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October 27th, 2011 8:43 AM by David W. Welch
Yes, I said it. Orlando is moving toward a seller's market. Our inventory levels are well below what we would consider a balanced market. There is only about a four month supply of inventory, and typically we have used six months as the point where supply and demand are in equilibrium. So why aren't prices increasing? Well, they are a little bit. If you are selling your home, don't call your agent and say raise the price though. At the beginning of the year our median price was at rock bottom around $90,000, and the median price for October looks to come in around $110,000. January tends to be one of the lowest points in the year, so there is some seasonality to the numbers. We also have posted a few months of year over year increases though, but again nothing to get terribly excited about.
We have also seen a shift in the type of owner that is selling. In January only about 25% of the sales were normal "equity" sales, meaning the owners were real people who were able to sell their home and payoff their existing mortgage without their bank approval of a shortfall. We have moved from that low back up to about 40% of the sales being equity sales. The biggest factor effecting this is the slowdown in foreclosures. Everybody likes to talk about waves of foreclosures, but I think of it more in terms of a garden hose. The banks legal troubles have forced them to turn the flow of foreclosure proceedings down, but they are close to resolving their issues with the Attorney's General around the country. When that happens, they will open up the flow of foreclosures coming to market again.
I have already noted that the number of foreclosures on the market is climbing slightly. I would not be too concerned about foreclosures flooding the market however. Even though foreclosure filings took a big jump a month ago, they were still more than 50% lower than a year ago. Next year, I expect to continue the improving trend. One thing to keep in mind if you are considering selling. The overall inventory of homes may be around four months, but the inventory of homes priced at $200,000 and up is pretty much in balance. Homes priced over $300,000 there is still a fairly significant over supply. That is why I say we are moving toward a seller's market, but we are not there yet for higher priced homes.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone