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July 6th, 2009 1:25 PM by David W. Welch
The official numbers will be out in a few days, but here is my take on what is going on in Orlando real estate. The big news you will be reading about in a few days is the 42% increase in sales compared to last June. So far there have been 2,121 closed sales with a median sales price of $131,500 posted for last month. That represents another month of year over year gains as well as an increase from May's 1,854 closed sales. The $1,500 increase in median price is hardly headline news, but it is the third month in a row without a decline. Of the closed sales about 55% or 1,166 were distressed properties (mostly bank owned) while 45% are normal sales.
The number of contracts pending used to be an indicator of future sales, but I am not so sure that it means as much with short sales making up such a big percentage. Right now there are 7,212 pending sales with nearly 52% or 3,743 of them being short sales. Only about 30% of the pending sales are "normal". If you break out the pending and closed contracts by type of sale you will see a pretty significant difference in the likelihood of a deal closing. There are 2,190 normal sales pending and 955 closed, 43.6% closed ratio. REO properties account for 1,279 pending and 827 closed sales for a 64.7% closed ratio. The majority of pending contracts are short sales with 3,743, but only 339 closed posting a closed ration of 9.1%.
Nearly 60% of the REO sales were identified as cash transactions while only 28% of the normal sales were identified as cash deals. The slow down in obtaining financing is probably the reason there is such a disparity between the REO and normal closed ratios. The banks expect cash deals to close within 30 days, while financing is taking about 45 days to obtain. Short sales are more a function of banks inability to adopt an effective and efficient process to approve short sales. Looking at these numbers, it is my estimate that the average short sale is taking about seven months to approve. I used that new math to guestimate this.
The number of active listings is continuing to decline, with only 17,825 properties currently available. At the current sales pace that represents only an 8.4 month supply of inventory. A more conservative measure using the first six months sales of 9,688 would indicate an 11 month supply. This is probably a better measure as sales will probably slow in the fall. Of course the number of listings dropped again by more than 1,000 from the prior month, so look for the months supply to continue to drop over the next couple of months.
Orlando Real Estate, David Welch Real Estate Optimist, @RealtyOptimist