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Yet Another Reason to Like This Market

by Don Roth

There is a common misconception that consumption is the prime driver of the economy. To be sure, consumption matters (because everything is made to be consumed), but production and investment shouldn't be overlooked. After all, production precedes consumption. You have to produce before you get paid with the money to consume.

With that in mind, residential real estate investment (defined as investment in new single family structures, multifamily structures, home improvement and commissions on existing home sales) matters. Investment goes hand-in-glove with production.

The good news is that residential investment was up strongly in 2012 and 2013. The even better news, it still has a long way to go to reach historical norms. Demand for new investment should be strong through 2014, and very likely through 2015.

Stronger residential investment isn't just good for us, it's good for the aggregate economy. Residential investment is a powerful contributor to gross domestic product (GDP) growth and employment. Housing activity contributes up 5% of GDP. The simple logic is that more investment activity will lead to more economic growth.

The bottom line is that we look for another strong year for housing. As long as the economy continues to improve, rising lending rates won't alter our outlook.

 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.

Harrisburg PA Mortgage Market Recap – January 6, 2013

by Don Roth

Trends Persist Heading into 2014

Trends established in 2013 show signs of persisting into 2014... but for how long?

Take home prices, which continue to move strongly higher. The latest edition of the S&P/Case-Shiller Home Price Index shows prices rose 1.05% in October. Year over year, prices are up 13.63% in the composite 20-city index to post the strongest year-over-year gain since February 2006.

There are a couple points worth noting: First, the latest index reading is for October, so it's two-month in arrears. That said, price data from other providers point to continued gains in November and December. The Case-Shiller index will very likely show that 2013 was a very good year for home prices.

It's also worth noting that there is some market rotation going on. Gains are no longer being paced by formerly depressed Phoenix and Las Vegas (where sales dropped to a five-year low in November). Instead, they are being paced by Detroit and Atlanta – markets that have been struggling until recently. This makes sense: Trees don't grow to the stratosphere and holes aren't dug to the center of the earth. There is a limit to how high or how low markets will go until they reverse course.

With that in mind, the Case-Shiller index has performed exceptionally well over the past two years. Aside from a hitch in 2010, the index has been on a tear since January 2009. This is unprecedented. And as we've noted before, it's also unsustainable. Once the last of the depressed markets rally, we expect national price appreciation, as well as price appreciation in more local markets, to slow. We wouldn't be surprised to see that begin as early as the first quarter of 2014.

The other major trend – rising mortgage rates – is showing signs of being sustained into 2014.

Bankrate.com's national survey shows the rate on the 30-year fixed-rate mortgage rose six basis points to 4.69% in the past week. We're not surprised that rates moved higher, because the yield on the influential 10-year U.S. Treasury note is on the rise. In fact, the yield on the 10-year note is above 3%, the highest it has been in over two years.

The 30-year loan historically trades two percentage points above the 10-year note. Simple math, therefore, points to a 5% rate on the 30-year loan. We'll likely see 5% prevail by the end of the year, or even by mid-year.

On a more positive note, we see a trend reversal in existing home sales. After stagnating in the second half of 2013, sales should gain traction in 2014. We say that because we agree with NAR's chief economist Lawrence Yun and his assessment of the market. Says Yun, “ We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014.”

We've expressed similar sentiments over the past few months. If our sentiment prevails, it's unlikely that markets will be derailed by higher lending rates and slowing home-price growth.

Courtesy of Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

4 Home Renovations Gone Wrong

by Don Roth

This post originally appeared on LearnVest, where smart people learn to manage their money and live their richest lives.

If you’re a homeowner, chances are you’ve taken on a home-repair project that you probably shouldn’t have. Whether the results were disastrous, costly or comical, we can all relate to the desire to do-it-yourself instead of calling a pro.

Meet four people who went it alone (with less-than-stellar results) and then find out what the experts say they should have done differently. These homeowner heartbreaks just might save you big the next time you decide to whip out the toolbox!

1. When Toddlers Attack

The Homeowner: Patrick Morris, Troy, New York

The Situation: “My wife and I were painting rooms," explains Morris, a public relations manager. "At one point, she went downstairs for something and came back to find that our two-year-old had used the paint roller as a push toy throughout the hardwood floors upstairs. There was light blue paint all over the floor in each room.”

What Went (Really) Wrong: “We tried to remove the paint. I went to Home Depot to get a floor sander, polyurethane finish, etc. Five minutes into sanding, there was wood dust everywhere. The sanding was uneven and a total mess. We ended up going to Sears and arranged to have wall-to-wall carpeting installed. The whole thing cost us $6,000!”

What the Expert Says: “When you’re painting walls, especially with children in the home, you should always be using a low VOC water-based paint on the walls,” says Amy Matthews, a home improvement expert. “When wet, it can be removed from most surfaces with soap and water. Always take the time finding a pro to solve home improvement issues for the right price at the right time. There is no crime in having a patch of temporarily damaged wood floor!”

2. The Bathroom Debacle

The Homeowner: Kathi Rollberg Boldt, Ashland, Massachusetts

The Situation: "We decided to renovate our bathroom while we were also doing the kitchen because there was a sale on bath countertops. If you ordered them with the kitchen, you saved a bit," says Boldt, a middle school math teacher and married mother of three.

What Went Wrong: "We had to buy a different sink because the countertop wouldn’t fit the dimensions of our bathroom,” she explains. “After demolishing the wall tile, we found water damage on the walls. When all was said and done, the job that was going to just cost us for the tiles, countertop and cabinet ended up being about $3,000!”

What the Expert Says: Beware of what seems to be a “good deal,” but leads you to expand the size of your project, suggests Matthews. “If you don’t assess the reality of the cost, physical commitment and tools needed for the job, you will always end up biting off more than you can chew,” she says.

3. A Mudslide in My Backyard

The Homeowner: Kyle James, Redding, California

The Situation: “I fancy myself a pretty handy guy,” says James, the founder of Rather-Be-Shopping.com and a married father of three. “So last year, after we had our pool professionally installed, I took on the task of doing some erosion control on a fairly large slope created by the pool installation. I did some research, installed jute netting to hold the soil and seeded the hill with seasonal rye grass.”

What Went Wrong: ”One afternoon, I went outside and turned on the sprinkler on the hill to water the seed. We left for a family get-together and returned only to discover that I hadn’t turned the water off. The hill got completely saturated, and the sprinkler created a mudslide. After a phone call and a $2,500 bill, I learned to leave some D.I.Y. projects to the pros.”

What the Expert Says: "Kyle’s only mistake was not turning off the water! When doing your own projects, you have to be very mindful. Attention to detail can make the difference between a successful project and a debacle.”

4. How Not to Fix a Leaky Toilet

The Homeowner: Marci Echeverria, West Orange, New Jersey

The Situation: One afternoon, I heard the toilet running. I tried playing with the handle, which didn’t help at all. My husband Tony came home and he went upstairs to fix it. Neither one of us had any experience in this area. Still, Tony found some online videos explaining how and began to work on it. He came downstairs and declared that the toilet was fixed.”

What Went Wrong: ”Two days later, I saw drops of water on the floor of the second-floor hallway,” says Echeverria. "The next day, there were more drops on the floor. Then, I saw water dripping down from a huge wet spot. I called the plumber right away. Total cost: $300–$400, including paying the plumber to fix the toilet and a contractor to patch the ceiling. For every other repair since, we’ve gone straight to the pros!”

What the Expert Says: “Water damage can be one of the most costly (and inconvenient) repairs in a home," Matthews says. "And, though a running toilet can be an easy fix, ask yourself if the risk is worth the reward when a professional can often leave you dollars ahead in the long run.”

Information provided by BrightNest.com.

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.

Displaying blog entries 11-13 of 13

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