Real Estate Information Archive

We would be derelict in our duties not report that mortgage lending rates hit another new low this past week. The truth is, that's occurred so often over the past two months, it's difficult to keep track on how many consecutive weeks a new low has been reached.

The reason for this week's new low mirrors the reason for last week's new low: investors rushing into haven investments over European debt and economic growth concerns. (This itself is becoming redundant.) U.S. Treasury securities are the top investor havens. That said, our concern is that investors are overestimating the safety of U.S. Treasury securities, and this could impact mortgage lending rates.

The risk isn't that investors will miss a principal payment or an interest payment on Treasury securities; the risk lies in loss of purchasing power and capital losses if these securities need to be sold before maturity.

Most U.S. Treasury securities don’t compensate for inflation, and this can't go on indefinitely. When investors start demanding compensation for lost purchasing power, rates will have to rise. That means yields will rise, prices will fall, and investors will suffer capital losses.

That also means mortgage lending rates will have to rise. What's more, they could rise more than expected, because not only will individual investors suffer capital losses, so will the Federal Reserve, which has been the largest buyer of Treasury securities this year.

The point we want to emphasis is not to take anything for granted, and that includes today's low mortgage lending rates.

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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.

Is it still meaningful to report on the upward trend in home prices? We have to answer “yes,” because there's still a lot of time to make up, considering all the negative reporting that occurred over the past four years.

With that in mind, we're happy to report that prices continue to trend higher. The latest data from Zillow show home prices rose 2.1 percent year-over-year for the second quarter of 2012 to post the first year-over-year increase since 2007. When measuring quarter-to-quarter movement, price gains were the highest they've been since 2005.

Supply, or rather the lack thereof, is helping to drive home prices higher in many parts of the country. The Wall Street Journal's quarterly survey of housing-market conditions in 28 metropolitan regions shows that inventories of unsold homes have fallen in every market and are down by more than 20 percent in two-thirds of those markets.

Reduced inventory is driving prices higher. Unfortunately, it's also driving sales volume lower. Closings on existing homes fell in June, and contract signings for the month point to fewer closings in July and August.

Sales of new homes also fell in June, but they fell on strong upward revisions to May's and April's data. June's annual sales rate of 350,000 units was 20,000 shy of the consensus estimate, but the sting of the disappointment was offset by a 13,000 upward revision to May's sales tally, which lifted the total to 382,000 units for that month. Further offsetting June's disappointing reading was a 15,000 unit upward revision to April's sales figures.

The dip in new-home sales didn't impact supply, which remains at 4.9 months at the current sales pace. In fact, completed new homes for sale, at 41,000, remains the lowest on record. In other words, inventory remains tight, and that in and of itself is limiting new-home sales. Not surprisingly, tight supply has also been lifting new-home prices over much of 2012. The national median price for a new home now stands at $232,600.

We find it interesting that so many pundits lamented the possible destabilizing impact of shadow inventory swamping the market, yet today many of these same pundits are lamenting that more of that inventory remains on the sidelines. Sometimes you just can't win.

There is a good reason we're seeing a dearth of new inventory coming to market – expectations. If you expect higher prices in the future, you'll be reluctant to list your property today. We see expectations of rising prices taking hold in more markets. For this reason, we don't see home prices backtracking any time soon; it's also a big reason for prices to continue moving higher.

Courtesy of 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.

Each week, mortgage rates establish a new all-time low. Is this a good thing? Many lenders and economists think so. After all, fewer dollar tied up in housing expenses means more dollars to spend and invest elsewhere.

The Federal Reserve's policy of purchasing long-term bonds means mortgage lending rates will likely stay low through 2013. If the Fed injects more money into the economy by purchasing these long-term bonds with new money, rates could go even lower.

The push for more money and lower interest rates is seductive, but there is another side to the coin: private capital. If investors and savers are getting paid little for tying up their money, they won't tie up their money. That means the market becomes even more dependent on government sources of financing. This, in turn, means a less diverse market.

The problem with a less diverse market is that we see a lot more recycling, meaning the same people refinancing repeatedly. Granted, the latest HARP has brought new refinances into the market, but we'd like to see the market promote more borrowing driven by new buyers. We think more private capital would do that. But private capital, unlike public capital, demands a positive rate of return. Today's low rates don't provide that.

Courtesy of 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.

Are the home builders foreshadowing the future of the housing market? We sure hope so, because builder sentiment suggests better days ahead.

We say that because the home builder sentiment index surged a whopping six points to 35 in July. The monthly improvement is the largest in nearly 10 years, and it lifts the index up to where it was in March 2007. What's more, the posting wasn't skewed by a few bullish outliers. All regions reported gains. Looking ahead, the expectation is that sales will continue to improve over the next six months.

When you parse the trend in housing starts over 2012, it's easy to why home builders are more optimistic. The uptrend in new home sales is finally working its way into new construction. Housing starts in June improved 6.9 percent over May. Gains were prevalent in both the single-family and multifamily components. The more-important single-family component saw starts increase 4.7 percent, while the volatile multifamily component rebounded 12.8 percent, following a 19.3-percent drop in May.

The news on existing homes was less rosy, proving again the housing market is a heterogeneous market. Sales for June dropped a surprising 5.4 percent to a 4.37-million annualized rate. The lower sales pace was reflected in inventory, which rise to a 6.6-month supply from 6.4 months in May.

There were still some positive takeaways. The national median sales price for an existing home rose to $189,400, a 5-percent increase over May and a 7.9-percent increase over June 2011. Higher prices might be discouraging sales on the low end of the market, but the price rise, which has been confirmed in other data sources, is good news for homeowners struggling with negative equity.

We've been reporting for months now that the housing market is on the mend. More important, it's on the mend in more local markets. After all, local markets are what matter most; few of us conduct business nationally.It's reassuring to have our anecdotal evidence reaffirmed by official data. The Federal Reserve, in its latest Beige Book release, reports that the trend remains largely positive. The Fed notes that most districts reported declines in home inventories, while stabilizing and home price were becoming more of the norm.

That said, many pundits and market watchers continue to worry aloud about shadow inventory. To us, though, the state of the U.S. economy is the much bigger concern. Job growth has been anemic in recent months. The latest quarterly data show that hiring by companies is the weakest it has been in two years. Unfortunately, the contraction has been equal opportunity: growth in both consumer spending and business investment have slowed. An economy that is marred by reduced spending and investing will also be marred by less hiring.

Slow economic growth could spur the Fed to pump even more money into the economy. The rationale is that more money will induce more spending and investing, because there is less incentive to hold cash due to the reduced value of each note. Concurrently, more money will keep lending rates low because there is more money to lend.This sounds good in theory, but there a few issues with the Fed's easy money policy, which we'll explicate below.

Courtesy of 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.

Last week, we reported on the Federal Reserve's renewed commitment to hold long-term rates low through the end of the year, and likely through 2012. So far, so good: mortgage lending rates once again hit a new all-time low.

You'd think that mortgage activity would be booming when the 30-year fixed-rate loan is consistently quoted below 4 percent. But that's not really the case. The mortgage lending business is good, but should be better. The market, especially for refinances, is still being held in check by negative equity and what is, in our opinion, excessively strict underwriting standards.

That said, the real issue isn't the cost of money, but the rise of risk aversion. Underwriting standards are a manifestation of risk: high risk aversion means higher underwriting standards, low risk aversions means the opposite.

In other words, we don't expect lower interest rates to spur additional lending demand. We see additional gains being spurred by a fall in risk aversion. The willingness to engage in riskier transactions, and buying a house is considered a riskier transaction because of its sheer size, is key. Risk aversion is positively correlated with uncertainty, and markets are suffering from a high level of uncertainty these days due to anemic economic and job growth.

We don't expect the housing market to back track, but for it to ratchet meaningfully forward, the underbrush of uncertainty must be swept away.

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.

Can we call the housing recovery “official”? That, of course, depends on what we mean. You can’t really call a housing recovery official on the national level because all real estate markets are local. Even in the best of times there are always particular local markets lagging.

But if we were to consider national numbers, it's difficult to argue that housing – at least with pricing – has (and is) recovering. We have reported many times over the past months that data from the leading real estate service firms – Clear Capital, CoreLogic, Zillow, Case-Shiller – show prices rising in many local markets.In addition, we've also been reporting on analysts changing their price estimates. The analysts at JPMorgan Chase are the latest to jump on the bandwagon, at least for the long term. Over the next four years, JPMorgan sees home prices moving ahead 12 percent at the national level.

Over the short term, though, JPMorgan remains negative, believing prices are still destined to decline 2 percent nationally. JPMorgan points to the specter of shadow inventory, a subject we have addressed frequently. JPMorgan estimates that 4.8 million properties are distressed, REO, or at least 90-days delinquent. Banks ramping up foreclosure processing means more of these properties will hit the market, thus pressuring prices lower.

It's a tidy theory, yet it hasn't materialized – and may never materialize. Economists at Calculatedriskblog.com have been studying residential real estate trends in various markets across the country. They've found the share of distressed sales is down from June 2011, and the share of foreclosures are down significantly.You could argue that banks still haven't fully ramped up foreclosure operations after last year's robo signing imbroglio. That could very well be the case. The more thoughtful rejoinder is that banks are simply proceeding in a rational, profit maximizing manner. They're processing more short sales and they are prudently selling REO property.

Home builders also see distressed property as a receding concern. Many builders – Beazer Homes, Meritage Homes, Hovnanian Enterprises – have recapitalized their balance sheets by issuing more shares into a rising stock market. These builders are using their new funds to purchase additional land and to expand production.In many markets, it's no longer a question of when the housing recovery will begin, but how it will progress. If JPMorgan is right, and home prices appreciate 12 percent over the next four years (which works out to 2.9 percent annually when accounting for compounding), I think most of us would be satisfied. That means prices would be moving at a rate slightly higher than the rate of annual price inflation. In other words, residential real estate will once again be offering a positive rate of return.

Courtesy of 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.

One of the most important items when considering whether to buy or sell a Central PA home is to look at the absorption rate in an area. This means the average inventory of homes for sale in a price range you are considering and see how many months of inventory (competition) is available in your desired price range.

History has showed that a six month inventory level is considered a normal market, below signifies a sellers’ market and above six month is considered a buyers market. Through the first six months of this year our market has been progressing towards a normal market in many price ranges. And although the market has improved substantially we have experienced an increase of 2.8% in the numbers of homes for sale. Meaning there are many homes competing to gain the attention of buyers in the market.

Accurate pricing and/or price adjustments are still critical to get a Central PA home sold.

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.

We have mentioned previously the gradual weekly decreases in mortgage lending rates. We also mentioned the difficulty in predicting market prices.

Admittedly, we've been flummoxed by the direction of interest rates in the past. Two years ago, if someone would have asked us if the 10-year U.S. Treasury note could possibly yield 1.6 percent, we would have answered possible yes, probable no. Today, it yields 1.6 percent.

We'll venture out on a limb again and predict that the 10-year U.S. Treasury note is unlikely to go significantly lower. And we are not alone in this prediction. Warren Buffett, the multi-billionaire chairman of Berkshire Hathaway, believes that U.S. Treasury securities “are among the most dangerous of assets.” They are dangerous because yields are so low that they fail to compensate investors for time value and lost purchasing power. Dangerous, according to Mr. Buffett, means ripe for a sell-off.

We note Mr. Buffett's comments because mortgage lending rates take their cue from U.S. Treasury securities, particularly the 10-year note. The spread between the 30-year fixed-rate mortgage and the 10-year note is historically around 2-to-2.5 percentage points, and that holds today. The 30-year fixed-rate mortgage has been between 3.6 percent and 4 percent over the past six months.

Here's the issue and the risk for borrowers holding out for significantly lower rates: a sell-off in U.S. Treasury notes means yields will rise. That means mortgage lending rates will rise too. We're not saying that's going to happen immediately, but if the world's greatest investor expects it to happen, it's tough to argue it won't happen some time.

Courtesy of 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.

Though the news on home prices has been repetitive in recent months, we don't tire of reporting it. After reporting falling home prices over the past four years, there's a lot of ground to be made up on the upside.

Thankfully, the upside continues to dominate. CoreLogic provides the latest news on rising home prices, reporting that prices increased 1.8 percent in its May home price index compared to its April index, and are up 2 percent year over year. Remove distressed properties (which are becoming less distressed these days) from the mix and the index is up 2.3 percent month over month and 2.7 percent year over year.

The sustained uptrend is significant for an obvious reason: A price recovery trend stimulates more buying and selling. The trend also refutes many predictions made earlier this year – from CoreLogic, Trulia, Zillow, Case-Shiller – that prices wouldn't move up meaningfully until the end of 2012. It just goes to show how difficult the prediction game is.

That said, we are going to engage in a little predicting of our own. We think the upward trend in prices is sustainable over the long haul. For one, there's a dearth of inventory. Low supply, particularly in new homes, will help keep prices elevated.

The relationship between rent prices and home prices is another reason. Reis Inc., a real estate information firm, reports that national asking rents are the highest they've been in five years. The national average asking rent is $1,091. At the same time, vacancies are the lowest they've been in over 10 years. Low supply coupled with high demand means rents will continue to rise.

Concurrently, the home affordability index in many metropolitan regions is at multi-year lows. It's a great opportunity for people who normally rent to buy. In some markets, a starter home can offer a $200-to-$300 monthly savings in housing expense.

Mortgage lending rates have no doubt contributed to the high affordability index. Rates continue to drop a couple basis points week after week. Over time, these incremental drops have produced significantly lower lending rates.

Our soapbox issue at this point remains credit availability. Too many potential borrowers are still locked out of the market. The worst is over for financial institutions and the economy has stabilized. The best move regulators could make to improve participation is to ease the rules.

To be sure, lending prices need to reflect risk, but risk can be attenuated through judicious underwriting. Judicious underwriting, in turn, most often arises from a diverse, dynamic lending base. That's tough to conjure when costs associated with regulation are historically high.

Courtesy of 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.

Well, mortgage lending rates hit another record low in many markets this past week. This is becoming a weekly occurrence, albeit one in small increments.

We mentioned last week how the Federal Reserve has stiffened its resolve to keep long-term lending rates at record lows at least through this year.

The Fed is accomplishing this task by rolling short-term securities into long-term U.S. Treasury notes and bonds and mortgage-backed securities. The increased demand in these longer-maturity issues increases their price and thus lowers their yield. The Fed is also being helped by our friends in the Mediterranean, namely Greece. People are often perplexed how Greece's fiscal woes impact our lending markets. The short answer is that we operate in a world financial market, not a national one. That means money and capital easily and frequently cross national borders. Many financial institutions – domestic and foreign – own the sovereign debt issued by other countries.

When the risk of owning the debt of a particular country (like Greece) rises, investors sell and often seek haven in less risky securities, like U.S. Treasury securities. As with Fed demand, private investor demand increases prices and lowers yield. Investors have been dumping Greek debt and buying U.S. Treasury debt in recent months, thus helping the Fed to maintain low lending rates.

There is a familiar saying “that's Greek to me,” which means “I don't understand.” In this case, it really is easy to understand Greek, when you understand that today's financial markets are global in nature.

Courtesy of 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.