Another in a long list of knee jerk reactions by lenders is in the news today. Countrywide is freezing 121,000 credit lines regardless of payment history. This is being done in response to regions where there are declining values. While they probably have the contractual right to do this, I don't know if that it is such a wise thing. When you consider that only a very small percentage of people default on their loans, why shut down everyone? Most of the defaults have been with the sub-prime loans, so why freeze the credit lines on people who may actually be planning to improve their property or make some other economy stimulating purchase? You would think that they could run some type of study to see which properties are truly going to be over the stated loan to value in the credit line.
www.davidwelch.com
The Orlando Sentinel and the Orlando Business Journal both reported MetroStudy results today for the first quarter of 2008. The total inventory of new homes from start to finished inventory went down by 1,100 compared to the fourth quarter of 2007. That should put the number around 7,600. A total of 2,630 units closed over that time which is slower than I anticipated. The lower prices of the resales may actually be having an effect on the new home sales. I think the bigger impact may be gas prices, since many of the new home subdivisions are further out of town. I have three listings in the Conway area of town that have been hurt somewhat by new homes further out, but the high gas prices may actually have people looking closer in now. The dynamics of the current economics are very interesting to watch. I know that I would like to be working with a lot more home buyers right now.
www.davidwelch.com www.orlandoarearealtor.com
I am sure I blogged about this before, but I just read an article in the Orlando Sentinel about the number of foreclosures. In the article someone states that there just are not mortgages out there for a people with less than perfect credit or for people without a lot of money to put down. That statement is just not true, at least not here in Orlando. FHA and VA, for our veterans, are fantastic loan vehicles that can get you into a home. The FHA loan limits have been raised significantly. Here in Orlando you can get an FHA loan for up to $353,750. That will buy almost 75% of the homes that are currently for sale. Other changes in FHA allow the seller to pay both the 3% toward closing costs and the 3% down payment. I had a couple recently close on their first home, and they got their deposit money back at closing. Obviously, you still have to qualify for the loan. Give me a call with any questions you have.
www.OrlandoAreaRealtor.com
"In Depth: America's Worst-Selling Housing Markets"
http://www.forbes.com/2008/03/31/homes-risky-property-forbeslife-cx_mw_0331realestate_slide_2.html?partner=playlist&thisSpeed=20000
Click on the link for the slide show of the markets Forbes calls the worst selling housing markets. If you ask me, the flip side is that these are the "best buying markets", and Orlando is number two. The numbers they quote in their article must include the entire metro area which is five counties. When you read my Orlando Real Estate Blog, I focus on the the tri-county "core" area, so the numbers are a bit different.
The article does not go into the economics of any of the markets, and I cannot speak about the other nine mentioned. I can tell you that Orlando is still expected to be one of the top job markets in the nation. I will also tell you that Orlando is continuing to grow in population, and builders are not really starting any new projects. Interest rates are still low (but rising), and the prices in Orlando are lower than they were a year ago by about 10%. Pending sales have increased about 150% since the beginning of the year to just over 3,000.
My recommendation: Buy A Home - It's OK!
I have a new URL for you to check out www.OrlandoAreaRealtor.com
www.DavidWelch.com
Wow, April new contracts are already around 1,600 with a week to go. Total contracts are closing in on 3,000, and closed sales are on track to beat March's numbers too. I cannot wait to see the final numbers this month. The only thing that I see down right now is the median price which is hovering around $215,000. That could change by the end of the month. The total number of homes listed for sale in the Orlando area is up just a little and the number of homes listed as pre-foreclosure, foreclosure or bank owned is up just a tad around 4,360.
Realtors are by their very nature optimists. Many would argue that the press is pessimistic. Let's face it negative headlines are attention grabbers. The truth is that the number of new sales contracts was up in March compared to February which was up compared to January. The total number of contracts is way up from the beginning of the year as well. The inventory of existing homes has remained fairly stable since last fall. Prices have come down around 10% year over year. New home inventories have come down quite significantly since the end of 2006. There are plenty of rentals out there that will come back on the market as conditions improve. The key to that statement is that "conditions improve". There is no "bad" real estate market. Conditions just happen to favor buyers right now. There are a lot of choices, prices have come down a bit and interest rates are at historic lows. I think many people have forgotten that you buy a home to live in and it should be viewed as a long term investment. Buying a home is not a get rich quick scheme.
I just received the annual report of Orlando/Orange County Convention & Vistors Bureau, Inc. (CVB), and I have to say their projections for this year look good. Let me start by saying that 2005 was just an off the charts kind of year for us here in a lot of ways. Job growth was at a pace double that of the rest of the state, and Florida lead the nation. Of course home sales were at a frantic pace, and builders actually could not keep up with demand. On top of that our commercial real estate market was going gangbusters too. Tourism was not to be outdone. That year we saw 49.4 million people come to Orlando. That is not a typo or a statewide number - Orlando had about a million extra people here each week just passing through. We have had a couple of down years in tourism compared to 2005, but 2006 and 2007 were still in the top three or four years we have ever had. The CVB is expecting 2008 to come very close to 2005 numbers with projected visitations of 49.2 million with about 2.9 million being internation guests. These numbers are important to our local economy because about one in four residents works in the tourism industry.
Pending contracts are continuing to climb and are approaching 2,900 total contracts as of this morning. New contracts this month are nearly 1,350 which looks good for another improvement in that number over last month. There are just over 600 closed sales so far this month, with a median sales price of $215,000. We should see better sales numbers this month, but possibly another slight decrease in the median price. Inventory remains fairly steady, while I believe the number of pre-foreclosure and bank owned properties is down a little bit. I have not been tracking this number closely, but as of today there are 4,322 in either pre-foreclosure, foreclosure or bank owned status. That makes up almost 16% of all the active listings. Just over 30% of the pending sales are in one of these categories. This is probably the biggest reason the median price has continued to float down.
I posted my first YouTube video this weekend. You can see it here on www.davidwelch.com or google Homes for Sale in Falcon Trace to see it on YouTube. I would love ideas to spice it up a little bit. You can also subscribe to my pod cast and download it to you iPod or MP3 player.
Come by today and check out a truly unbelievable deal in Falcon Trace. I will be there from 2:00pm til 5:00pm. Call me just to confirm, or if you need to see this fantastic home another time. You can reach me on my cell phone at 407-924-7670.
I have added a new page to my website to feature the construction of a new condo in my neighborhood Baldwin Park. I have customers, out of state, that are purchasing a unit in this building that will be completed in the September time frame. The condos are being built by Centerline Homes, and are truly beautiful. I sold a resale of one of Centerlines other condos last fall, and have to say that these are very nice homes. Baldwin Park is a planned community that features classic styles, lots of parks and a village center. The location of the community is ideal between dowtown Orlando and Winter Park. I would love to show you around, so give me a call 407-924-7670 or e-mail me at baldwinparkhomes@davidwelch.com.
The link below to see the latest official statistics for Orlando Real Estate. A couple of items to pay close attention to are the contracts numbers, both new and total contracts pending. Also check out the local interest rates. We are starting to see them rise a little bit as rates are rising on Treasuries. The Market Pulse is provided by the Orlando Regional Realtor Association.
Market Pulse April 08
If you have not noticed by now, let me clue you in on something about me. I love numbers! I remember my dad saying figures lie and liars figure, but numbers and statistics can really give us insight into what is going on in our market places. I have always been big on tracking the inventory, and pending sales numbers. It is the basic economics of supply and demand that drive real estate sales.
Our inventory was down at the end of March, but only by a little less than 2%. The main thing I have seen with our inventory is that the buildup stopped back toward the end of last summer. We have been fairly steady since then. The inventory of new homes, however has dropped significantly since the fourth quarter of 2006. When that number gets low enough, we will see a decline in the resale inventory as well. Homes that are currently rented will convert back to being for sale when sales begin to pick up. This will keep our inventory up for a while, but I just don't know how long since the rental numbers are not as well known. Builders will begin building again, but they need to start making a profit, so they should not be undercutting resales as much on "to be built" homes. I don't see them negatively impacting the resales any time soon.
Pending sales are making a fairly dramatic rise here in Orlando. Back at the beginning of January I measured the total pending sales at about 1,500. This morning when I checked on the MLS there were 2,805 contracts pending. That is about an 87% increase in contracts in about three months. The other number I look at now, because of the impact of foreclosures, short sales and the mortgage issues, is new contracts. One of the reasons total contracts are building up is because transactions are taking longer to close. While foreclosures make up only about 15% of our listing inventory they account for about 25% of the sales. Many of these are just taking longer to close, so the property remains pending longer. Mortgage lenders are being more cautious, and guidelines are more stringent so loans are taking longer to close. Also, the new FHA limits being raised to over $350,000 in the Orlando market means that about 75% of the listing inventory can be purchased with an FHA loan. These loans tend to take just a little longer to close as well. Because of these factors, I like to see what new contracts are doing. More good news! January new contracts were around 1,200, February was about 1,500, March hit over 1,700 and so far in April we stand at 941 for the first two weeks. The first two weeks of March I counted 729 new contracts so April is up 29%.
I know every market is different, but keep this in mind. Orlando tends to be one of the last markets effected and one of the first to improve. It must be the great weather? As people are able to sell here, they will be able to buy there wherever that may be.
Buy a Home - It's OK www.davidwelch.com
It's tax day 2008. Hopefully, you have already filed. If not there are several post offices open late around Orlando. The main center at Orlando Internation Airport is open until 12:00 midnight. I saw a report this morning that over 67 million returns were filed on-line. Maybe the lines at the post office won't be so bad after all.
The official March numbers are finally out. Sales were 1,080 up from February's 951 but still off March of 2007's 1,779. The median price is down from last year as well $220,000 compared to $240,000. Inventory was down from February by 512 homes. These are pretty much the same as my numbers, although I look at inventory a little differently. Here is an interesting statistic - twice as many homes over $1 Million sold in March as in February.
The rich get richer, because they buy when it is a great time to buy. This is a great time to buy.
A recent poll found that 60% have no plans to buy a home in the next two years, but 11% are certain they will be buying a home soon. The 60% is up from 53% in September of 2006, and the 11% is down from 15% from the same time. I would love to have more historical numbers - which I am sure nobody has. But I do know that the average time in a home is about 11-12 years which means only about 10% turn over in any given year. I would expect that outside of the 2004-2006 time frame 60% and 11% probably are not too far off normal. In fact if I had to been asked to guess the results of this poll, I would have guessed higher than 60%.
The truth is that the market is down in most areas around the country, and Orlando is no exception. The flip side of that is that buyers have more homes to choose from, and motivated sellers willing to work with them. Interest rates are still really low, but may not be able to stay that low for long. Prices may come down a little bit more, but builder inventories are coming down which mean the total supply of available homes is going down too. Reporting statistics with no benchmarks does not really report anything of value.
There have been some not so great reports about real estate both nationally, and for the state of Florida in the last couple of days. Specifically the pending sale index is way down. Orlando is a bright spot when it comes to pending sales. This is such an important indicator because pending contract eventually turn into closed sales. Back in January pending sales was down around 1,200 and this morning they are up to 2,620. Historically, I have seen between 60% and 70% of new contracts close in a given month. In March there were just over 1,700 new contracts and just over 1,070 closed sales which is about 62% close rate.
The mortgage mess and resulting stricter guidelines has slowed closing down a bit, but deals are closing. Mortgage rates continue to be very favorable at just below 6% on any given day, but that could change radically if we see inflation numbers come in higher. Prices have also come down fairly significantly, and I see them down maybe a little more this month. I don't think they will fall more than another 5%. Based on our median price of $220,000, I calculated that another 5% drop in prices would be offset by a 50 basis point increase in interest rates. Most lending people I have spoken with, feel that a half point rise in mortgage rates is very likely in the next few months. I just want to reiterate that right now is the time to buy. Inventory is high, rates are low and sellers are motivated.
March numbers should come in around 1,073 closed sales with a median price of $220,000. It does not look like any big last minute changes. Check back on the 10th for the "official" numbers. I'll post a link to the Market Pulse update.
Recession is all over the place in the news. You read it in the paper, see it on TV, and hear it on the radio. Has anyone gone to Disney World lately? I took my family to Disney yesterday, and it was packed. It was not a little crowded, but jam packed. I heard people complaining that they had trouble getting a hotel room. There were, of course, a lot of international guests and some spring breakers. There were also a lot of families, local and from around the country. Everybody wears their home town or their college shirts and hats when they come to Orlando. I like to see that kind of pride. I often wear my UCF gear when I travel. There were people from Michigan, Wisconsin, Ohio, New York, Washington, North Carolina, Alabama, Georgia and all over the country from the colleges and universities I saw represented.
I know things are not as good as they have been, and the real estate market is still tough. I also know that things are not nearly as bad as the media portray them to be. Bad news sells papers, and good news sells houses. Personally, I see real estate sales people as the optimists who keep going in spite of what the papers say. As a REALTOR, I must always recommend what is best for my customers, and I think this will go down as one of the greatest buying opportunities ever. We need to be selling people on the American dream of home ownership. If someone complains about the economy, send them to Disney World. They will come back and buy two houses.
The official numbers won't be out until the 10th, but here are my unofficial numbers for March 2008. Active listings still holding steady at 26,851. Pending sales are down a little bit, but that is because a lot of sales got closed finally. Now for the really good news. Closed sales counted so far 1,052 with a median price of $219,900. This is tentative though, because a few more lower sales, and this number could drop by $2,000. All closed sales are supposed to be reported in the MLS within two days, but the association statistician waits until the fifth of the month just to be sure all the sales get in. Even better news is that there were 1,711 new contracts written in March as compared with 1,239 in January and 1,537 in February.