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August 20th, 2012 7:53 AM by David W. Welch
When people ask me about my experience in the Orlando real estate market, I start by talking about the changes that have gone on over my 15 year career. When I started back in 1997, we still had a "normal" market. What I mean by that is there was a degree of predictability. We had trends that you could count on from year to year as well as a somewhat balanced market. Under the old "normal" you knew that sales slowed down in August as school got back into session, and October would have a bump up in sales before slowing again over the holidays. January would begin the climb up to the big Spring selling season that ran into July. The inventory would ebb and flow along the same trends as the sales, and prices would slowly climb by 2%-5% each year.
Then along came 2004. The pace of sales had increased, but the number of homes coming on the market had not. We were starting to see prices go up a bit faster already as the supply began to drop. When the hurricanes hit in August of that year, the inventory dropped even further as sellers either delayed selling or pulled houses off the market to make repairs. This sharp drop in the available supply sent prices skyrocketing in 2005. Easy money and increasing prices had builders erecting homes as quickly as they could to try to keep up with the demand for housing stock. By September of 2006 all of this came to an end. Builders and owners late to the party kept trying to cash in, but by 2008 we had an incredible oversupply with 24,000 new homes and another 26,000 homes listed on the MLS. Crash!
Since 2008 we have been in a constant state of change. This is the "new normal." This new market is really all about change. We have seen soaring inventories and no buyers to significant inventory declines as buyers have entered the market to pick up the bargains. In four years we have gone from approximately 50,000 homes available to 7,500. The inventory was measured in years supply, but now is only a three month supply. Prices dropped until February of 2011 when we hit a low with a median sales price of $95,000. A year and a half later prices have climbed back up to $125,000. Money is not easy, but cash is plentiful with over 50% of all our sales the last three and a half years being cash transactions. Rents have skyrocketed, and it is estimated that it is about 35% more expensive to rent in Orlando than to own. REO's and short sales that dominated the market last year with 75% of the sales now represent just about half the sales. Trends are not as predictable, as investors and bargain hunters buy any time of year as long as the price is right. Properties get multiple offers but may or may not get bid up over the asking price. This is the "new normal", and it is a bit unpredictable.
David Welch Real Estate Optimist, Orlando Real Estate, Search for Homes