moderate and mortgage rates remain low (which we believe they will), we still think we will see a resurgence in lending and in home sales that we predicted at the beginning of the year.

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 National Association of Home Builders/Wells Fargo Housing Opportunity Index shows homes remain affordable across much of the United States. The NAHB and Wells Fargo found that 62.8% of new and existing homes sold in the fourth quarter of 2014 were affordable to families earning the U.S. median income of $63,900. This is up from the 61.8% in the third quarter.

Last week, we highlighted the advantages of owning versus renting. In many markets, rents continue to push ahead while home-price appreciation has slowed. But recent news from Realtor.com has us wondering if the advantages of owning are dissipating.

Tightening inventory continues to plague many markets. Realtor.com reports that total listings nationwide declined 6.7% in January and are down 8.7% year over year. This suggests that price growth could start trending higher in coming months. At the beginning of the year, we thought price growth would abate in 2015. We still believe it will if the trend (down) in negative equity continues, but it appears less of a sure thing.

That said, it's still a good time to buy. Yes, mortgage rates have moved higher, but they are still very reasonable. But if economic growth is on as solid a footing as the Federal Reserve believes, rates will become less reasonable heading into the second half of 2015.

So we ask, what's the upside to waiting? We really don't see any.

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.