Real Estate Information Archive

Last week, we wrote that housing would be the economic driver that lifts us from the morass that has plagued the economy for much of 2012. This week's slate of housing data buttresses our argument.

We'll start with existing-home sales. The data show sales rose 2.1%, to a 4.79-million annual rate, in October. Prices continue to trend higher, with the median price of an existing-home posting at $178,600, an 11% increase over the year-ago median price. The average price, meanwhile, was up 9.9% year over year to $226,300.

Supply was a minor irritant in the data. Existing-home sales likely would have been higher if there had been more homes to sell. Inventory dropped to a 5.4-month supply in October, the lowest level in 6-1/2 years. The number of existing homes on the market, at 2.14 million, is the lowest in 10 years.

Existing-home sales contribute to economic growth, just not as much as new-home sales. Before a new home is sold, it must be built. Construction activity has far-reaching implications. Construction requires new material, new employment, and new financing. Many more businesses are impacted by the sale of a new home than an existing home.

For these reasons, new-home activity is a key component in economic activity.

The good news is that home builders are maintaining a busy construction schedule these days. New home starts were up again in October, rising 3.6% to an annual pace of 894,000 units. The pace in starts is up to a level unseen in over four years.

Given the strong, persistent trend in starts, we weren't surprised to see home-builder sentiment rise yet again. The latest survey of home builders show sentiment is approaching a seven-year high at 46 (50 is the point were optimists and pessimists are split). We expect sentiment, along with new home sales and starts, to trend higher through December and into 2013.

We remain bullish on sales because the housing recovery continues to expand to more markets. Zillow’s October Real Estate Market Reports show that 228 (62%) of the 366 markets it follows saw annual home-value appreciation in October. Among the top 30 metropolitan regions, 29 experienced monthly home-value appreciation.

Financing also continues to trend positively. The Mortgage Bankers Association reports its purchase index was up 3% for the November 6 week. Though applications are volatile week to week, they remain in an up trend dating back to April.

We've mentioned many times that leveraging an appreciating asset is a smart financial move. Borrowing to pay part of the purchase price means realizing a higher return on investment, because borrowing (leverage) requires less equity commitment.

Low lending rates also goose investment returns. Mortgage lending rates continue to hover near all-time lows, and we don't see that changing in the immediate future. Keep in mind, though, should housing ignite economic growth, lending rates will be hard pressed to maintain today's all-time lows.

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.

Times certainly change. Until early this year, most pundits and commentators were lamenting how housing was a drag on the economy. No more, housing is now looked at in many circles as the savior that will get the economy going. The great investor Warren Buffett, for one, sees housing growth stimulating the economy (and he is investing in housing and banking accordingly).

While its growth has been far from parabolic, housing has been the one constant this year. Equity markets, commodities, Europe, and our own domestic economy have displayed fits of volatility and stagnation. Housing in contrast, has continually pushed forward.

This is very good news, and better than most people appreciate. Residential fixed investment accounted for 0.33% of one percentage point of GDP growth (a sixth of its growth) during the third quarter of 2012, up from 0.19% in the second quarter, and up from 0.03% in the year-ago quarter. Housing is obviously a big contributor to economic growth.

Housing is also a big contributor to consumer confidence. Many people don't understand the stock market or the European debt crisis or the fiscal cliff, but everyone understands housing. As housing goes, so goes consumer confidence. Considering the direction housing is going, that's a strong positive indicator of how things could go in 2013.

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.

All the hype and hoopla that centered on shadow inventory and its ability to depress the housing market earlier this year seems a little overdone in retrospect.

Indeed, shadow inventory has almost become a non-issue these days, and heading into 2013 it will likely become even less of an issue. We say that because the Mortgage Bankers Association reports mortgage delinquencies hit a four-year low in the third quarter. At the same time, the foreclosure inventory rate fell 20-basis points, posting the lowest quarterly drop since the MBA began surveying the market.

The delinquency and foreclosure trend has actually been on the decline since peaking two years ago. We expect it will continue to decline through 2013, and very likely beyond. There are a number of reasons we think distressed properties won't spoil the recovery.

For one, negative equity is declining. Zillow reports that negative equity declined 30% in the third quarter of 2012, the largest percentage decline Zillow has ever reported.

The decline in negative equity is the corollary to rising home prices. Over the past year, we've continually, and almost without fail, reported on rising home prices. Keeping the streak alive, we report this week that Zillow's data show home values rose 1.3% in the third quarter compared to the second quarter, with the national median home price rising to $153,800.

A dearth of inventory will keep home prices rising, and thus further reduce the negative-equity overhang. New-home inventory is at record lows. The National Association of Realtors will report existing-home inventory next week, and most industry watchers are expecting inventory levels will be down sharply year over year in October. Low supply plus rising demand equals rising prices.

The current interest-rate environment should continue to ensure a minimum level of demand going forward. We are all aware that mortgage lending rates are at multi-decade lows, and that's unlikely to change through 2013.

Underwriting is the more pressing issue these days. Lending standards remain tight, particularly with lower-rated borrowers. A less diverse lending environment is one reason they remain restrictive. Private investment has yet to return in mass following the financial-sector meltdown in 2008.

Risk aversion is another reason. Lenders are rightfully concerned with the costs Obamacare will impose on the economy next year. They are also concerned with the fiscal cliff, which would mean tax-rate hikes and spending cuts. It also appears more likely that Europe could fall into recession. If that occurs, the probability rises that the United States could fall into recession too.

The fiscal cliff is the most oppressive concern these days. Democrats and Republicans have attempted to pound out various compromises. We've heard some chatter that the mortgage income tax deduction is on the table. One bipartisan plan would limit the deduction to $25,000 worth of mortgage interest annually. Other proposals include eliminating the deduction for taxpayers earning $250,000 or more, ending the deduction on second homes, and even ending the deduction entirely (this last option is unlikely).

In short, there is a heckuva lot of uncertainty in the financial markets today. Until some of the uncertainty is removed, we can expect mortgage rates to remain low, but we can also expect for underwriting standards to remain elevated.

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.

With the year coming to a close we can look at this chart and say when reviewing the prices of sold homes that things are not getting better in the Greater Harrisburg PA real estate market. BUT the number of sold homes increased and the all important days on market (time required to secure a sales contract) has decreased markedly. Yes you can say that the median and average sales price has declined and it has but the number of home for sale has decreased by over 5% compared to October 2011 and the homes that have sold but not settled has increased by 35% over the same time last year. We have been saying things will improve but any improvement will not be without some bumps in the road. October is a good indication of that. Later on I will give a breakdown of the sales for the school districts comparing 2011 vs 2012. Please remember the market is getting better and good things happen for those who wait.

HAPPY THANKSGIVING.

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 “fiscal cliff” has taken center stage after the election. The fiscal cliff is Fed Chairman Bernanke's shorthand for the combination of federal tax increases and spending cuts that are scheduled to go into effect January 1, 2013. If we were to hit the cliff full throttle, we'd experience $500 billion in expiring tax cuts and automatic government-spending reductions.

The fiscal cliff's attention is well deserved. The Congressional Budget Office (CBO) estimates the economy will be pulled down into another recession, with gross domestic product (GDP) shrinking 0.5%, if Congress fails to act. In turn, unemployment will rise to over 9% from today's 7.9%.

In other words, there is an elevated level of uncertainty still weighing on housing; however, we expect this uncertainty to be removed before the end of the year. We will likely see a compromise on income-tax rate increases; and we will likely see a compromise on federal spending cuts.

Once the uncertainty of the fiscal cliff has been removed, we expect business investment and hiring to increase, which will lead to more normalized economic growth rates (between 3% and 4% annually). Should that occur, the odds increase that we will be looking at fewer value-priced homes and higher mortgage lending rates this time next year.

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.

Home prices continue to point to a sustained and expanding housing recovery.

On that front, the National Association of Realtors reports that prices for single-family homes rose in 81% of U.S. cities. What's more, prices are not only rising, they are rising at a higher rate. NAR's data show the national median price for an existing single-family home rose to $186,100 in the third quarter, a 7.6% increase over the third quarter of 2011.

We've pointed out in the recent past that the good news on pricing isn't emanating from only a few sources; it's emanating from nearly all sources.

The NAR's good news on home prices is supported by CoreLogic and Trulia. CoreLogic's data show that home prices rose 5% year over year in September, posting the biggest increase since July 2006. Trulia's data show that home prices rose 2.9% year over year and 0.7% month over month in October.

This up trend in home prices is a strong selling point to clients, as is the prospect of a diminishing inventory of value-priced properties.

This time last year, we reasoned that homes were priced to produce outstanding long-term appreciation. That's turning out to be the case, but it may not be the case for long. Many homes are still priced to produce superior price appreciation, but there are certainly fewer of these homes on the market today compared to last year.

The reduction in distressed prices and value-priced inventory is attributable to the shrinking supply of distressed properties. The inventory of REO properties owned by Fannie Mae, Freddie Mac, and the FHA continues to decline, and will likely continue to do so in 2013.

An important, but frequently overlooked, demographic trend leads us to believe there will be no backsliding on rising prices and reduced value-priced inventory.

Census Bureau data show new households are being formed at the fastest rate in more than six years. T he United States added 1.15 million households in the 12 months that ended in September. That's a significant increase over the past four years, when an average of 650,000 households were formed annually.

Rising household formation means consumer confidence is also rising, as is confidence in the economy and job prospects. These factors translate to rising home demand and continually rising home prices.

Mortgage rates, on the other hand, continue to buck the trend; they're not rising. Though not moving materially lower in recent weeks, mortgage rates still don't show any inclination to move higher. Given the election results and slowing economic growth in Europe, we don't expect them to move materially higher, for at least the remainder of the year.

The four-year extension of the Obama administration means an extension of Ben Bernanke's reign as Federal Reserve chairman, and an extension of his low-interest rate policies. Across the Atlantic, slowing economic growth in Europe means more money will flow into haven investments like U.S. Treasury notes and bonds and agency securities, such as mortgage-backed securities.

Money flows from the Federal Reserve and private European investors into U.S. government securities ensure mortgage rates will remain low, at least 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.

Hurricane Sandy swept through 12 U.S. states this past week, causing wide-spread flooding and an estimated $10 billion to $20 billion in potential losses, according to research firm Capital Economics. That means a lot of money will be earmarked toward home repairs and new-home construction. Some commentators have viewed this as a silver lining.

To be sure, more money spent on housing will help the housing sector, but there is an unseen and a frequently neglected opportunity cost: Money spent on housing is money that could have been spent elsewhere. A natural disaster means money must be spent to replace what already existed; that's money that could have been spent on other goods or services or investments.

This lost opportunity to spend elsewhere is what the 19 th century French economist Frederic Bastiat referred to as “the unseen.” Yes, we can see more money being spent on housing, but we can't see where it would have been spent had there been no hurricane.

In other words, Hurricane Sandy will provide a boost to housing, which is our gain, but that doesn't translate into a boost to the overall economy because of the lost opportunity to spend elsewhere.

The point we want to emphasis is that it's always worth considering Bastiat's the unseen. The seen in housing is improving sales and pricing, but the unseen is what the housing recovery could be if it were unhampered by the exclusion of unfunded qualified borrowers. This unseen is our loss.

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.

“Dog bites man” has been a leading theme as we head toward 2013. By that, we mean we continually report on improving home prices; to the point where home prices are almost no longer longer news.

We say “almost,” because after years of reporting on falling prices, we still have a ways to go on the upside to balance the scales.

The latest price data from S&P/Case-Shiller added more weight to the rising-price side. Case-Shiller's data show home prices edged up 0.9% month-over-month in August for 19 of the 20 cities it follows. Case-Shiller's data continue to affirm the positive price-trend data issued by other popular pricing providers, such as Zillow, Fiserv, and CoreLogic.

Speaking of CoreLogic, its latest data release shows continued improvement in distressed properties. CoreLogic reports that completed foreclosures posted at 57,000 in September, down from 83,000 a year earlier and slightly lower than the 59,000 foreclosures reported in August. Improved pricing and greater demand, which have enabled more short sales, are allowing more underwater borrowers to escape their obligation without foreclosure.

The downward trend in foreclosures, along with a gradual clearing of the shadow inventory and rising home price, leave little doubt that we are in the midst of wide-spread housing recovery.

Of course, ulta-low mortgage lending rates have aided the recovery in no small measure. Rates today continue to hold their lows (though they haven't been setting new lows lately).

Today, the concern, if not the lament, among housing-market participants is credit availability. Last week, we reported on the Mortgage Bankers Association lament that too many qualified borrowers are not getting their loan. Overly strict lending standards, in short, are retarding the speed of the housing recovery.

Most of us know that credit availability is a chief concern among first-time home buyers, many of whom lack strong credit scores or large down payments. This segment usually constitutes 45% of the overall home-buying market, but today it's down to 32%, according to the National Association of Realtors.

There is still too much uncertainty in the market for lenders to venture farther out on the risk curve. Impending new regulations have lenders understandably nervous. The new regulations will determine risk held by lenders, as well as down payment required for borrowers.

To be sure, we need to balance regulation with access to credit, but that's a fine balancing act. What's more, it's not a constant act. The system must be sufficiently flexible to meet market demand.

The good news is that the purse strings show signs of loosening. A recent survey by the Federal Reserve shows that banks, on net, are reporting easing lending standards. (The survey encompasses all forms of credit, not just mortgage.)

We think we will see a less restrictive mortgage market in 2013. Economic growth and job creation are expected to improve next year. An improving economy leads to more liberal lending policies and more accommodating regulation.

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 MBA expects purchase originations to climb to $585 billion in 2013, up from an estimated $503 billion in 2012. That's the good news.

The bad news is that there should be even more purchase originations. Housing and Urban Development Department data show that 10% to 20% of qualified borrowers are not getting approved for loans. We believe that figure under reports the problem.

So why are too few qualified borrowers getting their loan? The answer centers on regulation and private participation.

As for regulation, it's simply too heavy handed, which discourages risk taking by lenders. We find a comment by new MBA Chairperson Debra Still revealing. She says, “Clearly, we are still in the penalty phase of the housing crisis,” meaning that lenders are still paying for past digressions. That's hurting many of today's qualified borrowers.

We also find it interesting that the government-sponsored agencies –Fannie Mae, Freddie Mac, Ginnie Mae – want more private capital in the housing finance system. We couldn't agree more, because more capital sources and more participants create a more diverse and accommodating lending environment.

Unfortunately, overly strict regulation and artificially low interest rates are keeping private capital on the sidelines. Private capital requires more lending freedom and a higher rate of return on investment than public capital.

Fortunately, stronger economic growth, which we expect in 2013, should loosen the shackles. Both lenders and regulators become less risk averse when economic growth is rising. Rising growth also brings rising interest rates, and that's not bad. Higher rates will attract more private capital.

In short, we expect to see a more robust lending environment next year, which should also be a higher lending-rate environment. And that's a good thing.

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.

Federal Reserve Chairman Ben Bernanke has a thing for housing. Most of the Fed's monetary policies over the past three years have focused on re-igniting the housing market.

Whether through Fed policy or market forces, a flame has taken hold. The new home market is becoming a driving force behind economic growth. To that end, sales of new homes rose 5.7% in September to an annualized rate of 389,000 units. This latest increase puts the market back to March 2010 sales levels. Back then, sales were propped up by federal home-buyer tax credits.

Supply of new homes, at a mere 4.5 months, is tight. Tight supply, along with increased demand, has pushed the national median sales price up 11.7% year over year to $242,400. Couple increased demand with higher prices and we get more home construction down the road.

More construction is good news for the economy. Residential real estate investment has historically averaged 5% of GDP, while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP. We're still not close to that level today. Despite the strong gains in new-home sales, 2012 will be the third or fourth lowest sales year since 1963. That means there is still a lot of upside potential in this market.

Current sales and construction trends point to a strong new-home market in 2013. The spill-over effect to the overall economy points to stronger economic growth.

Mortgage lending rates on all this new home construction, as well as on existing homes and refinances, continue to hold their multi-decade lows. More important, purchase applications have taken measurable strides forward in the past month.

We still don't see mortgage rates rising materially in the near future (and we don't see them falling materially lower either). For this, we can thank the Federal Reserve.

The Fed remains committed to buying $40 billion of mortgage-backed securities each month, which creates demand for mortgage loans on the secondary market. What's more, the Fed is committed to purchasing these securities in the same monthly amounts through 2013. The Mortgage Bankers Association (MBA) estimates the Fed will be purchasing nearly 50% of all mortgage originations by the end of next year.

The point we want to emphasis is that mortgage lending rates will have a tough time moving higher. Notice we say “tough,” not impossible. If the trend in new-home construction and sales continues, the economy will grow, and it could grow at a quicker pace than the Fed governors anticipate. Higher economic growth leads to higher interest rates.

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.