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.

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.

Is Smart Money Telling Us Something About Mortgage Rates?

We don't really know if the money is smart or not, but we know someone's money is saying something about interest rates and mortgage rates.

Over the past week, the yield on the 10-year U.S. Treasury note has climbed over 10-basis points. This continues a trend established late January. Over the past three weeks, the yield on the 10-year note has actually climbed 40 basis points to 2.1% from 1.7%.

As the yield on the 10-year note goes, so frequently goes the rate on long-term mortgage loans. Nationally, Bankrate.com shows the 30-year fixed-rated loan averaged 3.96% this week, while the 15-year fixed-rate loan averaged 3.21%. Both are at 2015 highs.

The Federal Reserve, in its latest meeting minutes , opines that the economy is strong. With a strong economy usually comes higher interest rates, which we've seen in recent weeks. Interestingly, the Fed also highlighted that it was in no hurry to raise the influential federal funds rates for fear the “strong economy” could weaken.

Fortunately, the Fed has some leeway on raising the fed funds rates, because consumer price inflation remains a non-issue. Thanks to falling energy prices – oil and gas in particular – consumer price inflation is running less than 1% annually (the Fed would like to see it run at 2%). Higher interest rates aren't needed to tamp down consumer price inflation, because there isn't any to tamp down.

Then again, maybe the economy isn't quite as strong as the Fed is projecting. Housing comes to mind. On the national scene, it's a bit disconcerting that activity in the new-home market has backslid.

Housing starts declined 2% in January to 1.065 million units on an annualized rate. More discouraging, starts were down 6.7% for the month compared to December. Disappointing starts were reflected in home builder sentiment. The National Association of Home Builders (NAHB) reports that its housing market index clocked in at 55 in February, down from 57 in January. The good news is a reading above 50 is mostly positive.

Sluggish home sales are reflected in sluggish lending activity. The Mortgage Bankers Association purchase index was down for a fifth-consecutive week last week. To be sure, rising rates have taken some steam out of overall lending activity. But if someone is serious about buying a home, 3.85% on a 30-year loan compared to 3.75% shouldn't keep that person on the sidelines. In short, we'd like to see a few more serious buyers off the sidelines and in the 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 Jobs Continue to Roll In

Last week we asked – somewhat rhetorically – whether the recovery was really on. If you were to focus on job growth, you'd be hard pressed not to answer “yes.”

Once again, rising economic activity produced another 200,000-plus month of new jobs. Specifically, 257,000 new jobs were created in January. At the same time, the unemployment rate inched up to 5.7%. This might seem a paradox – more jobs and a higher unemployment rate – but it isn't. When job creation ramps up, more people enter (or re-enter) the job market.

More good news was found on the wage front. Wage growth has stagnated in recent years, but is moving higher. The average hourly rate bumped up $0.12 to $24.75 in January. More people working and more people earning more is obviously a good thing.

The job numbers were better than most analysts and economists expected. The unexpected nearly always moves markets. Unexpected job growth resonated throughout credit markets. Over the past week, the yield on the 10-year U.S. Treasury note moved nearly 10-basis-points higher. Because the 10-year note serves as a base rate for the 30-year fixed-rate mortgage, we were unsurprised the rate on this benchmark mortgage loan also moved 10-basis-points higher.

Mortgage rates are higher, but they're still very reasonable. The 30-year loan remains firmly ensconced below 4%, while the 15%-year loan remains firmly ensconced below 3.25%. We say rates are reasonable because the downward trend in oil prices appears to have ended. Oil prices are moving higher. Rising oil prices could lead to more consumer-price inflation down the road. Rising consumer-price inflation could pressure interest rates to move higher.

The overall rate of home-price appreciation is becoming more reasonable (by historical standards). FNC's Residential Price Index was up 5% year over year in December. Trulia's data show that asking prices for homes rose 0.5% in January, or 7.5% year over year.

Prices continue to rise, but at a rate more aligned to historical norms. Normalcy is what market participants want. No one wants a market running too hot or too cold. The closer we get to that Goldilocks equilibrium, the more vibrant and sustainable the market becomes.

We've mentioned frequently the inability for existing-home sales to sustain growth. We think 2015 could finally be the breakout year. Normalized price-appreciation is a factor, but so is the trend in national home rents. Trulia reports rents were up 6.5% year over year in January. The rental market remains tight. A tight rental market makes owning a more viable and desirable alternative to renting.

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.​