Central Florida Real Estate Blog

On January 10, 2011, the MFRMLS-My Florida Regional Multiple Listing Service (http://www.mfrmls.com/) which covers most of the Central Florida market released the December Real Estate Sales & Inventory Report for the Orlando, FL Region. While a downward value trend appeared over the summer and early fall months, the Orlando market saw a slight increase in the average sale price during the December reporting period. Since the end of the first-time homebuyers tax credit June, we have seen a continual erosion in the average sales price through the end of November. Could we be getting close to the bottom? Or, is this just another hiccup in the current cycle. Let's take a look at the stats before you draw any conclusions.  

The number of single family home sales that closed in the month of December increased dramatically to 2,415 units, or +19.2% from November. The median sales price of all homes sold in the Orlando area increased to $106,000 in December from the $105,000 median price that had held steady since September. According to the Orlando Regional Realty Association-ORRA (http://www.orlrealtor.com) the current median price is 6.11 percent above than the $99,900 median price recorded in August 2010 (the year’s lowest) and is 11.67 percent below the median price of $120,000 recorded in December 2009.

The median price for “normal” existing homes – i.e., those that are neither a short sale nor a foreclosure – sold in December is $160,000. The median price for bank-owned sales is $75,000 and the median price for short sales is $100,000. The lower median prices of bank-owned and short sales, which accounted for 68.71 percent of all sales in December, exerts a downward influence on the overall median price ($106,000).

While inventory is slowly being absorbed, there is over 15,600 active homes available in the marketplace. MFRMLS currently shows a 6.5 month supply of inventory. While inventory "may" appear to be absorbed, these numbers are significantly distorted due to the significant amount of pending short sales which most likely will re enter the active inventory, or end up in foreclosure.

The current average list price of a home has increased 1.9% from November to December, but is still down 11.3% over the last 12 month.

In regards to the average sale price of a home, again we saw a slight increase of 2% from November to December. While not very exciting on a month-to-month basis, during the last 12 months that number is still down 11%. Consider the dynamic between Sellers and Buyers during the negotiating process. As of December'09, Buyers were negotiating an average of 6% off the asking price. A year later, that percentage is unchanged. 

The number #1 selling price range is still the $1.00-$49,999, making up over 21% of the year-to-date sales. In this category alone last month, there was over 500 units sold. Furthermore, year-to-date the $0.00-$99,999 range accounted for 46.85% of the sales, while the $100,000-$199,999 range accounted for 34.32%. Lastly, the $200,000-$250,000 range accounted for another 7.22% of sales. Collectively year-to-date, the $0-$250K price range makes up over 88% of all sales in the region. In comparison to the rest of the market, Sellers above the $250,000 range must be very realistic regarding price & marketing strategies.

On the flip side, Buyers have a huge advantage in negotiating on luxury and higher-end price ranges. With lower demand comes much more negotiating power. As predicted, sales volume and values have continued to drop-off following the expiration of the homebuyer tax credit. Recent news reports mentioned rumors floating around Washington, DC that Congress is considering reinstating some form of the tax credit to add additional stimulus to the real estate market. Hopefully our newly elected officials will act sooner than later. 

Where is the market heading from here? As reported in the December issue of DSNews (http://www.dsnews.com), the November figures released by Fitch Ratings (http://www.fitchratings.com) put the industry's shadow inventory at 7 million homes. The agency defines the shadow supply of properties as loans that are delinquent, in foreclosure, or real-estate-owned by the servicers, and Fitch says based on recent liquidation trends, it will take more than 40 months to clear the existing distressed inventory.

According to the ratings agency, the number of months between the date of the borrower's last payment and the date of liquidation has steadily increased over the past several years and is now at more than 18 months on average. Fitch says that is the highest figure on record. While the volume of newly delinquent mortgages has begun to improve in recent quarters, Fitch says liquidation rates of existing distressed properties have been constrained by weak demand and expanded initiatives to modify loans for troubled borrowers.

On top of that, the agency's analysts believe the recent discovery of defects in the residential mortgage foreclosure process will further extend liquidation timelines, slowing the resolution of distressed properties in the shadow inventory and preventing home prices from finding a floor.

"While the reduced volume of distressed sales since 2009 has temporarily helped home prices, Fitch believes that the extension in foreclosure and liquidation timelines is simply prolonging the housing correction under way", the agency said in its report. The total number of troubled loans reached a peak in early 2010 and has begun to show some improvement prior to the most recent foreclosure moratoriums resulting from documentation issues, Fitch said.

According to the ratings agency's analysis, the latest industry trends indicate that it will take more than three years to sell the properties of loans that are currently seriously delinquent, in foreclosure, or REO. Fitch says for judicial foreclosure states, such as Florida, it is expected to take longer than the national average of 40 months to resolve the distressed loans, while for nonjudicial foreclosure states, like California, the inventory will likely be resolved faster. 

On a special note, for those out there who would like to get further insight into the financial crisis, a very interesting article was published a few months ago in Rolling Stones Magazine and reported by Matt Taibbi. The title is "Courts Helping Banks Screw Over Homeowners". You can click the link below and read the article now. But, please have your bottle of Maalox ready because Mr. Taibbi takes us into the court room of the foreclosure courts in Jacksonville, FL for a mind-numbing reality into how the courts, lawyers, banks, servicers...to name a few...are giving us the royal shaft. Pucker Up!

If you would like a full copy of the Orlando Regional Sale & Inventory Report, please email joe@rockspringsrealty.net and a copy will be emailed to you at no charge. 

Rock Springs Realty is a full-service Real Estate Brokerage working with Buyers, Sellers and Investors throughout the Central Florida Area. We cover all areas of Lake, Sumter, Orange, Seminole, Osceola, and Volusia Counties. Our sales staff has extensive experience Buying and Selling normal, REO (Bank Owned Foreclosures), and investment properties. We welcome the opportunity to confidentially discuss your real estate needs. You can reach us toll free at (877) 333-2811 or on the web at www.rockspringsrealty.net

P.S. - If you would like a list of bank-owned foreclosure properties in your area, please contact me at the toll free number above.

Best Regards,
Joe Bornstein, Broker/Owner
Rock Springs Realty, LLC
3780 Rochelle Lane
Apopka, FL 32712