What Harrisburg Needs.....

No, we don't need $1 Million condominiums like Mary K. is proposing.... what we need are cool, hip, lofty condominiums like these.... check out the websites.

www.avenuelofts.com

www.foundrylofts.com

www.sunsetandvine.com

Thanks to Lou Colon for the Florida tips and Scott Hagopian for the Hollywood tip.

Cumberland Valley School District

Elementary School Totals..........................3,306 students

Middle School Totals..................................1,920 students

High School Total........................................2,557 students

Total Students in 2005..............................7,783 students


I must have a good reason for telling you this.... stay tuned.

Meet Jamie Berrier

Jamie Berrier serves as Residential Manager and is one of the Top Residential Agents at RSR REALTORS. She began her career in real estate as personal assistant to Greg Rothman in 1996.

"Jamie was a vital key to my success as an agent and is now a key to the success of RSR REALTORS." Said, Greg Rothman. "She has all the tools needed to be a successful real estate agent. There is no surprise she's been successful. She has a sense of urgency and cares about her clients. Real estate is her life."

She is a graduate of Penn State University with a degree in Information Technology. She was "Residential Agent of the Year in 2004" for RSR.

She represents McNaughton Homes in the Carriage Homes Development and Classic Communities, Inc. in Silver Creek. Check out her website for more information.

Article Review

Data Analysis Technology and Appraisal Fraud
George Dell, MAI, SRA, The Appraisal Journal, July 2002


Though this article was published more than three years ago, it remains timely and important to anyone interested in the appraisal industry. Real estate appraisal fraud continues to be a cancer on our industry. Thousands of consumers are suffering from the effects of appraisal fraud in the Pocono Resort areas of Pennsylvania. Dozens have been indicted. Fraud hurts lenders, real estate brokers, the consumer and the reputation of all appraisers. Advances in technology intended to improve the quality and efficiency of the appraisal work has made manipulation and fraud easier.

The residential sales boom and re-finance bonanza brought about by low interest rates have created a boom in the appraisal industry. Lenders and borroIrs alike demand a quick turnaround of the appraisal and have little tolerance for appraisals that “don’t hit the right number.” Therefore, the appraiser is often new to the business and has not been properly trained. Furthermore, the new appraiser is more likely to succumb to pressures from their client to raise values to make refinancing easier.

Mr. Dell provides an interesting look into the evolution of data collection of comparable sales. Prior to the rise of technology and availability of data, appraisers “nurtured, developed, and refined” comparable sales data and market analysis information. The sales data was often considered proprietary and the appraisers guarded and protected the data as if it Ire their stock in trade.

The article points out that paradoxically the conciseness of the form reports is also its Iakness. “It is easier to place inaccurate information in a box, or to just leave the box empty.” Perhaps the guilty appraiser considers the offense less egregious because it requires only misplacing an “x” in the wrong box. As the author puts it, “Each box is similar in size; therefore, they appear to be similar in importance, making the “box” mentality a convenient tool for deception.”

There are a number of ways appraisal fraud can take place in the production of the appraisal report. Misinformation or fraud can occur by “commission” or “omission.”
Commission is fraud by making statements that are untrue. Omission is fraud by leaving out or failing to make statements that due to the silence create an inaccurate picture. Fraud by commission would be an appraiser reporting that a property has more bedrooms than it actually has. Fraud by omission would be an appraiser failing to note that the property was next door to a seIr plant.

Another mode of misrepresentation is “generalization.” Generalization is information that would be accurate for most properties in the area but does not pertain to the subject property. Not stating adverse characteristics of the subject property is also a common falsification, according to the article. Failing to use the most applicable and available comparable sales in an appraisal report in order to chose comparable sales that increase or loIr the actual value of the subject is another common fraudulent activity.

The author discusses an interesting concept about the number of comparable sales that are used in an appraisal report. The Uniform Residential Appraisal Report only has room for three main comparable sales, with the ability to add additional comparable sales in an addendum. The concept of using three or four comparable sales was conceived when the ability to obtain accurate sales data was limited. With the multi-lists, internet and high-technology, dozens of comparable sales are available literally at the appraiser’s fingertips.

The Uniform Standards of Professional Appraisal Practice (USPAP) requires that the appraiser “collect, verify, and analyze all information applicable” and “must analyze such comparable sales data as are available.” The author suggests that today’s appraiser should insert a tabular chart of all the comparable sales in the subject’s market area. From this list the appraiser can choose three comparables to use in the report, but the table remains a part of the report to show the reader or revieIr the range in value and the comparables that Ire not used in the report. This is an excellent idea that would make fraud more difficult in the residential form report and the narrative reports.

The article also discusses fraud through externalities. The appraiser can commit fraud by ignoring the economic or political influences that can affect the value of the subject property.

The author suggests using graphics and numerics in the report to help mitigate possible fraud. He writes, “Statistics can be misleading, but not as misleading as words.” Using more data and statistics illustrates the range in data, the mean, mode, standard deviation and variances that make fraud more difficult.

The article offers several recommendations to protect the industry against fraud. He suggests that fraud would be more difficult to commit if the appraiser was required to report (even in summary form) all the data not just the convenient parts. Appraisal professionals must be proactive in the use of technology to improve our work product. He states that, “Our clients and intended users must be educated from within the appraisal report. We cannot expect our clients to demand improvement.” A good appraiser should make their clients aware of technology, not the other way around.

Dell makes the strong case that by increasing the data included in the report appraisal review would be easier, cases of fraud would be easier to prosecute and easier to prove. Ultimately, fraud would be harder to commit and the consumer and the public would be better served.

RSR REALTORS named #28 by Central Penn Business Journal

Yesterday, the Central Penn Business Journal announced and honored the top fifty businesses that have made significant contributions to the growth, strength and success of the Central PA region. The ninth annual Top Fifty Fastest Growing Companies awards breakfast was held at the Hilton Harrisburg. “RSR REALTORS” is proud to announce its rank of number “28” on this year’s list.

Harrisburg Makes List of Top 100 Places to Live

The Harrisburg and York areas are good places to raise a family, according to national non-profit America's Promise. The organization, headed up by Colin Powell, has announced the results of its first annual 100 Best Communities for Young People competition. The communities on the list, ranging from large cities to tiny towns, were deemed to provide good support for kids from birth to higher education. The communities were not ranked.

Congratulations to York and Harrisburg for making the list.

Thank you to Julia Taylor of the Central Penn Business Journal for this story.

Don Cunningham for Executive in Lehigh County

Don Cunningham, former Mayor of Bethlehem and Secretary of the Department of General Service is a rising star in Pennsylvania Politics. He directed the cost-saving programs at DGS and has returned home to Lehigh County to run for County Executive. Please join Governor Ed Rendell and the host committee in honoring him on Tuesday, September 27th, at 5:00 pm at the Red Door (110 North Second Street, Harrisburg). The recommended contribution is $500.00. Checks should be made to: Friends of Don Cunningham Committee. To learn more about Secretary Cunningham, check out his website. I expect he'll be Governor of Pennsylvania someday.

Donald T. Cunningham, Jr. was confirmed by the Pennsylvania State Senate on February 11, 2003 as Secretary of the Department of General Services (DGS), which oversees the core business operations of state government and manages nearly $4 billion in annual spending.

Cunningham was nominated by Governor Edward G. Rendell because of his experience with managing large government operations during difficult financial times and improving the quality of services while reducing the cost of operations. He played a central role in the Rendell Administration's effort to improve the management and productivity of state government, leading the effort to reduce $250 million in spending by streamlining government and introducing modern business management practices.

Prior to his appointment, Cunningham was Mayor of Bethlehem, Pennsylvania, the state's seventh-largest city, from 1998 to February 2003. In a city hit hard by the decline of Bethlehem Steel Corp. and the loss of 20,000 steel manufacturing jobs and a substantial portion of its tax base, Cunningham guided more than $1 billion of new development and the creation of 2,500 new jobs into the city during his tenure as mayor. He received national recognition for his work in economic development and urban revitalization for leading an economic renaissance and transforming Bethlehem into a New Economy city.

In addition to his work in economic development, Cunningham proposed five city budgets with only one small (5½ %) tax increase and developed new and innovative programs to improve public safety and the delivery of neighborhood services. He was recognized for his innovations in the delivery of local government services by both the U.S. Conference of Mayors (1999) and former Governor Tom Ridge (2001). The Democratic Leadership Council named Cunningham one of the top ten state and local "rising stars" in the Democratic Party in 2000.

His service-driven approach to government, emphasizing fiscal austerity and aggressive economic development, led to his election by his peers in 2002 as the president of the Pennsylvania League of Cities and Municipalities. Cunningham was the youngest mayor elected in the history of Bethlehem (1997) and the first mayor reelected (2001) with no opposition in the primary and general elections.

While in office, Cunningham spearheaded the redevelopment of the former Bethlehem Steel manufacturing lands, one of the largest urban brownfield renewal projects in the United States.

Before his term as mayor, Cunningham served for two years as a member of Bethlehem City Council. He also worked in the private sector where he served as Senior Information Specialist at Pennsylvania Power and Light Co. in Allentown and Media Relations Director at Moravian College in Bethlehem. Cunningham started his career as a newspaper reporter working for the former Bethlehem Globe Times and as a suburban correspondent with the Philadelphia Inquirer.

While in state government as Secretary of DGS, Cunningham served on the State Public School Building Authority and Pennsylvania Higher Educational Facilities Authority, as well as the Board of PENNVEST, the Capitol Preservation Committee, the Governor's Homeland Security Advisory Council and the Agricultural Land Preservation Interagency Committee.

Cunningham is a native of Bethlehem, Pennsylvania and was educated entirely in Pennsylvania schools. He graduated from Shippensburg University with a Bachelor of Arts in Journalism and earned a Master of Arts in Political Science from Villanova University.

Cunningham resides in West Bethlehem, the Lehigh County portion of the City, where five generations of the Cunningham Family have lived in the same neighborhood. He is married to the former Laura Allen. His children, Bridget, Shane, and Brendan, attend Bethlehem Area public schools.

City Council to vote on Mary K's Demolition

Important Notice!
The Harrisburg City Council will meet

consideration of
the proposed development of
2900 block of North Front Street


The meeting will be held on
Tuesday, September 27, 2005
at 6:00 P.M.
City Council Chambers
King Government Center
10 North Second Street

My take on Sprawl....

What is sprawl? Loss of Open Space? Traffic congestion? Malls? Loss of farm land? Isn’t it really low-density, single-use development? Malls in one place, employment centers in another place and living somewhere else.

Is sprawl the pejorative term for suburbia?

The Industrial Revolution brought people from the country to the cities. The history of zoning. We too often think of the Village of Euclid vs. Ambler Realty (Ohio in 1926). In fact, zoning began in 1916, with “Bolton’s Plea” from developers.

The city grew and then wars came. After WWI there wasn’t enough work and prosperity for homeownership to grow.

However, the suburbs boomed, when the troops came home from World War II, the GI Bill and VA financing, expanded and was subsidized by the National Defense Highway System that literally drove the population out of the cities.

Some statistics:

From 2000 to 2010, 24.5 million more Americans will need housing. During the same time, 17 million more workers will commute to and from their jobs.

Here are my solutions:

Efficient use of land resources: high-density and mixed use. Transfer of Development Rights.

Full Use of Urban Services – Back to the City Movements are followed by back to the small town: Carnegie in Pittsburgh, Steelton in Harrisburg, and Bethlehem in Lehigh Valley.

Mixed Use – New Urbanism, mixed social-economic uses and prices.

Transportation… high gas prices, soaring parking rate costs in the city and traffic congestion. We need new modes of transportation. Public transportation must be more convenient, faster and cheaper than driving alone in your car.

Changing outdated zoning and planning to integrate not segregate uses. Bolton’s Plea is replaced by the Commuters Plea.

1031 Like-Kind Exchange

A 1031 Exchange (Tax-Deferred Exchange) Is One Of The Most Powerful Tax Deferral Strategies Remaining Available For Taxpayers. Anyone involved with advising or counseling real estate investors should know about tax-deferred exchanges, including Realtors, lawyers, accountants, financial planners, tax advisors, escrow and closing agents, and lenders. Taxpayers should never have to pay income taxes on the sale of property if they intend to reinvest the proceeds in similar or like-kind property.The Advantage of a 1031 Exchange is the ability of a taxpayer to sell income, investment or business property and replace with like-kind replacement property without having to pay federal income taxes on the transaction.

A sale of property and subsequent purchase of a replacement property doesn't work, there must be an Exchange. Section 1031 of the Internal Revenue Code is the basis for tax-deferred exchanges. The IRS issued "safe-harbor" Regulations in 1991 which established approved procedures for exchanges under Code Section 1031. Prior to the issuance of these Regulations, exchanges were subject to challenge under examination on a variety of issues. With the issuance of the 1991 Regulations, tax-deferred exchanges became easier, affordable and safer than ever before.

Great new listing...CV Schools and Apartment

$369,900 Single family home in Hampden Township plus three car garage and seperate apartment that can generate $600 per month in rent.

50 Oak Avenue, Camp Hill, PA 17011

Land Statistics that NIMBY's won't tell you!

There are 2.3 Billion acres of land in the United States of America.

There are 1.9 Billion acres of land in the lower 48 states (not including Alaska or Hawaii)

There are 103 Million acres of land in California alone.

75% of Americans live in 3% of the land. I repeat, 75% of Americans live in 3% of the land.

66 Million acres in the United States are considered "developed" with 75% of the people.

80 Million acres in the United States are planted in corn. (USDA)

75 Million acres in the United States are planted in soybeans. (USDA)

City of Harrisburg Aerial Photograph

Condominiums for Sale....

There is a three bedroom, two and a half bathroom 3,046 square feet condominium currently for sale in Waterford (with a spectacular view of the Harrisburg Skyline) for $419,900.

I know of three investors who each lost over $1,000,000 in the Waterford Condominium project. The original developers shared Mary K's vision for opulence. They thought Central PA buyers would gladly pay $300,000 for their condominiums in the late 1980's.

In the last 16 years, only a dozen homes have sold for over $1,00,000, ANYWHERE in Central Pennsylvania. Mary K's project will not work at $1,000,000 for residential condominiums. However, with all the parking she is proposing, an office condominium might work.... hmmmm.

I also have a vision of Front Street someday returning to it's history of gracious residential homes. It is sad that three beautiful mansions have to be torn down to build condominiums when there are at least three other potential sites for a similar project in the city.

1301 North Front Street (Front and Verbeke, owned by the Vartan Estate, for sale for $1,500,000).
204-210 North Second Street (disclaimer, I am one of the owners of this site).
555 Walnut Street (15 floors of air rights available to be developed with condominiums).

Central Pennsylvania Statistics

Year Units Sold Avg. Price Market Days Properties For Sale Appreciation

1995 5,289 $109,501 87 3,294 4%
1996 5,518 $113,949 90 3,154 4%
1997 5,560 $114,332 89 3,554 0%
1998 6,420 $119,850 91 3,290 5%
1999 6,482 $122,650 88 3,122 2.3%
2000 6,331 $123,661 89 3,200 1%
2001 7,189 $126,294 86 2,969 2.2%
2002 7,265 $132,382 78 2,366 5%
2003 7,565 $142,610 55 1,950 8%
2004 8,468 $156,158 50 1,883 9.5%

Take notice to the total number of units sold and the decreasing number of days a property is on the market. In a decade the time of the market has dropped from 87 days to 50 days. The "properties for sale" column is the average number of properties on the market at any given time during the year. The trends are clear... increasing demand, decreasing supply, increasing appreciation like Central Pennsylvania has never experienced.

In January of 2005, I predicted the trends would continue and that we would see double-digit appreciation in the residential market. I'll have the year-to-date 2005 statistics for you in the next couple of days. Want to guess what the average sale price and days on the market has been in 2005? The winner gets a $25.00 gift certificate to LOLA'S DAY SPA.

Welcome to my real estate blog....

Thank you for visiting my real estate web log (aka "blog"). I am a native of Harrisburg, Pennsylvania and the President/CEO and Broker of Record at RSR REALTORS. I am a 1985 graduate of Cumberland Valley High School. I received a Bachelor of Arts in Political Science from the University of Massachusetts, Amherst in 1989. I have a Master of Science in Real Estate Degree from Johns Hopkins University.

Since 1989, I have been involved in virtually every facet of the real estate business. I am ranked in the Top 1% of all residential agents in the Greater Harrisburg Area. Only 7 agents out of 1,500 sold more homes than I did in 2004.

I also have done numerous commercial, investment and office real estate deals including the $6.1 Million sale of 901 North Seventh Street on behalf of the City of Harrisburg in November 2004.

I am a State Certified General Appraiser and was one of the founders of RSR Appraisers & Analysts.

Please come back and visit my blog for interesting information about the Central Pennsylvania real estate market and local information. If you have any questions please post them.

Thanks again. Take Chances.

Fight the Brain Drain and Have Fun....

ImPAct Conference comes to Harrisburg!

I had the honor of serving as Conference Chairman of the 2nd Annual ImPAct Pennsylvania Young Professionals Convention in Harrisburg in 2001. The conference is back to Harrisburg this year and worth attending if you are interested in "brain drain", economic development, and young professional organizations. It is also a great opportunity to network and socialize with like-minded young professionals from around the Commonwealth of Pennsylvania.

My Best of Harrisburg List

Best Restauranteur.................Rick Galiardo and Donnie Brown
Best Spa.................................... Lola's on Third Street
Best Coffeehouse..................... Cornerstone Coffeehouse
Best Bike Shop......................... Holmes Cycling and Fitness
Best Political Columnist.......... Peter DeCoursey (Capitol Wire)
Best Lawyer (Technology).... Eric Morrison (McNees Wallace & Nurick)
Best Lawyer (All things)........Andrew Giorgione (Klett Rooney)
Best Lawyer (Regulatory).... Mark Stewart (Wolf Block)
Best Lawyer (Corporate)...... James Ellison (Rhoads & Sinon)
Best Lawyer (Real Estate).... Michael Pykosh
Best Lawyer (Family Law)... Lee Smigel
Best Lawyer (Criminal)......... Scott Foulkrod
Best Prosecutor...................... Fran Chardo
Best Accountant..................... Donald Burgard (Smoker Smith)
Best Men's Clothing............... Michael Boyd's (Sam Boyd)
Best TV Anchor...................... Kirsten Page and Dennis Owens
Best Politician......................... Mayor Stephen R. Reed
Best "Go To" Guy.................. Fred Clark
Best Public Relations............. David LaTorre
Best Businessman.................. Dan Schwab (D & H)
Best Businesswoman............. Jessica Meyers (Reynolds)
Best Leader............................ Brad Jones (Harristown)
Best Patriot Columnist.......... Pat Carroll and Sara Bozich
Best Patriot Reporter............ I love them all... Ellen Lyon, John Luciew, Jack Sherzer
Best Business Reporter......... Julia Taylor (Central Penn Business Journal)

KELO and Congress....

http://www.valuationreview.com/pub/news/headlines/4143-1.html

Out with Sara...

You can read Sara Bozich's latest column on what's happening in Downtown Harrisburg. You can also hear Sara on Friday's at 7:50 AM on 960 AM on the Scott Donato Show.

When the Harrisburg Young Professionals were founded, it was with people like Sara in mind. She is clearly a "brain gain" for Central PA.

Since 1970...RSR REALTORS has been selling Harrisburg...

Meet my Family...First Day of School

BOOMS & BUSTS...

The Inman News article details the sky-rocketing home prices in the United States and the FDIC’s report titled, “U.S. Home Prices: Does Bust Always Follow Boom?” The five year increase of almost fifty percent overall and the greatest increase in any year during 2004, has real estate practioners, economists, and consumers wondering if a bust will follow this boom. The FDIC defines a “boom” as a thirty percent or more increase in inflation-adjusted home prices during any three year period. A “bust” is defined as an inflation-adjusted price decline of fifteen percent or more in five years.

The article points out that sixty-three U.S. metropolitan areas have had at least one housing boom since 1978. In the last twenty-five years, twenty-one cities have experienced a “housing bust.”

The article presents case studies of housing booms and busts in the Mid-west, Northeast and California. The FDIC reports that currently no cities are experiencing home-price busts and interestingly “only infrequently” do home-price booms lead to busts.

The FDIC does caution that there is more sub-prime lending and higher-leveraged borrowing then ever before. These factors could make a decline in the housing market more likely to become a bust.

Sir Issac Newton first taught us that “what goes up must come down.” Based on the real estate market activity in recent times Maryland and nationally may defy gravity. Short housing supply and a healthy economy are going to continue to keep home prices up for the foreseeable future.

Housing Bubble or Rational Price Appreciation?

Article Review
W. Greg Rothman

Housing Bubble or Rational Price Appreciation?

James W. Hughes, PhD, and Joseph J. Seneca, PhD, The Appraisal Journal


This article discusses the cycles of residential real estate and focuses on three booms and bubble busts. The key question is whether or not the current real estate market has reached a bubble in the northeast. The authors compare the residential real estate market with the 1990’s high-technology boom and subsequent bust. It is rightly noted that the housing market carried the United States out of a recession in the early 2001 and lifted us out of the ruins of the September 11th terrorist attacks.

The strength of the residential real estate market in the last half decade has been driven by 45-year low mortgage interest rates. The authors specifically look at the tri-state area of New York, Connecticut, and New Jersey. All three of these states have experienced extraordinary increases in housing prices. In addition to near half-century low interest rates, the authors also cite the diminishing availability of building lots in the tri-state area and its impact on housing costs.

Their conclusion is that the swell in housing prices in the New York region “does not represent an excessive, unsustainable advance, at least when assessed at the statewide level.” They also conclude that “the combined impacts of rising interest rates, advancing incomes, and a stronger economy are likely to lead to a soft landing – a slowdown in house price appreciation – rather than a painful housing price correction or crash.”

The article examines three other real estate market bubbles in the last quarter century. The first is the commercial office space boom in the early 1980’s following the accelerated cost-recovery established with the passing of The Economic Recovery Tax Act of 1981. The legislation gave commercial office building owners the ability to depreciate their office buildings over only fifteen years, rather than the current 39 years. This change created a tax benefit for commercial building owners that made owning this type of real estate extremely attractive.

The article also cites the legislation that deregulated the Savings and Loan industry and permitted S & L’s to make non-residential loans. These changes in the tax code and deregulation led to the boom in commercial real estate for the first half of the 1980’s.

The authors fast-forward to 1990 when the bubble burst and blame it on the “development excesses [that] were glaringly revealed.” To be sure, there were development excesses and loose loans made by the numerous Savings and Loans throughout the country. However, the authors fail to address the 1986 Tax Reform Act that took away the accelerated depreciation, effectively pulling the rug out from under commercial real estate developers and building owners in the United States. The government inspired boom was bust by the 1986 legislation.

The second boom-bust example that is analyzed by the authors was the high-technology investment boom of the late 1990’s. The so-called “dot com” exuberance in the stock market was driven by high-flying stock values without any relation to profits or assets.

Herein lies the major problem with comparing the real estate market with the hi-tech stock market sector. Real estate is valued by three different, distinct and equally important approaches. The Cost Reproduction Approach values the building based on the cost to construct the property less any applicable depreciation. The Income Approach values the real estate based on actual or expected income less expenses. The Sales Comparison Approach values the real estate by comparing it to other recent confirmed sales of similar properties.

The “dot com” stocks that rocketed to sky-high prices in the late 1990’s had no such valuation approaches. The values of the company’s assets did not reach anywhere close to the total stock share value. Applying the traditional real estate Income Capitalization Approach to the 1990’s hi-tech stocks would yield a value nowhere near the stock price, as often the companies had no profits to show.

The third boom was the related stock market boom in the mid and late 1990’s. The authors cite the NASDAQ Composite Index and its growth from 1996 to 1999. By October 2001, NASDAQ had given back all of its gains and declined three straight years 2000, 2001, and 2002. The NASDAQ began recovering by 2003. The authors fail to note three other events that impacted the U.S. during late 2000 and 2003. The first event was the prolonged presidential election of 2000. Financial markets are never comfortable with uncertainty and it took several weeks after Election Day before the Supreme Court ratified the election of George Bush. The second event was the aforementioned terrorist attacks designed to cripple our financial market and destroy our economic morale. While “9-11” has become the hackneyed excuse for economic failures, a study of the capital markets in the early 2000’s is not complete without addressing the impact of the attacks on our economy. The third event that has impacted our economy was the war in Afghanistan and Iraq. Many would seek to separate these two wars, but their impact on the economy is as a single seamless war. The authors fail to mention either war.

The article provides an analytical perspective of changes in housing prices between 1983 and 2003 in the tri-states and the entire United States. The authors use the Office of Federal Housing Enterprise Oversight (OFHEO) House Price Index (HPI) to “measure the change in house prices of the same single-family properties over time expressed as a housing price index.” The tables illustrate the total and compounded annual rate of change in housing prices showing various periods in the New Jersey market, the United States market, the New York market and the Connecticut market.

The authors next explore the bursting housing bubbles that led to the 1989-1992 recession in the Northeast. They explore the recovery nationally and in New Jersey (1991 to 1998). They also cite the housing recovery in New York and Connecticut.

The article addresses another federal legislative change that led to a boom in the residential real estate market. Congress passed a change in tax law in 1997 that exempted the first $500,000 in capital gains from the sale of their primary residence. Prior to the change, many empty-nesters were locked into keeping their homes rather than down-sizing and paying capital gains taxes in the 20% plus range. The only way the homeowner could defer the capital gains tax was to purchase a home of the same or higher value. Many states, including Pennsylvania, quickly followed suit and passed capital gains exemptions from state tax. The second factor was the boom in the stock market that gave homebuyers more capital to invest in their home choices. The market continued to grow from 1997 to 2000, fueling the housing booms in the tri-state and beyond. The third factor was the Federal Reserve’s aggressive reduction of interest rates. Thirteen times in a two year period, the Fed reduced interest rates to generational lows.

The authors consider whether the region’s housing prices have reached the bubble point. Since they demonstrate that appreciation rates from 1998 to 2002 have not exceeded the same levels of the appreciation seen in a similar five year period from 1983 to 1988, they conclude the tri-state housing market has not reached the bubble yet.

When the bubble and bust arrive will be a result of the economy, job growth and income levels. The authors offer the optimistic opinion that “the tri-state regional housing market is not about to suffer a collapse. The bursting of the housing bubble in 1988 remains an informative subject of history, not a predictor of our housing future.”

The safest way to predict the future is to study the past. The past as demonstrated by the authors well documented article is that government legislative changes in tax law and the Federal Reserves actions will have a greater impact on real estate market than any free-market forces can ever have.

Harrisburg Map

When will the Bust come to Harrisburg, PA?

Despite the farewell warnings of one of my heroes, Alan Greenspan, I don't believe a BUST is coming to Central Pennsylvania's residential real estate market anytime soon. Here is why....

1. Demand still exceeds supply.
2. Interest rates are still low. (They actually fell by week's end).
3. Unemployment rates are at record lows in Central PA and four year lows nationally.
4. Central PA is "recession proof" due to the size and scope of government.
5. Housing prices in the Harrisburg area are still extremely affordable.
6. Quality of Life factors are still great in the Harrisburg area: schools, crime, shopping, recreation, pollution (except the awful allergy levels), and employment opportunities.
7. Mortgage financing is still readily available.
8. Our population is growing at a steady rate.
9. Government and education (our top employers) ain't getting any smaller.
10. We are NOT in a boom* yet.

*A boom is defined as an aggregate 30% increase in value over three successive years. According to the Central Penn Multi-List appreciation in 2002 was 5%; 2003 was 8%; and 2004 was 9.5% -- that is only 22.5%. I predicted in January of 2005 that we would see double-digit appreciation this year. It looks like it could be as high as 12%. So....we will finally have met the definition of a BOOM.

Townhouses at Silver Creek....

Click here for information.

Starting at $179,900.

National Civil War Museum

The National Civil War Museum®
HARRISBURG, PENNSYLVANIA

Regular Business Hours: Mon. - Sat. 10 a.m. - 5 p.m. Sunday 12 Noon - 5 p.m.
The only museum in The United States that portrays the entire story of the American Civil War. Equally balanced presentations are humanistic in nature without bias to Union or Confederate causes.