Orlando Housing Market Nears a Balance Between Buyers and Sellers

Residential News » Residential Real Estate Edition | By Michael Gerrity | July 10, 2009 3:46 PM ET

(News Source: Orlando Regional Realtor Association)
(ORLANDO, FL) -- A steady increase in the pace of Orlando home sales activity is creating conditions that are within striking distance of a balanced market. Inventory level reflects an 8.37-month supply at the current pace of sales; a market with six months of supply is considered by housing economists to be balanced between buyers and sellers.

Members of the Orlando Regional Realtor Association in June sold 43.12 percent more homes than in June of last year, contributing to the area's year-to-date sales increase of 43.76 percent. There were 2,131 closings in June, which brings the year's total to 9,993, while a total of 6,951 homes had changed by this time last year. Of those June sales, 45.99 percent of the homes were either bank-owned (832) or distressed (148). The remaining (1,151) "normal" sales made up 54.01 percent.

ORRA President Les Simmonds, L.G. Simmonds Real Estate Corp., explains that the increase in sale activity can be attributed in part to first-time homebuyers taking advantage of the $8,000 federal tax credit. "The first-time tax credit should be expanded to all buyers of primary homes regardless of income," he says. "And, extending the credit into 2010 would allow more time for the market to catch up with underlying demand and maximize the potential for a housing recovery."

The significant percentage of bank-owned and distressed home sales continue to have an influence on Orlando's reported median price. The median price of all Orlando homes sold in June is $131,200 (a 39.26 percent decrease compared to June 2008 and an 0.92 percent increase compared to May 2009). The median price for "normal" sales is $172,500 (up 4.55 percent from last month's $165,000). The median price for bank-owned sales is $79,900 (down 2.56 percent from last month's $82,000) and the median price for distressed sales is $152,000 (up 8.57 percent from last month's $140,000).

In addition to an increase in completed sales in Orlando, there is more than double the number of homes currently awaiting closings (7,230) than in June of last year (3,329). Of those pending sales 3,686 are homes that came under contract in the month of June alone, yet again marking the most in a single month this year.

The area's average interest rate increased in June to 5.48 percent, which along with this rise in median price has contributed to a drop in the area's affordability. Orlando's affordability index, however, continues to hover near the 200.00 percent mark, 183.66 percent to be exact. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home.

Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $52,421 can qualify to purchase one of 9,318 homes in Orange and Seminole counties currently listed in the local multiple listing service for $238,757 or less.

First-time homebuyer affordability in June decreased to 130.60 percent. First-time buyers who earn the reported median income of $35,646 can qualify to purchase one of 5,462 homes in Orange and Seminole counties currently listed in the local multiple listing service for $144,316 or less.

Homes of all types spent an average of 104 days on the market before being sold in June 2009, and the average home sold for 93.77 percent of its listing price. In June 2008 those numbers were 121 and 93.41 percent, respectively.

The most single-family homes sold in any one price category (184) fell into the $200,000 - $250,000 range. On the far ends of the scale 10 homes were sold for $1 million or more while 118 homes -- the most in a single month this year -- sold for less than $50,000.

There are currently 17,831 homes available for purchase through the MLS. Inventory decreased by 1,292 homes from May 2009, which means that 1,292 more homes left the market than entered the market. Compared to last year, the June 2009 inventory level is 27.44 percent lower than it was in June 2008 (24,575).

The inventory level's 8.37-month supply is the lowest since July 2006. Increased sales activity has led inventory months-of-supply to decline by 61.14 percent since January 2009, when months of supply clocked in at 21.54.

There are 12,862 single-family homes currently listed in the MLS, a number that is 5,436 (29.71 percent) less than this time last year. As usual, most homes (1,558) are listed in the $200,000 - $250,000 price range. Condos currently make up 3,383 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,586. Most condos by far (641) are priced below $50,000; the majority of duplexes/town homes/villas (246) are listed in the $120,000 - $140,000 price category.
Condos and Town Homes/Duplexes/Villas

The sales of condos in the Orlando area increased by 189.71 percent in June when compared to June of last year, and increased by 4.23 percent when compared to last month. A total of 394 condos changed hands in June of this year compared to 136 in June 2008. To date 1,781 condos have sold this year, a 157.74 percent increase over last year's 691 by this time.

The most (176) condos in a single price category that changed hands were in the $1 - $50,000 price range, almost three times the number (61) that were sold in the next most populated category ($50,000 - $60,000). Only 11 condos sold for more than $250,000 in June, which is actually the second highest tally this year (a high of 17 condos sold for more than $250,000 back April).

Orlando homebuyers purchased 174 duplexes, town homes, and villas in June 2009, which is a 32.82 percent increase from June 2008 when 131 of these alternative housing types were purchased; year-to-date sales for these home types are up 36.95 percent. The majority (30) of duplexes, town homes, and villas sold in June 2009 fell into the $100,000 - $120,000 price category.
MSA Numbers

Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in June were up by 56.90 percent when compared to June of last year. Throughout the entire MSA, 2,774 homes were sold in June 2009 compared with 1,768 in June 2008. To date, MSA sales are up by 53.81 percent over this time last year, with sales at 12,863 compared to 2008's 8,363.

Each county's year-to-date sales comparisons are as follows:

Lake: 25.07 percent above 2008 (1,831 homes sold to date in 2009 compared to 1,464 in 2008);
Orange: 65.57 percent above 2008 (6,762 homes sold to date in 2009 compared to 4,084 in 2008);
Osceola: 110.66 percent above 2008 (2,450 homes sold to date in 2009 compared to 1,163 in 2008); 
Seminole: 10.17 percent above 2008 (1,820 sold to date in 2009 compared to 1,652 in 2008).

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