Orlando Florida Regional Housing Market Update January 2011

ORLANDO FLORIDA

 REGIONAL HOUSING MARKET

UPDATE

January 2011

The latest data are in for Central Florida. Here are the highlights taken from the Orlando Realtor Regional Board for January 2011:

Inventory 

Currently there are now 14,398 “units” on the market through the Orlando Regional Multiple Listing Service. This is another decrease of 595 units from December’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 9.5% less than a year ago. For a comparison, in December of 2008, there were 22,524 units on the market.   

There are 11,919 single family homes on the market – another 303 fewer than December and almost 2% fewer than a year ago. Condos account for 1,629 – 212 fewer than last month and 41% fewer than a year ago. Townhomes & duplexes round out the numbers with 1,153, almost 100 fewer than last month. The current pace of sales equates to 7.38 months worth of supply. Last January the supply was 8.74 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 

January sales were up 7.14 percent over January 2010, but there were 117 fewer closings in January than December. 

Bank-owned sales led the break out of sale-types with 967, short sales came in at 496 and “normal sales” - those between a willing homeowner and willing buyer – came in at 487.   This is another month whereby short sales and “normal sales” are nearly even with one another and may indicate that buyers are becoming somewhat disillusioned with the short sale process. 

Pending home sales were up in January by a little more than 2% (8,777) from January of last year (8,590).   

Condo sales increased by almost 27% over January of last year. Duplex, townhome and villa sales were up 10% over this time last year.     

Again, condos in the $1 - $50,000 price range continue to lead the condo sales and accounts for more than half of all condo sales.

Homes spent an average of 96 days on the market in January, one day longer than December and the same as November and 7 days more than this time last year. The average home sold for 94.4% of its then current listing price – the same as 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, Seminole County continues to lead with a 27% increase in sales over last January. Orange County was up 10%, Osceola came in at 32% above last January, but Lake County was down again by 6%.  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). 

Because the prices in Orlando are low enough to generate cash flow through rentals, investors have continued to snap up properties on a cash basis.  Of all of Orlando’s sales, all cash sales accounted for 58% of the closings.  

Prices

Bank owned and short sales continue to push prices down. The median price of an existing home dropped by 6.91% to $94,950 from last January’s $102,000.   

Remember - the median price above encompasses all sales. The median price for Bank Owned properties’ was $75,000, equal to December. Short Sales’ median came in at $94,500, down from $100,000 in December.  Normal sales continue to lead the median price breakout with $145,000 down from 160,000 last month.  

Affordability 

The Orlando MSA affordability index increased to 278 from 246 and the first time homebuyer’s index also decreased to 198 from175.  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 November 2010 it was 11.9% and in December of 2010 it was virtually unchanged at 11.8%. 

Other Discussion, Opinion and Points. 

A Truer Picture… 

Per last month’s discussion, these next months should give us a truer picture of where real estate is headed in the Orlando area.  Sans Lake County, all of the positive trends begun after the last of the government “fix it” programs have continued through January.  Sales are up and inventory has gone down.  While prices have continued to drop, this process of clearing out inventory is one that has to happen before things can turn around. 

Unemployment Continues to Plague Us 

Unemployment continues to hamper Orlando.  Though we did come down to 11.3% in December, Orlando is still a full two percentage points above the national average.  

And, while the number of homes receiving a foreclosure notice dropped 16% last month and were down by 54% year over year, it has been maintained here that until there is a significant reduction in unemployment, any sustained housing recovery will be difficult. 

Rents Rising 

Rents appear to be rising in many areas of the Orlando rental market – particularly for single family homes.  This would be from two sources.  First, the former homeowner displaced by foreclosure.  The second is the reduced number of renters who normally enter the home buying market as a natural progression. With lenders requiring more money down, fewer jobs available, and many renters just plain afraid to jump in with prices falling, the normal number of renters-turn-buyers has dwindled.  

This has continued to fuel the investment in residential homes.  Many investors with cash have been buying up properties for rental.  More than ½ of all of the purchases in January were all-cash deals.  Proformas today, more often than not, exclude the appreciation component and work off simply cash-on-cash returns.  

There is no reason to believe this trend will not continue for the near future.

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 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 2,467* 97* January 2011 4.84% 14,398 3,478 3,747 8,777 1,009 573 1,102 1,950 96 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.