Real Estate Information Archive

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.

The Trend Finally Ends

The run of lower lending rates has come to an end, at least for the time being.

Mortgage rates across most offerings and jurisdictions rose this past week. Bankrate.com's survey showed an average rate of 4.48% on the 30-year fixed-rate loan, five-basis points higher than the previous week. As to be expected, Freddie Mac's survey also showed a rise. It's data show the 30-year loan averaged 4.28%, which is also a five-basis-point increase. (The surveys differ because of methodology and average discount and origination points.)

Market participants point to two factors in the turnaround in rates: New Federal Reserve chair Janet Yellen and an encouraging economic report from China.

On the former, Janet Yellen reassured Congress this week that the economy continues to grow despite some softness. This means the Fed is unlikely to back away from tapering its purchases of mortgage-backed securities (MBS) and U.S. Treasury notes and bonds.

Over the past two months, the Fed has reduced its purchases by $10 billion each month. The Fed is expected to continue along this measured path – reducing purchases $10 billion each month – until it ceases. As we've noted frequently in the past, these note and bond purchases have helped keep mortgage rates low.

On the latter, China excited financial markets with an upbeat export report, which eased concerns of a possible global recession. This inspired investors to cycle out of haven investments – like Treasury notes and bonds and MBS – and cycle into riskier investments, like stocks. Money leaving the haven investments puts upward pressure on mortgage rates.  

For anyone concerned that rates will establish a new trend – up – we see little reason to worry. Five percent on the 30-year loan is still unlikely for the foreseeable future.

Despite the Fed chair chatting up the economy, things still aren't all that great. The employment numbers for January were particularly disappointing. The economy added 113,000 new jobs for the month, but this was far below the 180,000 many economists were expecting. Job growth remains stubbornly sluggish.

Interestingly, the unemployment rate actually fell to 6.6%, even though the participation rate increased slightly to 63%. Lower-than-expected job growth coupled with a higher participation rate would lead you to believe the unemployment rate would have at least remained constant, if not risen. Instead it fell, which is bit confusing to say the least.

The outlook for gross domestic product (GDP) growth is also vague. Some Fed officials still expect GDP to grow at a 3% rate this year. The private sector is a little more circumspect. The Wall Street bank Goldman Sachs has lowered its first quarter 2014 GDP estimate to 1.9% from 2.3% on an annualized rate. Anything below 3% is nothing to cheer about.

In short, there is no clear beacon to where the economy is headed. This leads us to believe that borrowers should still act to lock in today's low rates, but they've got some time to do so.

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.

So far, 2014 has been tough on stocks. Most major stock-market barometers are down, and down significantly. The Wilshire 5000 Composite Index , which encompasses nearly the entire U.S. stock market is down nearly 5% for the year.

So what does the stock market have to do with housing?

Most of us own stocks – either directly, through mutual funds, through a 401(k), or through an individual retirement account (IRA). What happens in the stock market effects our wealth position. Therefore, the stock market has a wealth effect: when the stock market goes up we feel more wealthy; when it goes down we feel less wealthy. How we feel impacts buying decisions, particularly for big-ticket items like homes.

It's plausible that the recent slowdown in housing activity is correlated at least somewhat with the recent down-drift in stock prices. People are hesitant to jump in the housing market when they see the stock market slump. They feel a little poorer, so they tend to resist the urge to take the plunge on a big-ticket item.

Of course, housing activity isn't dependent solely on the stock market, but the stock market does provide some insight to the outlook on the overall economy. The good news is that stock market has improved over the past week. Now we would like to see the stock market sustain recent gains and see those gains lead to more economic growth, and, of course, growth in housing activity.

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.

When Prognostications Go Slightly Awry

At the beginning of the year, we predicted that mortgage rates would end the year higher. Specifically, we predicted the 30-year fixed-rate loan would be quoted above 5%. To be sure, the year is still young. We're only into the first full week of February, but so far mortgage rates have been countering our opinion.

For the fifth-consecutive week, mortgage rates again drifted lower. On the national scene, Bankrate.com's survey shows the rate on the 30-year loan dropped seven basis points to 4.43%. Freddie Mac's survey shows the average rate on the same loan at 4.23%, nine basis lower from the previous week.

We're not quite ready to throw in the towel on our initial prediction. There are still 11 months left in the year. After all, we were right when we predicted the Federal Reserve would begin backing away from the U.S. Treasury and mortgage-backed-securities (MBS) markets. When that occurred, interest rates should have began to rise. Instead, the opposite occurred.

Last week, we mentioned there were extenuating circumstances that lead to lower interest rates, namely concerns about emerging markets that had investors seeking the haven of U.S. government debt. Similar circumstances continue to impact our lending markets to this day, only in a slightly different incarnation. This past week, Russia and Argentina suffered minor currency crises, which motivated even more investors to seek shelter in U.S. government debt.

Economic growth in China, the world's second-largest economy, further muddied the outlook for our own economy. China, in short, is struggling to maintain its high level of economic growth. Even though China is on the other side of the globe, it impacts our economic outlook because no country is an island anymore: economies and markets are interconnected. Enough U.S. companies do business in China so that a slowdown in China could hinder our own economic growth.

We've said more times than we can count that economic growth and job growth are the lead variables to sustaining a healthy housing market. We understand the desire for low mortgage-lending rates, but we would trade today's low rates for more growth, particularly job growth, in a heartbeat. Low interest rates simply lack the ”oomph” they carried a couple years ago.

We say that because despite mortgage rates falling over the past month, purchase applications still are unable to develop a sustained upward trend. The Mortgage Bankers Association's latest survey shows purchase applications were down 4% after posting a couple weeks of tepid gains. We understand that cash purchases are important contributors to housing sales, but the majority of buyers till use a mortgage to finance their purchase. Unfortunately, prospects for a pick up in new- and existing-home sales look discouraging for the near term.

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.

For the past year (if not longer), we've been preaching that economic growth, not interest rates will drive housing. To be sure, it was encouraging to see purchase-application activity pick up on lower rates. Unfortunately, cash is still king. The NAR's latest sales data show cash buyers comprised 32% of existing home sales in December. Therefore, a 2% uptick in purchase applications isn't as meaningful as it would have been a decade ago.

Whether mortgage rates are lower or higher, they don't appear to have much impact on home sales these days. Sales of existing homes bounced back in December from a very weak November, but not by much. Sales for the month came in at 4.87 million units, which is about where they were 18 months ago. Unfortunately, sales remain significantly below where they were this past summer. Interestingly, during that time, mortgages rates were rising as monthly sales were rising. Source: Econoday

For this coming week we'd like to see the Federal Reserve's data show stronger economic growth. In addition, we'd like to see that data supported by strong fourth-quarter-2013 GDP growth. If strong economic growth is supported with strong job growth, a 5% rate on the 30-year loan will still be an affordable rate in the grand scheme of things.

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.

Defying Consensus Estimates

We, along with most everyone else , believe interest rates will rise in 2014. If you were to ask most mortgage bankers where the rate on the 30-year fixed-rate loan will be on Dec. 31, 2014, you'll likely get a response of 5% or above.

To be sure, the year is still young, but mortgage rates have defied the majority opinion by trending down, not up. This past week, rates were either steady or slightly down across the board. Bankrate.com's weekly survey shows an average rate of 4.56% on the 30-year loan. Freddie Mac's survey shows the 30-year loan averaging 4.39%, two basis points lower than last week.

Depending on your local market, the rate on the 30-year loan has dropped from 10-to-15 basis points in this new year. Rates have dropped despite the Federal Reserve announcing it was reducing its purchases of mortgage-backed securities.

We're not terribly surprised mortgage rates have been falling. At the beginning of the year, the 10-year U.S. Treasury note was yielding above 3%. As we write, the yield is below 2.8%. (To get a rough idea of where the 30-year fixed-rate mortgage is headed, follow the yield on the 10-year Treasury note, which you can readily find at most financial portals .)

The upside of lower mortgage rates has been an uptick in both refinance and purchase application activity. The Mortgage Bankers Association 's latest survey shows refinance applications were up 10% last week, while purchase applications were up 2%.

The downside is that lower rates have come tethered to lower job growth. We mentioned last week that we were sorely disappointed in the December payroll numbers. Job growth for the month was far below expectations.

Later next week, we'll get an idea if December's employment numbers were simply an anomaly that's unrelated to the economy. Preliminary data point to gross domestic product (GDP) growing 3% on an annualized rate for the fourth quarter of 2013. Let's hope that growth is moving ahead at least that much. If growth meets or beats exceptions, December's weak job numbers will likely have been a one-off aberration, and not the start of a new trend.

The Federal Reserve will also influence interest rates this coming week. Fed officials are scheduled to convene on Tuesday. On Wednesday, we'll be privy to what they discussed. Most likely, we'll hear that the Fed still supports holding interest rates low into the distant future. But for the immediate future, rates could still rise or fall depending on the Fed's outlook on the economy.

The bottom line is that we expect to see some volatility in mortgage rates over the coming week, with most of it occurring on Wednesday and Thursday.

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.

Do lenders prefer higher or lower interest rates? The answer isn't straightforward. Higher lending rates translate to higher income as long as the rate at which a lender borrows (generally a short-term rate) to fund a loan remains unchanged. On the flip side, higher rates lead to lower lending activity.

We still think higher lending rates are in our best interest long term. We've noted many times that higher rates are reflective of the two important market variables we mention above – economic growth and job growth. Both can easily compensate for higher rates. If job growth is accompanied with rising wages, home affordability remains relatively unchanged.

Higher rates also lead to more accommodating lending standards. We'll all agree that standards are tight today, possibly overly so. But Federal Reserve data lend credence to our assertion: When rates were rising last year, lending standards showed a measure of easing. This makes sense; higher rates lead to more profitable lending opportunities. What's more, the risk of lending to lower credit-quality borrowers is mitigated by price-appreciating collateral.

So rising rates are a mixed blessing, but a blessing that in the grand scheme of things will prove beneficial.  

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.

Can We Trust the Numbers?

We'd like to think we can, but we have to ask, even if we ask tongue-in-cheek: Are these numbers real and do they reflect the state of the economy?

We're referring to the employment numbers released last Friday, which we found to be highly unusual and very surprising. According to the Bureau of Labor Statistics , the unemployment rate dropped to 6.7%, the lowest it has been since the Bush Administration. That's the good news, and news we can understand, given strong economic growth in the waning months of 2013.

The bad news – and the news that left us scratching our heads – is that payrolls increased by a mere 74,000 in December, which fell far short of the consensus estimate for 193,000. Even more disconcerting, many of the new jobs – 55,000 – were in retail, which tends to be a lower-compensated segment of the economy. We were, quite frankly, expecting job growth to hover near 200,000, especially when considering payrolls increased 241,000 (revised up from 203,000) in November and 200,000 in October. We thought elevated monthly job growth would coincide with gross domestic product , which had risen through most of 2013.

But at least the unemployment rate is falling, you might reason. This is a point of contention among economists, because it's falling on falling labor participation . Those working or seeking work has dropped to 62.6% of the population, the lowest since 1978. As recently as 2008, the labor participation rate was at 66%. Many market commentators fret over the low labor participation rate. But there appears to be a mitigating factor: There is evidence the lower participation rate is related to a higher retirement rate. If that's the case, today's flaccid labor participation rate is less dire than first appearances might lead us to believe.

Employment and economic growth is a recurring theme in these pages because of their importance to the housing and mortgage markets. We've said repeatedly that we'd love to see more jobs and more economic growth, even if they lead to higher lending rates.

The upside to disappointing job growth is falling mortgage lending rates, which is what happened this past week. Bankrate.com reports the average rate on the 30-year fixed-rate mortgage dropped nine basis points to 4.57%. Freddie Mac's survey shows the average rate on the 30-year loan fell 10 basis points to 4.41%.

The sizable drop in mortgage rates over the past couple weeks has ignited application activity, which we're glad to see. The Mortgage Bankers Association's latest survey shows that refinance activity jumped 11% last week. More important, purchase applications increased 12%. The surge in purchase applications leads us to believe that job growth for December was an aberration. After all, a loan is frequently contingent on the borrower being employed.

So if the December job numbers prove to be an aberration, then today's lower lending rates are likely an aberration, and also a window of opportunity. If the January job numbers move up to the 200,000 range, you can be assured mortgage lending rates will move up with them. Recent positive economic reports, along with our instincts, lead us to believe January's payroll numbers will be closer to 200,000 than 100,000.

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.