Real Estate Information Archive

Until the recent past, interest rates were driven by the economy: recession or expansion, job growth, inflation, risk aversion, productivity, etc. These factors would converge to form an interest rate that best reflected consumers and investors expectations.

It's different today. The Federal Reserve is the overriding factor in lending markets. Everyone is trying to game the Fed's next move on quantitative easing. Specifically, everyone is attempting to forecast when the Fed will begin tapering its purchases of Treasury notes and bonds and mortgage-backed securities. The Fed's purchases – its demand – for these instruments is largely responsible for the low lending rates we've enjoyed over the past few years.

The chief reason mortgage rates moved so high so quickly in past months is that many market watchers expected the Fed to begin tapering next month. Markets, after all, are anticipating entities (they act on expectations), so mortgage rates naturally move higher on the prospect of higher rates.

Based on the minutes of the last meeting of Fed governors, the Fed is unlikely to begin tapering as early as September. Inflation remains low and job growth remains sluggish. We don't expect either to pick up soon, which is why we think tapering could be delayed until later in 2013, and possibly into 2014.

But as long as market participants are anticipating higher interest rates, there is a good chance rates will continue to rise. (Paradoxically, when the Fed actually begins tapering – when expectations become reality – rates could actually fall.)

Needless to say, this is confounding market, but it's still one in which we think it's more prudent to act today than to wait and anticipate tomorrow.

  Courtesy of Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

Many mortgage watchers expect mortgage rates to maintain today's lows indefinitely. After all, the Federal Reserve has stated it will continue to buy $40 billion in mortgage-backed securities and $45 billion of longer-term Treasury securities each month (known as quantitative easing) for as long as it takes for the unemployment rate to fall to 6.5%.

But that commitment might be less firm than initially believed. The Fed recently clarified that its unemployment target isn't necessarily a specific number. In addition, a growing number of Fed governors are concerned over market risks associated with the Fed's asset purchases, which could lead the Fed to taper or end quantitative easing sooner than some economists expect.

These factors (along with a few others) have prompted Goldman Sachs to raise its yield expectation for the 10-year Treasury note – a good proxy for 30-year fixed rate mortgages – to the 2.25%-to-2.5% range this year.

Historically, the 30-year loan rate has averaged roughly two percentage points more than the 10-year Treasury note yield. The note currently yields around 2%. In other words, it's quite possible we could be looking at lending rates half-a-percentage point higher than today's rates by year's end.

 Courtesy of Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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

2013 is coalescing nicely to become the year of residential real estate, and this past week's data further buttresses that conclusion.

For instance, Fannie Mae polled 1,000 Americans and their responses point to a bullish outlook for housing. Waning concerns over job losses among those polled was particularly encouraging. This really shouldn't come as a surprise. Payroll growth has trended significantly higher over the past few months.

In fact, payroll growth has picked up momentum, increasing by 157,000 jobs in January, following a gain of 196,000 jobs in December (which was revised from 155,000) and an increase of 247,000 jobs in November (revised from 161,000). The upward revisions in payrolls indicate that job growth has been stronger than earlier believed.

The more jobs created, the more interest we will see in home-ownership. Forty-three percent of Fannie Mae's respondents see their financial situation improving this year, which is, no doubt, a significant reason the percentage of people, 65%, still value home-ownership.

We never bought the chatter circulating media outlets a couple years age that home-ownership was becoming blasé. In fact, Redfin, an online listing service, reports that more of us are acting on our desire to own a home. Redfin finds that th e number of customers writing offers soared 70% between December and January, while those requesting tours increased 57.9%.

Should the upward trend in demand continue (and we think it will), the market will soon switch to favoring sellers over buyers. In many markets, the switch has already occurred. Increased home-buyer demand, paired with a nationwide inventory shortage, has created an extreme seller’s market in many metropolitan areas.

That said, we expect many of the issues surrounding inventory shortages to abate; rising prices will undoubtedly draw more inventory into the market. More inventory and rising prices point to robust home sales volumes in the second half of the year.

Speaking of rising prices, the latest home-price data from CoreLogic show home prices nationally increased 8.3% year-over-year in December, which represents the biggest year-over-year increase since May 2006 and the 10th-consecutive monthly increase in home prices nationally.

Data from Trulia are also indicative of a relentless rise in home prices. Trulia reports asking prices rose 0.3% quarter-over-quarter in January, despite the fact that prices typically fall during the winter. When looking at monthly data, Trulia reports asking prices rose 0.9% for the month, which is the highest monthly gain since the price recovery began.

So things are looking up for housing. They are also looking up for the mortgage market, which has seen lending rates rise almost every weeks since the beginning of the year (and actually since late November).

The good news is that rising rates haven't taken the steam out of refinance and purchase activity – both of which continue to trend higher. We're not surprised activity hasn't slowed; the economy has supplanted low mortgage rates as the key driver in the housing recovery.

Courtesy of Jessica Regan.

Search all Harrisburg PA homes for sale.

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

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

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

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