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May 14th, 2011 11:05 AM by David W. Welch
Yes, it is already the middle of May 2011. The big story in Orlando and in many other markets is "where are the foreclosures?" I am also asking "what difference will they make when they come back?" The number of homes for sale in Orlando continues to drop. The current inventory of 11,272 represents a little less than a 4.4 month supply of homes for sale based upon April sales numbers. Our sales pace would have to drop below 1,900 to have a balanced six month supply, and I believe we will see 2,100 to 2,200 sales this month. Of the homes for sale in Orlando right now, only 1,129 or 10.0% are bank owned and 3,840 or 34.1% are short sales. The number of pending sales is almost as high as the number of active listings. There are 10,470 properties with contracts pending. Of those, 1,833 or 17.5% are REO and 6,893 or 65.8% are short sales.
Of the 690 closed sales so far this month, equity sales have taken over first place with 277 or 40.1%, REO's have posted 239 or 34.7% and short sales make up 174 or 25.2%. Bank owned sales had a median sales price of $80,000, short sales are coming in at $91,400 and equity sales are up to $157,500. Cash sales are still strong in our market making up 364 or 52.8% of the closed sales this month with a median price of $70,000. Financed sales of 326 have had a median sales price of $150,000.
So where are the foreclosures, when are they coming back, and what impact will they have? The answer to all three is nobody knows. Seriously, nobody has a good grasp of when they will be back. The only thing we know for sure is that there will be more foreclosures coming. I estimate we have only processed maybe 30%. I would not run for the hills just yet though. I don't see a "tidal wave" of foreclosures coming. I just see the process getting geared back up to produce a steady stream. I also believe it is a stream we are ready to absorb. If you break our market up into REO, short sale and equity by available inventory and buyers you will see why I am optimistic. There are 1,129 REO's available and there were 1,056 REO sales last month meaning there is a 1.1 month supply. There are 3,840 short sale properties available and 666 short sales closed last month for a 5.8 month supply (pretty much balanced). There are 6,303 equity sales available and 852 equity buyers last month for a 7.4 month supply.
The system for processing foreclosures has been putting around 1,000 per month on the market for the last couple of years. I suspect that even if foreclosures could be processed 50% faster the demand for these bargain priced properties would go up as well to absorb many of the extra listings. If they are not absorbed, a year from now we would have reached a balanced supply if nothing changes. Of course, Orlando added a state leading 20,000+ jobs last year, and I suspect will add at least that many more next year. For the folks that doubt our market improvement, three years ago there were 50,000 homes new and resale in Orlando. Today there are fewer than 15,000 if you include the new home inventory.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone