Real Estate Information Archive

You may have noticed that mortgage rates have moved higher over the past week. Depending on the lending product, you may have seen a five-to-10 basis point increase in the rate quoted this week compared to the rate quoted the prior week.

What’s going on?

Last Wednesday, the Federal Reserve released the minutes of the latest meeting of its chief policy makers. It appears that talk of raising interest rates has been amplified. The minutes show that there was a strong bias among the 17 participants for a June hike (June 15 is the next meeting) in the federal funds rate if the conditions warrant it. A few of the participants were even ready to raise the federal funds rate last month.

We frequently turn to futures traders to gauge what the market anticipates. As of now, traders in federal funds rate futures contracts are pricing the contracts for a 37.5% chance of a rate hike next month. These same traders are pricing a 61% chance the hike will occur in July if it doesn’t occur in June.

As for us, we still think that it’s more likely the Fed won’t raise rates. Economic growth remains sluggish. We don’t think the Fed will want to risk derailing the one reliable growth engine – housing. What’s more, the more dovish policy makers continue to cite downside risks to the economy and downside risks to their inflation target.

That said, we are a minority opinion. Many market watchers are concerned that the Fed is preparing for a rate hike. This could create rate volatility and raise the pressure for higher mortgage rates over the next few weeks.

Float or lock? All we can say is that locking wouldn’t necessarily be a bad idea.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Housing: The New Growth Market

Things are shaping up nicely as we head into summer.

Sales of existing homes once again ratcheted a notch higher. For April, sales rose 1.7% to 5.45 million units on an annualized rate.  The sales trend shows that monthly sales are occurring at the highs that were posted last fall.

We’re seeing more sales, but we’re not seeing more discounting.  To the contrary, the median price of an existing home rose 5% to $232,500 for April.  Year over year, the median price is up 6.3%. The fact that we are seeing more sales while prices hold firm bodes well for sales as we head into summer.

That we also see more existing homes coming to market also points to strong summer sales. Existing-home inventory was up a stout 9.2% for April, lifting the total number of homes for sale to 2.14 million. But even with this increase, inventory still runs low. The number of existing homes for sale in April were 3.6% lower than the number that prevailed a year ago. All in all, though, the April report on existing-home sales was a very encouraging report.

The same can be said for the report on new-home sales. The report was very encouraging. Indeed, it was even more than very encouraging. Our initial response was “WOW.”

April new-home sales posted at 619,000 units on an annualized rate. That’s a 16.6% monthly increase – the highest monthly increase in 24 years.  April’s numbers blew out all other monthly numbers since the housing recovery took hold a few years ago.  What’s more, the April report showed a 39,000 net upward revision in sales in the previous two months.

The trend in pricing makes the surge in new-home sales all the more startling.  Builders had been discounting to move inventory in recent months. That certainly wasn’t the case in April: The median price of a new home soared 7.8% to a record high of $321,000.

On the lending side, we find that the trend in mortgage applications also portends better days ahead.

Purchase applications moved higher last week, increasing 5% from the prior week. Purchase- application activity is running 17% higher than it was a year ago. This is an impressive gain that points to a strengthening housing market.

This latest round of housing and lending data support a contention that we’ve had all along.  Entering January, we predicted that 2016 could be the strongest year for home sales and lending that we’ve seen in over decade.  Our prediction is looking more likely to come to fruition.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

We certainly hope that stock-market investors don’t sell in May and then go away. A deep decline in stock prices could be a negative for us because it would mean a reduction in accumulated wealth.

The less wealthy you feel, the poorer you feel. This appears obvious, but when people feel less wealthy they tend to dig in and spend less. The first items they target for spending cuts are the big-ticket items – automobiles and homes. (People frequently label homes as investments, but that’s not true. A housing investment generates cash flow through either rent or a flip. An owner occupied house is an asset, but not an investment. It is a consumption purchase.)

When the stock market sold off hard in 2000 and 2008, we saw a marked decrease in home sales and lending activity. Potential home buyers felt less wealthy, and the big-ticket items were the first items to be deleted from the “buy” list.

The good news is that housing returned with a vengeance (even despite the price depreciation that occurred in 2007 through 2009). Many investors turned to homes as a store of value and source of cash flow instead of stocks.

That said, the stock market has been teetering on wobbly legs of late. Let’s hope it regains its strength.   Should stock prices tumble, you can be sure that the repercussions will be felt in our neck of the woods.  That, we can do without.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Sell in May and Go Away?

There’s a stock market bromide that goes “Sell in May and go away.” The gist of the bromide is to sell your stock holdings in May and then repurchase them in November. The strategy, so we’re told, enables you to avoid the months where stocks have historically suffered their most punishing losses.

For us, it’s the opposite – sell in May and keep selling to November. (Actually, keep selling through April, but why quibble?).  Home sales generally trend higher starting in May and peak in either September or October.

The good news is that we’ve got a jump on the prime selling season. Existing home sales were up strongly in March and the momentum is expected to hold in April.

As for new homes, sales growth has been respectable, but not spectacular, this year. Home builder optimism, in turn, has plateaued in recent months. The Wells Fargo/NAHB Sentiment Index posted at 58 for May. This is the fourth-consecutive month the index has posted at 58. This isn’t bad, but builders aren’t quite as optimistic as they were six months ago.  Buyer traffic remains an issue; builders don’t see enough of it. The dearth of first-time buyers remains a drag on overall traffic growth.

Despite sentiment plateauing, home builders are still willing to move ahead. Housing starts and permits trended higher in April. Starts rose 6.6% to 1.172 million units on an annualized rate. Permits rose 3.6% to 1.116 million units. Year over year, though, starts and permits are both down, with starts falling 1.7% and permits falling 7.2%.  Keep in mind that starts have historically averaged 1.5 million units annually.

But there is a mitigating factor: Most of the weakness is in the multi-family segment, which have been on a tear over the past five years.  Single-family units continue to trend higher.  Year over year, single-family starts are up 3.3%; permits are up 8.4%. 

We have to concede that we are somewhat nervous as we head into summer.  Gross domestic product growth (GDP) has ground to a halt. To be sure, GDP is by far an incomplete measure of how the economy is doing, but it does capture headlines and it does influence behavior. We’d like to see a little more growth.  The latest reading on GDP doesn’t even show the economy growing 1% annually.

Job growth – particularly in the private sector – is the greater concern, though. Last month, new jobs posted well under 200,000. A couple more months of sub-200,000 job growth and we might have to ratchet down our expectations for home sales and purchase mortgage lending.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Mortgage rates have drifted higher over the past two weeks. Many loan products are now quoted 10-basis points or more above quotes given in mid-April. Rising rates have crimped purchase-loan activity. Purchase applications were down 2% last week, according to the Mortgage Bankers Association.

Mortgage bond prices and U.S. Treasury prices have drifted lower on a dearth of bad news. In turn, yields have drifted higher. Commodity and oil price are on the rise (as you’ve likely noticed at the pump).  Rising prices is generally viewed as a good sign because demand is picking up and rampant price deflation is unlikely. There’s also little global discord. For the moment, most of us are getting along; markets are settled.

The current ethos is priced into the market. The news is unlikely to get much better, but it could get a little worse.

In fact, we’ve seen bond prices inch up and bond yields inch lower this week. Mortgage quotes have also inched lower. So, what’s going on? Financial markets are slightly unsettled over recent events in the technology sector. The world’s largest company, Apple Inc., missed on quarterly revenue and earnings estimates this week. The news likely had a few institutional investors selling Apple shares and buying low-risk bonds.

Overall, though, there isn’t much bad news, but what bad news there is should hold interest rates at their current levels. The party is still on.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Starts Still Spinning Wheels

It’s encouraging to see that home builder sentiment remains positive. The Wells Fargo/National Association of Home Builders Sentiment Index posted at 58 in April.  This is the third-consecutive month the index has posted at that number. (A posting above 50 is a positive sign.)

Home builders are optimistic about the future, but for the present, activity has slowed. Housing starts fell a sharp 8.8%, to a 1.089-million annualized rate, in March.  Permits, which are indicators of where activity is heading, show similar weakness. They were down 7.7%, at a 1.086-million annualized rate, last month.

That said, the long-term trend remains positive. Starts are up 14.2% year over year. What’s more, there’s still plenty of room to grow. The long-term average annual start rate is 1.5 million. Starts could increase by 50% and that would bring us only to historical norms.

Mortgage rates remain accommodating to both home starts and sales.  They continue to hold near lows established a few weeks ago.  Best execution rates on the 30-year fixed-rate loan are still regularly quoted below 3.75% in many parts of the country. What’s more, rates show little inclination to move beyond the tight range they’ve held since the beginning of April.

The good news is that more buyers are taking advantage of low rates. Though purchase applications were off slightly last week, they are still up 17% year over year.  Purchase applications for new homes have been particularly robust. They were 17% for March, and that was a month-over-month increase.  Perhaps that’s the reason for builder optimism.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

You’ve no doubt noticed that mortgage rates have been on the rise. This has been the trend over the past 30 days.  We shouldn’t be surprised. The 10-year U.S. Treasury note yields 2% these days. That’s a yield it hasn’t offered in nearly two months. As the 10-year note goes, so go mortgage rates.

The good news is that conventional 30-year fixed-rate quotes are still mostly below 4%. As long as the economy continues to grow and businesses continue to create new jobs, we don’t see rising rates derailing housing’s multi-year upward trajectory.

But again, rates have been rising. We wouldn’t be surprised if they continue to rise.

Given recent upward trends in stock and commodity prices, along with a general sense the global economy is less likely to enter a recession, mortgages rates could easily move higher. What’s more, odds favor the Federal Reserve raising the federal funds rate again sooner than later. A month ago, traders in fed funds rate futures contracts were pricing a 30% chance of another rate hike in December. Today, they’re pricing for a 41% chance of another hike by June.

To be sure, trader sentiment can wax and wane with market sentiment. But it’s looking more likely that higher, not lower, mortgage rates reside in our future.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

We’re becoming a nation of renters, so we’ve been told since the housing bubble burst in 2008.

We never bought the narrative. Surveys, most notably those produced by Fannie Mae, continually show that the vast majority of people prefer to own than rent. We’re not surprised. If given the choice between owning or renting a home, most people will choose owning. That’s human nature.

The good news is that more people are moving into a key home-buying age demography – those age 30 to 39.  Data aggregated by CalculatedRiskBlog show that people embrace and pursue home buying with more conviction when they hit their 30s. This age demography is expected to grow significantly over the next decade.

Given current trends, the long-term outlook on housing remains positive, particularly for new-home construction. This market niche has yet to return to historical norms. Starts have historically averaged 1.5 million per year. Today, that number is around one million. Rising demand driven by millennials hitting their 30s will help lift annual starts back to historical norms. This is a key reason we expect starts – single-family starts, in particular – to grow in coming years.

 Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Back on Pace Again

After a respite in January, payrolls returned to form in February: Job growth was again in excess of 200,000 for the month. Specifically, payrolls rose by 242,000, which held the unemployment rate at 4.9%. What’s more, another 30,000 was added to the payroll tally for the prior two months.

Markets have certainly turned more optimistic in recent weeks. Stocks are again on the rise; commodity prices continue to trend higher.  Oil, in particular, is up $9 a barrel over the past three weeks. This isn’t great news for us at the pump, but it is good news for the U.S. oil-and-gas sector, which has struggled with $30-a-barrel oil. (The sector swims in debt, estimated at $2 trillion, that needs to be serviced.) Nevertheless, gasoline remains below $2 a gallon in many parts of the country. Higher energy prices are unlikely to send the economy into a tailspin.

More good news is found in the U.S. dollar, which has loosened its grip on the world economy. The dollar has depreciated against many currencies. This makes it less expensive for foreign countries to import commodities, because most international transactions are settled in dollars. A falling dollar is also indicative of a rising risk appetite. The dollar and dollar-denominated investments – e.g., U.S. Treasury securities – are viewed as havens. Fewer investors are seeking havens these days.

Things are looking pretty good. When things are looking pretty good, lending rates tend to rise. The yield on the 10-year U.S. Treasury note hovers around 1.9% – 20 basis points higher than where it was two weeks ago. As the 10-year note goes, so, too, go mortgage rates. Not surprisingly, mortgage rates have been on the rise. The 30-year fixed-rate mortgage, though still priced well below 4% for best execution, is at a one-month high.

Odds are rising that another interest-rate increase could come sooner than later. Last week, traders in federal funds rate futures contracts were placing a 30% chance of another rate increase by June. The odds of a June rate hike have increased to 35%.

Of course, just because the Federal Reserve raises the federal funds rate doesn’t mean all rates will rise. Market interest rates have remained staid since the Fed implemented its first rate increase this past December.  That said, additional rate increases would be a sign that Fed officials are convinced the economy is on strong footing and that consumer-price inflation has taken hold. This paradigm points to rising market rates, and market rates that are unlikely to backtrack.

Yes, we’ve been down this road before: What goes up can, and has, come down.  But if we’ve got a Fed committed to raising interest rates, there’s less of a chance rates will come down.  We’ve got good lending rates today; odds are falling that they’ll be better tomorrow.

 Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

A month ago, the augments against another round of Federal Reserve rate increases were formidable: Slow economic growth in China, negative interest rates in Europe, a soaring U.S. dollar, weak commodity prices, and falling global stock prices.

Odds of another federal funds rate increase were low. Indeed, traders were giving no more than single-digits odds for another rate increase before June.

After a couple weeks of strong performance in the global financial markets, the odds for a June increase are on the rise. Today, traders are betting for a 30% chance of another rate increase by June. Those arguments that seemed so impenetrable a month ago seem less impenetrable today. This means the Fed will be less hesitant to raise the fed funds rate.

Of course, the Fed can raise the fed funds rates and mortgage rates could fall, which we saw after the Fed raised the fed funds rate in December. But when the Fed raises rates again, it will likely be backed by firmer financial-asset prices and stronger economic growth. Inflation will also likely be more prevalent. The market will be less inclined to move against the Fed.

To be sure, a couple weeks of solid financial-market performance and firming asset prices doesn't make a trend. It's worth highlighting, though, that if current advances hold, then there's a good chance we could see 4% on the 30-year loan sooner than later.  Yes, everything occurring today could be gone tomorrow, but it can be risky to bet that way.

 Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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