All Signs Point to Sluggish Orlando Housing Market
The Orlando housing market is showing no signs of a turnaround, with the latest numbers going from bad to worse during what should be the hottest sales stretch of the year.
Existing-home sales in the city fell again in July, a 42.6 percent plunge from the same month a year ago, and for the second time this year the median sales price posted a rare decline, the Orlando Regional Realtor Association reported Monday.
The median price of a home purchased through a Florida Realtor in the Orlando area in July slipped to $250,000, a 1.92 percent drop from July 2006’s median price of $254,900, the group said. Last month, the median price was a revised $252,500.
“I think we’ve got six months of serious bloodshed ahead,” said William Weaver, an associate professor of finance at the University of Central Florida.
The trade association also said the record-high inventory of homes for sale continued to grow, though the pace slowed, from 460 newly added homes in June to 95 last month.
For industry watchers waiting for a turnaround, the record 26,018 homes and condos on the market provided no hint that the local downturn has hit bottom.
It would take a record 19.2 months to sell all those homes and condos at the recent slower sales pace.
But for sellers such as ReNae Bailey, a teacher who lives in Altamonte Springs, the timing can’t be helped. Bailey recently put her three Oviedo rental homes on the market because the taxes have gotten too high, she said. The rental income covers the cost of the mortgage and insurance, but not the property taxes.
“That’s what’s going to kill the market: higher taxes,” she said.
Patty Gable, an agent with Exit Realty Central who is helping Bailey market the homes in the Twin Rivers subdivision, said today’s buyers’ market requires sellers to set the price low enough to attract Florida mortgage interest, but the home also must hit a home run with “location and condition.”
Gable said location is probably the most important, yet it’s the one thing that can’t be changed.
The average number of days it took to sell a home in the core Orlando housing market - mainly Orange and Seminole counties - crept up to 100 last month. A year ago, houses were selling in the Orlando area within 61 days, and two years ago, 27 days.
“I just sold a home in Bay Hill in 31 days,” Gable said, partly because the home was priced correctly, but also because of the prestigious location in west Orange County near Windermere.
Bailey said she bought her rental homes about two years ago, at the peak of the market, and now figures she will be fortunate to break even.
“I’ve made money on everything I’ve ever sold up until now,” Bailey said of her sales during the past 20 years in Central Florida. “It’s tough right now for people.”
Weaver said it was particularly troubling for the Orlando home-resale market to slip for the second straight month, an even worse sign than the year-over-year decline. The 1,354 units sold in July was down 10.8 percent from June and off 22.4 percent from May.
“The home-buying season is over,” Weaver said, so the chances of an improvement are slim for the rest of the year.
The Orlando area was among the hottest markets in the country in 2005, when Florida home prices were soaring at 35 percent or more a year. But July’s dip was the second year-over-year decline so far this year; the median fell 2.77 percent in April.
Rising prices and tighter lending standards have shut out many first-time buyers, and that slows the entire market, even for those with plenty of equity and decent incomes.
Weaver said loan originators who pushed subprime Florida mortgages helped bring on the slump by making loans that now are going bad.
But many buyers share the blame, he said, because they took on too much debt, didn’t understand what they were getting into or got caught up in the excitement of becoming a home buyer.
Realtors also are suffering from the slump caused in part by the mortgage financing fallout, said Randy Martin, president of the Orlando Regional Realtor Association and an agent with Re/Max 200 Realty in Winter Park.
“A lot of people went in with those low teaser rates,” Martin said. As the Florida home loan rates adjust upward, people default and put more homes on the market - or lose them through foreclosure.
SOURCE: The Orlando Sentinel
