REGIONAL HOUSING MARKET UPDATE
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The latest housing market data are in for Central Florida, including Lake Mary Florida, Longwood Florida, and Sanford Florida. Here are the highlights taken from the Orlando Realtor Regional Board for JUNE 2012 (the latest now available):
There was yet another drop in available housing inventory this month from last month. This continues the long-term decline in residential inventory in the Orlando market. Twenty-one out of the last 23 months has seen Orlando Florida’s housing inventory decline. Currently there are now only 8,136 housing units on the market through the Orlando Regional Multiple Listing Service - down from 9,258 in January of this year and 8,243 last month. This includes single family homes, condos, duplexes and townhomes. Last June held an inventory of 10,599. In December of 2008, there were 22,524 on the market. At the very height of inventory in early 2007, there were more than 28,000 homes on the market.
Overall inventory is down almost 23% from a year ago. Single family inventory is down 26%. The current pace of sales equates to only 3.22 months worth of supply – the lowest yet and down again from last month’s 3.53. This supply shortage hasn’t been seen since 2005. Six months of supply is generally considered balanced. Under normal conditions, anything above six months is generally considered a buyer’s market and anything below is then considered a seller’s market.
There were 2,449 home sales in June a drop of more than 6% from last June, but virtually unchanged from last month.
Of the sales in May, 1,148 were “normal”, 696 were short sales and 605 were bank-owned. This continues the trend where normal sales make up almost half of the sales now – a striking contrast to a year ago when almost 70% of the sales were distressed.
Condo sales decreased by almost 14% in June when compared to last year at this time. As has been true since 2009 the $1-$50,000 price category leads the pack in sales. Two hundred twenty five duplex, townhome and villa sales occurred in June - a decrease of more than 6% from this time last year. Most fell within the $100,000 - $120,000 price range.
Homes spent an average of 85 days on the market in June, the same number as last month and two and a half weeks less than a year ago. The average home sold for 94.83% of its then-current listing price. “Then current listing price” is an important distinction since a home may have been on the market with prior price reductions. Thus, it may have ended up selling for less than the percentage cited from its original debut listing price.
By county in the Orlando MSA for sales compared to a year ago: Seminole County was up over 12% from last June, Orange County was down 8%. Osceola came in down 22%, and Lake County decreased by 2.4%.No statistics for Volusia or Brevard were made available (Volusia has several different realtor boards with both New Smyrna and Daytona each having their own and Volusia is officially part of the Daytona Beach MSA. In addition, Brevard has its own Board).
The median price of an existing home jumped more than 13% in June 2012 from $110,000 in June 2011 to $125,000. This is an increase of 4% over May and represents an increase of almost 16% since January of this year and almost 32% over January of 2011.
However, remember - the median price above encompasses all sales. Individual categories can fluctuate within the median. However, this month, as was the case last month, prices rose in all categories. Normal sales rose to $161,000 from $160,000 last month and short sales rose to an average of $110,000 up from $108,000 last month and Bank-Owned averages increased to $85,900 from 83,500.
The Orlando MSA affordability index decreased to 243 and the first time homebuyer’s index also decreased to 173, more than twenty points lower than it was 90 day ago.
This had been see-sawing backing and forth for some time, but is now trending downward as prices continue to increase. The indexes are inversely proportional to pricing changes.
An affordability index of 100 means that a buyer earning the state-reported median income has exactly the income necessary to purchase the median-priced home. Anything over 100 indicates that buyers have more income than that which is required. A score of 99 means the buyer is 1 percent short of the income necessary to qualify. When prices rise faster than incomes, the affordability index goes down and visa-versa.
The latest numbers for Orlando Florida – for May 2012 - we are at 8.3% - up from April but down from 10.1% a year ago. The national average in May was 8.2%.
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Other Discussion, Opinion, Points and Tidbits.
While the election year accusations and political bidding are beginning their historic upturn, the housing market here in the Orlando area continues to improve – albeit solely through a dwindling inventory. These inventory levels haven’t been seen since 2005. It has taken seven years, but we are back to a housing shortage. We say shortage, because of the some 8100 homes on the market, a percentage of them are “left overs”; so badly beaten up and tainted in one way or another that no one is willing to tackle the headache. This means there are actually a significant number less than 8100 that are readily marketable.
We continually hear of talking-heads, pundits and nay-sayers about the glut of foreclosures and shadow inventory just waiting to come on the market. With just over 3 months of supply left – we say, “please bring them to market, we need them!”
While it certainly isn’t the wild days of 2005 – multiple offers are now back in vogue and it isn’t unusual to hear of offers over the asking. However, as pointed out above, these scenarios pertain to the homes on the market that are in decent shape at market prices – which are still far below the prices in 2005.
So why haven’t we seen more appropriate price increases given the extremely low supply?
Unfortunately the unemployment numbers continue to languish and as we have maintained for years – there can be no full scale recovery without full scale employment. Most employment comes from small businesses and with their own money at stake, business owners need a stable situation from which they can plan ahead.
With the President now calling for a tax hike on incomes over $250,000 – if he gets his way – many small businesses and farms – which fall into this group due to S corporation and limited liability company structures - will be giving the Federal Government money that might otherwise go to growing their businesses and hiring employees. For whatever reasons – politicians can’t seem to, or don’t want to, embrace this fundamental. Railing about the “fair share” literally ignores that this group already pays well over ½ of all income taxes but accounts for only 2.6% of the taxpayers and that the monetary increase itself will do little to reduce the huge debt already accumulated.
Could he be simply trying to deflect the failed recovery so many tax dollars were supposed to solve?
This coupled with the tax increase surcharge coming with Obamacare in the years to come as business and governments pay the tax penalties and struggle to pay for the mandates, may well hamstring any chances of a full-steam-ahead recovery.
This has many businesses sitting on the sidelines with growth plans until the political winds die down and things are more solidified.
With the aforementioned, it appears that this election is poised to be economically pivotal and will likely shape the U. S. economy for many years to come.
Local Markets Among Top Hot Spots for Purchasing Rental Properties: Orlandoranked number 4 behind Daytona Beach, Detroit and Las Vegas as the top four places in the nation to snag rental units. Tampa Bay ranked number 10.
The Latest Scam in Real Estate. Falsified short sale approvals are on the rise. It works when a Buyer and Seller present a contract and then a falsified approval is generated and sent to the title company with the idea of acquiring a property for pennies on the dollar and then presumably turning it quickly.
The Second-Latest Scam in Real Estate. Securitization Audits. Owners are told that such an audit will find the true owner of the mortgage and that can be used to vacate the mortgage in a court. However, the factual information is actually public and the audit reports themselves are inadmissible because they are viewed as opinions not fact.
Florida Still Leads In Mortgage Fraud. Florida leads the nation in mortgage fraud investigations, followed by Nevada, Arizona, Michigan and Rhode Island. By MSA – Miami-Fort Lauderdale is number three in the nation.
Short Sale Tax Break Ending. Normally, when a bank forgives debt, the debtor owes federal income tax on the amount forgiven as if he or she had earned that money. For the past five years, this has been suspended. At the end of 2012 this suspension will end and once again short sellers will owe tax on the amount a lender forgives.
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The statistics cited is provided by the Orlando Regional Realtors Association, of which we are a member.
This report is intended to be for reference and informational purposes only. The opinions expressed herein are solely those of New Southern Properties Inc. and are opinions. No purchases or investments should be made based solely on this report, this data, or the opinions expressed herein. Real Estate purchases and investments are complex transactions. You are strongly urged to consult with your financial, legal and real estate consultants before making any real estate purchase or investment.