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August 24th, 2010 4:20 PM by David W. Welch
Believe it or not home prices in Orlando have actually been pretty stable over the last six months, although the median price declined last month and will take another drop this month. How can I say that prices are stable when the median price appears to be dropping? It is not the prices that are unstable but the mix of buyers in the market that has changed. I have written a few posts this year that I believe the market is getting back to normal in terms of sales trends. In other words, there are busier times of the year and slower times of the year for real estate sales. Here in Orlando these seasonal changes are not terribly dramatic, but there is a slow down around the holidays and in August and September when school is starting back up. Conversely, we see the market pick up after the first of the year. The busiest time is usually from March through July with a peak in June.
Investors do not really care about the time of year, so they just keep on buying even when "home" buyers slow down here in August and September. This causes the investor purchases to weigh more heavily on the median sales prices. I went back to March and found that the median sales price for "home" buyers has ranged from $147,700 to $154,000 and the median sales price for investors has ranged from $56,500 to $62,000. See the table below (suggested by Amy Holobyn at Remax 200 - thanks Amy). If you take a look at the numbers you don't really see a trend of prices going down, but the mix of investors to "home" buyers shifting with seasonal trends. In March investors median sales price was $59,900 and so far in August it is $56,500 which is a bit of a drop, but "home" buyers in March paid $152,000 and $154,000 so far this month. The shift from more "home" buyers to more investors is the culprit in the recent drops in median sales price. So the prices have been stable, but the types of buyers have not.
With a week to go in August I would expect close to another 800 sales to close, but I don't know that the mix will change that much. Although, a lot of "home" sales close at the end of the month.
David Welch Real Estate Optimist, Orlando Real Estate