Real Estate Information Archive

Last week, we surmised that if the yield on the 10-year U.S. Treasury note dropped to 2% or lower, we'd see the 30-year fixed-rate mortgage quoted regularly below 4%. The yield on the 10-year note dropped 15-basis points over the past week and is below 2%.

Mortgage-backed securities take their cue from the 10-year note. Therefore, mortgage rates (longer-term rates, specifically) take their cue from the 10-year note. Lenders today are regularly quoting the 30-year loan on top-tier scenarios below 3.9%.

The drop in longer-term mortgage rates has lead to a surge in refinances. The latest survey from the Mortgage Bankers Association shows refinances up 19% week over week. That's the good news. The bad news is that the same survey shows purchase applications down 2% week over week.  The downtrend in purchase applications is another reason we're not expecting an immediate upturn in home sales. 

The stock market is key. It's also a threat. We could easily see a spillover into housing: Both sales and lending activity could start trending lower if stock prices don't start trending higher.

 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.

Still Stumbling Out of the Gate

2016 has hardly gotten off to an auspicious start, particularly if you own stocks.  Through the first two weeks of January, the S&P 500 has lost over 10% of its value. This is the worst start to a new year ever. 

If misery loves company, then the S&P has plenty of it. China's major stock barometer, the Shanghai Stock Exchange Composite, is down 16% year to date. Japan, Germany, and France have also experienced double-digit stock-market declines. In the United Kingdom, stocks are down almost 10%, but not quite. 

Around the world, investments are losing value, and they're not alone. Many asset groups are also losing value. (We distinguish investments from assets, in that investments generate cash flow.) Commodity assets – food stuff and industrial metals – continue to hit new multi-year lows. Then there is oil and natural gas, which also continue to trend lower. Oil prices are at a 13-year low. Though natural gas prices have rallied in recent weeks, they continue to hover near a 15-year low.

Not surprisingly, consumer price inflation (CPI) barely registers a blip these days. CPI for December showed a 1.0% monthly decline, which drops the annual inflation rate to a mere 0.7%. Energy lead the charge lower, posting a 2.4% monthly decline.

Housing continues to be the one positive sector in the economy. Unfortunately, even housing is showing signs of faltering.

Home builders remain optimistic, but just not as optimistic as they were in the second half of 2015.  The home builder sentiment index dropped to 60 in January. This is the third-consecutive monthly decrease.

Lower optimistic could simply be a reflection of fewer starts. Total housing starts for December were down 2.5% to 1.149 million on an annualized basis. Single-family starts bore the brunt of the decline, falling to 768,000 from 794,000 month over month.  Permits were the silver lining (somewhat). Permits came in at 1.232 million on an annualized basis. This beat expectations for 1.2 million permits, but they were still lower than the 1.282 million posted in November.

We've devoted a good deal of space to markets outside of housing and mortgage lending, and for a good reason. No market is an island. (The same can be said for any country.)

Our concern is that what's occurring in investment and asset markets could affect the housing market. Investments and assets produce a wealth effect: When investment and asset prices are appreciating, people feel wealthier and more confident. They're more likely to take on a big-ticket item – like a house.  The flip side is that when investment and asset prices are depreciating, people become more cautious. They're less likely to take on big-ticket items.

We're still bullish on housing, but we're also realistic. We wouldn't be surprised to see a further slowdown in national sales volume. We also wouldn't be surprised to see a slower pace of price appreciation (and even price depreciation) in more local housing markets. 

 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.

Five years ago, we repeatedly implored readers to keep the faith: Home prices would cease declining and would recover. We reasoned that 2010 (and 2011) was terrific time to enter the housing market - bargains abounded. You just had to keep your eye on the distant horizon.

The distant horizon is here. Times have certainly changed. Rising prices, not declining prices, is the overarching concern.  Many markets – Denver, Seattle, Washington D.C., Austin, Orange County, for instance – have seen home prices blow past previous highs.

Lack of new construction is a contributing factor to today's higher prices. Builders rightly throttled back after the 2008-2009 recession.  There was a glut of housing at the time; you don't add gasoline to a raging fire.

Today, there is a dearth of housing, which has held back both existing and new home sales.  Unfortunately, builders have yet to fully throttle up. Starts – around one million per year – are still far below the 1.6 million long-term annual average.  Policies more friendly to housing wouldn't be a bad thing at this point. After all, more supply would mean more affordable housing. More affordable housing, in turn, would mean more first-time buyers.

We understand many people don't like change (such as new housing in their neighborhood). But if failure to change means running off young first-time buyers, then failure to change means running off your future. 

 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.

Blow Out Employment Numbers Fail to Blow Up Lending Rates

We've been emphasizing monthly employment numbers for at least the past two years, and for good reason: The employment situation is a key variable in the Federal Reserve's interest-rate calculus. Strong job growth enables the Fed to raise interest rates, which it did last month by raising its range on the federal funds rate.

Job growth remains strong to this day. Payrolls soared 292,000 in December. The number smoked most economists' estimates by a wide margin. What's more, October and November payrolls were adjusted up a total of 50,000. October payrolls were adjusted up to 307,000. eral funds rate.

With payrolls trending ever higher, interest rates should be expected to trend higher as well. Rising payrolls reflect robust business activity and a strong economy.

But the world is never so neat and tidy. Since last Friday, when December's employment numbers were released, interest rates have actually drifted lower. The 10-year U.S. Treasury note yields roughly 10 fewer basis points today than it did last week. Long-term mortgage rates, namely the rates on the 15- and 30-year fixed-rate offerings, are being quoted near a two-month low.

Macro events have taken center stage: China's stock market has tanked to start 2016. Our own stock market isn't fairing much better. The S&P 500 is down 6% year to date.

Deflation, more than anything, has financial markets on edge. Oil recently hit an 11-year low, with West Texas crude trading near $30/barrel. Commodities in general – oil, natural gas, metals, grains – are all selling near multi-year lows. On the other hand, the U.S. dollar remains at multi-year highs against many of the world's currencies (which reflects strong world demand for U.S. assets and investments, including U.S. real estate).

When these events are aggregated, it appears unlikely the Fed will implement another rate hike in the near future. Traders in fed funds rate future contracts are pricing only an 8% chance of another rate increase when Fed officials meet later this month. They're pricing a 43% chance when Fed officials meet in mid-March.

We're skeptical that we'll see another rate increase until the second quarter of 2016. But even if we do see the Fed ratchet the fed funds rate higher that doesn't mean all mortgage rates will ratchet higher.  We've seen some up-drift in short-term mortgage rates since December. Long-term mortgage rates have remained muted.

Inflation is key. If there is no inflation, expect long-term mortgage rates to remain low.  There is such a dearth of inflation these days that we've heard forecasts of the yield on the 10-year Treasury note falling below 2%. If that occurs, you can be sure that quotes below 4% on the 30-year fixed-rate loan will again be the norm.   

 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.

This past week, Federal Reserve Vice Chairman Stanley Fischer said that predictions for four federal funds rate increases this year were “in the ballpark.” Should they occur the range for the fed funds rate would increase to 1.25%-1.5% by the end of 2016. The range is currently at 0.25%-0.5%.

To be sure, a lot can happen over the course of a year, but there is not much happening now to elicit more fed funds rate increases.

Deflation, as we mention above, is an issue. The Fed wants annual inflation running at 2% annually. At the same time, U.S. economic growth is stagnating. Let's also not forget the ultra-strong dollar, which is near a 10-year high against the euro and a five-year high against the Chinese Yan. If you're considering a trip to Mexico, Brazil, Argentina, or some other Latin American hotspot, by all means go. It's been decades since your dollar has gone so far.

If the Fed were to continue to raise the fed funds rate, the dollar would continue to strengthen. Deflation would become even more of an issue. Rates on floating-rate loans would rise, but rates on longer-term fixed-rate loans would likely fall, thus risking a yield-curve inversion.

So, for now, we'll ignore what the Fed says on interest-rate increases. We just don't see 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.

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.

One and Done?

Sometimes you have to riff a bit this time of year. Meaningful news is scarce, which is understandable. With the majority of people preoccupied with December holidays and New Year festivities, much of the news falls on deaf ears anyway.

For the engaged minority, substantive topics are still worth discussing. Few are more substantive than the Federal Reserve and interest rates. Admittedly, we've done our fair share of riffing on the Fed and interest rates, and for good reason: The Fed is the gift that keeps giving. Its influence over housing and mortgage lending can't be understated.

Now that the Fed has finally notched its belt with a federal funds rate increase, punditry and interest-rate speculation run rampant. We again join the fray.

The prospect of rising mortgage rates can be a good marketing tool. It motivates potential home buyers and refinances to act now.  We've voiced our opinion that higher rates reside in our future, but now we have to tack back. We've changed our opinion somewhat; not so much because the facts changed, but more because they haven't improved.

Gross domestic product growth (GDP), for instance, continues to languish stubbornly. Yes, GDP growth at 2.0% for the third-quarter allowed the Fed to raise the fed funds rate, but growth for the fourth quarter was recently revised down to 1.3% by the Federal Reserve Bank of Atlanta. Slower economic growth will give Fed officials reason to pause on an immediate follow-up rate increase.

If you look around the globe, you'll find deflation, not inflation, remains the great concern. Oil prices are near a seven-year low; natural gas prices are at a 14-year low. Many commodity indexes (Bloomberg Commodity Index and Rogers Agricultural Index, most notably) are at multi-year lows. Central bankers are much more keen to cut interest rates, not raise them, in a deflationary environment.

What's more, the U.S. dollar will rise even further against the world's currencies if the Fed continues to hike interest rates. The dollar is already at a multi-year high against many of the world's major currencies. Yes, this is good news for U.S. international travelers and importers, but it's bad news for U.S. exporters. 

With all that said, we still see some possibility of higher mortgage rates, just not across the lending spectrum. You may have noticed that short-term lending rates have drifted somewhat higher, but longer-term rates remain flat, even down, depending on when you asked for a quote. We're seeing a flattening of the yield curve. The spread between short-term rates and longer-term rates has narrowed.

This isn't all that unusual. The fed funds rate will impact the short end of the yield curve first. Because inflation expectations remain low, it's failing to raise rates on the long end of the curve. This suggests long-term rates could remain at current levels for some time to come – through the first quarter of 2016 seems reasonable to us.

But, of course, that outlook could change if the facts change.   

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 still up, up, and away for home prices in many markets. CoreLogic reports prices nationwide were up 6.8% year over year for October. This means prices in many markets are still appreciating more than the historical norm of 2% to 4%. (Inflation is a key factor in home-price appreciation.)

After the housing bubble burst in 2008, many of us couldn't wait for home prices to rise after such a precipitous and unexpected fall. (This was the first time many of us had actually experienced home-price deflation.) Fortunately, prices since then have recovered, and advanced to set new highs in many markets. 

But sometimes you can have too much of a good thing. Rising prices can be a windfall for sellers (though not necessarily if a seller is also a buyer), but they can be an impediment to buyers, particularly first-time buyers with no equity to cash in.  That's the problem today: a dearth of first-time no-equity buyers.

We'd like to see a further reduction in nationwide home-price appreciation going forward. More signs suggest that's the case in more markets. (Case-Shiller, in particular, has seen a slowdown.) Slow and steady has always won the real estate race in the past. It will continue to win the race in the future.

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.

Time to Brace Ourselves (Or Maybe Not)

Thanks to Thanksgiving, Black Friday, and Cyber Monday, there really isn't much to report on the housing and mortgage front. The focus for most of the past week has been on eating and shopping. Therefore, we might as well take another look at the Federal Reserve and its upcoming Dec. 16 meeting. After all, it's only two weeks away.

We again turn to CME Group and its data on trader expectations. As it stands now, traders in federal funds rate futures contracts are pricing a 75% chance the Fed will raise the fed funds rate come Dec. 16. That's the highest odds given for 2015. 

Trader expectations were further buttressed this past week on the words of one Fed official. Federal Reserve Bank of Atlanta President Dennis Lockhart said he favors raising the fed funds rate this month. (The fed funds rate is a base rate for all other rates and hasn't been raised since 2006.) “Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling,” Lockhart said.

Yes, the language is mealy and equivocating, but Fed officials speak only in equivocating terms (the difference is always a matter of degree). November's employment numbers (released on Friday) will likely be the final arbiter: If November saw 200,000 or more new jobs created, we'd expect to see the odds of a rate increase rise above 80%. We expect to see 200,000 or more new jobs for November.

At this point, though, pretty much everyone has priced in a rate increase. That's the way it's been for the past few weeks. Mortgage rates have held steady, and have even drifted lower.  We've mentioned in the past that it's not the actual event that moves markets; it's the anticipation of the event. Pretty much everyone is done anticipating.

That said, we expect mortgage rates to hold steady over the next week to 10 days. When we get closer to Dec. 16, volatility could pick up. Post-Dec. 16, we wouldn't be surprised to see rates drift higher.  The impetus is for lending institutions to find a way to generate more interest income. A higher fed funds rate helps the cause. 

That means that the rates we have today might be the best rates we see for awhile. If anyone is in the market to refinance or to buy, now is as good a time as any to lock and load. The odds of gaining 10 basis points isn't worth the risk of losing 25 basis points. Better to be pound wise and penny foolish then the reverse.

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 odds continue to rise. Last week, we reported that traders in federal funds rate futures contracts were pricing in a 74% chance the Federal Reserve will raise the fed funds rate come Dec. 16. The odds over the past week have been lifted to 78%. This means that in three weeks something will occur that hasn't occurred in nine years: the Fed will officially raise an important benchmark interest rate.

Of course, that doesn't mean current mortgage rates are a thing of the past. We've frequently mentioned that anticipation moves markets, not the actual event itself.  This is the reason we've seen mortgage rates actually hold steady, or even drift lower, over the past three weeks.  The future is priced into the present.

We're not expecting too much volatility in rates over the next couple weeks. AsDec. 16 approaches, that could change. (Another blow-out employment report, due on Dec. 4, will further raise the odds of a fed funds rate increase, but it shouldn’t do much to move interest rates more than they've already moved.)

That said, after the fed funds rate increase occurs, we wouldn't be surprised to see interest rates begin to drift higher. Not much higher, but enough to appreciate the rates available today.

 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.