Real Estate Information Archive

Speaking of positive equity, RealtyTrac reports that the universe of equity-rich properties, defined as equity 50% higher than what's owed, swelled to 9.1 million in the fourth-quarter of 2013 from 7.4 million in the previous quarter. On the other end of the spectrum, those deeply underwater – owing 25% or more than what the house is worth – declined to 20% in December from 25% at the start of 2013.

These two trends are obviously encouraging to our respective industries, but they're also important to the national economy. We say that because fewer people will view a house as an albatross. Many people have been reluctant to buy a house for fear if they need to move in a year or two, they'll be stuck with an asset that has lost value.

Today, people feel more secure because they don't believe their mobility will be compromised. This is obviously an important factor in bringing more people into the housing market.

This is also an important factor in economic growth. If someone buys a house in Denver and two years later is offered a better job in Chicago, that person needs to feel confident the house can be sold without incurring a loss. When people feel more mobile and more confident, they're more likely to take steps to improve their economic situation.

The perception of unimpeded mobility is crucial to maintaining a vibrant housing market. Thankfully, we should see more labor mobility in 2014, which will lead to a more vibrant housing market and a more vibrant economy.

 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.

Change Is on the Way

The most noteworthy change in 2014 is the confirmation of a new Federal Reserve chairperson. This past Monday it was made official: Janet Yellen now chairs the Federal Reserve.

In the course of a regular workday, few of us give the Federal Reserve much thought. But the Fed does matter; its policies are very influential to housing and credit markets, and to the economy as a whole. So the lead question is, is the new boss much different than the old boss?

For the immediate future the answer is “no.” Everyone is aware that the Fed under the old regime leader, Ben Bernanke, was foreshadowing a tapering, which came to pass. Starting this month, the Fed will purchase $75 billion in Treasury notes and bonds and mortgage-backed securities instead of $85 billion. We don't expect a further reduction until the unemployment rate falls below 7% and stays there.

At the same time, personal consumption expenditures (PCE) remain sedate, running at 1.2% on an annualized basis. PCE is the Fed's preferred measure of inflation, and it would like to see PCE running at 2% annually instead of 1.2%. Therefore, we don't expect the Fed to announce any rate changes, possibly until 2015.

So the Federal Reserve has changed chairpersons, but its current policies are unlikely to change.

With that said, we still see changes in the mortgage market. We see rates rising, to be specific. Even if the Fed wants to hold interest rates low, it can't mandate the rate at which market participants lend. Markets are anticipatory, and they are anticipating economic growth, which is why the yield on the 10-year Treasury note – a leading proxy for the 30-year fixed-rate mortgage – is now hovering at 3%.

This is why we expect a change in mortgage lending rates; “change” being a euphemism for higher mortgage rates in 2014.

A slowdown in home-price appreciation is another looming change. Admittedly, we've been talking about a price slowdown for some time, and yet the data from the major home-price aggregators has contradicted us. Are our eyes lying?

It's appearing less likely. The latest price data from Trulia show the year-over-year increase in asking prices slowed for the first time in nearly two years. Asking prices rose 0.4% month over month in December, and that translates to an 11.9% year-over-year gain. But in November the year-over-year gain was 12.2%.

2014 won't be a repeat of 2013, and that's a good thing. Yes, mortgages won't be quite as affordable and slowing home-price growth won't immediately lift as many homeowners into positive equity, but these negatives will be offset by big-picture gains in job growth and more economic activity – two themes we've been banging the drum on for the past six months.

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.

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

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

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

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

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

 Courtesy of Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Trends Persist Heading into 2014

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

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

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

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

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

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

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

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

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

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

Courtesy of Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

The principal reason we remain housing bulls is that we have a lot of ground to make up.

It's worth mentioning that the new-home market is not the existing-home market. Many people want new homes, and there aren't as many of them as there was in the recent past. This suggests that we will see a sustained uptrend in housing construction over the next few years. This is important not just for us, but for the economy in general, as housing has historically contributed 2%-to-3% to gross domestic product.

The good news is that we see stronger economic growth and stronger job growth in 2014. The bad news is that this growth will ensure higher lending 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.

Strangely Calm and Settled

The employment numbers for November were better than expected. Payrolls increased by 203,000 for the month, which handily beat the consensus estimate for 180,000. These new jobs helped drop the unemployment rate to 7.2% from 7.3%.

Last week, we mentioned that an unexpected spike in job growth would likely move mortgage rates higher. Interestingly, that wasn't the case: Bankrate.com's national survey held steady at 4.55% on the 30-year fixed-rate mortgage. Freddie Mac's survey shows that the rate on the 30-year loan actually declined four basis points to 4.42%.

Some credit-market analysts believe the mortgage-rate spike that occurred last week was a matter of market participants anticipating a strong employment report. That's plausible, given strong gross domestic product (GDP) growth, which also beat most economists' estimates.

More likely, though, uncertainty surrounding the federal budget kept investors in bonds, and, thus, kept mortgage rates under wraps. We say that because after a budget agreement was announced late Tuesday, mortgage rates moved discernibly higher.

This suggests economic growth will pressure mortgage rates going forward. By that, we mean growth will pressure rates to move higher. The meeting of Federal Reserve officials this coming Wednesday will provide further insight. The odds are rising that the Fed will initiate some level of tapering of its monthly Treasury and mortgage-bond purchases within the next couple months.

Frankly, when we look at the rebound in the yield on the 10-year Treasury note – a good proxy for the 30-year fixed-rate mortgage – we see a yield poised to move higher. And as the 10-year Treasury note goes, so, too, goes the rate on the 30-year loan.

But even if rates stand pat, costs on many mortgage products will rise beginning in 2014. The Federal Housing Finance Agency says Fannie Mae and Freddie Mac will increase the fee they charge lenders to guarantee mortgage loans. Of course, consumers don't directly pay for the fees, but lenders must recoup costs. So in the end, the consumer does pay.

Stricter rules on ability to pay also kick in. Stricter rules mean circumstances will arise where people who should get a mortgage won't. There are no free lunches: If costs aren't covered monetarily, they are covered through reduced opportunity.

That said, if rates don't stand pat, and we doubt they will, a 50-basis-point rise isn't out of the question. Many economists predict the rate on the 30-year loan will gradually work its way up to at least 5% by the end of 2014. We think that's a conservative estimate.

If we've said it once, we've said it a 100 times: risk in this market is in the waiting. Holding out for a meaningfully lower rate can potentially be very costly at this point. 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.

A month or so ago, we opined that home prices would cease to appreciate at a double-digit rate. Perhaps we jumped the gun. Trulia reports average asking prices rose 1% in November compared with October. This helped lift the year-over-year rate to 12.1%.

But in our defense, Trulia reports that price appreciation is slowing in some markets, particularly in ones that experienced the greatest price growth. Among the 100 largest metropolitan markets, the quarterly price increase in the 10 metropolitan areas where prices rose more than 20% year over year fell to 3.7% in November from 6.1% in August. This is no surprise; the hottest markets are always the first cool (and vice versa).

The point we want to emphasis is that many local real estate markets have been hot over the past two years, so we should expect to see more cooling in more local markets. Three months from now, we wouldn't be surprised to see a cooling trend appearing in Trulia's data.

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.

Will the Fed Cease Ruling the Roost?

Mortgage lending rates have made a beeline northward in recent weeks. This past week, Bankrate.com's national survey of lenders shows the average rate on a 30-year fixed-rate mortgage rose 11 basis points to 4.55%. Freddie Mac's survey shows an even bigger jump, with the average rate on the 30-year loan spiking 17 basis points to 4.46%. (A basis point is 1/100th of a percentage point.)

So what's going on?

By initial appearances, the economy is stirring to life. Revised gross domestic product (GDP) data for the third-quarter point to accelerating economic growth. The latest revision shows GDP growth increased 3.6% when annualized, exceeding most economists' estimates.

The $64,000 question is can the current growth rate be sustained?

As we've seen in the recent past (such as in the fourth-quarter of 2011), a couple quarters of growth are strung together, but the trend peters out. Companies building inventory levels was a key contributor to growth in the third-quarter. Most economists would have preferred to see more capital investment and more hiring leading the charge. That said, companies frequently build inventory in anticipation of increased business activity.

Friday's employment report will provide additional information to the state of the economy. We noted last week that the Federal Reserve keeps a close eye on employment numbers. Fed officials have said they'd like to see the unemployment rate below 6.5%. It stands at 7.3%.

The trend is the key, though. If job growth again beats the consensus estimate – as it did last month – this suggests the GDP-growth trend that's developed over the past year will be sustained. That in itself points to greater loan demand, which will pressure interest rates, including mortgage rates, to move higher.

Just as important, more growth (economic and payroll) will embolden the Fed to finally taper; that is, reduce its monthly purchases of Treasury and mortgage-backed securities. The Fed's demand for these securities has been key to holding mortgage rates so low for so long.

As we all know, mortgage rates have been moving higher ahead of actual data releases. This is normal, because markets are anticipatory: they act on expectations, not what's known at the moment.

It's obvious that more credit-market participants expect stronger economic growth; hence the rise in mortgage rates. Should Friday's job numbers support that contention, by meeting or beating the consensus estimate for 180,000 payroll additions in November, rates will likely move higher still. We stay that because exceptions for stronger future growth will rise.

But nothing is certain. The majority can be wrong – as it was when it expected the Fed to begin tapering in September. If job growth disappoints, interest rates will likely fall because the Fed will have less incentive to taper.

Back in September, we were among the correct minority: We didn't think the Fed would taper. More recently, we thought the economy still wasn't that strong and that the Fed might not begin to taper until 2014. We still believe the Fed will hold off until next year. That said, next year is less than a month away.

The bottom line is that pressure is building for the Fed to taper, which strongly suggests mortgage rates are much more inclined to go higher in coming months.

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 mortgage market has been subdued, and we don't expect that to change until Dec. 6 when the all-important November employment report is released. The report for October was exceptionally strong, and motivated a few Federal Reserve governors to ponder “tapering” the Fed's bond purchases in December.

If the employment numbers come in strong again (payroll growth above 200,000), the odds measurably increase that the Fed will undertake tapering as soon as December. The amount and pace of tapering – if any – is anyone's guess. But should the Fed begin to taper, mortgage rates will surely rise. How much they will rise, again, is anyone's guess, because the Fed will attempt to moderate any rate increase. Whether it can actually do that is another story.

We have to confess that we're still somewhat circumspect on the strength of the October employment numbers (which were likely hastily compiled). We would not be surprised to see them revised lower; nor would we be surprised to see payroll growth come in below the consensus estimate of 180,000. Economic growth appears to be gathering momentum, but still not enough to maintain payroll growth near 200,000 per month.

With that said, higher lending rates loom in the future – if not this month, then very likely within the next quarter. So at this point, waiting to buy a home with a purchase mortgage or waiting to refinance a current mortgage makes no economic sense.

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 Chug Along

A month or so back we thought a slowdown in the rate of home-price appreciation was upon us. After all, data from the NAR and the Census Bureau pointed to stagnating national median home prices.

But the latest issue of the S&P/Case-Shiller Home Price Index suggests otherwise. The index showed prices in its 20-city index increased 0.9% month over month in September. For the second-consecutive month, prices increases swept all 20 cities. This latest increase lifted the year-over-year gain to an impressive 13.3%.

We'll be interested to see what Case-Shiller reports for October. Data we've seen from Zillow and CoreLogic suggest some slowing in the rate of price appreciation. Our own anecdotal experience also suggests some slowdown in more local markets. We'd like to see if empirical evidence bears this out.

Unfortunately, empirical evidence still bears out weak sales growth. The Pending Home Sales Index slipped 0.6% to a 102.1 reading in October. The index is at the lowest level in nearly 12 months. Contract signings were likely impacted by the government slowdown, which made verifying income difficult for anyone needing a purchase mortgage. At the same time, rising prices and low inventory continue to impede sales.

Given the strong price increases over the past year, we're surprised we haven't seen more homes come to market. Rising prices always increase supply. With housing, though, the increase has been less than we expected.

Nevertheless, we are seeing at least a marginal increase in inventory, which is up 3.2% for the year. To be sure, i nventory remains very low, but if it continues to increase, you can be assured that the rate of home-price appreciation will slow. Rising supply always leads to a slowdown in the rate of price growth, if not an outright price reduction (which we don't expect).

New construction is another factor in raising overall supply. The Census Bureau hasn't published housing starts in a couple months due to the government slowdown, but it did release data on permits. On that front, permits for residential construction increased to 1.034 million units on an annualized basis in October, a considerable increase over the 918,000 units in August.

Unfortunately, all the gains are attributable to the multi-family segment. Single-family permits posted at 620,000 units on an annualized basis in October, which is actually a decreased compared with the 627,000 units in August.

The encouraging news is that we've seen a recent uptick in purchase-mortgage activity. Now, we'd just like to see this recent uptick morph into a long-term trend.

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.