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July 7th, 2009 5:05 PM by David W. Welch
I say yes, sort of.
If you look at the past three years new contracts, you will see that December 2007 was the bottom of our market in terms of demand. We really did not see substantial decreases in prices until 2008 and 2009 which has significantly stimulated demand for homes in Orlando. June's numbers will be out in a few days and the number of new contracts is again around the 3,500 mark. It is no coincidence that the median price hit $130,000 in April and May and is around $131,000 for June. As prices are leveling off so is demand. At the same time the supply of homes available has continued to slide, and is currently around 17,800 homes which is about 21% fewer than there were at the beginning of the year. Basically, our prices have reached a point that has driven pace of demand higher than the pace of new inventory. So, prices have stabilized at a point where demand is stripping away the supply of homes. This price stabilization should stay in effect until the supply of homes available is lower than six months which has long been considered a balanced supply. At that point, there will be upward pressure on prices.
At the current rate of sell off, we could hit that tipping point in as little as six months. Of course there are always other factors that could shift the supply and demand curves. If the government decides to extend or modify the first time home buyer tax credit the pace of demand could be effected. Inflation could force the Fed's hand, and tighten credit markets possibly raising interest rates. Banks could get their acts together and start approving short sales in a more timely manner, process REO's more efficiently and maybe even approve loans again. They could flood the market by disallowing all short sales or releasing large numbers of REO's into the market or tighten lending guidelines further. In other words, barring govenmental or banking actions look for stability in our prices through the end of the year.
Orlando Real Estate, David Welch Real Estate Optimist, @RealtyOptimist