Orlando Florida Regional Housing Market Update December 2010

ORLANDO FLORIDA REGIONAL

HOUSING MARKET UPDATE

DECEMBER 2010

The latest data are in for Central Florida. Here are the highlights taken from the Orlando Realtor Regional Board for December 2010:

Inventory 

Currently there are now 14,993 “units” on the market through the Orlando Regional Multiple Listing Service. This is another decrease of 199 units from November’s inventory and continues the trend that began in June when there were more than 16,300 units on the market.  The inventory for this December was 3.5% less than a year ago and   this is the first time the inventory has been below 15,000 in  years.  For comparison, in December of 2008, there were 22,524 units on the market.  

There are 11,919 single family homes on the market – 884 fewer than November. Condos account for 1,841 - nearly identical to last month’s 1,871, but significantly lower than the 2,011 listings of October. Townhomes & duplexes round out the numbers with 1,260 virtually identical to the 1,238 of last month. The current pace of sales equates to 6.33 months worth of supply, substantially lower than last month’s 8.35 month supply. Last December the supply was 6.45 months. 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 

The pace of Orlando regional home sales picked up in December from previous months. There were 2,368 closed sales in December – but only 1,953 in November, a solid increase of 432 (+18%) and less than 2% fewer than a year ago.    This is the first month that closed sales topped 2,300 since September but still far short of the 3,059 peak in June of this year. 

To date Orlando area home sales are up 19.5% compared to this time last year.

Bank-owned sales led the break out of sale-types with 1,028, but short sales were the least at 599.  “Normal sales” - those between a willing homeowner and willing buyer – came in at 741.   

Pending home sales were up in December by a little more than 2.5% (8,363) from December of last year (8,163).   

Condo sales increased by almost 8% over December of last year. Duplex, townhome and villa sales were up just over 6% over December of last year.   

Again, condos in the $1 - $50,000 price range continue to lead the condo sales with 254 in December and is the category which accounts for 54.32% of all condo sales this year.

Homes spent an average of 96 days on the market in December – the same as those in November (as was adjusted) and 7 days more than this time last year. The average home sold for 94.4% of its then current listing price – consistent with last month’s 94.08%.  “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, Seminole County continues to lead with a 13.78% increase in sales over last December but is the only county with an increase. Orange County was down 5.21%, Lake County was down 5.5% and Osceola came in at 3.4% below last December.  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 

Overall, prices have still decreased significantly from a year ago – but the gap continues to narrow. The decrease in the median price of an existing home dropped by 11.67% to $106,000 from last December’s $120,000.  However, November’s spread was a decrease of 14.63%. The December median price of $106,000 is nearly identical to September, October and November’s $105,000 median price. 

Remember - the median price above encompasses all sales. The median price for Bank Owned properties’ was $75,000 down from $78,000 in November. Short Sales’ median came in at $100,000, unchanged from November.  Normal sales continue to lead the median price breakout with $160,000, unchanged from last month.

Affordability 

The Orlando MSA affordability index decreased to 246 from 261 and the first time homebuyer’s index also decreased to 175 from186.  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. 

2010 Year–End Recap

Sales:  35,021 homes were sold in the Orlando MSA in 2010, an overall of 15.29% increase over 2009.

Price:  The median price (includes all sales) fell 16.23% to $108,900 from 2009’s $130,000. 

Inventory: We started in January with 15,911 (all units) and rose to a height of 16,563 in July and ended with 14,993.

Closings: January started with 1,820 and we peaked in June with 3,059 and ended the year with 2,368.   January 2010 had the fewest number of closings for the year. 

Orlando Unemployment: In November 2009 the rate was 11.7% and in November 2010 (latest figures available) it was 11.9%.

Other Discussion, Opinion and Points.

 A Truer Picture? 

One long standing and pervasive thought common with most folks during this unprecedented economic downturn seems to be the continuing distrust that any recovery can be afoot.  No one seems to believe it possible – or perhaps more accurately most are afraid to believe it – lest it be jinxed. 

But, with the holidays out of the way and the aberrations caused by the home-purchase-tax credits no longer evident, 2011 should provide a truer picture of the housing market here and allow it to sink or swim on its own without the artificial props and incentives.  There are no tax incentives and none contemplated and this is the time of year when inventory naturally swells.  If market forces are left alone to act, as 2011 progresses, we should get a better idea of what is really happening and if the gains of 2010 are artificial or mark a true trend upward. 

Orlando Is Still Behind

However, housing markets are hyper-local in that what happens elsewhere in the country, or in a state or even within regions are not usually even.  They are a reflection of the local conditions.  To wit - employment has improved nationally according to the latest numbers.  But the latest in Orlando is an increase in unemployment again – from 11.2 for October to 11.9 for November – a huge jump.  The nation is at 9.4. 

The last national data indicates consumer spending is rising. Consumer spending drives about 70% of the U.S. economy and the top 20% earners account for 40% of the spending. Many retailers are reporting one of the best holiday seasons in years – especially high-end retailers like Nordstroms and Saks.  

Nationally, in October 2010 layoffs had dropped to their lowest levels since August of 2006.   Job creation was only 103,000 – meager by most standards – but in the right direction. In addition, investment portfolios have faired better in 2010 and the stock market is flirting with 12,000. 

If government spending can be brought under control – real control - these things bode well for a potential national recovery. 

However, our economy of late has been largely development and service driven – much like that of Las Vegas.  As such, our unemployment numbers are largely affected by construction where the unemployment numbers are in excess of 20%. With an economy also largely based on services (the resorts) – many of the jobs are not high paying (this is not to be construed as meaning these jobs are underpaid).  The Orlando area still lacks a significant stable high-paying segment in its work force – that 20% who accounts for 40% of the consumer spending.  The Lake Nona medical developments are just the type of development Orlando has to work towards in order to adequately diversify its economy towards higher wage-earners.

The foregoing may seem to infer Orlando is doomed to bring up the economic rear.  However, much of this downturn has been spent by many just “hoping” that things will turn around.  Fully recognizing and accepting the causes – in whatever form they are – allows us to understand and then believe a recovery can be afoot when those indicators turn around.  

Let’s see what next month brings…..

If you or someone you know is in the market to buy or sell a home, townhome, condo or light commercial property – please call us and let us help !

Statistical Data and Graphs 

ORRA Originated Sales Dec. 2009 5.03% 15,549 3,485 2,984 8,163 875 1,419 916 2,410* 89* January 2010 5.05% 15,911 4,279 3,579 8,590 956 691 1,048 1,820* 89* February 2010 4.96% 16,051 4,586 4,043 9,462 960 601 1,064 1,973* 91* March 2010 4.99% 16,223 5,282 4,662 10,179 1,195 680 1,233 2,610* 91* April 2010 5.12% 15,766 5,116 5,221 10,832 1,331 579 1,540 2,644* 81* May 2010 4.89% 15,963 4,304 3,669 10,351 1,161 553 1,187 2,783* 83* June 2010 4.84% 16,304 4,470 3,736 9,625 1,343 743 1,294 3,059* 85* July 2010 4.67% 16,563 4,388 3,793 9,133 1,224 709 1,182 2,516* 84* 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 2,368 96

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.