Real Estate Information Archive

It’s  a Central Banker's World; We Just Live in It

We've devoted a good deal of space over the past few months discussing central banks and monetary policy. We've focused on ours – the Federal Reserve – and theirs – the European Central Bank (ECB). These are the two most important central banks in the world.

Usually, we'd focus on matters purely housing or mortgage related – sales, prices, mortgage rates, underwriting rules, etc. Thing is, the Federal Reserve and the ECB have taken center stage. These institutions have never been as influential as they are today.

It's all about the money.

The Federal Reserve was responsible for flooding the U.S. economy with new money after the housing-market collapse in 2008. The Fed injected nearly $4 trillion through quantitative easing (QE) – buying Treasury notes and bonds and MBS with newly issued money. A drop in mortgage rates and new money flowing into housing were the intended consequences. Mortgage rates fell and housing prices rose.

We mentioned last week that the ECB had torn a page from the Fed's playbook. It will implement its own version of QE. It might seem a stretch for the European Union's central bank and its monetary policies to influence U.S. markets, but they do.

The yields on U.S. debt instruments are higher than those on European debt instruments of similar vintage and quality. This means more European money flows into U.S. debt. Prices rise and yields fall. Today, the yield on the 10-year U.S. Treasury note – an influencing instrument for 30-year fixed-rate mortgages – is below 1.8%. Not surprisingly, rates on the 30-year mortgage remain well below 4%. (Historically, the 30-year loan has averaged two percentage points more than the 10-year note.)

The ECB's commitment to easy money and low interest rates will also influence Federal Reserve policy. The best guess among most economists is that the Fed will begin raising the fed funds rate – an influential short-term rate – in June. The ECB's new monetary policy puts that guess on shakier ground. It appears more likely to us that the Fed will push back raising the fed funds rate unit the third quarter.

With all this new money sloshing around in the world's economies, it's extraordinary that consumer price inflation has failed to take off. In the United States, consumer price inflation runs below 2% annually. In Europe, deflation, not inflation, is the greater concern. Money remains in high demand. That's reflective of heightened uncertainty.

Our best guess is that interest rates in general and mortgage rates in particular will hold current lows through the first quarter. Unless there is a blockbuster jobs reports or an unexpected surged in economic growth, there is simply no reason for rates to rise. That said, it's always worth remembering that markets are marked by trend-reversing surprises. Therefore, there are no guarantees.

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 All About the Interest Rate

The employment numbers for December were released last Friday. As expected, the economy created another 200,000+ jobs for the month, which has been the case for 11 of the past 12 months. To be specific, 252,000 new jobs were created in December.

December's job gains has dropped the unemployment rate to 5.6% – the lowest it has been in seven years. 2014 turned out to be a darn-good year for anyone seeking a job. In fact, 2014 was the best year for private-sector job growth since 1997.

The economy is obviously doing well. Usually with rising economic output comes rising interest rates. This occurs for a couple reasons: namely rising loan demand and rising inflation risk.

But here we are in the second week of January 2015 and interest rates are very low, and in some cases at an all-time low. The yield on the 10-year U.S. Treasury note is down to 1.8%. That's as low as it has been in two years. Meanwhile, the 30-year Treasury bond is down to 2.4%, which is indeed a record low.

Not surprisingly, mortgage rates are also at a multi-year low. Bankrate.com's survey shows the 30-year fixed-rate loan averaged 3.8% over the past week. Freddie Mac's survey has the 30-year loan averaging 3.66%.

Last week, we mentioned that low consumer-price inflation is the principal reason rates remain so low. Falling oil prices are an obvious factor in their being a dearth of inflation. Many consumers are paying less than $2.00 for a gallon of gas these days. Depending on where you live this is $1.00 to $1.50 less than what you paid this time last year. Because oil is so pervasive throughout industry, lower oil prices are helping to keep inflation muted across the economic spectrum.

In Europe, China, Japan, and the United Kingdom, lower oil prices have not only kept inflation at bay, they've darn near extinguished it.

We also mentioned last week that shorter-term German bonds were actually being quoted with negative yields. The same negative yields are being seen in Japan. Given record low yields on many foreign government bonds, the yields on U.S. Treasury notes and bonds look generous in comparison. This means demand for U.S. debt will remain high, which means yields will remain low.

Because of low consumer-price inflation in the States and possible deflation abroad, lending rates are unlikely to move anywhere, except down. We don't expect to see mortgage rates rising anytime soon. That is, we don't expect to see longer-term rates – rates on the 15-year and 30-year loans – rising anytime soon.

But we could see pressure on short-term rates. The Federal Reserve is expected to begin raising the federal funds rate by mid-year. This means short-term loans, particularity the 5/1 ARM and adjustable-rate HELOCs, could see rates rise.

In other words, locking in a longer-term fixed-rate loan appears the least risky, and possibly least expensive, financing option in this 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.

Ultra-low mortgage rates are making homes more affordable. At the same time, the lending market is becoming more accommodating. Insurance premiums are being reduced on FHA loans. This means even cheaper financing will be available to a wider swath of potential home buyers.

Home-price appreciation is also moderating, and homes are appreciating at a more reasonable rate. Rent-price increases, on the other hand, are making it more expensive for people to rent. Data from Zillow show that rents have grown at twice the pace of income over the past 14 years. Zillow expects rents to outpace home-price appreciation over the next year.

This means homeownership will become even more appealing in 2015.

We've always believed most people prefer to own than rent. There is something about owning a home than can't be replicated by renting. Peace of mind is found in being able to paint the walls and drive a nail wherever you want without worrying about a security deposit. Pride of ownership really does have value.

But more than anything, ownership gets people off the price escalator. Rent never ceases to rise. When a home is bought and financed with a fixed-rate loan, what was paid last year will be paid this year, and years after that (property taxes and insurance aside).

When low lending rates are combined with the comparative advantages of ownership, there is no reason to not like the outlook for housing in 2015.

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 Sub-4% the New Norm?

Nearly everyone believes the Federal Reserve will raise the influential federal funds rates this year. The fed funds rate has been held near zero for the past five years. This rate matters because it influences other lending rates.

With so much chatter about the Fed raising interest rates this year, you would think rates would begin to rise in anticipation of the event. That's hardly been the case. The yield on the 10-year U.S. Treasury note has steady declined over the past year, and was recently quoted below 2%.

As the 10-year note goes, so frequently goes the 30-year fixed-rate mortgage (and other fixed-rate term loans). Sub-4% on the 30-year loan has been the norm in recent months. Bankrate.com's national survey, which tends to be higher than many local quotes, shows the 30-year loan averaged 3.85% this past week. That's the lowest it has been in 20 months.

Though the Fed might want to see rates rise that simply hasn't been the case, at least for longer-term loans. This is extraordinary when you consider the U.S. economy has produced new jobs at a monthly rate of 200,000+ through 2014.

Consumer-price inflation just might keep all rates low through 2015. Falling oil prices have kept inflation risk at bay. Consumer-price inflation remains below 2% in the United States, and will likely remain below 2% through the first half of 2015.

Meanwhile in Europe, deflation, not inflation, is the overarching worry.

The European Central Bank (ECB) recently admitted that inflation will likely spend a large part of 2015 in negative territory. Eurozone inflation, 2% at the beginning of 2013, has drift lower since. Consumer-price inflation was below 1% for all of 2014.

Today, you can find European bonds that actually pay a negative rate of interest. The two-year German bond is quoted at a negative 0.12%. The price on the five-year German bond has risen to drive the yield down to zero.

If the choice is between a negative interest rate, like in Germany, or a nominally positive rate, like in the United States, many investors will choose the latter. This means more foreign money will likely flow into U.S. Treasury notes and bonds. This flow of money, in turn, will raise prices on U.S. notes and bonds and lower their yield.

We do offer a caveat on our outlook: Interest rates are akin to predicting the flight path of a butterfly. It's impossible to know where it is going at all times. But given recent events, we would not be surprised to see mortgage rates flutter at today's lows through the first quarter of 2015.

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 number of homes sold in Central PA and the greater Harrisburg area increased slightly (3%) over the sales results for 2013 continuing a positive trend we have experiencing over the past few years. But the increase is smaller than the approximately 10% increase in sales in 2013 over 2012. But there is also some additional positive news in that the average sales price increased to $187,076 in 2014 and the days on market before a home is under contract now stands below 90 days.

What does 2015 look like? I think the trend will continue to look positive with respect to the number of sales and the average sales price. Although I do not expect these numbers to go off the charts, I am anticipating a steady rise similar to the years prior to the financial crisis. Why?  Some of the increase, I believe, will come from a decision that the federal government (FHFA) made recently to decrease the insurance premium on FHA mortgages that would save a borrower approximately $75 per month on a $180,000 mortgage. And since approximately 15% of all sales in 2013 and 2014 were financed by this type of financing this should provide some stimulus to the sales market. And although higher mortgage interest rates have been called for by the experts for the past year, the current interest rate for a 30 year fixed rate mortgage is between 3.75 – 4.00%, which does positively impact affordability. I do though anticipate mortgage rates to increase, by how much I do not know but it will impact some potential buyers.

All that said you can see a positive trend has emerged and I anticipate it to continue in 2015. If I can be on any assistance or provide any information please contact me at your convenience.

Don Roth

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 information compiled by me came from our local Multiple List which comprises primarily Cumberland, Dauphin and Perry counties with some additional info from Lebanon, Lancaster and York Counties.

The economy continues to hum along. What's more, it continues to hum along at a higher pitch than most economists had expected. Gross Domestic Product (GDP) – the value of all goods and services – was revised up to an annual growth rate of 3.9% in the third quarter. The consensus estimate called for GDP to be revised to show 3.2% growth.

Within the GDP data, the trends in private investment were particularly encouraging. Both nonresidential fixed investment and residential fixed investment ratcheted higher. This is good news because more investment today leads to more consumer spending tomorrow.

We're not particularly surprised that economic growth is picking up. After all, the economy has been producing new jobs at the rate of 200,000+ per month for most of 2014.

On the other hand, interest rates are a surprise. When economic growth ratchets higher, so, too, do interest rates. This time around is different, though. Interest rates continue to remain subdued. The 10-year U.S. Treasury note continues to hover around 2.3%. This is the low-end of the range that has prevailed through 2014. At the same time, mortgage rates remain low. The 30-year fixed-rate mortgage continues to vibrate around 4%.

We have rising GDP growth coupled with low interest rates. What's more, growth should continue to rise, while rates should remain low. We say that because consumer-price inflation remains very subdued.

So, we have the best of both worlds – strong growth and low lending rates. This unique paradigm suggests housing should get off to a strong start in 2015.

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 Mixed Bag, But It's One We'll Take

Is it two steps forward, one step back; or one step forward, one step back? Sometimes it's difficult to tell.

When it comes to existing home sales, one step forward, one-and-a-half steps back might be the better descriptor. Sales of existing homes drifted down 1.8%, to 5.05 million units, on an annualized basis in August. Year over year, sales are down 5.3%. Supply has again been fingered as the culprit for the sales-volume dearth. Supply for the month fell by 40,000 units, which drops total inventory to 2.31 million units.

The good news is that pricing continues to reflect reality. Existing-home prices have been relatively flat for the past six months. Year over year, the median price of an existing home is up 4.8% to $219,800. This is no surprise. We've seen price appreciation moderate through most of 2014. We expect that trend to continue into 2015.

When we vet new-home sales, the trend is definitely two steps forward, one step back. New home sales surged 18%, to 504,000 units, on an annualized basis in August. Pricing appears to be more favorable to buyers. The median price of a new home dropped 1.6% for the month to $275,600. Year over year, the median price is up 8%, but that rate of increase is slowing and will likely continue to do so. At the current sales pace, inventory has dropped to 4.6 months. This points to home-builder activity picking up through the end of the year. That's good news for the overall economy.

There's more good news specific to housing.

CoreLogic reports that nearly 950,000 homes were lifted into positive equity in the second quarter of 2014. Nationwide, home equity has increased by $1 trillion year over year. To be sure, we still have more room to improve. CoreLogic estimates that approximately 5.3 million homes, or 10.7% of all residential properties with a mortgage, were still in negative equity as of the second quarter. But that's a significant improvement over the 7.2 million homes in negative equity a year ago. We expect the equity trend to remain positive deep into 2015.

We see more positive news in a recent survey conducted by The Demand Institute, a nonprofit think tank. Demand's survey reveals what we've known all along: Millennials might be transforming the workplace, but at home they are very much like their parents and grandparents. They want to get married and have a family, and many of them want to raise that family in the suburbs – the domain of the single-family home.

We never bought into the notion that the United States is becoming a nation of renters. Many surveys we've read over the past year have confirmed our bias. The Demand Institute's survey is simply another arrow for our quiver.

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.

Bond markets were given a slight jolt this week on unexpectedly high consumer-price inflation.

Specifically, the Consumer Price Index (CPI) jumped 0.4% month over month in May. This was the largest monthly increase since February 2013. The latest increase in consumer prices lifted annual CPI to 2.1%. This is within the Federal Reserve's tolerable inflation range, but it still raised a few eyebrows.

Eyebrows were raised because inflation influences interest rates. When inflation rises, bond yields rise as well. At the same time, bond prices fall. Investors want to be compensated for lost purchasing power over time (which is the result of inflation). If investors anticipate higher inflation, they will demand a higher interest rate.

The CPI was released Tuesday, and mortgage rates rationally rose. But they've actually eased back since. When we look at the national averages we don't see much change week over week: Bankrate.com's survey has the 30-year fixed-rate loan at 4.33%, a basis point lower than the previous week. Freddie Mac's survey pegs the 30-year loan at 4.17%, a three-basis point decrease.

To be sure, the national surveys unlikely captured the full impact on rates when the CPI was released. (The 10-year U.S. Treasury note serves as a good proxy for the 30-year fixed-rate mortgage. You can see that the 10-year note's yield spiked higher .) But there is a mitigating factor for rates to remain subdued – low Gross Domestic Product (GDP) growth.

We've been cautiously optimistic that growth would accelerate this year. Indeed, we've been encouraged by the trend in job growth, with the economy adding 200,000-plus new jobs each month for the past three months. This seemed like a good omen.

Today, we are a little more cautious and a little less optimistic. This past week, the Fed cut its growth prediction to 2.2% from 3% for 2014. That's a sharp reduction and reflects the 1% economic contraction that occurred in the first quarter. The reduction also suggests the Fed is still wary that widespread predictions for an economic growth breakout will not occur.

Low growth, in turn, will hold inflation at bay, because loan demand will remain muted. For anyone unfamiliar with how our banking system – which is based on fractional reserves – works, more lending increases the money supply. More money chasing the same amount of goods and services eventually leads to consumer-price inflation.

Today, the 30-year fixed rate mortgage is as close to 3.5% as it is to 5% – the year-end prediction we proffered in January. So do we still think we'll hit 5% by the end of December? We have to confess that it's appearing less likely. That said, keep an eye on the monthly employment numbers, which are released the first Friday of every month. Should the economy continue to create jobs at a 200,000-plus rate each month, 5% on the 30-year remains a possibility.

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.