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January 29th, 2013 7:53 AM by David W. Welch
The laws of supply and demand would dictate that prices of Orlando real estate should be rising, because our supply has declined 25% in the last year. Prices indeed, have been on the rise for the last two years. The median price reported in December was up around 12% from a year ago. The problem we are facing with our limited supply is that we seem to be running out of lower priced homes. It's kind of like having a car lot full of Porsches, and all the buyers are looking for Hondas. Most of our less expensive properties have come from the ranks of the distressed, and thankfully we have fewer distressed properties.
Short sale inventory has dropped 50% from a year ago, and now the REO inventory has dropped a bit recently after holding steady for the last 12 months. Our median sales price has been around $130,000, but the median list price in Orlando is close to $190,000. Short sales have been the difference maker the last several years filling the gap between REO and often overpriced equity sales. Despite a lot of talk to the contrary, short sales appear to be falling out of favor with buyers. Additionally, with the increase in prices fewer people are short, leading the precipitous decline in active inventory. The decline in distressed inventory and the corresponding upward price pressure now appear to have impacted our pending sales and possibly closed transactions.
It is January, and that is usually our slowest month, so things are likely to pick up. Right now though, we are going to be lucky to close 2,000 sale this month after many months of sales in the 2,400 range. I have been speaking with a number of people who will be selling, but most are going to be well above the median sales price. There are a number of positive things happening in our local economy, but most seem to be developing over the next couple of years. Unless lending loosens, I think we may see a somewhat less active real estate market this year simply because there are not enough modestly priced properties. It is a little bit of an odd place that I think we are in.
David Welch Real Estate Optimist, Orlando Real Estate, Search for Homes