Since I wrote in early May, we continue to see more and more signs of Good News as we make significant headway with the inventory of bank owned properties and short sales! In June, Orlando area Realtors sold 2,418 homes. While the $110,000 median sales price represents more than a 4% decline from June of 2010, it was the second month in a row that the year-over-year decline has been in the 4% range. In April of this year, the median sales price was $105,000. It jumped to $110,000 in May and remained there in June, perhaps signaling the bottom of the market.
The increase in the median sales price is due to several factors: the belief on the part of many buyers that we are at the bottom of the market, historic affordability levels, very low mortgage rates, and an inventory loaded with moderately priced homes.
The market continues to create tremendous opportunities for buyers and for owners who wish to refinance an existing home loan! With our average sales price significantly below both the state and national averages, home prices in the Orlando area continue to be a real bargain and, in the opinion of some, are artificially low! In the past, the necessary amount of home owner’s insurance has been roughly estimated by using the purchase price minus the land value. However, in today’s market the Buyer often ends up insuring the property for significantly more than the purchase price because the replacement cost is more than the current market value. At some point home values will have to at least return to their replacement costs.
For a quick synopsis, please watch the Market at a Glance video below and review the bullet points. Further down you will find several graphs which will help you visualize the dynamic changes in the Orlando market. It is our goal to provide you with a lot of valuable information as you and your family and friends seek accurate and reliable data with which to make informed decisions.
Good News on the Home Front!
First Six Months of 2011 in Review
Steady sales of existing properties bring inventory to a manageable level.
On July 18th ground breaking occurred for Sunrail – the commuter train which will run from Volusia to Osceola County with multiple stops in Orange and Seminole counties. When complete the $1.05 billion Sunrail project will be 61 miles long with the first 31 miles slated to be operational by May, 2014!
There are currently 10,559 homes in all shapes and sizes available for purchase through the MLS. Overall, inventory was down 35% from June of 2010 and at its lowest level since the final quarter of 2005! Condominiums have shown the most significant change with inventories declining almost 55%.
Almost 40 percent of all the sales in June were “normal or private sales” representing the fourth straight month of increases in that category and reflecting a decreasing number of Foreclosures and Short Sales!
The average 30 year interest rate is hovering around 4.5%!
The time required to complete a Short Sale has decreased significantly – from 6 months to 60 days or less!
With the economy continuing to show signs of improvement, low housing prices and average 30 year interest rates in the mid 4% range, experts agree that homebuyer demand will continue!
So, I’m hoping that you will refer me to one person this year! I would love that and I’ll take good care of them! Every time you introduce us to a friend or family member, we promise to ask them a series of thought-provoking questions to carefully identify their goals, needs and desires. Only after clearly understanding their answers do we use our experience and knowledge of current market conditions to help them develop a plan that fits their individual needs and desires. A long-term commitment like a real estate investment deserves our studied opinion with years of experience, not an amateur’s guesswork.
Please know that your friends and family members are not just another transaction to us: they are real people with dreams and desires and we will always make time to help them. We value each relationship. Thank you for your continued friendship and for your confidence in introducing them to us. Over the past 27 years we’ve served 995 of your friends and family members with integrity.
For a more detailed picture, please review the graphs and commentary we’ve prepared below and I know you’ll be able to see the positive signs we’re observing. Please email or call to discuss any of the data we’ve outlined here or if you would like additional information! Now is the time to buy real estate and take advantage of the incredible bargains!
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Median Sales Price of Resale Homes
The median sales price of all homes sold in the Orlando area started the year at $94,900 and has increased each of the past five months to $110,000 in June. $110,000 was also the highest median sales price since June of 2010. The median price for “normal” existing homes – i.e. those that are neither a short sale nor a foreclosure – sold in June was $158,000. The median price for bank-owned sales was just over $80,000 and the median price for short sales was $99,000. The lower median prices of bank-owned and short sales, which accounted for approximately 60% of the sales in June, continued to exert a downward influence on the overall median price of $110,000. Though June’s figure is over 4% below the median price of $115,000 in June 2010, I believe this is a direct result of the $8,000 Federal Tax Credit which artificially boosted sales in the first six months of 2010. It is also my opinion that we have moved into a more stable price environment. The free market has been able to take its course for the past twelve months without being artificially impacted by a temporary tax credit.
Inventory of Resale Homes
The inventory graph continues to show the number of available homes steadily declining over the past 45 months. June’s inventory of 10,559 homes represents 15,771 fewer properties than when the market oversaturation crested in October 2007 at 26,330 homes. The over-supply of inventory continues to be absorbed and the median sales price will continue to reach equilibrium as the short sales and distressed sales work their way through the closing process. We have been under a five month supply for the past four months. Such a strong rate of absorption is another indicator of a stabilizing market.
Number of Resale Homes Sold
In June, Orlando area Realtors sold 2,418 homes. As seen from the graph, historically a sales pace of 2,418 homes per month reflects very strong demand (stronger than 2004). Large numbers of Buyers continue to take advantage of the current market conditions, so don’t find yourself wishing next year that you had taken action this year!
Average Mortgage Interest Rates
Home mortgage interest rates continue at historic lows with the average 30 year rate in April at 4.56%. When combined with property values not seen since 2000, these factors continue to provide powerful incentives to take action in the Orlando market now! I believe anyone purchasing or refinancing at today’s fixed interest rates will profit and be extremely grateful when prices and rates begin to climb.
My friends, as always, I’ve provided this analysis for your financial benefit and the good of your family and friends. However, this research can only reveal general market trends for the Greater Orlando area. If you currently own residential property, the market is specific to your neighborhood and will require that we conduct a more in-depth analysis for your particular property. Please feel free to share this free report with anyone you think would benefit from our real estate services and call with any questions you may have regarding your particular circumstances.
Other Graphs you may find useful:
Percent Difference: Sales to Listings
Average Days on Market of Resale Homes
Number of Months of Inventory of Resale Homes