Orlando Florida Regional Housing Market Update August 2011

ORLANDO FLORIDA

REGIONAL HOUSING MARKET UPDATE

August 2011 

The latest data are in for Central Florida, including Lake Mary Florida, Oviedo Florida, and Sanford Florida. Here are the highlights taken from the Orlando Realtor Regional Board for August 2011: 

Inventory 

Once again the downward trend of inventory continues! Currently there are now only 10,055 housing units on the market through the Orlando Regional Multiple Listing Service – a drop of more than 1,425 units from April’s 11,480 and almost 300 fewer homes than were available last month. This equates to a 40% drop in inventory from a year ago. Last year at this time there were 16,535 homes on the market. For other comparisons, in June 2010 there were 16,304 homes on the market and in December of 2008, there were 22,524 units on the market.    

Single family home inventory is down 35.5% from a year ago. There are now only 9,421 single family homes on the market.   In addition, Condo inventory is still down 52% from a year ago. The current pace of sales equates to only 4.29 months worth of supply. Six months of supply is generally considered balanced.   Under normal conditions, anything above is generally considered a buyer’s market and anything below is then considered a seller’s market.

Sales 

August sales of existing homes were down almost 9% percent from August 2010.    

Of the 2,342 sales in August, 968 were “normal”, 764 were short sales and 610 were bank-owned.  This continues the solid 7 month trend now where normal sales have outpaced short sales.   

Condo sales decreased by almost 41% in August when compared to last year at this time. The under $50,000 price range accounted for 41% of those sales and have dominated condo sales since March of 2009. Duplex, townhome and villa sales increased by more than 1% over this time last year. As with last month, most townhomes sold in the $100,000 to $120,000 price range.    

Homes spent an average of 101 days on the market in August, the same as last month. The average home sold for 95% of its then current listing price – virtually unchanged from last month. “Then current listing price” is an important distinction since a home may have been on the market with prior price reductions.  Thus, it may have ended up selling for less than the percentage cited from its original debut listing price. 

By county in the Orlando MSA for sales compared to a year ago:SeminoleCountyis now up 2.8%,OrangeCountywas down almost 14%. Osceola came in down 30%, butLakeCountyhas continued its reversal up again a little more than 17%.  No statistics for Volusia or Brevard were available (Volusia has several different realtor boards with both New Smyrna and Daytona each having their own and Volusia is officially part of the Daytona Beach MSA.  In addition, Brevard has its own Board). 

Prices 

The median price of an existing home was $115,000, down slightly from last month’s $117,000, but is an increase of 15.12% from a year ago. Median prices are up 21% for the year to date.   

Remember - the median price above encompasses all sales. The median price for Bank Owned properties’ was $81,750, barely an increase from last month. Short Sales’ median came in at $97,000, virtually the same from last month.  Normal sales price continues to lead the median price breakout with $155,000, slightly down from last month’s $157,000.  Keep in mind that many times Bank Owned properties require extensive repair work which can be reflected in the price.

Affordability 

The Orlando MSA affordability index increased to 247 and the first time homebuyer’s index also increased to 176. 

This has been see-sawing backing and forth for some time now and is inversely proportional to pricing changes. 

An affordability index of 100 means that a buyer earning the state-reported median income has exactly the income necessary to purchase the median-priced home.  Anything over 100 indicates that buyers have more income than that which is required.   A score of 99 means the buyer is 1 percent short of the income necessary to qualify. When prices rise faster than incomes, the affordability index goes down and visa-versa. 

Orlando Unemployment: In December 2009 the rate was 11.3%. In   December of 2010 it was 11.8%.The latest numbers for Orlando Florida – for July 2011 - we remain unchanged from June’s 10.4%.  Last July we stood at 11.6%.   

Other Discussion, Opinion, Points and Tidbits. 

It’s Getting Just A Little Crazy Out There 

In light of the economic conditions overall, the continued and now dramatic drop in inventory levels remains unexplained and somewhat unexpected. With trend histories of more than 6 months in most categories and 14 months in inventory depletion – the trends are firm. 

While many of the buyers are investors – some companies in parts ofFloridahave bought up hundreds of units – mainly condos – many are just average homeowners looking to own while the prices are down.  

Right now most sales are below replacement costs.  That is, most homes are selling for less than what it would cost to build them.  The equity is essentially automatic since at some point housing prices will have to eventually increase to the replacement cost simply to keep up with a normal demand. Otherwise, no new homes will be built.

In addition, nice homes – both for purchase and for rent are becoming increasingly harder and harder to find.  Multiple offers are not uncommon for truly desirable properties priced correctly. Much of the existing inventory are homes which have been picked over, or are still over-priced.

The continued “explanation” for the drop has been that banks continue to hold vast inventories and/or have delayed the foreclosure process in order to deal with what they already have.  This would make sense – but still would not explain the drop in inventory only the absence of a rise in inventory. 

Though this has been the network-talking-head-mantra for almost two years now, if this does turn out to be true one day, we could see an increase in inventory.  Even so, this may just drive inventory levels to the 6 month supply mark which would be balanced – where it should be. 

However, as we have maintained for many months – until the job market improves this inventory depletion will remain a footnote instead of being termed a shortage.

Until next month……

Tidbits 

Zillow Announces Top Ten in Price Drops.  Zillow announced the top ten cities where prices have dropped over the last five years – six are in California and two are in Florida. Daytona Beach came in number 7 with a 56.8% decrease and Fort Myers came in 9^th with a drop of 56.0%. The remaining of the list: Merced (-67.6%), Modesto, Stockton – all in California, Las Vegas (-61.4%), Vallejo, Salinas, Bakersfield – the last three in California and the 10^th spot was occupied byPhoenix (-55.6%).

Bank of America Cuts 30,000.  CEO Brian Moynihan announced he will cut 10% of the workforce from the nation’s largest bank.  This is part of the latest efforts to pare down the bank since taking over in January 2010. Last month Warren Buffett’s Berkshire Hathaway Inc. invested $5 billion in BofA.  

Rental Market Continues Its Upward Trend. Rents continue to rise along with demand. Opportunities are widespread for those investors willing to become landlords. In more than 500 cities, demand for rentals has increased with vacancies reaching its lowest levels since 2003. Rents were up an average 11.6% in 2010.  

Smartphones Continue Trends.  Now more than 35% of the people with cell phones now have a smartphone.  That equates to 82.2 million users and counting. Androids lead the pack with a 42% marketshare, Apple’s iPhone comes in at 27%, RIM’s Blackberry continues to slide and now accounts for 21%.  Microsoft and Symbian round out the bottom.    

Foreclosure Sales Down.   Foreclosure sales accounted for 31% of the nation’s sales – but that was down from 37.4% two years ago and 36% last quarter.  Nationwide 265,087 homes were in some stage of foreclosure in Q2, down 11% from the previous year. 

ORRA Originated Sales August 2010 4.61% 16,535   4,146 3,892 8,945 1,277 613 1,285 2,566* 83* Sept. 2010 4.46% 16,359   3,984 3,654 8,713 1,169 637 1,301 2,374* 87* October 2010 4.28% 15,441   3,650 3,466 8,817 1,080 707 1,323 1,953* 91* Nov. 2010 4.48% 15,192   3,346 3,243 8,998 999 630 1,083 1,936* 96* Dec. 2010 4.92% 14,993   3,444 3,196 8,363 952 1,189 1,039 2,467* 97* January 2011 4.84% 14,398   3,478 3,747 8,777 1,009 573 1,102 2,041* 96* Feb. 2011 4.88% 13,480   3,202 3,777 9,223 934 499 1,018 2,170* 99* March 2011 4.91% 12,533   4,152 4,526 9,510 820 504 1,098 2,613* 103* April 2011 4.89% 11,480 72 3,391 4,156 9,955 788 458 1,161 2,464* 104* May 2011 4.66% 10,969 282 3,145 3,678 10,210 841 396 869 2,486* 104* June 2011 4.56% 10,559 461 3,204 3,680 10,087 851 485 848 2,611* 102* July 2011 4.53% 10,349 627 2,912 3,244 9,869 786 399 770 2,294* 101* August 2011 4.26% 10,055 594 3,264 3,466 9,502 800 378 783 2,342 101 ORRA Originated Sales

The statistics cited and the graphical data is provided by the Orlando Regional Realtors Association, of which we are a member. 

This report is intended to be for reference and informational purposes only.  The opinions expressed herein are solely those of New Southern Properties Inc. and are opinions. No purchases or investments should be made based solely on this report, this data, or the opinions expressed herein.  Real Estate purchases and investments are complex transactions. You are strongly urged to consult with your financial, legal and real estate consultants before making any real estate purchase or investment.