Orlando Home Sales Fall Just Shy of Record

The hot Orlando housing market lost much of its spark in the second half of 2006, though the year still wound up as the second-best on record for local existing-home sales, the Orlando Sentinel reports today.

The Orlando Regional Realtor Association reported Wednesday that 27,378 homes were sold last year through its members in the core Orlando market, down from the record 31,230 sold in 2005, but ahead of the 26,088 in ‘04.

Even as sales fell last year compared with 2005 - they were down more than 12 percent - the median price of the homes sold in 2006 continued to rise:

Buoyed by strong home and condo sales, the December median - half the homes sold for less, half for more - was up 4.2 percent to $250,000 compared with December a year ago.

Local Realtor President Randy Martin said home sales are now being driven by economic fundamentals, rather than speculative buying, so the slower pace of the appreciation is a “sustainable price-growth trend, good for the long term.”

The number of homes for sale in December dipped below 20,000 properties for the first time since July, to 19,537 listings. But that still represented a more than 11-month supply at the recent, more sluggish sales pace - well above the six-month supply that’s generally considered the dividing line between a seller’s market and a buyer’s market.

The double-digit-percentage price gains that local homeowners marveled at in 2004 and 2005 are clearly a thing of the past: The median price in the core market - mainly Orange and Seminole counties - has essentially been stuck at $250,000 since May.

“We’re not going to see the kind of appreciation we saw for several years there,” said Mary Lou Lee, a relocation specialist for Watson Realty in Longwood. “But what happened was, we just caught up with the rest of the nation in terms of the pricing of properties.

“That’s a hard thing for some buyers to accept.”

Lee said she does see some areas of strength in the local market, including a rebound in the number of companies buying homes from employees to make it easier for those workers to relocate - a key factor in this era of Florida home mortgage costs stretching families too far.

Sales of condominiums ended the year down just 1 percent compared to 2005, largely because monthly activity didn’t tail off until late summer.

New-home sales also have slowed in recent months, and local home builders - who have cut back on construction as buyers move to the sidelines - contend that the huge volume of existing-home inventory has been a drag on new-home purchases.

William Weaver, a finance professor at the University of Central Florida, warned that even with lower mortgage rates, many home buyers who bought at or near the market’s peak in 2004 or 2005 using “various exotic mortgages” and adjustable loans with low “teaser rates” will be trying to sell in the weaker market.

Many risky Florida home loans will soon be adjusting upward, despite a generally stable interest-rate environment, pushing the monthly carrying costs out of reach for some.

“Those folks are going to be in trouble,” he said.

But the median sales price has held steadier in the Orlando market than in many other parts of the state and nation, Weaver noted, and at least some “investor” owners are resisting the pressure to cut asking prices and are instead renting out properties until Florida mortgage demand improves.

“People will hang tough if they have a choice,” he said.