By signing into my site, you can access your favorites from any computer and get e-mail updates when new listings come in that match your recent searches.
October 20th, 2008 10:54 AM by David W. Welch
This actually has nothing to do with "Joe the Plumber", but since the last Presidential debate Joe has been a great attention grabber. This post is actually about something closer to home for the folks in Orlando. I am going to go ahead and go out on a very precarious limb, and say that we have hit the price bottom here in O-town. Last month our median sales price dropped to $182,000 and so far this month with almost 500 closed sales we have a median sales price of $185,000. That is not to say that we are on our way back up. There are always ups and downs from month to month. I do have a few reasons why I believe we are at the bottom barring any more unforseen challenges.
First, sales are continuing to remain in the 1,400 range which is relatively strong compared to last year. In fact September's sales of 1,390 were about 38% higher than September of 2007. These stronger sales numbers have stabilized and somewhat reduced our inventory of homes for sale from the peak last October of more than 26,000 to just over 24,000. This does not include all of the builders inventory which has actually dropped considerably over the last two years from over 24,000 in inventory to around 6,000. New construction is still way off even last years numbers, so look for builder inventory to continue to decline.
The second reason I belive we are at the price bottom is that the current properties under contract (over 3,500 of them) have a median list price of $182,000 compared to $191,000 for the most recent closed sales. This number is a bit lower, but it is effected by the higher proportion of distressed properties. About 23% of all active listings are distressed, while about 44% of pending sales are distressed properties. However, only 33% of the closed sales are distressed, so a higher percentage of the distressed properties are not closing.
Finally, and maybe most importantly, is affordability. At the current price level, the affordability index for Orlando is nearly 124. That means the median income earner makes 24% more than necessary to afford the median priced home. There have been some articles written recently about rents -vs- home prices which also illustrates the point of affordability here in Orlando. Historically, home prices have reportedly run about 15 times annual rents. At $180,000 that equates to annual rent of $12,000 or $1,000/mo. I doubt that you will find the median home in Orlando available to rent for $1,000/mo. At least on source I found on the internet (zilpy.com) had the median rent for a three bedroom home at $1,171. I am sure there are more reliable sources, but that is really close to my expectation.
www.DavidWelch.com, www.OrlandoRealEstate.me, Orlando Real Estate Blog