Real Estate Information Archive

Here we are with August relegated to posterity and we have been proven right. We said at the beginning of August that mortgage rates wouldn’t move much for the month, and that has been the case. For the most part, rates held within a tight range. We didn’t see much variance from 3.375%-to-3.5% for the conventional 30-year loan.

Now, the question is, will this range hold for another month?    

Tough to call, but it appears less likely. Sentiment is in a flux. More credit-market watchers anticipate an increase in the federal funds rate, and they anticipate it could happen at the next Fed meeting on September 21. Traders in federal funds rate futures contracts are betting a 27% chance of a rate increase in three weeks. A month ago, the odds were low-single digits. Looking further afield, these same traders are betting a 56% chance interests will be raised at the December meeting, if not before.

Mortgage rates have been staid for the past month, and so has the yield on the 10-year U.S. Treasury note. This is no surprise; long-term mortgage rates tend to follow the yield on the 10-year note.

That said, two other indicators don’t rule out a rate increase this month.

Gold prices have fallen over 3% in the past two weeks. Gold tends to move inversely to interest-rate expectations – the higher the interest-rate expectations, the lower the gold price. Over the same period, the U.S. dollar has appreciated against most of the world’s currency.  The dollar would gain in value against another currency if U.S. interest rates are expected to rise because foreign investors would demand more dollars to invest in U.S.-denominated securities (which would offer higher yields).

The outlook for interest rates is a bit more uncertain, but we’ll stick to our guns, nonetheless: No Fed interest rate increase before December. But that doesn’t mean we couldn’t see rising market interest rates, or more rate volatility, between now and then.  

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.

A Set Up for a Strong Push Into Fall

Recent data point to home sales retaining momentum as we push into September and beyond.

The NAR’s Pending Home Sales Index posted at a respectable 111.3 for July, a 1.3% increase over June’s reading of 109.9. The index posted at its highest level since February 2006 and was second only to the 115 posting this past April. What’s more, NAR data show the increase as broad-based, with only the Midwest failing to improve on its June numbers. These contract signings usually lead sales by roughly  45 to 60 days, so we expect to see decent existing-home sales numbers for August and September.

A recent uptick in mortgage purchase applications also leads us to believe that we should see decent sales numbers. Purchase activity has been flat for most of August, but we have seen an uptick in activity over the past two weeks. Confirming our anecdotal evidence, the MBA reported purchase activity increased 1% last week.

We’re further encouraged by the fact that we’re seeing an uptick in mortgage availability. The MBA’s Mortgage Credit Availability Index increased 1% in July to post at 165.3. This is near the highs set earlier this year. The increase was driven by an increase in programs for lower-credit-score borrowers. The trend in lower-credit availability was seen in both conventional and government programs.

Even more encouraging, the overall health of credit servicing among consumers continues to improve. Fannie Mae reports that the single-family serious delinquency rate continues to decline. Mortgage loans of three monthly payments or more past due or in foreclosure dropped to 1.3% in July from 1.32% in June.  This is the lowest level since May 2008. Over the past year, the level has fallen by nearly 25%.

To get an idea of just how much the credit-servicing market has improved in the past five years, the delinquency rate was nearly five times the current rate when it soared to 5.59% in February 2010. And we still have room to improve. The average long-term normal serious delinquency rate is under 1%.

The bottom line is that housing and mortgage lending continue to serve as lead engines of economic growth. We expect that both will continue to serve in their respective capacity deep into 2017.

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.

We started August with a prediction: We didn’t expect to see much movement in mortgage rates for much of the month.  So far, our soothsaying has proved accurate, and even more accurate than we expected.

Mortgage rates continue to hold a narrow range. In fact, Mortgage News Daily reports that there are no historical examples of rates holding as steady and as narrow as they have held in August. Rates are about as narrow and as steady as they’ve ever been.

Of course, that could all change next Friday, if the employment numbers for August are as strong as those in July (which saw a 255,000 increase in payrolls.)  The Federal Reserve could be as motivated as it has been all year to finally move on interest rates.

But then again, maybe not. Global economic growth remains an overarching concern.

According to the International Monetary Fund's (IMF) latest World Economic Outlook released in July, advanced economies will grow only 1.8% in 2016 and 2017, down 0.1% and 0.2% separately from the IMF’s April forecasts. Lack of meaningful growth means central banks around the world will continue to pump more money into their respective economies, which they do by buying government bonds with newly created money. All this money pumping and bond buying has swelled the value of negative-yield bonds to $13.4 trillion.

Federal Reserve officials meet again on Sept. 21. Traders in federal funds rate futures contracts are betting with an 18% chance of a rate increase. (We think the odds should be lower.)  The strongest odds for a rate increase don’t occur until the Fed’s December meeting, which is when the Fed last raised rates. The odds for an increase in December rise to 49%.

In short, we wouldn’t be surprised if this narrow range for mortgage rates persists deep into September.  

 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.

We’re convinced that the vast majority of people – old,  young, and in between – want to own a home. Numerous surveys from Fannie Mae, Freddie Mac, etc. support our claim.

But even if these surveys were never taken, human nature would convince us that people prefer to own than to rent. Knowing you can drive a nail into any wall you like offers incalculable psychic benefits: You know that your abode is yours.

We travel down this path because the Washington Post posted an excellent article a few days ago titled "How a Family Is Sending 13 Kids to College, Living Debt Free - and Still Plans to Retire Early."

Except the family featured in the article wasn’t always living debt free. They eschewed debt, but they were willing to carry a mortgage – the only debt they carried – to buy their home. We applaud the family (the parents, really). When you borrow, and when you can borrow at low rates, it’s economically sensible to borrow to buy assets that tend to appreciate in value over time. The value of a house, of sturdy condition and in the right location, will appreciate over time.

The key takeaway, though, is the importance of keeping your finances in order. The family in the Post article – the Fatzingers –  were able to buy a home in one of the country’s most expensive regions. (They live in Bowie, Maryland.)  This is despite the fact the family is a single-income family. In fact, the father’s income didn’t exceed $50,000 until he was 40 years old.  It just recently exceeded $100,000.

To be sure, the Fatzingers are frugal, but not cheap. They are creative in managing their limited resources. The Fatzingers are also inspiring. They tell us that with forethought and intelligent planning, there is always a way to get someone into the home he or she wants, even if the national numbers suggest otherwise. 

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 Sailing on Calm Seas

All quiet on the home front, at least that’s the way it has been for the past few weeks.

The lack of impacting news continues to hold mortgage rates in a narrow range.  For most of August, the conventional 30-year loan has been quoted between 3.375% and 3.625%. We expect this range to hold until the next employment report, due September 2. Even after the report, we might not get much movement. Few credit-market watchers expect the Federal Reserve to move on interest rates until December.

The lack of movement in mortgage rates has taken some steam out of refinances, which isn’t unusual. Refinances were down 4% last week compared to the previous week, according to MBA data.

Purchase activity was also down 4% last week. Activity has been trending lower over the past month.  The good news is that activity remains elevated compared to the five-year average. Compared to this time last year, applications are actually up 10%. We’re still looking at a healthy market.

Speaking of healthy markets, the new-home market might be the healthiest of them all. Home builders appear to think so, at least if we are to gauge sentiment.

The NAHB Home Builder Sentiment Index posted at 60 in August.  This is the second time this year the index has posted at 60 (which is a positive).  Components within the index show gains for both present sales and future sales. Traffic volume was the only negative, reflecting the continued dearth of first-time buyers.

Builder sentiment is reflected in builder action. Housing starts were up 2.1% to 1.21 million units on an annualized rate in July.  This gain is on top of the gain we saw in June, when starts were up a strong 5.6%. Starts for single-family homes, the most important category, rose a respectable 0.5%.

When we look at the long-term trend, we like that single-family starts lead the way. Multi-family starts are actually down 0.6% year to date; single-family starts, on the other hand, are up 10.6%. It’s also worth noting that single-family starts continue to run at a historically low rate. We wouldn’t be surprised to see several years of rising single-family starts and completions.

All told, we like where housing is heading. Then again, we’ve liked where housing has been heading for the past five years.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

It’s human nature to extrapolate the present into the distant future. That is, what prevails today will prevail tomorrow. If any change occurs, it will be gradual and predictable.

When it comes to interest rates, nothing could be further from the truth. This point is driven home in Sidney Homer’s and Richard Sylla’s fascinating book A History of Interest Rates. The book’s authors trace the history of interest rates back to 3,000 BC. The extent to which interest rates can range across geography and time is quite extraordinary.

For example, Homer and Sylla tell us that in classical Athens, money was lent at a rate of 48% per month; this sums to 576% annual interest, and that’s uncompounded. In the 12th century, loans in England were made at 52% to 120% a year, depending on the collateral, while at the same time in the Netherlands long-term loans secured by real estate were made at 8% to 10%.

The greatest range in interest rates occurred as recently as the 20th century. Rates at one time during the previous century were quoted as high as 10,000% in Berlin and 0.01% in New York for standard money-market credits.

It’s easy to get lulled into complacency, believing today’s low rates will be maintained into the deep future.  But if A History of Interest Rate tells us anything, it’s that credit markets are marked by volatility and immediate change. It’s worthwhile to keep that fact in mind if we are even lulled into believing today’s rates will exist in perpetuity.

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 It Time to Change Our Tune?

The number was certainly big, which is to belabor the obvious.

July payrolls came in much higher than expected, with 255,000 new jobs being added for the month.  What’s more, June payrolls were revised up by an additional 5,000 to 292,000. May payrolls were also revised higher.  Two consecutive months, two consecutive blowout numbers.

The unemployment rate was nudged lower to 4.8% from 4.9%. You would normally expect to see a larger drop in the unemployment rate. But with job prospects improving, more people are being drawn back into the workforce. The employment participation rate moved up to 62.8%.

For the past two weeks, we’ve mentioned that there are few anticipated events that could move interest rates: Federal Reserve officials won’t meet again until next month. The UK Brexit vote is at best a back-burner issue now, if not a forgotten one.  We surmised that only the employment data could get rates moving – one way or the other.  Strong employment numbers could move interest rates higher.

So, did July’s employment numbers get interest rates moving higher?

After the employment numbers were released last Friday, rates moved higher.  We saw an immediate spike in the yield on the 10-year US Treasury note. The yield was up nearly 10 basis points to above 1.6%.  We also saw a spike in rates quoted on many mortgage products.

Since then, Treasury yields and mortgage rates have drifted lower. Indeed, the yield on the 10-year Treasury note is about where it was before the July employment numbers were released.  Mortgage rates are again quoted in the range that prevailed before last Friday. It appears nothing has changed.

It certainly hasn’t changed with traders. Federal funds rate futures contracts are priced with a 12% chance the fed funds rate will be raised next month. Meaningful odds don’t arise until December, where the odds are 43%.

Few credit-market watchers think the Fed will move the fed funds rate higher before December.  You can count us among them.  Yes, employment has picked up in recent months, but gross domestic product (GDP) growth remains sluggish, posting at 1.2% on an annualized basis for the second quarter.  We also need to keep in mind that that US dollar remains exceptionally strong when measured against other currencies, particularly against the British pound and the euro.  A rate increase would likely strengthen the dollar even more.

Therefore, we have to answer, no, it’s not time to change our tune.  We can see the current range of mortgage rates holding through the rest of the month.  That said, come September 2, we get the employment report for August.  Another blowout number on the upside will certainly move rates higher. Whether they stay higher, is another story.

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 latest data from the US Census Bureau show the homeownership rate in the United States at its lowest level since the bureau began tracking the rate in 1965. As of the second quarter of 2016, the homeownership rate had dropped to 62.9%.

The bursting of the housing bubble is a major contributor to the decline. That said, the rate has actually been declining since 2004 when it peaked at 69.2%. After the bubble burst, the percentage of people who didn’t own a home accelerated.

Many commentators point to the rise in consumer debt or lack of income growth for the downward trend in homeownership. We’re not so sure.

A lot has been said about rising consumer debt, particularly debt tied to student loans. Indeed, student-loan debt has trended higher, rising to $29,000 in 2014 from $18,550 a decade earlier, according to Institute for College Access and Success data. Roughly 70% of graduating seniors graduate with some debt.

Yes, student-loan debt is an issue, but only if it’s out of hand relative to disposable income.  It may not be quite as out of hand as some pessimistic prognosticators lead us to believe.

Consumer debt as a percentage of disposable income stands at 5.5%, where it was 25 years ago. The percentage has actually dropped a full percentage point since 2001. For younger people, student-loan debt might comprise a larger percentage of overall debt, but if the debt is used to fund an education that leads to a marketable degree, it’s really an investment. Researchers at the New York Federal Reserve estimate college graduates earn about $1 million more over their lifetime than those without a degree.

As for income, it’s true: Real wages have stagnated, but they’ve stagnated since 1964. (Real wages are wages adjusted for inflation. Nominal wages, which are unadjusted for inflation, continue to rise.)  But as is always the case when dealing with large averages, meaningful details are frequently lost.

Quality is one meaningful detail. A real hourly wage buys more quality today compared to 1964. For example, televisions of today are not only infinitely superior in every way to televisions of 1964, they’re cheaper as well. Quality also demands a lower percentage of wage income today than in 1964. Real wages might have stagnated over the past 50 years, but you get more bang for your real-wage buck year after year.

Demand more than anything points to a trend reversal. The vast majority of us prefer to own than to rent a home. This preference also resonates with younger adults. Surveys from Fannie Mae continually show that over 90% of millennials are optimistic they will eventually own a home.

In short, we don’t see a problem with the current homeownership rate, because we see the opportunities that will arise when it trends higher. 

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.

Slow and Easy, for Now

It sure feels like the middle of summer.  It felt that way last week; it feels that way this week. There’s not much going on.

We mentioned that with the Brexit vote fading into a distant memory and the lack of any important news pending domestically or internationally, financial markets would likely go on hiatus. We even predicted that lending rates we saw last week would persist into this week and beyond.

So far, we’re right (but when predicting interest rates, you never want to do a victory lap). If you asked for a quote on a conventional 30-year mortgage last week, something between 3.5%-to-3.625% would have been a reasonable reply. That range has held this week (though we should note that the 3.375%-to-3.5% range is gaining in popularity).

We shouldn’t be too surprised rates hold current levels. Second-quarter gross domestic product (GDP), reported last Friday, wasn’t particularly encouraging. Growth posted at a 1.2% annualized rate, below most economists’ expectations.

No need to fret, though. Within the GDP report, nuggets of good news could be found, most could be found in housing. Residential investment remains robust. The segment includes new single-family structures, multifamily structures, home improvement, brokers’ commissions, and other ownership transfer costs.

Focusing on single-family-structure investment, it posted at $242 billion for the second quarter. That’s a slight drop from the first quarter, but year over year investment is up 7.3%. Current investment in single family homes is roughly 1.3% of GDP. From a historical perspective, that’s low. Annual single-family-structure investment has historically averaged between 2% and 2.5% over the past 55 years.

People frequently overlook this fact – investment drives the economy as much as spending. Residential investment should continue to do its part to drive the economy 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.

We continue to see a strong future for housing, and we continue to see housing as the primary economic engine for the indefinite future.

Last week, we highlighted strong existing-home sales for June. This week, we highlight strong new-home sales for June. New-home activity is emerging as a positive surprise for the 2016 economy. New-home sales came into their own last month, posting at a higher-than-expected 592,000 units on an annualized rate. In June 2015, new-home sales posted at 472,000 on an annualized rate. Year over year, sales are up 25%.

More impressive, builders were not discounting to move inventory. The median price of a new home jumped 6.2% to $306,700 last month. Existing-home price appreciation has slowed in recent. New-home price appreciation, in contrast, appears to be picking up pace.

The good news is that pending-sales data point to rising sales in coming months. The data show a thin 0.2% rise in June, but the trend remains up. This suggests that existing-home sales, in particular, should post additional gains before summer winds down.  

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.