Real Estate Information Archive

Is Short-Term Volatility a Long-Term Worry?

Things have gotten a bit bouncy of late. The velocity of up-and-down movements in housing data has certainly increased in recent weeks.

Home prices are an example. Last month, the S&P/Case-Shiller Home Price Index showed prices were mostly up in the 20 metropolitan districts it follows. This month, prices are somewhat more scattered.

Case-Shiller reports surprising price weakness in many markets. Specifically, home prices declined in 12 of the districts it follows. When the numbers are tallied, the index shows a 0.2% decline for May. This is on top of a downward revision in April's numbers. Year over year, the rate of price appreciation has eased to 4.9%.

Activity pertaining to new home sales could be a contributing factor in Case-Shiller's numbers. New home sales can be volatile, and sales were certainly volatile in June. Sales plunged a surprisingly steep 6.8%, posting at 482,000 units on an annualized basis. What's more, revisions erased 40,000 new home sales from the prior two months.

The good news is that the price of new homes are holding steady, with the median price posting at $281,800, a 0.5% monthly increase. Price appreciation will likely remain anemic, though. There are an estimated 215,000 new homes on the market. At the June sales pace, the current supply rises to 5.4 months compared to 4.8 months in June. More supply coupled with slowing sales points to slowing price appreciation at the national level.

Of course, what happens at the national level frequently has no bearing at the local level. Markets are segmented by location and by property type. Price appreciation in many markets has stagnated at the higher echelons. Lower down, price appreciation remains brisk. That's an issue for new potential home owners (younger people). Homeownership rates remain stubbornly low. In fact, the homeownership rate for the second quarter of 2015 fell to 63.4%, the lowest rate since 1967. Much of the decline can be traced to a dearth of first-time owners.

The obvious question is, are higher mortgage rates dragging the market down?

Existing home sales for June were surprising strong, but a change in mortgage rates lags in the existing-home-sales data. New home sales are reported when the contract is signed; existing home sale are reported when the transaction closes. If higher mortgage rates are an issue, we should expect to see a slowdown in existing home sales for July and August.

We suspect that higher mortgage rates aren't the issue. The Mortgage Bankers Association reported that purchase applications were up again last week. Year over year, purchase activity is up 18%. If we focus on just new-home purchase activity, we find that activity is trending hire.

In short, we view recent volatility in home sales and prices as being similar to a case of indigestion. No need to worry, because this, too, shall pass.

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 eased over the past couple of weeks. Greece bores more than it titillates, and China's economy is on firmer footing than it was a month ago. On our side of the world, fewer people seem willing to speculate on when the Federal Reserve will raise interest rates.

There's not a lot going on, and that's reflected in lending rates. Mortgage rates are down, though purchase mortgage activity continues to climb. Last week, the Mortgage Bankers Association's survey showed application activity was up 1%. This lifts the year-over-year increase to 18%.

The mortgage market is robust, and should become even more robust. The MBA now forecasts that purchase originations will hit $801 billion this year and $885 billion in 2016. That's a $71 billion and $94 billion respective increase over the previous forecast.

Now is the time to act. Mortgage rates are lower, but the impetus is for them to rise longer term. Keep in mind, the impetus is there whether the Fed acts or not. Market participants are pushing for higher lending rates.

Also keep in mind that demand influences lending costs. If the MBA's forecast on mortgage activity materializes, there is less incentive on the suppliers' side to discount fees or offer other accommodations. The bottom line is that today's prices – both financing and real estate – are very likely better than tomorrow's prices.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

The Market Gives Us More of What We Like

A week ago we wondered aloud if housing was set to lead the economy for the rest of 2015. Data this week suggest it's certainly moving in that direction.

After smoldering for far too long, existing home sales have taken fire. Sales were up a blistering 3.2% to 5.49-million units on an annualized rate in June. That's on top of May sales, which were revised up 4.5%. We haven't seen this monthly rate of sales since February 2007.

What's more, we haven't seen existing homes fetch what they are fetching in some time. The median price of an existing home surged 3.3% in June to hit $236,000, which surpasses the July 2006 peak.

This is really quite extraordinary, if not logic defying. When prices surge, demand usually abates (more so, though, with lesser consumer goods than with homes). That's hardly been the case. People obviously want a home, and they want it now. At the current sales pace, inventory has dropped to 5.0 months from 5.1 months. Supply isn't getting ahead of demand.

Sale composition is also contributing to rising prices. What was once a surfeit is now nearly a dearth: Distressed sales tumbled to 8% of existing home sales in June, down from 10% in May. This time last year, 11% of sales were distressed. Considering where we were four years ago, the distressed-home market has made a remarkable recovery.

Veteran readers might remember that four years ago we were anticipating the turn of fortune that we are witnessing today. To be sure, we didn't expect the turn to be so sharp and so robust, but we did anticipate it. There was no shortage of exhortations on our part for people to seriously look at housing, and then get in. There were fewer takers than there are today, though prices in most markets were considerably cheaper.

To be sure, the world was different in 2011: Credit underwriting standards were tighter, the economy was less surefooted, household finances were shakier, and many potential buyers were fearful the nascent recovery would backslide. Today, economic conditions have improved all around, but of course, that's reflected in higher prices. The takeaway is that if you can afford (and stomach) being assertive when most are timid, it frequently pays off being assertive in the long run.

This isn't to say we don't like today's market; we do. Rising home sales is a sign of improved market liquidity. Lack of liquidity also kept many potential buyers on the sidelines a few years ago. When you buy a home today you are reasonably assured you can sell it within a reasonable time at a reasonable price. That's a huge plus.

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.

Don Roth harrisburg pa jessica regan mortgage update

Federal Reserve Chair Janet Yellen again addressed the question of the Fed and interest rates earlier this week. This go around Yellen suggested that an interest-rate hike was in the cards for later this year. We say “suggested,” because as usual Yellen made any rate hike conditional: When the economy can support a rate hike, in the Fed's opinion, then we will see a rate hike.

To be sure, a rate hike could be in the cards (though we remain skeptical), but it really doesn't matter. Interest rates have been rising with or without the Fed's imprimatur.

The yield on the very influential 10-year U.S. Treasury note seems intent on hanging above 2.35%. This, after it was hanging around 1.9% as recently as April. Mortgage rates, in turn, also seem intent on hanging around at a higher level. The 30-year fixed-rate loan continues to creep progressively higher. It's now comfortably above 4%. The 15-year fixed-rate loan has followed a similar trajectory. As the yield on the 10-year note goes, so goes longer-term mortgage rates.

The fact is that mortgages rates have moved higher without any prompting by the Fed. This point is worth underscoring. Many borrowers believe low mortgage rates will remain as long as the Fed continues to procrastinate on its first rate hike in nearly a decade. This is untrue. Interest rates in general and mortgage rates in particular can rise without any input from the Fed, as we've seen in recent months.

Nevertheless, many borrowers believe time is on their side. Until the Fed announces a rate hike, low rates are here to stay. That's a dangerous mindset, because there is nothing to stop credit markets from supplanting low interest rates with high interest rates. What's more, there is nothing to stop the market supplanting rates much quicker than most people expect.

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.

All-cash buyers continue to retreat into the background. RealtyTrac reports that all-cash purchases dropped to 24.6% of all single-family and condo sales in May. This is down from 28.5% in April. As recently as February 2011, all-cash purchases accounted for over 42% of all sales.

A normal, stable home market is driven by owner-occupied buyers. An owner-occupied market is a market where buyers look to a house as a home, not as a profit center. Stability and predictability rein in such a market.

Stability and predictability extend to price appreciation, which should return to a normalized historical rate in more markets. Normalized price appreciation, in turn, should generate more inventory, particularly for young and first-time buyers. Most investment properties are taken from starter-home inventory. The trend to more owner-occupied buyers is good news for young people entering the market.

We're not disparaging investment buyers. They were vital to the recovery. Without someone – mostly investors – to halt the slide, we'd be a few years behind in the progress we've made to date. That said, normalcy needs to eventually take over to sustain the market. Fortunately, normalcy has taken over in 2015.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

The residential rental market has been on a tear since the housing bubble burst seven years ago. Nationwide, rents have been rising at double the inflation rate. Rent is now a real burden to many renters. Roughly half the renters in the country pay more than 30% of their income to landlords.

This is good news for the long-term outlook for housing. The rental market will push more frustrated renters into homeownership. We don't think it can be any other way. Admittedly, many people like to be free of the responsibility of homeownership, but only to a point. If you are continually subjected to 5% annual rent increases, the benefits of renting quickly dissipate. In turn, the benefit of a stable shelter budget grows significantly in stature.

Young people are getting the message. The percentage of first-time buyers continues to rise and comprised 32% of the market in May compared to 27% last year. The unrelenting upward trend in rents should lead to an unrelenting upward trend in first-time buyers.

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.

Given the popularity of rehabbing and flipping houses on cable television, it's important to understand what is actually occurring. It might seem straightforward, but it's less straightforward than many people (novices, in particular) think.

When someone buys a house to rehab and flip for a profit, or to rent, he or she is undertaking a business proposition. In this regard, the house is really an investment. The goal is to increase cash flow: Buy now at one price and hopefully sell at a higher price in the near future. If the house is bought to rehab and rent, this too, makes it an investment.

But when a house is bought to rehab and owner occupy, it's not an investment. The house's primary purpose isn't to create cash flow, it's to provide shelter. In this regard, a house is an asset. Of course, over time an asset can appreciate in price and be sold in the future for more than it cost. Still, it's not an investment.

Noting the distinction between an asset and an investment might seem like an exercise in splitting hairs, but it's more than that. A house as an investment can be used to meet everyday living expenses, but a house as an asset can't. This distinction matters because it properly sets expectations on the economic purpose of that house.

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.

Prices Heat Up… And So Do Sales

Home prices appear to have caught a second wind. Through the second half of 2014, the rate of price appreciation was slowing in many metropolitan markets. Lately, though, the rate has picked up pace.

The S&P/Case-Shiller Home Price Index posted another month of uplifting prices. Specifically, Case-Shiller's 20-city index rose a strong 0.9% in February, posting its best monthly performance since late 2013. February's strong showing lifts the year-over-year rate to 5%. More impressive, the index wasn't lead by a few outliers.

To be sure, San Francisco and Denver lead the way with 3.3% and 2.2% price increases, respectively, but none of the 20 cities in Case-Shiller showed a monthly decline. Given the dearth of existing-home inventory, no one should be terribly surprised that home prices are on the upswing.

Today, housing appears to be the key economic driver. Residential investment increased at a 1.3% annual rate in the first quarter of 2015. This is despite the lousy weather, which took a bite out of overall economic growth. New revised numbers on first-quarter gross domestic product (GDP) show the economy grew a mere 0.2% in the first quarter – a full two percentage points less than the fourth quarter of 2014.

But it's not just investment driving housing forward. Sales on the retail end have picked-up pace. The Pending Home Sales Index was up a third-straight month in March. Month over month, the index was up a stout 1.1%. Sales of existing homes appear to have finally established an uptrend. Strength in existing home sales will hopefully portend strength in new home sales, which have been weak the past couple months. 

Given the weakness in the GDP numbers, the Federal Reserve is less likely to move to raise the federal funds rates. In the latest meeting of Fed officials, economic weakness was the overarching theme. The minutes of the meeting were peppered with words like “moderated” and “slowed.” That said, Fed officials stopped short of scotching any possibility of a rate hike in June.

If we were forced to place a bet, though, we'd bet against the Fed raising the fed funds rate in June. In fact, we've stated in the past that we wouldn't be surprised if the Fed didn't move to raise rates this year. The Fed continues to hang its hat on low inflation and further improvement in the labor market (even though the official unemployment rate is down to 5.5%).

In short, we remain in the low-interest-rate camp, but it's worth remembering that the Fed isn't omnipotent. It can influence interest rates; it can't dictate them. Therefore, it's dangerous to take the current low-rate environment for granted. Things can change, and they can change in a hurry.

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.

Is Smart Money Telling Us Something About Mortgage Rates?

We don't really know if the money is smart or not, but we know someone's money is saying something about interest rates and mortgage rates.

Over the past week, the yield on the 10-year U.S. Treasury note has climbed over 10-basis points. This continues a trend established late January. Over the past three weeks, the yield on the 10-year note has actually climbed 40 basis points to 2.1% from 1.7%.

As the yield on the 10-year note goes, so frequently goes the rate on long-term mortgage loans. Nationally, Bankrate.com shows the 30-year fixed-rated loan averaged 3.96% this week, while the 15-year fixed-rate loan averaged 3.21%. Both are at 2015 highs.

The Federal Reserve, in its latest meeting minutes , opines that the economy is strong. With a strong economy usually comes higher interest rates, which we've seen in recent weeks. Interestingly, the Fed also highlighted that it was in no hurry to raise the influential federal funds rates for fear the “strong economy” could weaken.

Fortunately, the Fed has some leeway on raising the fed funds rates, because consumer price inflation remains a non-issue. Thanks to falling energy prices – oil and gas in particular – consumer price inflation is running less than 1% annually (the Fed would like to see it run at 2%). Higher interest rates aren't needed to tamp down consumer price inflation, because there isn't any to tamp down.

Then again, maybe the economy isn't quite as strong as the Fed is projecting. Housing comes to mind. On the national scene, it's a bit disconcerting that activity in the new-home market has backslid.

Housing starts declined 2% in January to 1.065 million units on an annualized rate. More discouraging, starts were down 6.7% for the month compared to December. Disappointing starts were reflected in home builder sentiment. The National Association of Home Builders (NAHB) reports that its housing market index clocked in at 55 in February, down from 57 in January. The good news is a reading above 50 is mostly positive.

Sluggish home sales are reflected in sluggish lending activity. The Mortgage Bankers Association purchase index was down for a fifth-consecutive week last week. To be sure, rising rates have taken some steam out of overall lending activity. But if someone is serious about buying a home, 3.85% on a 30-year loan compared to 3.75% shouldn't keep that person on the sidelines. In short, we'd like to see a few more serious buyers off the sidelines and in the market.

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 recently ran across an intriguing data set on CalculatedRiskBlog.com. We were intrigued because the data show the trends in single-family rentals over the past 15 years.

In 2000, renters' share of the single-family-home market was 15%. By the end of 2014, that number was 21%. Every state except North Dakota has seen an increase in the percentage of single-family renters.

Renters are potential (and likely) owners, especially renters who've lived in a single-family home. We've frequently mentioned that if the choice is between owning and renting, most people opt for owning. After all, we want to properly nest: We want to decorate and paint without worrying about forfeiting a security deposit. If we make a capital improvement, we want to own that capital improvement.

We believe more renters will pursue ownership. This will lead to fewer renters and softening rent rates. If this scenario unfolds, more landlords, in turn, will leave the business. This means more homes will be offered for sale.

But even if our scenario fails to unfold, we still think more single-family homes will be offered for sale. Fatigue will become a greater influencing factor. Many new landlords poured into the single-family-home market over the past five years. We suspect that a growing percentage of these newbies are tiring of their investment. Managing rental property is frustrating and time-consuming work. Entropy naturally sets in over time.

In short, we see more ownership demand and more homes offered for sale. These two trends bode well for sales growth 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.