Real Estate Information Archive

Over the past four years, the Federal Reserve has pumped an unprecedented amount of money into the banking system, which is one reason interest rates have remained so low for so long.

This new money has also found its way into many investment assets: Today, the S&P 500 and Dow Jones Industrial Average are at multi-year highs; oil continually hovers near $100/barrel; many metal commodities are near all-time highs, as are many food commodities; gold remains near its all-time high and continues to adhere to its decade-long price trend.

More money has also been funneled into housing, especially from institutional investors. Hedge funds are large buyers of single-family houses, which is a new phenomenon. Interest among these institutions appears to be growing. American Homes 4 Rent , a California-based firm specializing in single-family rentals, recently purchased 10,000 homes, making it the second-biggest owner of single-family rentals in the institutional space.

The point we need to emphasis is that more money flowing into housing from institutional investors means there will be fewer values available to individual owner-occupied buyers. We've been warning over the past year that the pool of good deals is evaporating. It's important to let clients know that the rate of evaporation is accelerating.

 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.

Is the End Upon Us? We hope so, and the evidence suggests that it is.

This is a good thing, because we are referring to the national foreclosure crisis, which has weighed on the housing recovery (at least it did through mid-2012). RealtyTrac reports that the number of homes in various stages of foreclosure is down to the lowest level since the housing bubble burst.

For most of 2012, we said that the overhang of foreclosures and distressed properties would dissipate. Our rationale was that the issues were well-known and understood. Market participants would actively address the issues, and thus, would rectify them.

That's exactly what's occurred (and is occurring). RealtyTrac also reports foreclosure starts fell to a 79-month low, reaching levels not seen since June 2006.

We expect foreclosures to continue to trend lower. TransUnion finds that the rate of borrowers 60 days or more past due on a mortgage dropped 14%, the largest reduction since the recession ended in mid-2009. Just as encouraging, many of the delinquencies are a result of older vintage loans – borrowers who haven't made payments for an extended time – and are inflating the overall delinquency rate.

We expect housing construction to continue along its trend as well. For-sale inventory – both existing and new – is at a decade low (and possibly a multi-decade low). This points to a rise in construction activity. In fact, Goldman Sachs expects real residential investment to grow at a 10%-to-15% annual rate through 2014. This means we'll also likely see a surge in housing-related employment. Goldman's economic models point to 25,000 new housing-related jobs being formed each month for the next two years.

So the stage is set for an uptick in economic growth. This means mortgage lending rates will be pressured to move higher, thus continuing a trend started last fall.

We look for higher rates because as the economy improves more money will flow out of fixed-income investments – Treasury and mortgage-backed securities – and into riskier investments. We've already seen a surge in stock-market investments. Both the Dow Jones Industrial Average and the S&P 500 are up strongly over the past three months.

The counter argument states that mortgage rates will remain subdued because of the current battle in Congress over sequestration and spending cuts. In other words, market uncertainty is rising, which means investors will be motivated to seek shelter in Treasury and mortgage-backed securities.

This might happen, but its impact would be ephemeral. This big-picture view points to economic growth. Economic growth and continued strength in housing will also force the Federal Reserve to exit its open-ended policy of quantitative easing sooner than expected.

The bottom line is that anyone who can benefit from a refinance or a purchase loan should take advantage of today's rates. The risk/reward paradigm strongly lists toward taking action; it makes little sense to procrastinate at this point.

 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.

We've written frequently on the reasons we think the market should not fear a rising lending-rate environment. The principal reason is that rising rates will likely come tethered to rising economic activity and job growth. The indicators so far this year lend credence to our hypothesis.

Rising rates also appear to be making more lenders less risk adverse. We say that because the Federal Reserve reports that more banks have eased lending standards across the major loan categories (and that includes mortgages) over the past three months. Yes, lending standards are still tight, but they are becoming less so.

Again, this shouldn't come as a surprise: Lenders need to calibrate the interest rate they charge for a loan and the risk embedded in the loan. To be sure, borrowers like very low interest rates, but when interest rates are very low, there is less incentive for lenders to extend credit because they're not being adequately compensated for risk.

Rising rates are frequently indicative of a stronger economy and more lending opportunities, which is why rising rates shouldn't be feared. On the other hand, rising rates mean rising borrowing costs, which is why clients should be fearful of remaining on the sideline.

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.

For the past year, we've been urging potential buyers to take the plunge. Low lending rates and a low-cost-basis on homes significantly raise the probability of entering a profitable transaction. We continue to urge buyers to take the plunge.

We've also noted that the sin of procrastination means many of the better deals have been taken. Fortunately, there are still many good deals left. The market remains a buyer's market.

We are not alone in our sentiment. The online financial Website Business Insider offers a detailed slide show that buttresses our argument. When interest rates, home affordability, wage growth, and the widening gap between rents and mortgage payments are aggregated, Business Insider opines convincingly there has never been a better time to buy a home.

Seeing where the market has been over the past year and seeing where it is expected to go in the future, we'd be hard pressed to disagree with their opinion.

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.

New homes are suffering from the same affliction as existing homes – a dearth of inventory.

The supply of new homes stands at only 151,000 units. With so few homes to offer, sales have suffered, dropping 7.3% in December to an annual rate of 369,000 units.

The percentage drop in new-home sales, though mildly discouraging, shouldn't be fretted over. Sales were actually revised up by 22,000 units in November, so the 7.3% drop is from a much higher base than originally reported. That said, at the current sales pace, inventory is still only 4.9 months.

The upside is that tight supply nearly always leads to higher prices. That's the case today: the national median price for a new home increased 1.3% to $248,900 in December to post the highest median price in five years.

On the existing-home front, the pending sales index fell 4.3% in December to pull the year-over-year comparison, which had been trending in the double digits, down to a plus 6.9%. Until more inventory avails itself, establishing an uptrend in existing-home sales will be difficult.

The good news is that prices – new and existing – should continue to trend higher, which will eventually draw more inventory and more buyer interest into the market.

In fact, home prices increased 0.6% in the S&P/Case-Shiller Home Price Index for November. The year-over-year increase is now over 5%, the largest percentage year-over-year price increase since 2006. The most encouraging news in the index is that gains were found in nearly all the metropolitan areas Case-Shiller covers.

Economic growth should also trend higher in 2013. We say this despite gross domestic product posting a surprising 0.1% contraction in the fourth quarter of 2012. We not concerned, because fewer government expenditures were the cause of the shortfall. Less government spending isn't necessarily bad, because resources government spends are resources taken from the private sector.

As for the private sector, we expect it to pick up the slack. Residential investment will likely lead the way, which is also good news. Because residential investment is a leading economic indicator and a strong force for economic growth, it appears very unlikely the economy will slip back into a recession. Indeed, it appears much more likely economic growth will accelerate through the year.

As economic growth accelerates, we should expect interest rates to move higher. They already have. The 30-year fixed-rate mortgage rose to a four-month high this week. Market forces appear to be overriding the Federal Reserve's strategy to hold rates near the all-time lows set in late November.

With the stock market moving higher, we expect more pressure for rates to rise. We say this because investors are growing increasing confident, and when they grow confident they pull money out of bonds and put it into stocks. This asset rotation pressures interest rates and yields to rise.

Last week, we said that the market shouldn't fear higher interest rates, because higher rates are a sign the economy is improving. On the other hand, this also means the risk of holding out for lower rates will only increase.

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.

We appear to hold the minority opinion on mortgage rates: Most market watchers believe they remain an important variable in sustaining both the housing and the economic recovery.

A few years ago, lower rates were an indispensable variable. Many households had mortgages three or four percentage points above today's rates. The savings realized by refinancing or purchasing a home at a lower rate could amount to hundreds of dollars each month. This was especially important to household cash flow at a time when the economy was mired in a recession.

But the fact is that most everyone will have taken advantage of today's historically low rates by the end of the year. After each refinance, the marginal economic benefit drops. In other words, the impact of lower rates has diminished.

Here's another consideration: Rising rates will likely be accompanied by greater economic growth. When we go back to the 1990s, mortgage rates were 300 or 400 hundred basis points higher than they are today, and the housing market performed fine. The key distinction is the 1990s were marked by strong economic growth, which meant more people were able to service a higher borrowing rate and a higher home price.

The point we want to emphasize is that higher mortgage rates won't stall the housing recovery if they are accompanied with economic growth, and that will likely be the only way rates will rise. This is why we say higher mortgage rates are nothing to fear, and if they are accompanied by higher economic growth, should actually be embraced.

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.

2012 was the year of the price increase.

Indeed, the median price for existing homes rose to $180,800 in December, an 11.5% gain over the median price a year ago. Prices rose steadily through 2012 on increased demand and reduced supply, which has fallen to 4.4 months at the current sales rate.

Low supply, though great for buttressing prices, is impeding sales-volume growth. Existing home sales posted at 4.94 million units on an annualized rate in December, which was below the consensus estimate for 5.09 million units.

That said, rising homes prices are still an overall benefit. Rising prices are shifting more home owners to a positive-equity position. This should help spur inventory growth, as more owners interested in selling won't be constrained by the prospect of bringing money to the table.

This rising equity offers an additional benefit: It raises the “wealth effect.” Home owners naturally feel more optimistic when they're not burdened by being underwater on their most important asset – their home. A rising wealth effect spurs additional spending and investing, which leads to more economic growth.

Additional investment is particularly important. Many economists focus on consumer spending, believing it's the key driver of economic growth. Spending is important, to be sure, but investment is the real driver, because production must precede consumption. In other words, you must produce to consume.

We see a lot of potential in residential investment, especially in the important single-family home sector. Over the past 50 years, single-family residential investment has averaged 2.5% of gross domestic product. We are far below that level today. This suggests to us that the market can support much higher levels of investment.

We are further encouraged by the trend in sales composition.

Many markets across the country have seen double-digit year-over-year drops in distressed sales as a percentage of total sales: Phoenix has seen a 32% drop; Colorado, a 29% drop; South Florida, a 14% drop; and Las Vegas (possibly the hardest hit bubble market), a 24% drop. If this trend continues, and we expect it will, residential real estate investment will move closer to regaining its rightful position as a primary economic driver.

As for mortgage rates, they haven't been trending lower or higher. The way financial markets have been performing lately, we don't see much impetus for rates to go lower. The economy is expected to pick up pace this year, and this is reflected in the higher yield on the 10-year Treasury note.

We might sound like a broken record on this point, but it's worth repeating: We simply see little reward (and more risk) in waiting to buy or refinance a home in this stage of the 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.

We are speaking of the multi-family home market, where rents have been on a tear, and where apartment builders have been ramping up production. Over the past year, residential real estate investment trusts (REITS) have been the best performers in the REIT investment space.

Such a strong run in multi-family home construction begs a question: Is the multi-family sector forming a bubble? We have to ask, because over the past 25 years, we haven't seen this much multi-family construction packed into one year. We obviously don't have a definitive answer, but at a minimum we can say that the multi-family market deserves to be closely monitored.

On the other side of the coin, it appears the single-family sector still has plenty of room to run, and we think it will run in 2013. As rents continue to rise, home ownership will appear more attractive compared to renting. This paradigm will motivate more households to take the ownership plunge, and we see many of these households opting to plunge into single-family homes.

In short, we see a strong housing market for 2013, but we see more of that strength shifting to the single-family sector.

 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.

Home builders appear committed to making up for activity lost over the past few years.

We say that because housing starts surged 12.1% in December to 954,000 units on an annualized rate. For the year, starts rose a whopping 36.9%. What's more, home builders are expected to maintain the momentum at least through 2013.

As to be expected, the gains in starts and new-home sales have had a meaningful impact on home-builder outlook. This time last year, the Home Builder Sentiment Index stood at 25. Today, it's at 47.

The gains in home-builder optimism are impressive, to be sure, but it could be higher. Home builders are still frustrated with credit conditions that are too tight and property appraisals that are frequently too low. Most of us have had to deal with these two frustrating issues, but as 2013 progresses, we think these issues will become less frustrating.

We say that because we expect home prices to continue to trend higher. The corollary to rising home prices is falling negative equity. Indeed, rising home prices lifted more than 100,000 homeowners out of negative equity in the third quarter of 2012, according to CoreLogic. Through the first nine months of 2012, 1.4 million homeowners were elevated into a positive equity position.

Should home prices continue to appreciate (as we expect), the lending purse strings should loosen somewhat. Experience has taught us that rising prices and economic growth tend to persuade regulators to take a less risk averse and a more accommodating stance. In other words, regulators tend to give lenders more latitude in underwriting.

Of course, history never exactly repeats itself, and this time could be different. Indeed, many industry watchers are concerned that new regulation, namely the Ability-to-Repay/Qualified Mortgage (QM) rule, issued by the Consumer Financial Protection Bureau (CFPB), has placed a formidable hurdle for many potential home buyers to overcome. The new rule, scheduled to go in effect in January 2014, codifies eight requirements for lenders to verify a borrower’s ability to repay.

That said, we remain sanguine on the credit outlook nevertheless. Yes, the new CFPB rule could make it more difficult for home buyers to get a mortgage. Keep in mind, though, we still have 12 months to go before the rule takes effect. A lot will happen between now and then, and we expect much of what will happen will be positive.

As for the here and now, mortgage rates have leveled off after rising over the past month. We think this presents an opportunity to lock in a rate.

Now, we'll freely admit there is no guarantee rates won't fall, particularly if the debt-ceiling (which the federal government has reached at $16.4 trillion) elevates risk-aversion in financial markets. This would lead to more money flowing into haven investments like the 10-year Treasury note.

That said, the yield on 10-year Treasury remains near a six-month high, which suggests to us that mortgage rates, particularly on the 30-year fixed-rate loan, are unlikely to test recent lows. In short, we still see no reason to sit on the sidelines.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.