I had a conversation with a gentleman named Tony yesterday, and thought that there may be other people out there with the same great questions that he had. First, he was questioning whether there was still money available in the various first time home buyer down payment assistance programs. Like most questions, the answer is "it depends". Many municipalities have first time buyer and down payment assistance programs available. As you can imagine, these programs have been very popular. They are even more popular since October 1st when seller funded down payment assistance went away. City or county funded programs typically run out of funds very quickly. Orange county has now added restrictions to the property. To qualify, the property must have had a significant rehab (not cosmetics), such as a new roof or new HVAC in the previous year. There is a state funded program that is available all over Florida that has money available without such restrictions. You can get more information at www.FirsTimeBuyer.info.
The second question that Tony had related to the Federal first time home buyer tax credit. That credit is in effect right now and continues through next summer. It is a tax credit not a deduction. That means if you file your taxes and owe $0 you will actually get up to $7,500 back as a credit for purchasing a home. You do not get the credit unless you buy a home during the specified time period, and you do not receive it until you file your income taxes. If you purchase in 2008, you qualify to receive the credit when you file you 2008 taxes. If you wait until after the first of the year, you cannot receive the credit until you file your 2009 taxes in 2010. You still have time to find a home and close this year, but you need to call me today at 407-924-7670.
Another question that people have been asking me has to to with lenders having money to lend. The answer to that question is YES!!! There is money to lend and the rates remain very favorable.
David Welch, Orlando Real Estate Blog
I will be enjoying the day tomorrow with my family, so I thought I would post some of the things I have to be thankful for this year. First, I am thankful for all the blessings that God has given me this year. Every new day is an opportunity for me to enjoy my family, friends, and customers that I have had the privilege of working with this year. My wife and children mean the world to me, and I consider it an honor to be able to provide a home for my mother and mother-in-law. We have been very fortunate to have the means to take care and honor them by having them live in our home. I am very fortunate to still be in the real estate business for nearly 12 years now, and be able to make a good living that provides for my family. Many agents have had to leave the industry, and I am still able to enjoy some success in a very tough year.
Happy Thanksgiving!
If you are looking for a home near the Orlando area, but don't have to be in town, the USDA may have just the loan for you. Through the Rural Housing Service, moderate income families can qualify for 100% financing with no PMI. This is not a typo, this is a real possibility for people looking for a home in a more rural area. Just to give you an example, I met with a family yesterday that is looking in the Davenport area about 30 minute south of downtown Orlando. I had Chip Gregory at Trinity Mortgage check the address and it falls in the rural area. The home is three years old, over 2,800 sq ft with a beautiful pool, brand new carpet and freshly painted inside for under $175,000. This is another example of the foreclosure market that we have in the Orlando area. Many of the foreclosed homes I see here were purchased to flip, and appear barely lived in.
If we can get a contract on this with the bank, my customers will be able to get into this home with very little out of pocket. They will also have a monthly payment that is more affordable because there is no PMI. That is especially important since many of these homes have very high property taxes. I am going to get more information on these loans through the USDA to create a resource page on my web site like the page I have for First Time Home Buyers looking for down payment assistance.
It's June 2004. That was the last time prices were this low in Orlando. The median price back then was $175,000, and it looks like we are going to see a median price in November 2008 pretty close to that, maybe a little lower. Just to remind everyone, June of 2004 was really before we started our big boom here in Orlando. Most of our price appreciation happened over about a six month period early in 2005. From February to July of 2005 our median price went up 25% from $196,000 to $245,000. For the next two years the median bumped along between $240,000 and $254,900. It did jump up once to $264,436 in July of 2007, but for the most part for two years we saw monthly ups and downs in the $240's. August of 2007 was the last time we saw the $240's. Since then, prices slowly until June of this year. In June the median price was $216,000 dropping nearly 18% to $178,000 in October.
I have been saying that we are at the bottom for three reasons: first, investors are starting to pick up bargains; second, rents and prices are in parity (properties can cash flow with 20% down); third, the affordability index is over 120. Of course not all properties are price appropriately, so you still have to do your research. It is also my expectation that prices will fall a bit more as these cycles tend to over correct. I am looking forward to Mr. Obama selecting a treasury secretary, so that will be one more uncertainty taken out of scheme of things. I am sure that he is waiting on that until the last minute so that the fourth quarter numbers cannot be attributed to his administration in any way. That is a smart political move, but it delays recovery by a month while the markets wait for stability. Secretay Paulson in the mean time could help quiet things by not continuing to change policy on a weekly basis.
Some of these pearls I got from Kevin Hassett at a luncheon yesterday sponsored by SunTrust. He is Director of Economic Policy Studies at the American Enterprise Institute. He also served as economic advisor to John McCain's campaign. According to his analyses the markets have priced in a 50% default rate for corporate blue chips. The highest default rate in the history of the market is 3%, so he believes that there is some over reaction going on right now. One reason for it is the questions still unanswered about the "bailouts". The bigger reason has to do with a couple of policies that Obama supported in the past that could replicate some of the conditions of the Great Depression. Mr. Hassett does not believe that Mr. Obama will look to modify his position on those issues in light of the current economic situation. Specifically, they deal with unionization and restraint of trade in the form of tariffs. Just google Kevin Hassett for more on his views. I found them very insightful.
I would like to thank SunTrust and my host Marcus Hopkins with Endowments & Foundations Services for giving me the opportunity to attend Mr. Hassett's presentation.
It has been many years since I sat in ECO 101 and studied endless supply and demand curves. That was not my last course in economics, in fact I even took a couple of post graduate courses as I contemplated a second masters degree in economics. In all those courses, I cannot recall speaking at any length about psychology. In one of the last courses I took as well as a banking course I had as an undergrad we spoke a little about the Fed's power to impact the market with their commentary. We probably discussed consumer confidence as a leading indicator, but that was probably the end of that discussion.
A lot of what our country is dealing with right now has to do with those supply and demand curves. I don't want to take anything away from Keynes. We really over built houses here in Orlando, and we really went overboard on condo conversions. My point I have been trying to make is that the primary reason the supply and demand curves get out of balance, is psychological. Supply was getting low for housing here in Orlando, and demand was growing because our job market was the strongest in the nation. Read some of my blogs from a few years ago. Jobs equate to the need for housing, so there were real pressures on prices and the supply curve. Buyers began to fear that they would never be able to buy a home, and investors, builders and sellers took full advantage of the market situation. In the end, greed and fear drove the economy more so than need for housing.
Now we see the same two forces, greed and fear, driving things back the other way. Just like the driver that hits a slick spot in the road and over corrects out of a fearful reaction, our economy is now over correcting. Just think of the bailout as the stability control that comes in a lot of newer cars. It is expensive and probably is not going to do as much as people think, but it is comforting to know it is there. Given the fragile psyche of the consumer these days, it might be just the thing to quiet some fears. If Detroit was building Prius' they might not be looking for a bailout too.
City of Orlando voted to spend $6.7 million in Federal Neighborhood Stabilization money. This will go to purchase about 30 homes in selected neighborhoods in the city of Orlando. I have to agree with the plan to focus the purchases in specific areas to derive the greatest benefit. Had the money been spread around more the impact of the program would have been diluted. Hopefully, this plan will allow the targeted neighborhoods to see real results and have a favorable impact on the homes surrounding the purchased properties.
In the end, while I am generally not in favor of such invasive governmental actions, I believe this will have a positive impact on our local real estate market. A similar program on a larger scale is underway in Orange county. This should be the more effective way to combat the escalating foreclosure situation in our area. Although, I beleive we may already be seeing a small improvement in distressed properties through market activity. While the number of distressed properties continues to grow, the prices are attracting investors and first time home buyers alike. The buyer activity appears to be slowing the growth in the number of distressed properties on the market.
The development of Baldwin Park near downtown Orlando began several years ago, and from the beginning they sought to preserve the natural beauty of Florida. Recently, the Baldwin Park community was recognized again for this commitment to the environment. You can read more by going to www.BaldwinParkFL.com and checking out the community and news tabs. It is truly a beautiful place to live, because of all the parks surrounding and throughout the neighborhood. Baldwin Park is really all about greenspace and preserving the areas around the lakes. There is a 2.5 mile path around Lake Baldwin with environmentally protected lands. The city of Orlando and the developers have worked with the Audubon Society to restore and protect these sensitive areas.
There are plenty of areas that are also devoted to fun too. The path brings out dozens of people at almost any time of day walking, running, biking and skating. At one end of the lake in the Winter Park area is Fleet Peeples Dog Park. Yes, a park just for dogs with lake access, and trails through the woods to walk. There are also people and kid friendly parks all over Baldwin Park with playgrounds, big open spaces for football and kite flying, as well as baseball fields and soccer fields. Audubon Park Elementary School is right in the neighborhood as well as Glenridge Middle School. GMS shares their track, soccer field, tennis courts and basketball courts benefitting the school and the community. Baldwin Park also has three swimming pools and fitness centers just for residents. And all of this surrounds a Village Center with shopping and services within walking or biking distance. Even the Cady Way Trail runs right around the edge of Baldwin Park, so you can ride your bike to the mall or East to Winter Springs.
Today's Orlando Sentinel featured an article that was very important to me, because if involves my wife Carol. She is a teacher at Bay Meadows Elementary School in Dr. Phillips, and invited Hector the reading dog to come work in her classroom. The story and video feature Hector, his handler and some of the children in Mrs. Welch's class. Obviously, I am very proud of my wife who is always looking for creative ideas in her work. The children really like it too.
We are about half way through November, and there are 378 closed sales posted in the MLS so far. The median price is remaining somewhat stable, but lower at $175,000 with a median days on market of 104. If the time on market holds that will be a one week improvement in the time to sale. The other numbers I have noticed have to do with the inventories of homes for sale, distressed properties and contracts pending. The first two are actually down just a tad, like a handful of homes. The most significant thing is that the distressed properties are not continuing to climb. The pending contracts are continuing to climb especially among distressed properties. There are 1,674 pending contracts on properties identified as distressed with 6,359 active distressed properties. I have seen a high of 6,375 distressed properties, so like I said it is not a huge number.
These are numbers you probably won't see anywhere else. One reason is that there is a degree of inconsistency with how distressed properties are being identified in the MLS. I have been to homes that are identified as pre-foreclosure, but in fact they are already bank owned. I have also been to short sales that do not have the pre-foreclosure or in foreclosure status box checked in the MLS. I say all this to qualify the numbers I am about to share. However, I will also say that even if these numbers are not the most accurate, I do believe them to be representative of what I am experiencing in the market.
First, while there are 6,398 properties in one of the three categories I described above, only about 1/3 are bank owned meaning 2/3 are probably in short sale situations. Second, out of the 1,659 distressed properties with contracts pending 55% are bank owned properties. Third, of the 462 distressed properties that closed in October 77% were bank owned. In raw numbers, there were 1,214 closed sales in October with 354 bank owned properties closing and only 108 short sales closing. Those numbers represent 29% and 9% of the closed sales respectively.
The official numbers are finally out. They have not hit the paper yet, but they should show up later today at www.OrlandoSentinel.com. Right now here is how they break down. While sales in October were down compared to September they were 10% higher than October 2007. This year's closed sales were 1,199 compared to last year's 1,090. The flip side of that is the price which are down month over month from $182,000 in September to $178,000 in October. That is a big 24% lower than October 2007's median of $235,000. In case you need help with the math that is an improvement of $57,000. On a 30 year mortgage at 6% interest that is a monthly savings of just over $340.00.
The number of pending sales continues to climb with 3,316 properties under contract compared to 1,923 a year ago. Homes still took on average 111 days to sell with the sale prices coming in an average 93% of the list price. The affodability index did go down slightly overall and for first time buyers because the average interest rate went up slightly. The inventory of homes available for sale declined very slightly to 24,657 which is 33 fewer than September.
I was just on the phone with Chip Gregory with Trinity Mortgage here in the Orlando area. We were talking about some of the things that we are seeing in the Orlando real estate market, and what the big drivers are.
First, foreclosures and distressed properties have had a big impact on prices and values all over Orlando. Here in Baldwin Park, I was just checking values for a prospective seller. One investment property he owns in the newest section of the neighborhood has actually gone down fairly significantly due to the distressed properties around his. That particular section of the neighborhood was bought up by investors during the hottest time we had back in 2005.
Second, first time home buyers are a huge influence on the market right now. Move up buyers are having a hard time selling their current home to purchase their next home. That leaves a big hole in the middle of our market that is just not going to get filled for a while. The top end of our market continues to move, but is finally starting to slow down somewhat. With the top end slowing and the folks in the middle stuck, the more affordable segment of our market is the part that is seeing the most activity.
The biggest obstacle for the first time buyer is the down payment. That is why Trinity Mortgage is part of the Florida First Time Buyer Bond Program. You can get the details by clicking on first time buyer, and I have more information about the tax credit for first time buyers. For the most part, closing costs are very negotiable right now, so they have not been as big a challenge.
Check out the link below to an article in the Orlando Business Journal last week. Anthony Crocco Director of Metrostudy's North and Central Florida divisions talks about the new home inventory in Orlando. While housing starts are off significantly compared to last year, the inventory of available new homes is down as well. In fact, starts are off 45% compared to 2007, and the inventory is down by over 37%. Even more dramatic is the drop in lots delivered for building. Delivered lot inventory fell by over 69% to just over 1,000 compared to the third quarter of 2007. Available lot inventory is still a staggering 43,303 representing an 83 month supply at the current pace.
http://orlando.bizjournals.com/orlando/stories/2008/11/03/daily7.html?q=metrostudy%20orlando%202008
Official Orlando real estate statistics should be released some time today. I'll post those when they come out, so check back here later.
Tomorrow afternoon at 2:00pm, I will be talking about blogging with some of my fellow Remax agents at the Remax 200 Realty office in Winter Park. I don't really have a formal presentation, but planned on pulling up www.RealEstateOptimist.com, my ActiveRain and Realtor.com blogs to show the features of each of the blog sites. If anyone is reading this, and has any ideas that I can share with the other folks, please let me know. For me the best part about blogging is the impact it has had on my Google position. The biggest downside is the occasional negative comment that I receive from time to time.
I believe official Orlando real estate sales numbers will probably be coming out today. As soon as I see them, I will have them posted here, so come on back, or better yet subscribe to my blog. Buy a home Orlando - It's OK!
Maybe the media should get over the comparisons to Kennedy, and focus on the work ahead for our new President. I really have a hard time believing that anyone really cares what designer Michelle Obama is wearing when they are losing their job or their house. I don't think that Mr. Obama is the type to let all this go to his head, but I do believe that it can be a distraction for him. The last thing he needs right now is distractions. Every candidate makes a lot of promises to the American people to get elected, and this year was no exception.
It is time to get to work Mr. President, and I think most everyone can agree that job number one for you has to be the economy. My advice would be to put the negative partisan junk behind us and start focusing on positive forces in the marketplace. Home prices are down all over, and relatively affordable compared to the last several years. The unsold inventory of homes available for sale is still high in most markets around the country. Interest rates are still at historically low levels. It would do wonders for our economy if people would just start buying homes again.
Greed pushed home prices to the brink, and fear toppled them over the edge. We are now at the bottom looking up, and more than ever the American people are looking for positive leadership. Personally, I think Mr. Obama would do the country and his administration a great deal of good by encouraging people to make the investment in a home or income properties. I cannot speak for markets outside of the Orlando area, but Orlando real estate is poised for a comeback. We just need a little more encouragement right now. A push from Mr. Obama could really make a difference. If he starts speaking positively about home buying, I might even vote for him next time.
Right now I am counting 1,176 closed sales for October with a median price of $179,250. Both of these numbers are down compared to September's 1,335 closed sales posting a median price of $182,000. Typically, we see a drop in September and a pick up in October. I am not sure if the fall bump came a month early, or it is just a function of our marketplace reacting to the seller paid downpayment assistance going away October 1st. I suspect the latter is the case. If my personal business is any indicator of the rest of the market, we are beginning to see things pick up even as sales dropped in October.
Inventory levels remain high, but appear to continue coming down slowly. The number of distressed properties remains high with 6,246 homes in some stage of foreclosure. There continue to be a very high number of homes with contracts pending with a growing percentage of the contracts coming on distressed properties. I personally have contracts out on three properties and two of them are foreclosures. I have written another on a downtown condo that is also about to be foreclosed. I am also seeing a rise in the number of investors contacting me about properties in Orlando. I am currently working with three different people that are outside the US and two from New York. What is really interesting is that all but one is a woman.
let's get back to business. There are people who have been waiting to see what happens with the election. I know, because you have told me so. While everyone has been waiting, some very interesting things have been happening. Prices have dropped significantly in our market here in Orlando. We topped out a couple of years ago with a median price around $260,000. Looking at the numbers for October, we are probably going to see a median sales price around $180,000. That represents just over a 30% price reduction in Orlando Real Estate. Interest rates have moved up and down like the stock market, but remain historically low in the 6-7% range. The inventory of homes for sale has remained high, but they are coming down little by little. Builders have just about stopped building. In fact a recent release on new home construction put the pace at the 1945 level. Seller funded downpayment assistance has been banned, but there are other options available. Check out www.FirsTimeBuyer.info for information about first time home buyer downpayment assistance bond programs in Florida.
What does all this mean? It is time to accentuate the positive and put the negative behind us. As the politicians say, let's reach across the aisle and work together to pull our economy up by it's bootstraps. Greed and fear put us where we are today in terms of our economic situation. Optimism and a positive outlook on where we can go and what we can achieve can get us back on track faster than any politician. If you are one of the consumers waiting for a bargain, the sale has already started in Orlando. If you are an owner holding out for your price, speak with your agent about the current market value of your home. Listen to their advice, and you will get your home sold. If you are an agent waiting to see what will happen - it happened. Sit down with your broker and start working on your business plan. I believe opportunity is knocking, and we all need to answer the call.
Here in Florida, we take voting very seriously. Let's face it, we have some recent history when it comes to choosing our President. I believe the 2000 election was decided by about 500 votes in Florida. We have heard all the jokes about pregnant chads, dangling chads and all the rest of chads friends. Our state can even be boiled down to the I-4 corridor. The southern part of the state tends to be more in favor of the Democratic party, and the northern part leans toward the Republican party. I-4 divides the state from Daytona to Tampa running right through my home town Orlando. To punctuate this point, my neighborhood Baldwin Park is home to both of Florida's US Senators. Mel Martinez (R) and Bill Nelson (D) live in Baldwin Park, Orlando.
I have looked at the voter registration numbers for Orange county, and they are almost perfectly split 48.8% Democrats and 48.6% Republicans. I believe the two candidates could have saved themselves a lot of traveling and advertising by focusing on Orlando. I have heard one statistic that states that 95% of Americans will visit Orlando in their lifetime. We have about one million visitors here every week. They probably could have spoken to more potential voters by staying here and speaking at the Citrus Bowl or Amway Arena or the Orlando Convention Center every week for the last 18 months. Well, maybe next time. Today is Election Day '08, and you need to get out and vote if you have not already voted early or by absentee ballot. If you don't vote today, you cannot complain about the results tomorrow.
With the end of the month being on Friday, we have a few days before all the sales are posted in the MLS. As of this morning, there are already 1,076 closed sales posted. The median sales price of the sales posted so far is $180,000 which is just $2000 less than September. We continue to show more than 3,500 pending contracts with 1,553 or 44% identified as distressed properties. Only about 24% of the active listings are listed at distressed (bank owned, in foreclosure or pre-foreclosure). Of the closed sales posted so far, nearly 38% are distressed properties. This continues to demonstrate a trend of distressed properties leading the sales increases and price declines.
Last week, I closed a transaction on a Baldwin Park condo built by Centerline Homes for more than $330,000. I negotiated a contract on a corporate relocation in Remington priced at $175,000. By the way, that home is nearly 2,000 sq ft with a pool in a gated, golf course community in the Kissimmee area. I also am working on negotiating the sale of a foreclosure property in Meadow Woods just south of the Orlando International Airport. This last property is a 3/2.5 townhome priced in the $70's. Finally, Saturday I listed a fantastic starter home in Plantation Estates in Debary. This is a 3/2 with tile floors throughout, a white on white kitchen, and newer roof on over a 1/4 acre for $134,900. You can see it at www.249Toms.info.
I also introduced a new way for First Time Home Buyers to access information about downpayment assistance and financing options. If you are a first time buyer, be sure to check it out. I would love help you get into your first home here in Orlando. Orlando real estate is affordable again, and I have the tools and experience to help you find the right home.
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