Real Estate Information Archive

An Important Prognostication Comes to Fruition

Predicting the direction of interest rates over the past two years has been an exercise in futility. One would have had better success predicting the flight path of a butterfly than the direction of interest rates. History has certainly proved to be an unreliable guide.

We've been considerably more sapient on housing prices. At the beginning of the year, we expected the rate of price appreciation to slow in many, if not most, markets. Our rationale was predicated on the fact trees don't grow to the sky. Double-digit year-over-year price gains are simply unsustainable. Given sufficient time, momentum peters out. Four years appears sufficient enough.

As we head into the waning months of 2014, price appreciation in many markets has indeed throttled back palpably. The widely followed S&P/Case-Shiller Home Price Index again shows slowing price growth in the 20 metropolitan regions it follows. H ome prices were down 0.5% month over month in July. This marks the third-consecutive monthly decline, and is the steepest monthly decline since November 2011. Year over year, prices are still up 6.7%, but the rate of appreciation has been falling through most of 2014.

We expect the rate of decline to continue, because we are seeing stagnating prices, and even price declines, in more markets. Case-Shiller's data show that prices in 14 of its 20 metropolitan regions declined in July. As for the remaining six markets, three showed no gain, and three showed modest gains, with Las Vegas leading the field at 0.3%.

Zillow has taken to predicting future Case-Shiller index releases, and, like us, Zillow sees the rate of price appreciation further abating. Zillow sees modest month-over-month growth of 0.1% for August, which will drag the year-over-year tally down 5.7%.

Of course, all real estate markets are local markets, and a national average very likely has no direct correlation to our neck of the woods. That said, the national number is composed of local numbers. When more local numbers trend in the same direction, the national number will follow.

Slowing home-price appreciation will slow the rate that negative equity turns to positive equity. On the other side of the coin, slowing price appreciation should help home sales, which have still yet to establish momentum. Unfortunately, momentum is unlikely to be established in the immediate future. The Pending Home Sales Index fell 1.0% to 104.7 in August from 105.8 in July, and is now 2.2% below August 2013.

New lower mortgage rates could provide relief. Rates have been trending down for the past two weeks, which corresponds with the recent stock-market sell-off. The S&P 500 Index is down roughly 4% since hitting an all-time high on Sept. 19. Much of the money flowing out of stocks has flowed into bonds, which is lifting bond prices, and lowering interest rates – including mortgage rates. We would not be surprised to see this trend continue over the next couple weeks.

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.

On average, gutters accumulate anywhere from 40-250 pounds of debris per year! This buildup can create all kinds of problems for your home such as foundation erosion, mosquito infestations and damage to your roof and gutter system, which can cost thousands of dollars to replace.

Safety Note: Gutter maintenance generally means using a ladder. Please use ladder safety precautions at all times.

1. Remove all debris from your gutters. Get every leaf and twig with a gloved hand. Go section-by-section, dump the debris you can reach in a bucket, and then move the ladder down (very carefully).
    
2. Check for damages. After removing debris, check for corrosion and any holes or dents. Tip: If you find small holes, place a piece of painter’s tape by the hole so you can easily find it when you’re ready to repair. If you’ve found small holes in your gutter, you can seal them with clear silicone sealant.
    
3. Test the drainage. Gently run water through your gutter with a garden hose to ensure your gutter is draining correctly. If water is standing still, increase the grade of your gutter to create and maintain a proper drain slope. To do this, simply bend the hangers. The gutter should slope at least 1/4-inch for every 5-10-feet of gutter.
    
4. Check for sagging. A sagging gutter is a useless gutter. Rainwater will get trapped in the sagging portion and become stagnant mess (a love nest for mosquitoes). If the gutters are sagging, it’s likely because the nails holding the gutters have loosened. Try to hammer them back into place. If the nails won't hold, replace them with screws.
    
5. Unclog your downspouts. If the downspout is clogged, work to loosen the debris from the bottom up to avoid further clogging the downspout. Turn your water hose on high and run it up the spout from the bottom. If this doesn’t work, try a plumber’s snake (again, from the bottom to the top). If all else fails, remove the downspout and tackle the clog by hand.

Interest rates are confounding to predict. Of course, the Federal Reserve is a lead influence, which is why market participants spend so much time parsing its every word. That said, most of the Fed's influence is focused on the short-end of the yield curve. By way of extrapolation, market participants then estimate longer yields. For example, if the current one-year yield is 1% and the market believes the Fed will lift that yield to 2% next year, the 2-year yield today should be 1.5% (1% plus 2% divided by two).

If life were only so straightforward. It's not. Money supply, wealth position, and expected inflation also play important roles. If the money supply increases and wealth and inflation expectations remain the same, interest rates should fall. With everything else held constant, more money can be allocated to financial assets, thus raising their prices and lowering their yields. On the flip-side, if money supply decreases and wealth and inflation expectations remain the same, interest rates should rise. With everything else held constant, less money means less money flowing into capital markets. Financial asset prices fall and yields rise.

So where does this leave us? We think wealth will at least remain constant. Inflation will likely remain muted. As for the money supply, it will likely decrease beginning next year due to the Fed withdrawing from quantitative easing and raising short-term rates. Based on this outlook, interest rates should rise in 2015.

Admittedly, we've been down this road before. We thought this scenario would play out this year. It hasn't, but it has to one day.

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.