Real Estate Information Archive

The unemployment rate has dropped to 5% from 10% since Oct. 2009. That sounds good. Unfortunately, the underlying numbers aren't quite as good as the overall unemployment rate appears.

Yes, the U.S. economy continues to add jobs in 200,000 chunks each month, but not everyone is getting in on the action. Millennials, those in the 18-29 age group, continue to suffer from unemployment and underemployment at depressing rates. U.S. Census data show that 40% of U.S. millennials are unemployment. What's more, the number of employed young people making less than $25,000 a year has spiked to the highest level in more than a quarter century.

There's more. The Labor Department sees a decline in workforce participation among prime working-age adults, those between ages 25 and 54. From 1950 through mid-2000, the employment participation rate among this group had trended higher, hitting a high of 84.5%. Since then, it's drifted lower, to below 81%. Unfortunately, most of the decline is concentrated in the younger end of the age range.

We've been saying for the past year that the lack of young first-time buyers is the one variable that could set housing market back. We're not bearish on housing or lending by any stretch, but without an influx of first-time buyers, it will be tough for housing and mortgage lending to maintain the trajectory established in recent 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.

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.

Times are tough if you're a renter. The Census Bureau reports that vacancy rates are at a 30-year low, at 6.8%.  That can mean only one thing – rising rents.  Rents have already climbed 3.5% in the past 12 months through June. The median asking price for monthly rent is now above $800, a new record. Things are unlikely to improve. Economists at Capital Economics Ltd., in a note to clients, wrote, "Our forecasts that rents will grow at an annual rate of 5% both this year and next would represent the fastest rate of rental growth since the 1980s."

Relentless rent inflation should help reverse the downtrend in the homeownership rate, which is at a 48-year low.  We see more people motivated to lock in a predictable monthly payment.  If you pay $800 in monthly rent, in five years you'll pay $1,021 if rents rise 5% annually. If they rise 3.5% annually, as they have over the past 12 months, you'll still be paying $950 in monthly rent.

Low vacancy rents and relentless rent increases are yet more reasons to remain bullish on the long-term out lookout for home sales. 

 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 Still On Track for a Strong 2015

Home builders are as optimistic as they've been for nearly a decade. The National Association of Home Builders/Wells Fargo Housing Market Index rose a point this month to register at 61. This is the highest reading since November 2005.  

Sentiment is usually driven by activity. The good news is that activity remains strong. Housing starts rose 0.2% to an annual rate of 1.21 million homes in July. Nearly all the gains were recorded in the important single-family component, which shot up 12.8% to 782,000 homes. 

To be sure, existing-home sales produce the lion's share of transaction activity, but new-home sales and new-home construction contribute much more to overall economic activity. Residential investment has historically averaged roughly 5% of gross domestic product, according to NAHB data. That we continue to see strong home-builder activity bodes well for the overall economy.

The good news is that it continues to climb toward the important 1.5 million annual average. Historically 1.5 million has been the marker that lets you know the economy is hitting its stride. 

With that said, is the sword of Damocles about to break free and end the good times? 

We again refer to the Federal Reserve and interest rates. We've mentioned many times how fickle markets are, and credit markets are as fickle as any. After China devalued its currency last week, many market participants changed their bets: They bet the Fed wouldn't raise the federal funds rate next month. Now, it appears that many bets were placed in haste. The federal funds futures market now shows that traders are pricing futures contracts for a 45% chance the Fed will raise the federal funds rate next month. 

Mortgage rates have been less fickle than most, having trended lower in the past month. The 30-year fixed-rate loan priced below 4% has again become the new norm.  An increase in the federal funds rate could easily change that, though, with above-4% supplanting sub-4%. 

Since the beginning of the year, we've been skeptical of impending Fed action on interest rates. Nevertheless, pressure is mounting on the Fed to do something. But as the Fed itself has said, any decision will be “data” dependent. The employment situation for August could be the datum that tilts the scales. If job growth comes in strong – 250,000 or higher – for August, the Fed could well decide to raise the federal funds rate.  Below that, and it's anyone's guess.

We wouldn't be surprised either way, and either way we still see strong home sales and construction activity through the remainder of the year. As for mortgage rates, we still think current rates are about good as it's going to get.    

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.

Goldman Sachs released an interesting investment note to its clients this week. The note was titled “What's Keeping the Kids at Their Parent's Home?” Goldman concludes the job situation is a key factor, with a few other factors tossed in: high student-debt loads, poor credit scores, and rising rent-to-income ratios. It all sounds negative, but it's not.

There are a high proportion of 18-to-34 year-olds living with their parents. The number hit an all-time high after the recession, and the number just began to drift lower last year. This younger demography represents a huge pool of new household formations. (After all, you have to leave eventually, if just to maintain sanity.)  Fortunately, and contrary to some opinion makers, this young demography still wants to own a home, and it wants to own a single-family home, according to Fannie Mae data.  This is good news for the long-term outlook on housing.  There's a lot of pent-up demand in the single-family-home market that will need to be satisfied.

For the time being, though, prices are keeping many first-time buyers on the sidelines. Demand is particularly strong for starter homes, which have been on a tear. CoreLogic reports low-end homes are now priced 5.5% above pre-bubble levels.  Many first-timers have been priced out of the market. 

For the past year, we've been cheerleading for slower home-price appreciation. Entry-level affordability is the reason why.

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.

Will They or Won't They? (We Again Ask)

We're tired of writing about the Federal Reserve. We suspect that you're tired of reading about the Fed. But the Fed matters – to both the housing and mortgage markets – so we have no choice but to press on. 

Recent events had pointed to the Fed standing back from raising the federal funds rate in September. Specifically, economic growth remains anemic.  Gross domestic product (GDP) for the second quarter came in weaker than expected, at 2.3%. Most economists were expecting growth to post closer to 3%. 

Weakness was particularly pronounced in nonresidential fixed investment, which fell 0.6%. Commentators frequently focus on consumer spending when commenting on economic growth. To be sure, spending is important, but so is investment, because investment lays the foundation for future consumption: You have to produce in order to consume in the long run.  Production, which investment funds, paves the way for consumption.

When the disappointing GDP figures were released last Thursday, the yield on the 10-year U.S. Treasury note drifter lower by 15 basis points. In turn, rates on most mortgages, particularly the 15- and 30-year loans, drifter lower. Depending on the market, sub-4% on the 30-year loan could be had. 

But over the past day or so, yields and rates have drifted higher. One of the Federal Reserve's presidents, Dennis Lockhart, opined publicly this week that the economy could handle an increase in the fed funds rate in September. (The fed funds rate is the rate banks lend to each other overnight. It's a short-term rate, but it tends to filter through to the long end of the curve.) 

So what do private-market participants think will happen?

As for private-market traders, those who bet on interest-rate movements, the futures market has priced in a 50% chance the Fed will raise the fed funds rate next month. Last week, futures were priced at a 33% chance. So who knows what next week will bring. 

We remain skeptical that anything happens in September: Economic growth is still weak, while the U.S. dollar is still strong. Against most currencies, the dollar has appreciated significantly. A rate increase will only further strengthen the dollar against other currencies. For many multinational corporations, this is an issue. A stronger dollar makes exports more expensive and can result in significant currency-exchange losses when money is repatriated from overseas. We could see some additional push-back against a rate increase. 

With that said, we wouldn't be surprised if a rate hike occurs. The Fed may have to move to raise rates simply to maintain credibility. (You can drag people along only so far before they revolt.)  The impetus, then, is for rates to rise. (Keep in mind, they can rise without or without the Fed's blessing.)  Therefore, we're likely looking at the floor on mortgage rates. The mortgage rates we see today could be the best rates we see for quite a while.

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.

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.

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.

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.