Real Estate Information Archive

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.

We’ll Believe it When We See It

No one was surprised.

On Wednesday, Federal Reserve officials again decided to hold the federal funds rate between 0.25% and 0.50%. Thus, they once again delayed an interest-rate hike that most everyone at the beginning of the year thought would have occurred by now.

The vote wasn’t close – nine-to-one to keep rates where they are. That said, the Fed did leave the window open for a rate increase when officials meet again in late September.  In the statement that accompanied the latest decision to maintain the status quo, the Fed noted a “strengthened” labor market and that household spending was “growing strongly.” It’s also worth noting what the Fed didn’t say. There was no mentioned of the UK Brexit vote in the statement.

Many traders parsed the Fed’s words and arrived at a similar conclusion – the window is open. Traders in fed funds rate futures contracts are now betting a 24% chance a rate increase will occur in September. These are the highest odds given since the first quarter of the year. These same traders are giving 50/50 odds that we will see at least one rate increase before the end of December.

It could happen, of course, but we remain skeptical. Traders are a notoriously schizophrenic lot (as are Fed officials). If next week’s employment report for July disappoints, the odds given for a rate increase could be reduced to single digits. If the report goes the other way, so will the odds.

We wouldn’t call the economy a one-trick pony, but let’s be honest, housing has been performing most of the tricks. Seven years after the recession officially ended, normal growth – 3% annual gross domestic product growth – remains elusive. Fed officials have all but thrown in the towel on 3% annualized growth. Without the housing recovery, we can only guess what the annual growth rate would be. Housing is more interest-rate sensitive than many other sectors of the economy. Fed officials will tread carefully on raising interest rates. No one wants to stall the one engine – housing – that’s hitting on all cylinders.

With no meaningful news to report in recent weeks, mortgage rates have drifted higher, though not egregiously so. For most borrowers, a quote around 3.5% on the conventional 30-year loan has been the norm for the past week. After the Fed’s statement on Wednesday, mortgage rates actually drifted a bit lower.

With the Brexit vote digested, the US presidential candidates settled, the lack of anything of importance pending domestically or internationally, we don’t expect to see much movement in lending rates until September (when action in financial markets usually kicks into a higher gear).  In other words, the lending rates we have now are likely the lending rates that will prevail for the next four or five weeks.

Then again, we do have two employment reports between now and Labor Day. These two reports, more than most other scheduled reports, have the potential to move lending rates one way or the other.

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.

Times change, and they frequently change quicker than we think. Black Knight Financial Services drove this point home earlier this week.

We refer specifically to Black Knight and its Mortgage Monitor report. The report shows how dramatically the negative-equity situation has improved in the past five years. As recently as 2011, more than 28% of all borrowers with a mortgage were in negative equity. Today, that percentage is down to 5.6%. This is close to the percentage that prevailed in late 2006.

Black Knight goes on to say, “The first quarter also saw tappable equity grow by $260 billion – a 6% increase in just the first three months of the year. There are now 38 million borrowers who have at least 20% equity in their homes, with an average of $116,000 in tappable equity per borrower.”

This is all good news, of course. It points to a very fluid housing market; one able to maintain stable sales volume and reasonable price appreciation.

Again, times change. We harken back to the post-2008 dark days, when housing prices were trending in one direction – down – with no end in sight.  We kept a positive attitude because we knew the market would eventually clear. Markets always do. A bottom is hit and then the trend reverses.

The moral here is don’t despair during the down times, but don’t take the up times for granted either.

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.

Rates Rise on Strong Employment Numbers

Perhaps we shouldn’t have asked how low rates could go last week. When such a question comes to mind, the answer is usually self-evident. In this case, mortgage rates were unlikely to go lower; they were likely to go higher instead.

We thought they could go higher. The imbroglio over the Brexit vote was already dying down. It wouldn’t take much positive economic news to get things moving, and that includes interest rates.

We received a positive piece of economic news last Friday. The employment numbers for June came in much stronger than anyone expected. Payrolls were up a whopping 287,000 for the month. This was a welcomed turnaround compared to the dismal 38,000 payroll increase in May. Somewhat paradoxically, the unemployment rate also rose, by two-tenths of a percent to 4.9%. This is actually good news. It reflects an increase in labor participation and a decrease in the number of discouraged workers.

Interest rates were given an additional boost when officials at the Bank of England surprised financial markets by holding off cutting interest rates. Analysts expected the BoE to cut rates because of uncertainty and an expected economic slowdown as a result of the Brexit vote. BoE officials said that they would give it another month to assess Brexit’s economic impact.

Financial markets were receptive to the BoE’s actions and outlook. It’s becoming clearer that the Brexit vote will be less damaging to the U.K. economy than initially predicted, hence the delay in cutting interest rates. At the same time, BoE officials said that monetary policy will remain accommodating to financial markets.

Good news generally manifests in higher interest rates. Good news motivates investors to sell haven investments, like U.S. Treasury securities and precious metals, and buy riskier investments, like stocks.  Over the past week, the yield on the 10-year U.S. Treasury note has risen 15 basis points. Stocks are again trading near an all-time high.

Mortgage rates, most notably those on the 30-year fixed-rate loan, also moved decisively higher. This is no surprise. As the yield on the 10-year Treasury note goes, so goes the yield on mortgage-backed securities, and so goes mortgage lending rates.  

For the immediate future, there is no great impending concern to weigh on financial markets. Therefore, we wouldn’t be surprised to see lending rates trend a bit higher.

To be sure, someone is always worried about some possible impending doom somewhere. That’s always the case. But if you were to ask us where mortgage rates will be this time next week, we’d say either flat to slightly higher.  For now, everything looks calm and steady (relatively speaking). Rates rarely move lower when things are calm and steady.

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.

Another home price index, another index that shows monthly price gains.

CoreLogic released its home price index for May, and no surprise – prices were up for the month.  The index showed national home prices up 1.3%, which lifts the year-over-year gain to 5.9%. The index is up 22-consecutive months.

We’re not surprised by CoreLogic’s findings. All the other housing-data aggregators – Case/Shiller, Zillow, Black Knight, etc. – show persistent monthly price gains as well.  What’s more, CoreLogic’s HPI Forecast shows that prices will increase by 5.3% annually by May 2017, and by 0.8% month over month in June 2016.

More price appreciation appears in store, at least at the national level. But as we know, real estate markets are local markets. Demography, the rate of price appreciation, and the market composition of homes in Aurora, Colo differs from demography, the rate of price appreciation, and the market composition of homes in Aurora, Ill.

The good news, at least to us, is that the rate of price appreciation is slowing in more markets, particularly in the hotter markets, like those in Northern California.  We think this is healthy. Rapid price appreciation reduces the number of potential buyers. It also leads to a more stratified market.

We agree with CoreLogic: Home prices in many local markets will likely trend higher.  We like the idea, though, of prices trending higher at a rate that adheres more closely to historical norms.

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.

How Low Can Rates Go?

Each week, we see interest rates as low as they’ve been in our lifetime. We obviously continue to live each week, and each week we continue to see interest rates at the lowest we have ever seen. (Of course, one week one of the two conditions  – the living or the falling interest rates – will give. Needless to say, we prefer the latter to give first.)

This week, the yield on the 10-year U.S. Treasury note hit another all-time low, dipping below 1.37%.  Mortgage rates aren’t quite at an all-time low, which occurred in December 2012, but they’re darn close.  Quotes on a conventional 30-year fixed-rate loan frequently range between 3.25% and 3.375% on best execution these days.  As for the 15-year loan, quotes are well below 3%.

Again, we look to the other side of the Atlantic for the cause. Financial markets rallied over the second half of last week, but they pulled back again this week. It seems market participants, after having a holiday weekend to mull things over, returned to work Tuesday thinking there is still considerable market risk associated with the U.K. Brexit vote.  Investors re-embraced haven assets – precious metals and U.S. Treasury securities.  Prices in both asset classes have risen meaningfully over the past week.

At this point, you would think the odds of the Federal Reserve raising rates would be zero for the remainder of the year.  That’s not the case.  Traders in federal funds rate futures contracts are pricing a 6% chance of a rate increase at the Fed’s September meeting (even though they’re pricing contracts with a 2.4% chance of a rate cut later this month).  Last week, they weren’t giving odds for an increase until December.

But as we are quick to note, traders can be a schizophrenic lot, as can Fed officials.  The June meeting contrasted sharply with the April meeting. Back then, many Fed officials chatted up the possibility of rate increases in the near future. At the latest meeting, everyone softened his stance, evinced by a 10-0 vote to hold rates steady.

Falling interest rates have certainly impacted our corner of the word. Refinance applications have taken flight, which comes as no surprise. More important to the housing market, purchase applications are again moving higher.  The Mortgage Bankers Association Purchase Index was up 4% last week after treading water over the previous three weeks.

So, again we ask: How low can rates go?

What occurred this past week may have been one last spastic reaction to the Brexit vote. In that case, rates could start trending higher, especially when you consider no other major event hangs over our heads.  With nothing hanging over heads, the risk for rates to move higher rises. In short, it’s tough to argue against locking in at today’s rates.

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 U.S. economy is improving, but it’s still sluggish from a historical perspective. First-quarter gross domestic product grew at a 1.1% annualized rate. Consumer spending remains weak and has been a drag on growth for most of the year.

That said, the economy is driven as much by investment as by consumption. After all, we all have to produce in order to consume. Investment drives production. Residential investment has been a key driver of economic growth for the past two years. In fact, residential investment is estimated to have added a half percentage point to GDP growth in the first quarter.

Home sales – both new and existing – have been up most of the year. Price appreciation continues unabated in lower-end homes in many markets, though the overall trend in price appreciation is moderating. Case-Shiller's 20-city index shows prices year over year were up 5.4% compared to last year when they were up 6%.

We favor moderating price appreciation.  Prices at the national level should really appreciate at a percentage point or two above consumer-price inflation.  Yes, real estate wealth will accumulate at a slower pace, but at the same time sales activity will increase.

Homeowners want higher prices and home seekers want lower prices.  Prices appreciating at a rate closer to consumer-price inflation provides a nice equilibrium. We’re getting closer to a nice equilibrium that’s also a sustainable equilibrium.

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.

Thank the British for Today’s Lower Mortgage Rates

A vote occurred on the other side of the Atlantic last week, and the result was unanticipated by most political wonks.

As you no doubt know, the citizens of the United Kingdom voted their country out of the European Union.  And given the immediate response from financial markets around the world, you’d have thought that they had voted themselves off the planet.  Market participants responded by marking most everything down: stocks, commodities, global economic growth, and interest rates. (Gold, silver, and U.S. Treasury securities – havens all – bucked the trend to trade up.)

The yield on the 10-year U.S. Treasury note dropped nearly 25 basis points overnight to a level unseen since, well, never.  Because long-term mortgage rates follow the 10-year note (though not in lockstep), the 30-year fixed-rate loan hit a four-year low. Sub-3.5% on the 30-year loan has become the new norm.

The UK vote – known by the tedious portmanteau “Brexit” – enables the UK to free itself from EU diktats, which can be stultifying at times. (For example, bottled-water manufacturers are prohibited from saying water PREVENTS dehydration.) By voting “yes” on Brexit, the Brits voted for more local control, which it appears they will get.

Market participants are worried that the Brits also voted themselves out of the European market.  Worries were exacerbated by the notion that other EU countries – most notably France and the Netherlands – will also vote themselves out of the EU, thus starting a contagion that could end the EU.  Should this occur, a worldwide recession would ensue, so we’ve been warned.

Last week, we mentioned that we remain skeptical that the Federal Reserve would raise the federal funds rate before the end of the year. After the Brexit vote, we now have plenty of company. Traders in fed funds rate futures contracts are no longer giving near-term odds on a rate increase; the odds have shifted to a rate decrease.  Futures contracts are trading with a 6% chance that the Fed will cut the fed funds rates at its Sept. 21 meeting.  Odds for a rate increase don’t arise until the December meeting. The odds given are only 13%.

We think the potential negative consequences of the Brexit vote are unduly amplified. Yes, feelings are hurt and passions are inflamed, particularly among the losing side and among continental Europeans. But in time, cooler heads and rational thought will prevail.  The EU and the UK will maintain trading relations and the world will go. As for a global recession, It’s possible, but also improbable.

For now, we’ve got a low-lending rate environment that’s likely to persist through the summer months. With the Brexit vote out of the way, no major global event resides on the horizon. This means mortgage rates are unlikely to trend much lower.

There’s no overriding reason to lock at this point, but there’s also no overriding reason to float. Just keep in mind that rates tend to rise faster than they fall.  

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.

Purchase mortgage activity has been a bit weak in recent weeks, but we’re not worried.  We like this housing market and our affinity is unlikely to wane this year.  The outlook is simply too positive.

The outlook is certainly positive among homebuilders. The NAHB’s sentiment index increased two points to 60 following four-consecutive months stalled at 58. The latest report shows improving traffic, which has languished over most of 2016.  First-time buyer interest, in particular, is finally gaining traction.

Optimism picked up despite a slowdown in housing starts. Overall starts slipped 0.3% to 1.164 million units on an annualized rate in May. But there was a silver lining: Single-family starts continue to trend higher, rising 0.3% to 764,000 on an annualized rate. Year over year, single-family starts are up 10.1%.

As we all know, our bread is mostly buttered by existing-home sales. The NAR reports that existing-home sales sprang ahead in May to their highest level in almost a decade. Sales were up 1.8% to 5.53 million units. Prices continue to rise, with the median price of an existing home rising to $239,700, a record high.

Better yet, existing-home inventory is up, and that bodes well for summer sales. Inventory rose 1.4%  to 2.15 million existing units for the month.

To be sure, most people look to housing for shelter. But with financial markets riddled with uncertainty and volatility these days, we’re not surprised that more people look to housing as a store of wealth and as an investment opportunity. This, too, is unlikely to change in the indefinite future.

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.