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April 2nd, 2009 3:14 PM by David W. Welch
As the name of my blog implies, I am optimistic about where real estate is heading at least here in Orlando. Someone who follows my blog forwarded a link to me about an article in money magazine that ranks Orlando number 3 for markets that are going to keep going down. Negative news sells papers - oh wait apparently it doesn't actually sell papers but ad space on "journalistic" websites. There is no denying that prices have plummeted here in Orlando. As of today 1,568 sales have been reported for March in the Mid Florida Regional MLS with a median sales price of $137,000. You would have to go back to March of 2007 to find a month with more closed sales (1,745), and January of 2003 to find a month with a lower median sales price ($132,184). Of the 1,568 closed sales 858 (54.7%) were distressed properties. As a percentage that is actually on the lower side compared to what I have seen the last few months.
Active listings are running at 21,340 with 8,162 (38.2%) in distress that is actually on the higher side (but not much). You would have to go back to January of 2007 to find the active inventory lower (21,266). Pending sales are continuing to rise currently at 4,957 with 3,179 (64.1%) being in distress. That is pretty much what I have been seeing for the last several months. Foreclosure and short sale properties are going to continue to have an impact on the Orlando real estate market for at least a couple of years. Although, with declining inventory and little new construction, the impact of the distressed properties is pretty much being absorbed each month. In fact, I believe prices would probably have to rise 25% before we see any significant increase in new construction. If prices remain at their current level, we should see a significant acceleration in sales.
Of course we could get there a lot quicker if the government bought up all the foreclosure properties (one million). I keep promoting this idea since this would instantly stabilize the real estate market and the economy. Without this type of intervention, I am expecting Orlando to take less than two years to get to a stable real estate market. I believe prices will stabilize and begin increasing in the next few months if we continue to see the sales trends of the past several months. Then look for the market to actually begin getting hot again. With the lead time for new construction to get out of the ground, we could actually see an inventory imbalance in the other direction within two years. This leads me to the conclusion that now is definitely the time to buy. Lower prices, lots of selection, low interest rates, first time home buyer tax credits. It won't last forever.
David Welch, Real Estate Optimist