Prediction- prices of existing homes in Metro Orlando would fall 19 percent during 2011 – the biggest drop in the country. Prediction-the median home price would be $110,500 by the end of 2011. Good news, Orlando never saw these predictions come true. In reaction to these dire predictions, lenders gradually released distressed properties onto the market , and Floridains released an unusually small inventory of homes listed for sale. One of the worst predictions of 2011 was the fear of the “shadow inventory” of foreclosed properties. This blow is being softened by the low inventory of traditional listings currently on the market. The improvment of the overall health of the market in 2012 is that banks have become better at processing short sales, which is the predominant way of selling a homes that is “underwater” or, worth less than their outstanding mortgages. In the beginning, only about 9 percent of pending short sales closed during a month’s time, but that has increased to approximately 10.5 percent.
The public becoming more aware of “the short sale process” coupled with the banks ability to close more quickly has led to a more possitive short sale experience for owner and buyer alike. If you are considering cashing in on the great prices and low interest rates, buying a short sale may be the way to go. Traditions Realty has certified short sale specialist on staff to answer your questions and walk you through the process. Call today for short sale listings in your area. Read more below.
Fewer listings may soften blow of new REOs
NEW YORK – Jan. 9, 2012 – Forecasting the real estate market can be a perilous task.
Case in point: In May, financial services provider Fiserv Inc. projected that prices of existing homes in Metro Orlando would fall 19 percent during 2011 – the biggest drop in the country. Analysts predicted the median home price would be $110,500 by the end of the year.
But as of November, the median was virtually unchanged from a year earlier at $130,000, according to Florida Realtors.
Two factors have mitigated the earlier projections of continued price declines in residential real estate: the gradual release of distressed properties onto the market by banks, and an unusually small inventory of homes listed for sale.
If those factors continue through 2012, they could further soften the potential effect on the market of the region’s “shadow inventory” of foreclosed and repossessed houses.
“The banks really have a lot to do with where the year ends up,” said Re/Max broker David Welch. “Looking back over the last few months, they haven’t been flooding us with REOs (“real estate owned,” or repossessed, properties). It’s more of a garden hose than a wave. … We still have a lot more to go through before we are done with the foreclosure situation in Orlando, but most of them are getting absorbed.”
Buffering the effect of those foreclosed properties as they hit the market is the manageable supply of houses listed for sale. The Orlando Regional Realtor Association started 2011 with about 15,000 listings in its core market – mainly Orange and Seminole counties – but ended November with about 10,000.
Orlando’s modern-day version of a traditional neighborhood, Baldwin Park, is a good example of this shrinking inventory: As of late December, it had 28 homes listed for sale, when a community of its size would ordinarily be expected to have about 200, Welch said.
Another factor that could continue improving the overall health of the market into the coming year is that banks have become more adept at processing short sales, which have become the predominant way of selling homes that are “underwater” – that is, worth less than their outstanding loans. In the recent past, only about 9 percent of pending short sales would close during a given month, but that has now edged up to 10.5 percent, Welch said.
Banks are also now more motivated to get through the short-sale process, Welch added: One bank recently mentioned in a short-sale approval letter that it would increase the real estate commission if a particular sale closed within 30 days.
Such mitigating factors could help stabilize prices this year, though they are not likely to boost them much in areas where more than half of all mortgaged homes are underwater, according to the real estate research firm Corelogic.
John Tuccillo, chief economist for Florida Realtors, expects a gradual increase in existing-home prices for Orlando and the rest of the state through 2012.
“For the state of Florida, I think you’ll see prices begin to move upward, but not by very much,” he said recently.
The large amount of distressed housing has established a price base that, so far, has remained stable; as a result, prices will increase only marginally. In the next year, Tuccillo’s trade group plans to release a new price index for existing homes that would cover all properties within the state, and the association hopes to track same-property sales, both residential and commercial, over a 17-year period.
In the new-home market, the next year is expected to see a continuation of the gradual increases in housing starts that the metro area recorded in 2011. Prime locations, those considered A- or B-level sites, have been holding their prices and even raising them slightly, said Anthony Crocco, director of the research firm Metrostudy Inc.’s North and Central Florida divisions.
“I don’t foresee a very strong growth forecast,” said Crocco, who doesn’t expect the number of starts this year to increase more than 10 percent. “I see it being a stable year from the standpoint of it being an election year.”
While town homes and condominiums have had it the worst of all residential sectors, multifamily products make sense right now in the more urban parts of Orange and Seminole counties, rather than in some of the suburban locations where they were built in the past.
The active-adult market has been doing well and should continue to do so well into the year, Crocco said. He cited The Villages, which straddles parts of Lake, Sumter and Marion counties, and has been adding 200 new homes a month. Other locales where home construction will likely do well this year include the Lake Nona area in southeast Orlando, downtown Orlando, and areas near the University of Central Florida in east Orange County.
“Because of what’s happening with the resale market, the more we look at it you can see that there’s not going to be a slowdown in ‘12 and maybe ‘13 in the REO process, and that’s going to continue to drag the market down,” Crocco said. “But it’s a necessary step for recovery.”
One trend emerging in the region – the development and redevelopment of apartment complexes – is likely to lead in the coming year to an oversupply, Crocco said.
“There probably will be some overbuilding because that’s the only thing that’s been able to get financed, and the occupancy numbers look good,” he said. “The market needs to be aware of the amount of multifamily coming in.”
Copyright © 2012 The Orlando Sentinel (Orlando, Fla.), Mary Shanklin, The Orlando Sentinel, Fla. Distributed by MCT Information Services.