Real Estate Information Archive

D.R. Horton, the nation's largest home builder, reported strong financial results for its fiscal-year fourth quarter. Earnings were up 44% year over year. Orders, an important metric for future revenue, were up 19%. D.R. Horton executives see strong sales and solid earnings growth into the relevant future.

But it's not D.R. Horton's consolidated numbers that is the key takeaway. D.R. Horton's success in the starter-home segment is what we find encouraging.

In late 2013, D.R. Horton started its Express brand of entry-level homes. In the quarter ended this past June, D.R. Horton reported that Express homes had grown to account for 19% of its orders.

The segment continues to grow. First-time home buyers accounted for 40% of D.R. Horton's sales in the latest quarter. Year over year, Express sales tripled to 5,648 homes. D.R. Horton sold a lot of Express homes, and sold them at a lower price. The average price for an Express home was a very reasonable $185,000, which was $6,000 less than the previous quarter.   

To be sure, we're looking at markets that tend to be lower priced – those in Florida and the Carolinas. Margins aren't as thick as those on higher-priced homes. But if the turnover is high enough, good money can be made selling to first-time buyers, as D.R. Horton proves.   

We frequently mention that first-time buyers are key to maintaining the housing market. Given Horton's success, we expect more builders to follow its lead and up their investment in the segment. That would be good news for near-term sales prospects and for housings' long-term health.

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.

Did the Employment Numbers Seal the Deal?

Everyone's talking interest-rate hike after the blowout employment numbers for October. Payrolls surged by 271,000, handily beating all economists' estimates. October saw the strongest monthly payroll gains since last December. The surge in employment, in turn, dropped the unemployment rate down to 5%, the lowest it has been since May 2008. 

Job gains were realized across a wide swathe of the economy. Professional and business services lead the way with a 78,000 gain. The sub-component of temporary help services – a leading indicator for future hiring – was up a robust 25,000. What's more, everyone now working has, on average, a little more money to spend. Wage growth for October increased 2.5% year over year. 

When employment takes flight, interest rates are sure to follow. Indeed, the yield on the 10-year U.S. Treasury note spiked nearly 10 basis points when the employment numbers hit the wire last Friday. As the 10-year note goes, so too goes mortgage rates. Rates rose to a four-month high over the past week. For much of October, the 30-year fixed-rate mortgage was quoted below 4%. Today, it's regularly quoted above 4%. 

Lenders are obviously pricing in a rate increase at the next Federal Reserve meeting, to be held on Dec. 16. More traders are also pricing in an increase. Federal funds rate futures contracts are priced with a 68% probability that the Fed will raise the fed funds rate next month.

So, it appears our streak could be ending. We've been saying since the beginning of the year that we don't see a fed funds rate increase until 2016. As recently as last week, we affirmed that opinion. But as a famous quote attributed to economist John Maynard Keynes goes, “When the facts change, I change my mind. What do you do?” We change our mind. We'll concede that a rate increase is more likely than not come December. 

That said, more likely isn't synonymous with inevitable. If consumer price inflation remains muted and if gross domestic product growth is revised downward, we could easily see the probability of a rate increase fall. The deal isn't done yet. 

Until then, we expect to see 4%-plus quotes on the 30-year loan. If the Fed decides again to kick the can down the road and postpone a fed funds rate increase, rates will very likely reverse course.

And if the Fed does raise the fed funds rate, that doesn't mean rates are going higher still.  When the Fed made its other major policy change – to systematically withdraw from quantitative easing two years ago – rates ran up until the time the Fed begin to withdraw. Rates than drifted lower by a full percentage point over the subsequent year.

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.

Speaking before Congress this week, Federal Reserve Chair Janet Yellen said that a rate hike is a "live possibility” next month, if the economy advances as Fed officials expect. Fed officials meet again on Dec. 16.   

A couple questions: What's a “live possibility” as opposed to a dead possibility? What are Fed officials' expectations for the economy? It's all a black box really; something for them to know and for us to find out later. As is so often the case, Fed officials rarely enlighten when they try to explain. 

What do the traders think? They seem to have bought into Yellen's rhetoric, as equivocating as that rhetoric might be. Traders in federal funds rate future contracts are pricing these contracts with a 60% probability the Fed will raise interest rates next month.  A week ago, the probability was at 30%.  

So is it likely the Fed will raise the fed funds rate for the first time in over nine years? More important, is it likely mortgage rates are going to rise, and keep rising? 

We'll stick to our guns: We've been saying since January that a fed funds rate was unlikely in 2015. That said, the next time around is the last chance for us to be proven wrong. Fed officials might do something just for appearances. After all, they've been leading the market on for the entire year. A rate increase has always been just around the corner. Sometimes you do something just to save face. 

Mortgage rates appear to be pricing in the potential for an increase. For most of last week, rates held steady, and even drifted slightly lower. This week has produced a noticeable move higher. The 30-year fixed-rate mortgage is near a 30-day high. Despite the rise, the 30-year loan is still regularly quoted below 4%. That could change over the next month, or even the next week. To err on the side of caution, more lenders could continue to price in a rate increase. 

That said, we don't see rates continually ratcheting higher, even if the Fed does raise the fed funds rate. For one, the increase will be no more than 25 basis points. What's more, 2016 is an election year. Fed officials are reluctant to raise rates when the two major political parties go to battle. The Fed wants to remain as politically neutral as possible. Therefore, whatever occurs on Dec. 16 could very well hold over the ensuing 12 months. 

The impetus is for mortgage rates to move higher over the next 30 days, but we don't think they will move egregiously higher. However high rates rise, Dec. 16will likely be the high-water mark. After Dec. 16, we could see rates drift lower again.

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.

Most Everything Down

A slow week on the news front, and what little news there was wasn't especially good. 

Initial indications show that economic growth in the third quarter was nothing to write home about. Gross domestic product (GDP) growth posted at 1.5% on an annualized rate. This is considerably slower than the 3.9% growth posted in the second quarter. Admittedly, economists weren't expecting much – most expected growth to post lower than 2% – but what we got was even lower than most estimates. 

Residential investment was the noticeable bright spot in the GDP numbers. Investment continues to trend positively, having increased 6.1% for the third quarter. That said, we still need more of it. Residential investment currently runs at 3.5% of GDP. Historically, it runs between 4% and 5%. 

GDP growth could be crimped further by fewer home sales. The Pending Home Sales Index dropped 2.3% in September. The drop was due primarily to one of our frequent laments: Insufficient starter housing and starter housing that's expensively priced. The dearth of lower-end sales is pulling down the overall index. More important, it continues to pull down first-time buyers. 

Finishing the trifecta, mortgage applications posted lower last week. The Mortgage Bankers Association reported that both the purchase and refinance indexes fell 1%. Given the recent uptick in mortgage rates, we don't expect to see a pickup in activity when the MBA reports for this week. Still, application activity all around remains significantly elevated compared to this time last year. 

But will mortgage application activity remain elevated? The Federal Reserve is once again front-and-center and could alter the current market dynamic. We explain below.

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.

On first blush, ultra-low lending rates would appear to be nothing but good. After all, lowering the cost of financing lowers the financing cost of purchasing a home (or any asset). 

But things aren't quite that clear cut. When interest rates are low for borrowers, they are also low for savers and investors. Investment portfolios generate less income. This means savers and investors generally have less income to spend. It also means savers and investors have to take on riskier assets to capture income that was formerly available in safer assets. This increases the likelihood of capital losses, which can impede the ability to service loan obligations. 

Closer to home, low interest rates may not be as good for home buyers as people think, even if interest income isn't a consideration. Low financing costs sound attractive, but interest rates are a discounting tool: When rates are low, asset prices rise at a quicker pace than when rates are higher. It's a wonderful benefit to see surging home prices when you're a home owner, but it's not so wonderful if you're a young buyer seeking that first home. 

All things considered, a higher level of interest rates could actually improve the overall health of the housing market more than it could harm it. 

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.

Good News Abounds, But Interest Rates Continue to Fall

It has been awhile, but economic growth has finally kicked into gear. Gross domestic product (GDP) growth for the second quarter was revised higher to 3.9% on an annualized rate. For most of 2015, and a good chunk of 2014, GDP growth has wallowed at 2% or lower. 

More encouraging, most everyone contributed to the growth spurt. Personal spending was stronger than most economists expected. At the same time, businesses upped their rate of fixed investment. Spending matters, to be sure, but investing matters just as much. You can't have personal spending without the investment to produce the goods and services on which to spend money. 

Speaking of investment, rising home builder investment in land, material, and labor continues to pay dividends. New home sales were up strongly in August, with sales posting at 552,000 units on an annualized basis. This is the highest monthly rate since February 2008. A 15,000 upward revision to July's tally added to momentum.

Expect more home builder investment and more new home sales in the months to come.   Supply remains tight, and prices remain strong. The former stands at 4.7-months supply at the current sales pace; the latter shows the median sales price at $292,700, a 0.5% monthly increase.  Low supply plus a favorable price trend equals more investment. 

As for overall home prices, the S&P/Case-Shiller Home Price Index showed prices up 5% year over year in July. The rate of appreciate continues to ease, but no one should be alarmed. The rate is simply reverting to the historical long-term rate (2% to 4%). This is a good thing. Prices in many markets have been rising faster than incomes, preventing potential first-time buyers from taking the plunge. Unfortunately, the rate of price appreciation in the lower-price niches continues to run at an accelerated pace. Younger buyers are still having a tough time entering the market. 

Given the recent spat of solid economic news, you'd think interest rates would trend higher. That hasn't been the case. The yield on the 10-year U.S. Treasury note has shed 25 basis points over the past two weeks. As the yield on the 10-year note goes, so goes long-term mortgage rates. Rates on 30-year fixed-rated mortgages are hovering near a four-month low. Quotes as low as 3.75% haven't been uncommon. 

What's more, rates continue to fall in spite of Federal Reserve Chair Janet Yellen saying the Fed is likely to raise rates this year. But market participants still aren't buying the narrative, which is understandable given the Fed's propensity to cry “wolf.” Federal funds rate futures are trading with only a 12% chance of a rate hike in October and 35% chance in December. 

As for us, we continue to stick with our January 2015 prognostication: No rate hike until 2016. All things the same, sub-4% on the 30-year fixed-rate loan should hold for the remainder of the year.

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.

Inflation Remains Muted, But Rates Are on the Rise

Inflation is an important variable in the interest rate lenders charge borrowers. Over time, inflation erodes purchasing power. A dollar in an inflationary environment won't buy as much tomorrow as it will today. To compensate for lost purchasing power, inflation is factored in to interest rates. An inflation premium ensures lenders are able to maintain purchasing power over time.

Today, consumer price inflation remains muted. Thanks to falling oil prices, the aggregate consumer price index has actually declined. When energy and food are stripped from the equation, consumer prices are rising at less than 2% annually. Inflation by Federal Reserve standards is a non-issue.

Private market participants appear to have a slightly different take, though. They appear to be less sanguine on inflation than the Fed and other government data collectors.

In recent weeks, the yield on the 10-year U.S. Treasury note has risen to over 2.1%. In early February, it was below 1.7%. As the 10-year note goes, so, too, goes the rate on the 30-year fixed-rate mortgage. Bankrate.com's survey shows the national average on the 30-year loan above 3.9%. That's a 15-basis-point increase in the past month.

Though we believe interest rates and bond yields will remain low for the relevant future, there are no guarantees. Inflation is an insidious thing. It can appear out of the blue; mostly when it is least expected. When inflation appears out of the blue, so do spikes in mortgage lending rates.

The good news is that rates are still very reasonable across the board. Better yet, these rates are available to a wider swath of borrowers. Thanks to more-accommodating FHA and Freddie Mac and Fannie Mae guidelines. More people can capture rates unavailable to them even a few months ago.

Low rates are an obvious factor in home affordability . Here, we find homes are still a good deal in many metropolitan markets. This is a point we've been emphasizing over the past few months.

More than anything, though, we've been emphasizing the risk of waiting. In a normalized housing market, which we believe prevails today, prices persistently rise over time. The house that cost $200,000 today will likely cost $205,000 next year, and $210,000 the year after. What's more, the rate to finance that purchase could easily be higher too.

So again, we ask, what's the point in waiting? We simply don't see one in today's 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.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index shows homes remain affordable across much of the United States. The NAHB and Wells Fargo found that 62.8% of new and existing homes sold in the fourth quarter of 2014 were affordable to families earning the U.S. median income of $63,900. This is up from the 61.8% in the third quarter.

Last week, we highlighted the advantages of owning versus renting. In many markets, rents continue to push ahead while home-price appreciation has slowed. But recent news from Realtor.com has us wondering if the advantages of owning are dissipating.

Tightening inventory continues to plague many markets. Realtor.com reports that total listings nationwide declined 6.7% in January and are down 8.7% year over year. This suggests that price growth could start trending higher in coming months. At the beginning of the year, we thought price growth would abate in 2015. We still believe it will if the trend (down) in negative equity continues, but it appears less of a sure thing.

That said, it's still a good time to buy. Yes, mortgage rates have moved higher, but they are still very reasonable. But if economic growth is on as solid a footing as the Federal Reserve believes, rates will become less reasonable heading into the second half of 2015.

So we ask, what's the upside to waiting? We really don't see any.

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.

Falling mortgage rates have ignited a mini financing boom. The Mortgage Bankers Association reports mortgage applications were up a whopping 49% in the week ending January 9. Refinances were up 66% week over week. Just as encouraging, purchase applications were up 24%.

Of course, one week does not a trend make, but we like the potential for mortgage (and home sales) activity to rise this year.

First, there is the strength in job grow and economic activity we mention earlier. Second, more households are in a financial position to service more debt. The Federal Reserve reports that household debt and financial obligations as a percentage of personal income is near multi-decade lows. In fact, mortgage debt is only 4.67% of disposable income on average. For comparison, it was over 7% back in 2007.

More people working, more people in a sound financial position, cheap lending rates, and leveling home-price growth all offer persuasive evidence that 2015 could turn out to be a banner year for housing and 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.

It's All About the Interest Rate

The employment numbers for December were released last Friday. As expected, the economy created another 200,000+ jobs for the month, which has been the case for 11 of the past 12 months. To be specific, 252,000 new jobs were created in December.

December's job gains has dropped the unemployment rate to 5.6% – the lowest it has been in seven years. 2014 turned out to be a darn-good year for anyone seeking a job. In fact, 2014 was the best year for private-sector job growth since 1997.

The economy is obviously doing well. Usually with rising economic output comes rising interest rates. This occurs for a couple reasons: namely rising loan demand and rising inflation risk.

But here we are in the second week of January 2015 and interest rates are very low, and in some cases at an all-time low. The yield on the 10-year U.S. Treasury note is down to 1.8%. That's as low as it has been in two years. Meanwhile, the 30-year Treasury bond is down to 2.4%, which is indeed a record low.

Not surprisingly, mortgage rates are also at a multi-year low. Bankrate.com's survey shows the 30-year fixed-rate loan averaged 3.8% over the past week. Freddie Mac's survey has the 30-year loan averaging 3.66%.

Last week, we mentioned that low consumer-price inflation is the principal reason rates remain so low. Falling oil prices are an obvious factor in their being a dearth of inflation. Many consumers are paying less than $2.00 for a gallon of gas these days. Depending on where you live this is $1.00 to $1.50 less than what you paid this time last year. Because oil is so pervasive throughout industry, lower oil prices are helping to keep inflation muted across the economic spectrum.

In Europe, China, Japan, and the United Kingdom, lower oil prices have not only kept inflation at bay, they've darn near extinguished it.

We also mentioned last week that shorter-term German bonds were actually being quoted with negative yields. The same negative yields are being seen in Japan. Given record low yields on many foreign government bonds, the yields on U.S. Treasury notes and bonds look generous in comparison. This means demand for U.S. debt will remain high, which means yields will remain low.

Because of low consumer-price inflation in the States and possible deflation abroad, lending rates are unlikely to move anywhere, except down. We don't expect to see mortgage rates rising anytime soon. That is, we don't expect to see longer-term rates – rates on the 15-year and 30-year loans – rising anytime soon.

But we could see pressure on short-term rates. The Federal Reserve is expected to begin raising the federal funds rate by mid-year. This means short-term loans, particularity the 5/1 ARM and adjustable-rate HELOCs, could see rates rise.

In other words, locking in a longer-term fixed-rate loan appears the least risky, and possibly least expensive, financing option in this 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.