The professionals at the Orlando Florida home scene, the Orlando Regional Realtors Association, tell the story of marketplace conditions in their February 11th 2009 report, extracts of which are:
“The median price of Orlando homes sold in January ($148,274) decreased by 33.06 percent compared to January 2008.” “Buyers are responding to lower prices and mortgage rates but uncertainty about the economy is creating hesitancy and pent-up demand.” “Homes of all types spent an average of 104 days on the market before being sold in January 2009” “There are currently 22,613 homes available for purchase through the MLS.” “The inventory level reflects a 23.63-month supply at the current pace of sales.”
What a difference a few years makes. In December 2005 we wrote a newsletter to our customers containing the following views of the Orlando real estate marketplace:
“After Disney-area property prices built to a frenzy by the late 1990s, the only significant slowdown happened around the year 2000 with the US economic downturn followed by the Sept 11th 2001 terrorist attacks in New York. This resulted in approximately 12 to 18 months of virtually no growth in home price.
The past 2 years have certainly reversed that flat growth – and then some! Individual accounts of buyers purchasing a new home to be built, then selling it for a $50,000-$100,000 profit or more at closing, are commonplace.
However, this recent period is one that we would be surprised to see ever repeated. Orlando Florida Orlando Property manager ran out of building lots, home prices spiked by $50,000-$100,000 and the inventory of available re-sale homes almost went to zero. This caused a seller’s market and multiple bidding, which resulted in homes selling for above the asking price.
It has now finally slowed down to a more manageable level. Although no one has a crystal ball and can say what home appreciation will be next year, it appears that it may maintain a lower, more reasonable but still positive pace. We believe that this is a very welcome event: if the appreciation rate of last year continued, home prices would soon reach the million dollar level and the discrepancy between personal incomes and home prices would become unsustainable.
Somewhere between the talk of a real estate bubble and corrections in real estate prices are the middle ground opinions, which suggest that Florida real estate will continue to fare well. Florida is one of the top states in job growth and approximately 1000 people per day are relocating here. The most recent statistics show apartment rental occupancy at 96%, which represents virtually full occupancy and is indicative of housing demand here.
So our overall view of the Florida real estate market? Opportunities to make money still exist and we remain bullish on real estate investment with one caveat. Last year, a purchaser almost anywhere in Florida, and of any type of property, could hardly go wrong. With the market returning to normal, buyers need to use more discretion in their selection process – for example, does the property represent good value for money, is it the right property in the right place, and so on. In addition, we believe that real estate purchases should again be viewed as minimum 2 year if not 3-10 year investments. Although last year saw individuals flipping properties in 6 months, this is usually not the formula that works most successfully in normal markets.”
At that moment, there was effectively no inventory available because buyers snapped up almost whatever they could the minute it had been recorded. Builders became addicted to monthly cost increase running into the thousands of dollars. And investors and buyers suspended any doubts regarding how long the party could survive in a frantic attempt to combine in the riches that appeared to be unending. Certainly, it couldn’t continue, as our newsletter predicted, but even we didn’t see the fall being so fierce or long-lasting.
Will it ever recover?
Well, exactly enjoy the good times seemed to be endless, so do the poor ones today. But things will change. It might take the remainder of this year or even longer, but almost inevitably we’re convinced that we will finally return to the sort ot situation described in the publication – when Orlando Florida land will represent decent value for money if seen as a moderate to long term investment. That’ll benefit both sellers and buyers!