Real Estate Information Archive

Lenders make money lending, not by not lending. This might seem obvious, but lenders are often a lightening rod for frustration. “We can't we get my client qualified?” is a repeated complaint.

We all know that we are not returning to the lending environment circa 2005, and that's a good thing. That said, we would like to go to a new lending environment, because the current one is too homogeneous (lacks diversity) and too formulaic.

There are simply too many one-size-fits-all rules and regulations in today's lending market. Banks have to adhere to uniform new regulations set forth by the Dodd-Frank Act. They also have to adhere to international rules, known as Basel III, which impart strict capital requirements.

More rules and tighter regulations, particularly ones that are uniform across the country, discourage lenders from venturing out past plain vanilla residential mortgages. If any business is forced to address increased regulation, mandated MBS repurchases, and increased litigation, that firm will tend not to venture far out on the risk curve.

What we need are rules and regulations that account for risk-based pricing tailored to particular markets. North Dakota and New York are different markets with different borrower profiles. Instead of forcing lenders to adhere to a uniform standard, regulators should permit a variety of standards and pricing policies based on the risk and borrower characteristics of different metropolitan markets.

Should that occur, today's clogged lending pipes would certainly flow more freely, allowing more funds to flow to more borrowers.

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 argument that housing isn't in full-recovery mode continues to weaken. Look no further than the sentiment of those whose living depends on bringing new supply to market – the home builders.

Confidence among builders has surged through 2012. A year ago, the builders were deep in the doldrums; their sentiment index was down to a very low 15. Today that index stands at 40. That's a remarkable change in sentiment. Optimism is no longer the exception; it's the rule.

The upward trend in housing starts is no doubt a contributing factor to rising optimism. Since August 2011, starts have been on a steady upward trajectory. For August 2012, the trend continued to move higher, with starts advancing 2.3% to 750,000 annualized units. Single-family units paced the gain, improving 4.5%.

To be sure, 2.3% advance isn't a spectacular, but slow and steady wins the race. Slow and steady also produces substantial advances over time. A year ago, starts were at 600,000 annualized units. Today, the pace in starts is up 25%.

Sales of existing homes are also moving in the right direction, though the pace is a bit more volatile. For August, existing home sales improved 7.8% – posting the largest percentage gain in over a year – to an annual rate of 4.82 million units. The higher sales pace, in turned, tightened inventory to a 6.1-months supply.

Existing home sales were helped by a slight drop in prices in some markets, which dropped the national median home sales price 0.2% to $187,400. Looking at the longer-term price trend, the national median home price is still up 9.5% year over year.

At this point, the best course of action is to let the market recover on its own. The chart below reveals what can happen when good intentions interfere. The spikes in existing home sales that occurred in November 2009 and May 2010 were a reaction to the impending expiration of the federal home tax credits. After November 2009 and May 2010, sales fell off a cliff. Future demand was simply pulled into the present, thus leaving a future void.

Around September 2011, a slow, slightly volatile, uptrend formed. The good news is that the trend that formed in 2011 is genuine and sustainable.

The trend in mortgage rates is less genuine, because the Federal Reserve has openly influenced the mortgage lending market. This week, mortgage rates did ease a couple basis points across most product offerings. Such a minor decrease suggests that rates really don't want to go much lower.

Activity in the 10-year Treasury note also points to a rate bottom. When the Federal Reserve announced it would continue to buy mortgage-backed securities and Treasury securities last Thursday, the yield on the 10-year Treasury note actually increased (since then it's been moving marginally lower).

Given the Fed's strategy to add $40 billion to the base money supply monthly, investor concerns could be shifting toward consumer price inflation and away from slow economic growth. If inflation becomes a front-burner issue, interest rates will be very hard pressed to go lower.

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.

QE3 sounds like a luxury British ocean liner; it's actually an abbreviation for a third round of quantitative easing, which itself is a euphemism for the Federal Reserve pumping more money into the economy. On Thursday, the Fed said it would implement QE3 in the near future.

The mechanics of QE are straightforward: The Fed adds more money to the economy by buying mortgage-backed and U.S. Treasury securities from banks. The securities are paid for with new money the Fed conjures into existence. The Fed's demand for these securities drops the yield on these securities. These lower yields, in turn, are expected to produce lower mortgage lending rates, or at least sustain today's already low rates into the future. 

At least that's the theory. The problem is that price inflation fears – due to the new money – can rise. Should investors' inflation fears trump Fed demand for the aforementioned securities, that means mortgage lending rates could actually go up, thus thwarting the Fed's intended outcome.

In short, there is no sure thing. Many borrowers are waiting on the sideline, anticipating lower lending rates. We think that's a dangerous game, because even if QE3 lowers lending rates, we doubt they will lower them by a significant margin. On the other side of the coin, rates could easily go higher if investor concern switches to inflation from slow economic growth.

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 broached the possibility that the residential rental real estate market could be forming a bubble. We found it interesting, even if it were only coincidental, that the the Wall Street Journal ran a piece this week on institutions piling into single-family residential rental real estate.

The Journal article featured a private-equity firm, Colony Capital, that has been buying single-family homes, refurbishing them, and then renting them. Colony has accumulated 3,600 homes, most purchased out of foreclosure. Business, so far, has been remunerative.

Colony Capital isn't the only institutional player in single-family rentals. According to investment bank Jefferies & Co., big private-equity players Blackstone Group, Och-Ziff Capital Management, and Oaktree Capital have raised more than $8 billion to buy houses, which they plan to refurbish and rent.

This flood of institutional investor money into the single-family rental market is a big reason we are less concerned about distressed shadow inventory than most market observers. A lot of demand has developed to soak up supply. Over time, that supply will continue to dwindle.

The trend in multi-family residential rentals is also revealing. Data from the National Association of Real Estate Investment Trusts (NAREIT) show money flowing freely into this market as well. In fact, REITs that focus on multi-family residential properties have been some of the best performers in the real estate segment over the past year.

The point we want to emphasis is that investors and market watchers should become more alert when markets heat up – and the rental real estate market is certainly heating up. More risk resides in the hot market, because the hot market doesn't stay hot forever. We reported a couple week ago that rents, which have been on a tear the past two years, are already showing signs of slowing. Trulia's data show rents rose 4.7% in August from a year ago, but that growth is lower than the 5.8% year-over-year growth reported in May.

We obviously can't say for sure if a bubble is forming in the residential rental market, but we can say the bullish sentiment is starting to sound like the sentiment that prevailed in the single-family purchase market circa 2004.

There is another reason we should maintain our perspective on rentals: People still prefer to own their own home, which is why we expect to see sustained growth in the owner-occupied market over the next couple years.

Risk aversion is the impediment to more owner-occupied activity. The financial firm Redwood Trust recently issued a private jumbo mortgage-backed security. The security was backed by mortgages with an average FICO score of 771 and a loan-to-value ratio of 67%. Such issues have been the norm in recent years.

We'd like to see more investor interest in more speculative mortgage-backed securities. More interest in more speculative issues would indicate more risk taking by investors and a more liquid, more inclusive lending environment.

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.

An aspiring home owner who can't buy a home becomes a renter.

Today's credit markets have forced many aspiring home owners to become renters. In turn, the rental market has caught fire. By some estimates, there are 2.1 million more single-family homes rented now than in 2006. It's a strong trend. Rents rose nationally 4.7% year over year in August, which builds upon the 5.8% year-over-year rise recorded back in May. In a few markets, Houston and Seattle most notably, rents are up 10% year over year.

Buyers of rental homes (many paying with cash) have soaked up much of the inventory, and to be sure, that's a positive. But many of the people renting these properties would have preferred to buy them themselves, but they were precluded from buying because they were unable to secure financing.

The market at this point is becoming too skewed toward rentals, which is driving up rents at an abnormally fast rate. This isn't a good thing, because abnormally fast-growing rates aren't sustainable rates. Should rents turn south, many of those investment properties will no longer be sound investments, particularly those bought late into the rising-rent trend.

What's more, a neighborhood of rentals isn't as well maintained or holds its value like a neighborhood of owners. A neighborhood of rental homes tends to loose value over time; a neighborhood of owner-occupied homes tends to gain value over time.

The point we want to emphasis is that we need a lending environment that encourages more of the latter; that is, more owner-occupied buying. To get that, we need a lending environment that encourages profitable, heterogeneous lending. We simply don't have that today.

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.

This lead in could be filed under “dog bites man,” because it's something most of us already know.

We are referring to recent data from the National Association of Realtors that show the time to sell a home is shrinking. According to the NAR, the time to sell for traditional sellers is back within historic norms: the median time a home was listed fell to 69 days in July, down from 98 days a year earlier.

Of course, national numbers often hold little meaning to any particular local market. In fact, the NAR's data range from one-third of the homes were listed for less than a month, while one in five homes was listed for at least six months. The positive takeaway is that more homes in more markets are selling at a quicker pace. What's more, that pace appears to be accelerating.

The price of many homes listed for sale is also accelerating. Clear Capital reports that home prices are up 2.9% year over year in August. Clear Capital cites fewer REO properties coming to market due to new borrower-friendly legislation and the $25 billion lenders' settlement with the federal government.

That's really only part of the story, though, and gives short sales the short shrift, because many lenders are simply finding it more remunerative to engage in short sales than foreclosure and REO sales.

While we are on the subject of sales and prices, Trulia reports that national asking prices on for-sale homes, which precede actual sales prices by two or more months, increased 2.3% year over year in August. Gains were widespread, with 68 of the 100 largest metropolitan areas Trulia follows reporting price increases.

Trulia's data are particularly encouraging, because they are a leading indicator of future home sales (where we are going is much more important than where we've been). Therefore, we would be surprised if home-price gains and the housing recovery were not to persist into fall.

That said, lending could be the monkey wrench that grinds the recovery gears to a halt. Participation is the issue, and it is akin to the observation “water, water everywhere, but not a drop to drink.” Rates are low, but not enough borrowers are able to take advantage of them.

We've mentioned many times over the past year that the issue isn't low lending rates at this point: it's a dearth of borrower-buyers. If only the same people can access credit at these low rates, these low rates become meaningless. A less restrictive lending environment would do much more to accelerate the recovery than historic low rates.

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.

Home prices are strengthening and affordability of houses is slightly lower, according to new data from the second quarter of 2012. The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) found that 92 percent of metropolitan areas had a rise in median home prices over the first quarter of 2012.

Some homebuyers might not welcome this news, but for the home seller, it’s “another signal that the housing recovery is starting to take root,” said NAHB Chairman Barry Rutenberg, “and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace.”

According to the report, 73.8 percent of all homes sold during this period were affordable to households earning the mean national income of $65,000.

Looking at the bottom of that list, major metropolitan areas with the least affordable homes, the number one city is no surprise: New York-White Plains-Wayne, N.Y.-N.J. (a distinction it’s held for 17 consecutive quarters), followed by the metro areas of San Francisco, Bridgeport-Stamford-Norwalk, Conn., four other California areas as well as Honolulu and Miami.

Topping the list are Youngstown-Warren-Boardman, Ohio-PA.; Dayton, Ohio; Buffalo-Niagara Falls, NY; Indianapolis-Carmel, IN; Modesto, CA; Ogden-Clearfield, UT; Harrisburg-Carlisle, PA; Lakeland-Winter Haven, FL; Wilmington, DE metro area; and Columbia, SC.

Median housing price in Harrisburg-Carlisle PA is $147,000. The Housing Opportunity Index (HOI) in Pennsylvania’s capital city metro area is 90.6, meaning about nine in 10 homes on the market are affordable to households bringing in the median income of $73,500.

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.

A Washington Post blogger, Ezra Klein, caused a minor stir in the blogoshere this past week with a novel, though hardily original, thought. Mr. Klein opined that it would be a good idea if the Federal Reserve announced it would buy huge numbers of mortgage-backed securities with the intent to bring the 30-year fixed-rate mortgage down to 2.5%, and then hold the rate there for one year, “and one year only.” According to Mr. Klein, such a move on the Fed's part would incentive a home-buying spree.

Upon reading Mr. Klein's recommendation, we were immediately reminded of a speech RE/MAX CEO Margaret Kelly gave a couple months ago. In the speech, Ms Kelly basically said the best course of action at this point was to simply leave markets be.

There is always room for improvement, to be sure, but Mr. Klein's recommendation is simply larded with unintended consequences. It would pull future demand forward into the present. Sure, we'd all be super busy in 2013, but what about 2014? After the federal home buyers tax credit expired, sales dropped off a cliff. What's more, buyers would be buying into an artificially inflation market. After the surge ended, prices would fall, meaning anyone who bought during the surge would likely own an asset worth less if it were put on the market post-surge.

More than anything, we'd like to see a more accommodating regulatory environment. As for housing demand, that's coming along and doesn't need any additional stimulus. We think demand would come along even better in a lending environment that accommodated more buyers' needs.

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.

There is an old investing bromide that goes “the trend is your friend,” which means a directional market can lead to riches.

The trend in home prices is surely our friend. Indeed, the S&P/Case-Shiller home price index points to a trend that is becoming friendlier by the month. Case-Shiller's data show that home prices gained 0.9 percent month over month for June, posting a fifth-consecutive monthly gain. Just as important, price increases were widespread, with 18 of the 20 metropolitan regions Case-Shiller follows moving higher.

Most of the media commentary on the Case-Shiller data were positive. Of course, there were the usual caveats on the negative impact shadow inventory and distressed properties could still have (lest anyone get too confident). But these caveats are falling on deafer ears, and for good reason: distressed properties are also posting price increases.

RealtyTrac reports the average price of a foreclosure sold in the second quarter of 2012 rose 7 percent compared to the year-ago quarter. Foreclosure-related sales accounted for 23 percent of all home sales in the quarter, up 19 percent from last year. At the same time, the number of foreclosures and REOs coming to market declined 22 percent year over year.

In short, we have rising foreclosure prices, greater buyer interest in foreclosures, and fewer foreclosures hitting the market. These are all positives. If this trend continues, the shadow inventory will have proven to be a case of whistling past the graveyard: a little disconcerting, but harmless nonetheless.

We see no reason for the price trend to end. Existing homes sales are gaining momentum. The pending home sales index rose 2.4 percent in July compared to June. Year over year, the index is up 12.4 percent.

For all the price and sales gains recorded this year, homes still remain a value. Rental prices have kept pace with home price gains. In fact, price-to-rent ratios are where they were back in the late 1990s. Relatively speaking, a home is still a bargain.

But the bargain won't last forever, and maybe not even through 2013. The NAR projects existing home sales will rise 8-to-9 percent this year, followed by another 7-to-8 percent rise in 2013.

Today's mortgage-rate bargains also won't last forever. Yes, rates dropped close to recent lows this past week, but the drop occurred early in the week. As the week progressed, mortgage rates progressed higher after estimates of second-quarter 2012 gross domestic product were raised by the Commerce Department. In addition, the Federal Reserve's Beige Book showed the economy continued to expand in July and part of August.

When the economy kicks into gear so will loan demand, as will the price of loans – interest rates.

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.