Real Estate Information Archive

Last week, we reported that the national averages on mortgage rates would likely move higher after the Federal Reserve's pronouncements on quantitative easing and interest rates. That's exactly what happened: Rates across the board were up on most mortgage products in most markets, according to the latest surveys from Bankrate.com and Freddie Mac .

Rates, though, have actually eased somewhat over the past day or two. Recent action suggests that rates could remain sedate into the immediate future. This lack of volatility would be welcomed, because more borrowers would lose interest in interest-rate speculation.

In turn, we would like to see more borrowers take advantage of today's placid mortgage-rate environment. Cash has been king in recent years, but we don't view that as a positive.

In our opinion, mortgage financing leads to a more stable housing market. We say that because mortgage financing has historically been tied (leaving the early 2000s aside) to consumer fundamentals: income, debt-to-equity ratios, credit ratings, and realistic appraisals all help to perpetuate a fundamentally sound market.

What's more, when a high majority of homes are purchased with sound mortgage loans, it's virtually impossible for home prices to wildly detach from end-user fundamentals. In other words, home prices don't rocket toward the stratosphere, nor do they plummet into the abyss. Prices tend to move predictably, which, in turn, encourages more buyer and seller participation.

We are obviously somewhat biased in our affinity for mortgage lending, but our argument has merit, and it's one few market commentators have considered. Perhaps they should.

 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.

What to Expect from Here on Out

One of our prognostications for 2014 was that there would be a considerable slowdown in home-price appreciation in more markets. Our rationale is predicated on the fact that double-digit annual price gains are simply unsustainable in perpetuity.

Perhaps our prognostication is coming to fruition.

The closely followed S&P/Case-Shiller Home Price Index showed prices were up in January in the 20 metropolitan regions it follows. On a seasonally adjusted basis, sales were up an impressive 0.8% for the month. But when we look at the unadjusted index we find prices were down 0.01%, posting a third-consecutive monthly drop.

Both measures have merit: The unadjusted numbers better captured the market drama that occurred a few years ago. With the market becoming more normalized, the seasonally adjusted numbers probably better reflect reality. It's worth noting, though, that both the adjusted and unadjusted numbers were down year over year in January. This suggests that price gains are slowing in more markets across the country.

This isn't a bad thing. Since the housing-market meltdown of 2008 and 2009, we've anticipated returning to historical norms of 2%-to-4% annual price gains. Detractors might posit that prices are still significantly below the 2005-2006 market peaks, so we should continue to welcome more double-digit annual price increases.

To be sure, they've got a point, but that era hardly reflected the norm. What's more, few of us would want to risk another bubble. Slow and steady usually wins the race.

Recent monthly home-sales data have surely been slow, and not very steady. New-home sales for February come in at 440,000 units on an annualized rate, which lagged the consensus estimate by 10,000. The positive takeaway is that inventory increased to a 5.2-months supply at the current sales pace, a 0.2% increase from January. Prices also held steady, with the median national price posting at $261,800.

Of course, new-home sales are a small part of the overall market. Our bread is buttered selling and financing existing homes. On that front, the pending home sales index took another hit – its eighth consecutive one – falling 10.2% year over year.

Nevertheless, we remain optimistic. Most of the data we report tells us where we've been, not where we're going. It's common knowledge that atypically cold, snowy weather has kept many buyers and sellers on the sideline over the past few months. We're encouraged that the overall economy grew, nonetheless. Final real gross domestic product (GDP ) growth for the fourth quarter was revised up slightly to an annualized 2.6% rate from the second estimate of 2.4%.

If we get another strong jobs report for March (which will be reported April 4) like in February, which we expect, home sales in more local markets should rise noticeably into the spring and summer selling seasons.

 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.

We'll venture to guess that nearly everyone is eager for spring and summer. Winter has been lousy in many regions of the country. Lousy weather, in turn, has been reflected in lousy home sales and construction data.

Weather was surely an influential variable in February, where existing home sales again disappointed. Indeed, sales slipped for the sixth time in seven months, with annualized sales posting at 4.6 million units. Year over year, sales are down 7.1%, the steepest decline in nearly three years.

Fortunately, there are signs that existing home sales will improve in coming months: Prices remain firm, with the median price rising to $189,00. As we've noted many times in the past, rising prices call forth more supply. Indeed, more homes are coming to market, with two million homes for sale in February compared to 1.88 million in January, according to the NAR's data . This bodes well for future sales.

On the construction front, housing starts slipped 0.2% to a 907,000-annualized rate in February. The good news is permits jumped 7.7% to a 1.018-million-unit pace after decreasing 4.6% in January. Once the weather warms, the bulldozers should return in force, as should the buyers.

 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.

The Fed Giveth; Will It Taketh Away?

More than 200 years ago, Mayer Rothschild, founder of the Rothschild banking dynasty, uttered one of the more profound observations on finance and power. “Permit me to issue and control the money of a nation,” said Rothschild, “and I care not who makes its laws.”

Rothschild recognized that money matters, and it matters a lot. Money is, after all, 50% of every transaction. The importance of how much money is in an economy and the interest to be charged on that money cannot be understated.

Because the quantity of money and the interest charged are so important, much time and attention are extended to the Federal Reserve. The Fed is, after all, our central bank and manages our money supply and the interest to be charged on that supply. When Fed officials speak, markets always listen.

Fed Chair Janet Yellen spoke to Congress this past Wednesday, and markets listened, and for good reason: Ms Yellen offered more insight on quantitative easing (QE) – the Fed's purchases of Treasury notes and bonds and mortgage-backed securities (MBS) – and the direction of interest rates. In short, QE is going down and interest rates are going up.

As for QE, it's likely to end by December. The Fed has already reduced its monthly purchases of Treasury notes and bonds and MBS to $55 billion per month effective in April. Should the Fed continue to reduce its purchases at the rate of $10 billion per month, as it has for the past three months, there will be no QE by January 2015.

As for interest rates, Ms Yellen hinted that they could commence rising within six months after QE ends. This means the fed funds rate, in particular, would likely begin to ratcheted up sometime in July 2015. The fed funds rate is currently near zero, and many market participants doubt it will stay there. Futures markets are now pricing a 0.50% fed funds rate by August 2015.

In short, we should expect meaningfully higher mortgage rates this time next year.

As for the here and now, Bankrate.com's and Freddic Mac's most recent weekly surveys actually showed the rate on the 30-year fixed-rate mortgage down week over week. But we need to note that these surveys were winding down just as Ms Yellen was winding up. On Wednesday, rates on most mortgage products moved higher, though not disconcertingly so.

We're even more convinced that we'll likely see 5% on the 30-year fixed-rate loan by this time next year. Note that we say “likely,” not “guaranteed.” Ms Yellen offered her projections with many caveats and hedges based on growth prospects. As it now stands, though, the Fed expects economic growth could run as high as 3.5% annually in 2015, with the unemployment rate falling to as low as 5.4%.

If the Feds more bullish forecasts come to fruition, rising mortgage rates shouldn't be feared. But that means it becomes more urgent to act sooner on locking in a loan rate. The window on the rates that prevail today will close sooner than many borrowers anticipate.

 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.

How the Unexpected Leads to the Expected

Lending rates were up this past week, though not discerningly so.

When we parse the national averages, we see the 30-year fixed-rate mortgage was up five basis points to 4.5%, according to Bankrate.com . Freddie Mac's data show a slightly frothier gain, with the 30-year loan up nine basis points to 4.37%.

A rate increase was inevitable after the February employment report, which showed an unexpected lift in payrolls. Specifically, the Bureau of Labor Statistics (BLS) reported the economy added 175,000 jobs last month – 26,000 more than the consensus estimate. In addition, net revisions for the prior two months show 25,000 more jobs than initially reported.

The natural reaction (or the expected reaction) in the mortgage market was for rates to rise. We say that because the expected isn't what moves markets; it's the unexpected. What's expected is already baked into current market prices. When something unexpected occurs – such as the robust payroll numbers last week – markets move. In the case of interest rates, they moved up.

We expect job growth to pick up pace. Recent growth has been hampered by atypically inclement weather. People simply weren't getting out and about. More telling, though, is the number of job openings, which is trending higher. The BLS reports that the number of job openings rose to 3.974 million in January compared to 3.914 million in December. Year over year, openings are up 7.6% and are at 2005 levels.

The trend in job openings isn't a surprise when you look at the trend in capacity utilization rates , which reflects the extend to which factories, mines, and utilities are being used. The utilization rate is above 79%, the highest it has been in years. What's more, it has been trending higher since the second half of 2013.

More employees are needed to support higher utilization rates. In addition, the rise in utilization rates points to more robust growth all around. After all, factories, mines, and utilities support other businesses.

Our best estimate is for payroll growth to ratchet up to 200,000 by summer. Should that happen, and as it becomes apparent, higher payroll growth will get priced into interest rates.

In short, we stick to our prediction that the 30-year fixed-rate loan will approach 5% by December. In the meantime, borrowers can capture a 30-year loan with a rate in the mid-fours, which is still darn good from a long-term historical perspective.

 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.

We recently stumbled across a revealing report published by the Redfin Research Center . Redfin surveyed 1,909 home buyers in 22 major metropolitan markets and found that 39% of them prefer to rent their last home rather than sell. This is an astonishingly high number.

We also find it a somewhat disconcerting number. We've long been advocates of normalized housing markets – markets driven by occupied owners. These markets tend to be more stable, and less prone to speculative fervor.

To be sure, we have nothing against single-family rental properties. They satisfy a very real need. That so many people want to be rental landlords these days isn't necessary a good thing, though: For one, it withholds inventory that could benefit those who wish to own and occupy. Second, the rental market isn't what it used to be: Large institutional single-home landlords like American Homes 4Rent and Invitation Homes have entered the market. This is a recent phenomenon and one difficult to gauge on home prices and future rents.

Selling and financing these rentals is obviously good for business, but only if were not sacrificing the future for the present. After all, another housing bubble (and were not saying we're currently in a bubble) is the last thing we would want to again endure.

 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.

Slower and Steadier: The New Norm

For at least the past three months, we've anticipated a slowdown in the rate of home-price appreciation. Recent data are beginning to point in that direction.

The latest reading of the S&P/Case-Shiller Home Price Index suggests some wind has been trimmed from the sails. In December, the 20-city composite index showed a 13.4% year-over-year price increase. It's an impressive rate, but compared to November, the year-over-year increase was actually 30-basis points lower.

A recent article from the Wall Street Journal also points to slower price growth. The Journal featured data from housing-research firm Zelman & Associates. According to Zelman, land prices are cooling. A survey of builders, brokers, and developers in 55 major markets found that prices grew 2.9% in the fourth quarter of 2013 compared to the fourth quarter of 2012. Going back to the first quarter of 2013, prices were increasing at a more torrid 6.8% pace year over year. Land prices are obviously predicated on home prices.

Given the latest price data, we shouldn't be surprised that the median price of an existing home fell 4.5% to $188,900 in January, according to the NAR . As for new homes, the median price fell 2.2% to 260,100. Price growth in new home sales have actually reverted to a more normalized rate. After posting a double-digit, year-over-year price gain last year, the gain has fallen to 3.4%, according to the Census Bureau.

The good news for new homes is that sales continue to rise, with January posting a strong 9.6% increase to 468,000 units on an annualized basis. Existing home sales, on the other hand, continue to struggle, with sales falling 5.1% for the month.

We surmise that by the end of 2014, we'll see year-over-year price gains in the 3%-to-4% range, which better calibrates with long-term economic reality. Our outlook is somewhat corroborated by a new report published by the Demand Institute, a subsidiary of the Conference Board, which expects annual price gains of 2.1% from 2015 through 2018.

Of course, we all know that real estate markets are local markets. National averages frequently hold little relevance for any particular market, and especially for any particular segment of that market. But it's reasonable to expect slower price growth, and possibly even negative growth in the hottest markets since the 2008-2009 recession.

Local mortgage rates, in contrast, are more attuned to the natural averages. Here, rates remain steady. Bankrate.com's survey shows the 30-year fixed-rate loan averaged 4.48% over the past week, which is about where it was the week before. Freddie Mac's survey shows a slight increase, with the rate on the 30-year loan rising to 4.37%.

Mortgage rates are muted, and still very reasonable, which is something we have to continually remind people. Ten years ago, 6%-and-higher on the 30-year loan was the norm. A 4.5% rate on the same loan is a bargain in comparison.

 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.

Mortgage rates have taken a breather over the past couple weeks. Bankrate.com's weekly survey has the 30-year fixed-rate mortgage rising a mere basis point to 4.49% this past week; Freddie Mac' s survey shows 4.33% for a similar loan.

These are still good rates from a historical basis, and from an expectations basis. Unless civil unrest in Ukraine and Venezuela spread throughout Eastern Europe and South America (which is unlikely), we see little impetus for rates to move lower, and significant impetus for them to move higher.

We say that because the Federal Reserve appears to be all-in on tapering. In the minutes from the latest Federal Reserve governors meeting, several participants argued that, in the absence of an appreciable change in the economic outlook, Treasury bond and mortgage-rate securities purchases will be reduced by $10 billion each month. (The Fed currently purchases $65-billion worth of these securities monthly.) As the Fed tapers, the ceiling on mortgage rates weakens, meaning it becomes more likely rates will rise.

At the same time, many local housing markets are becoming less affordable. While it is still cheaper to own than to rent in the vast majority of markets, CNBC reports the scales are tipping the other way in major markets like Seattle, Los Angeles, San Francisco, Chicago, and Denver. We expect that trend to continue, and to spread to other markets.

So we have low lending rates and high affordability. It's not going to stay that way, though, and the dynamic can change faster than most people realize.

 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 Good Times Gone?

If the question were put to home builders, the answer might be a resounding “yes.”

We take our supposition from the latest NAHB/Wells Fargo Home Builder Index , which gauges home builder sentiment. The index plunged 10 points in February, to post a 46 reading – essentially erasing 12 months of improving optimism.

Weather has been fingered as the catalyst for the sudden change of heart, especially in the South, Northeast, and Midwest. These regions were plagued with unusually cold weather. Because of the weather, starts in January stalled. Month over month, starts fell 16% to an 880,000 annual unit rate. Given the cold weather we've had in February, we expect another monthly decline in the data to be released next month.

Our concern really isn't the weather, though. After all, weather is always unpredictable and usually volatile in one part of the country or another. Home builders surely understand that weather can impede immediate plans. So weather alone wouldn't lead to a rash of pessimism.

Our concern is more fundamental. The trend in permits is telling. Permits are less affected by weather, and they, too, also declined, falling 5.4% to a 937,000 annual unit rate in January. Somewhat encouraging, the single-family component showed relative strength, down only 1.3%. Overall, though, activity appears to be abating.

It's no secret that housing – both new and existing – has stumbled over the past few months, and not solely because of weather. Other factors are weighing on the market, including high prices, low supply, and sluggish job growth (which is possibly the most leaden of the factors). Rising mortgage rates, particularly in the latter quarter of 2013, have impacted sales, to be sure. But in the grand scheme of things, the slow rate of job creation trumps everything.

When population is factored in, you can appreciate just how much potential is on the table. In 1970, there were roughly 205 million Americans ; today, there are roughly 317 million , yet starts remain far below 1970 levels. This suggests to us that there is huge pent-up demand for new household formation.

Of course, household formation is predicated on job formation, which is why without fail we continually highlight the importance of job growth.

We're eager to get to March, where we hope we'll see warmer weather, more sales activity, and rising builder sentiment. We'll be keenly interested in the employment numbers for February (to be released the first full-week in March). As employment goes, so, too, goes housing.

 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.

The new-home market continues to go like gangbusters. Purchase applications for new homes soared 35% in January compared to December. This bodes well for the outlook. We expect to see a strong rebound in new-homes sales for January after a disappointing December.

Existing homes are another story. Sales continue to languish. If we look at the trend in purchase applications, we see few signs of improvement. The purchase index was down 2.0% in the February 7 week. This points to continued weakness for existing-home sales, which dominate the overall market.

Most of us are familiar with the inventory issues that plague existing-home sales. This is somewhat confounding when you consider that home prices across the country continue to improve. The latest data from FNC show its Residential Price Index closed 2013 on an up note, with property values improving 8.7% year-over-year. Rising prices should have drawn in more supply than they have.

This suggests to us that sluggish GDP and job growth are impacting the existing-home market more than the new-home market. This makes sense when you consider younger and first-time buyers are more active in the existing-home market.

Once again, higher economic growth is what's needed. Unfortunately, it still refuses to materialize.

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.