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An Important Trend that Could Lead to Another Important Trend

Tuesday, February 17, 2015
by Don Roth

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.

 

Harrisburg PA Mortgage Market Recap – Oct 1, 2014

Wednesday, October 1, 2014
by Don Roth

A Mixed Bag, But It's One We'll Take

Is it two steps forward, one step back; or one step forward, one step back? Sometimes it's difficult to tell.

When it comes to existing home sales, one step forward, one-and-a-half steps back might be the better descriptor. Sales of existing homes drifted down 1.8%, to 5.05 million units, on an annualized basis in August. Year over year, sales are down 5.3%. Supply has again been fingered as the culprit for the sales-volume dearth. Supply for the month fell by 40,000 units, which drops total inventory to 2.31 million units.

The good news is that pricing continues to reflect reality. Existing-home prices have been relatively flat for the past six months. Year over year, the median price of an existing home is up 4.8% to $219,800. This is no surprise. We've seen price appreciation moderate through most of 2014. We expect that trend to continue into 2015.

When we vet new-home sales, the trend is definitely two steps forward, one step back. New home sales surged 18%, to 504,000 units, on an annualized basis in August. Pricing appears to be more favorable to buyers. The median price of a new home dropped 1.6% for the month to $275,600. Year over year, the median price is up 8%, but that rate of increase is slowing and will likely continue to do so. At the current sales pace, inventory has dropped to 4.6 months. This points to home-builder activity picking up through the end of the year. That's good news for the overall economy.

There's more good news specific to housing.

CoreLogic reports that nearly 950,000 homes were lifted into positive equity in the second quarter of 2014. Nationwide, home equity has increased by $1 trillion year over year. To be sure, we still have more room to improve. CoreLogic estimates that approximately 5.3 million homes, or 10.7% of all residential properties with a mortgage, were still in negative equity as of the second quarter. But that's a significant improvement over the 7.2 million homes in negative equity a year ago. We expect the equity trend to remain positive deep into 2015.

We see more positive news in a recent survey conducted by The Demand Institute, a nonprofit think tank. Demand's survey reveals what we've known all along: Millennials might be transforming the workplace, but at home they are very much like their parents and grandparents. They want to get married and have a family, and many of them want to raise that family in the suburbs – the domain of the single-family home.

We never bought into the notion that the United States is becoming a nation of renters. Many surveys we've read over the past year have confirmed our bias. The Demand Institute's survey is simply another arrow for our quiver.

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.

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