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August 11th, 2010 11:12 AM by David W. Welch
I am working with a few investors that are actually finding it more difficult to find properties in the areas where they have been buying. Despite what you read or may believe about the real estate market here in Orlando, it is not a bottomless well of foreclosures and short sales. There are a lot of each, but some areas seem to be running a little lower on available inventory. This made me wonder how many properties have turned over in these particular areas. In the ones I have looked at, around a third of all the properties have turned over in the last two years. These were some of the areas hardest hit by foreclosures and there will be more, but maybe not like we have seen over the last two years.
I took a look at what has been happening in our market overall in the last two years and found that 28,960 properties identified as bank owned or short sales have closed in the past 24 months as of today. There have been some changes in how properties are identified in our MLS, so that number may actually be higher. The total number of homes that have turned over in the last two years is 48,722. I believe the homes most at risk of negative equity are those purchased between 2000 and 2006. During that time there were 156,145 existing home sales posted. At the peak between 2004 and 2006 homes were sold over and over again by speculators and there were also at least 40,000 new homes built to throw into the mix. To be conservative, I am estimating with cash out refinancing and such there could be about 250,000 homes at risk of negative equity less the 84,805 that have sold in the last four years. That leaves about 121,000 properties, but many of those people are in it for the long haul and will stay in their homes.
The worst case scenario is that we will be dealing with these distressed properties for the next four to five years. I think the best case is that the job market gets back on track and we could see many of the short sales go away as equity begins to return. In another two years things could be very different. Considering how much stronger sales have been recently, I am optimistic.
David Welch Real Estate Optimist, Orlando Real Estate