Orlando Florida Regional Housing Market Update October 2010

ORLANDO FLORIDA REGIONAL

 HOUSING MARKET UPDATE

OCTOBER 2010

The latest data in are in: Here are the highlights taken from the Orlando Realtor Regional Board for October 2010:

Inventory 

Currently there are now 15,441 “units” on the market through the Orlando Multiple Listing Service.  This is a decrease of 918 units from September’s inventory. October 2010’s inventory is lower by 302 than it was in October 2009 reversing the trend of the past few months.   

There are 12,124 single family homes on the market - 594 fewer than September and 645 fewer than August. Condos account for 2,011 listings – 216 fewer than September and townhomes & duplexes round out the numbers with 1,306 – 108 fewer than September.  The current pace of sales equates to an 8.35 month supply – up by a month from September. Last October the supply was 6.79 months. Six months of supply is generally considered balanced.    

Sales 

Orlando home sales in October slowed somewhat.  There were 2,374 (revised) closed sales in September – but only 1,848 in October, a decrease of 526 and almost 21% fewer than a year ago.    

To date, Orlando area home sales are up over 26% compared to this time last year. 

The number of “Normal sales” - those between a willing homeowner and willing buyer – continues to trail bank-owned and short sales – with normal sales accounting for 32.74% of all sales (up by just over 4% from last month) and the latter groups making up 67.26%.   

Pending home sales are down by almost 2.5% (8,817) from October of last year (9,050).   

Condo sales increased by less than 1% over October of last year. Duplex, townhome and villa sales are now down just under 1% from this time last year as well.   

Homes spent an average of 91 days on the market in October – up 4 days from September (as was adjusted), but 1 day less than this time last year. The trend of average days in the 80-90 day range has been fairly constant now for a year. The average home sold for 94.61% of its then current listing price.

By county in the Orlando MSA, Seminole County continues to lead with a 35% increase in sales over last year. Orange County is up 22%, Lake County is up 5% and Osceola came in at just over 14% above last year.  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 decreased significantly from a year ago. The decrease in the median price of an existing home dropped by 19.23% from a year ago to $105,000 from $130,000. The October $105,000 median price is identical to September’s median price.

The median price above encompasses all sales. The median price for Bank Owned properties’ was $70,000, down from September, and Short Sales’ median came in at $90,000 which is down more than 20% from September.  Normal sales, as would be expected, led the median price breakout with $173,000, up more than 10% from September.    

Affordability 

The Orlando MSA affordability index increased to 267 and the first time homebuyer’s index also increased to 190.  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.

Other Discussion, Opinion and Points.

The Real Estate Market Struggle Continues…

Though this time of year typically sees a slowing of real estate in anticipation of the holidays, the Orlando area real estate continues to labor under the weight of falling prices brought on by continued foreclosures and high unemployment.   

Strategic Defaulters Exacerbate The Trend …

One disturbing statistic is that reportedly 31% - almost a third - of all defaults are now considered strategic.  These are borrowers who can actually afford to make their payments, but “strategically” decide to walk away from their obligations – choosing instead to saddle their neighbors with the declining pricing and values by contributing to the problem.

These defaults have a compounding affect on everyone else.  First, by walking away without a true hardship they add to a lender’s apprehension about doing work-outs with all borrowers in need - which can lead to increased processing time trying to identify and weed out strategic defaulters from borrowers with real problems.   Second, the increase by almost a third simply by volume slows down the entire short sale and foreclosure timeline and in turn stalls the entire market process of correction and normalization.  These two in turn contribute to the further decline in pricing affecting those left behind in the wake of such decisions. 

In addition, an effect not yet being discussed is how these individuals will affect the housing market for years to come.  In theory they will have the stigma of a strategic default on their credit histories thereby making them unqualified for a home loan.  Fannie Mae has already instituted a proposal whereby they will not purchase a loan from any lender who loans to a strategic defaulter.  Will they further affect the markets by decreasing the pool of otherwise qualified buyers years down the road? 

Prices and Value

Now that the elections are over and the balance of power has incurred a dramatic shift, many feel that the markets will begin to stabilize under the theory of stalemates are good for the markets – i.e. no new radical proposals or legislation can be passed.

One thing that remains unaffected in the short term – most properties being purchased today are still being purchased for less than what it would cost to build.  This means they are worth more than what is currently being paid – a trend which is just as unsustainable as the one we experienced in 2005 - 2007.

This has spurred a flurry of activity by investors in both the residential and commercial markets.   Properties purchased for this purpose can   and are being purchased to cash flow at a profit without the need for an appreciation component. 

Employment Still Remains Key To Real Recovery

The unemployment in the Orlando area is 11.8% as of September, a tenth of a point lower than August, but still higher still than July’s 11.7%.  In September of 2009, the unemployment rate was 11.5%.  Thus, the unemployment rate in excess of 11% is becoming a longer term trend and the longer it remains high, the harder it is to reverse as people’s short term choices (looking for work elsewhere, leaving the area, etc.) become permanent ones.

Please have a safe and happy Thanksgiving !

Let’s see what next month brings us……….

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

Statistical Data and Graphs

ORRA Originated Sales October 2009 5.02% 15,743 4,165 3,864 9,050 857 924 646 2,319* 92* November 2009 4.95% 16,002 3,758 3,023 8,633 1,007 636 1,047 2,329* 85* December 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 1,848 91

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.