I am going to keep this short, because I still have shopping to do. Unlike a lot of people who get frustrated by last minute shopping, I get motivated. Maybe that is why I have been blessed to be successful in an industry where so many people have difficulty. In real estate, your back is always against the wall. You develop systems and strategies that generally produce a certain level of results, but in the end the market has the last word. In a year in which prices dropped, foreclosures dominated and short sales expanded many of the strategies and systems of the past have been tested. In the end the basics always have a degree of success, but we still rely on lending to be available and title agents to have the staff to get their valuable work done. While those two industries have had their share of cutbacks, restructuring and new regulatory requirements the partners I have worked with for years have remained steady.
I would like to send out holiday wishes to the Coleman's and Anita over at First Service Title in Winter Park for their steady support in the transition year. They have not only been ready to close when I needed them, but have expanded their services to include a new short sale department. I feel confident that we will finally start making a dent in this area of our market place. This year has been dominated by the buyers, specifically the first time home buyers. This year I have leaned heavily on Jeffrey Sachs at FBC Mortgage to help with several of my buyers. We have gotten through tighter credit and HVCC, and pushed through the delays early in the year back to closing on time. Merry Christmas Jeffrey and everybody at FBC Mortgage. They are also our new partners at Remax 200 Realty. I would also like to wish a very happy holidays to the folks at HGTV's House Hunters and Lisa and Doug. Thank you for the chance to be on television this year.
Of course, Merry Christmas to all my family, friends and customers that supported me, listened to me talk about the market and trusted me to help with their sale or purchase this year. 2009 was a great improvement over 2008, and I am looking for 2010 to be even better. Well, the mall opens in 20 minutes, and I have shopping to do. Merry Christmas, and may the spirit of the season be with you all the time. By the way, it is not only Jesus' birthday, it's also my wife Carol's birthday. So, Happy Birthday sweetie.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters
Well, 2009 is just about behind us and we really saw a significant transition and stabilization in our marketplace here in Orlando. Prices fell significantly through the first quarter of the year until sales picked up to a pace great enough to absorb excess inventory. At the beginning of 2009 we had about a 24 month supply of homes available for sale. As we wrap things up that number is hovering just under an 8 month supply. Two things impacted this number; the inventory dropped from 24,000 to 16,202 as of today, and the monthly sales pace rocketed from about 1,000 to 2,000 per month since June. Right now we are showing 1,575 closed sales posted for December, but I think we may still see around the 2,000 mark. It is hard to tell, since it can be difficult to get sales closed during this last week. I believe we have stabilized since our median price has hovered around $130,000 since April with fluctuations between $125,000 and $135,000. It dipped a little more in November as first time buyers pushed to close to make sure they qualified for the tax credit. So far this month we are right at $125,000 median sales price.
Active listings were made up of 5,978 or 36.9% short sales and 1,589 or 9.8% bank owned properties. Of the 8,307 pending sales 5,455 are short sales and 1,557 are bank owned. Almost 41.6% of closed sales were bank owned properties with 655 closed so far, and another 23.9% are short sales with 377 closed. The 377 closed short sales continues to indicate the slow pace at which short sales are closing, representing less than 7% of the total pending short sales. We continue to see a huge difference in prices between REO, short sales and "normal" sales with their respective median sales prices of $79,500, $135,000 and $181,250.
Baldwin Park near downtown Orlando has seen somewhat better results than Orlando overall. Sales in Baldwin Park are up 59.8% over last year's 117 with 187 closed so far. Prices are only down 11.9% with a median sales price of $348,000 compared with last year's $395,000. Short sales and REO's make up a smaller share of the Baldwin Park sales with 69.5% of the closed sales this year being "normal" sales. There are currently 88 active listings in the neighborhood, but only 6 are bank owned and 25 are short sales, accounting for just over 35% of the inventory combined. There is a big difference in prices among the different types of sales here as well with bank owned properties posting a median sales price of $279,975; short sales with $299,000 and "normal" sales with $384,000.
I think a lot of people fear the next wave of foreclosures like it is a tsunami that is going to come in and wipe out the rest of the value in the real estate market. I look at foreclosures coming on the market as more of a steady stream. The foreclosure process occurs as a series of events, and at the end of that process the property is placed on the market for sale. When they first started coming on the market, it was like turning on a hose. First, it came in squirts and air pockets. Quickly, it was flowing freely at a full continuous flow. To continue this analogy of a stream of water through a hose, I'll ask you to remember when you were a kid drinking from the hose. If you don't remember doing that ask your parents.
When you first turn the hose on, a lot of times the water that first came out was warm. You had to let the hose run for a little bit to get to the cold water. This is also a lot like our foreclosures here in Orlando. The first wave, if you will, or water out of the hose was made up of homes that flippers walked away from. Many of these were new or nearly new homes in great condition. Also like the first water out of the hose these foreclosures leave a bad taste in your mouth. These were homes going back to the bank because someone was trying to make a quick buck on them. This kind of activity fueled the boom, but created the bust when the inventory of homes grew much faster than it could be absorbed. The bigger the boom, the longer the hose sitting out in the sun full of warm water.
Once the warm water gets through the hose, the cold water from the well starts to come through. There are often some more squirts and air pockets, but then it is back to full flow. This water will flow until someone cuts it off through government intervention or the well runs dry. At this point the source of the water is related to the depth of our unemployment. We are looking at a pretty deep well right now with unemployment figures in the double digits. Recently, we have had more positive news regarding employment. This helps at both ends of the hose. As employment improves the well will start to run dry, and the better able the market is to absorb the foreclosures coming out the other end. Efforts to aid short sales and loan modifications also help to restrict the flow, but so far they have not been very noticeable. Of course, some of the banks have kinked the hose during the holidays, but it when they release it we will be back to full flow almost immediately. Hopefully, the well of foreclosures here in Florida is like our actual water table. It is very close to the surface, but does not run very deep. I am looking for much better employment numbers by the end of the first quarter, and the beginning of the end of drinking out of the hose.
VA loans have never been huge here in Orlando. I believe historically they have made up about 2% of the loans originated here locally. When conventional loans were available for 100% of the purhcase price or everybody's favorite 80/20 loans were easily obtainable VA and FHA almost disappeared. Now FHA has been making their guidelines more stringent (which I completely disagree with), and VA is practically the only 100% loan available. If the home is in a rural location there is an option from USDA that provides 100% financing. By the way Avalon Park qualifies for USDA.
Having said that, if you are a veteran and qualify for VA you may already have relationship with USAA. Edith Navarro with USAA just worked on a loan for a first time home buyer that I have been working with. He just closed today (eleven yes 11 days early). The seller was willing to pick up the majority of his closing costs so he paid a point and closed with a 4.5% interest rate. That is a fixed rate for 30 years. Edith really did a great job for our mutual customer, and I have to say she did a great job of keeping me in the loop as far as the loan process is concerned. If you are a veteran and using USAA, I recommend asking for Edith. I told her manager Bev Morrison that I was going to be mentioning this in blog, so I hope she is reading this. Merry Christmas to Edith and Bev and thank you for making this a smooth closing for everyone involved.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV's House Hunters
Baldwin Park Festival of Lights and Christmas Parade 2009
Featuring the State Champion Sound of the Wildcats, Winter Park High School Marching Band
This is just a short exerpt of the fun you missed last night if you did not make it out to this terrific annual event. Your neighbors were all there.
The festivities kickoff around 5:00pm today. I would arrive early, and check out all the local merchants along New Broad Street and throughout the village center. There will be lots of activities, and the parade kicks off at 6:00pm. You don't want to miss the newly crowned State Champion "Sound of the Wildcats", Winter Park High School Marching Band. This year's event should be the best yet as the tradition continues to build. Check out some of my YouTube videos of Baldwin Park.
This year's parade looks to improve on last year, with a longer route and more streets closed for enjoying the festivities. Come on down to Baldwin Park early, do some shopping and enjoy the restaurants in the village center. Hang out by Lake Baldwin on one of the docks or up by the fountain. There will be plenty to do and opportunities to sample the local flavor. This is the third year of the parade, and looks to be even better than last year's big success. The first year was mostly residents, but last year was packed. Tomorrow, you will be able to enjoy the Christmas parade in shorts and t-shirts unlike our neighbors to the North.
Listen for the State Champion, "Sound of the Wildcats" Winter Park High School Marching Band.
The official numbers will come out tomorrow, but here are my estimates of how they will look. Inventory is actually up just slightly to 16,174. Since sales and the number of new contracts continue to do very well, it looks like new listings have gone up a bit. I think REO properties account for some of this since they have grown to 1,444 or almost 9% of the total. Short sales continue to account for a significant piece of the active listings and pending sales with 5,918 or 36.6% of the current inventory. The pending sales have actually gone down from their peak of around 9,000 to 8,446 with 1,603 REO's and 5,471 or 64.8% being in a short sale status. The sales completed in November were a very strong 2,250 with a median sales price of $123,000 overall. The median price varies widely between "normal", REO and short sales. Normal sales accounted for 822 or 36.5% or the closed sales with median sales price of $173,960. REO properties made up 963 or 42.8% of the sales in November with a median sales price of $83,500. Closed sales are the one category of listings that short sales lag with only 466 or 20.7% of the total closed and a median sales price of $122,000. Still only about 8.5% of the pending short sales are closing in any given month.
The Treasury Department has offered new guidelines for short sales, but similar guidelines and programs have been offered for loan modifications without much success. To be successful the banks need a bigger incentive to negotiate these deals. The Fed owns a lot of these non-producing assets, and is in a position to incentivize the loan servicers to approve the short sales. Recently, Wachovia approved a short sale in four days on a new contract I brought after they lost their first buyer. They had already been through the approval process once, and did not start all over again. There is an idea that makes sense. The net result is that we closed the transaction 20 days from the day the contract was executed. The recent TARP windfall of a couple of hundred billion dollars could be used to help fund some serious incentives for the servicers to make short sale approvals a priority. It gets houses off the market, and families in otherwise empty homes. This would also open up the short sale market to a lot of buyers that have been avoiding them because they can take so long and are somewhat unlikely to close. Getting the short sales closed that are pending right now would be a big boost to the local and state economy from a tax revenue perspective not to mention the title, mortgage and real estate professionals working on them.
The Orlando Sentinel reports that the Sunrail bill passed the Senate today, and is on it's way to Governor Crist's office for his signature. I cannot say that this is or is not the best deal, but I do believe that this is critical to continue to support the growth of Central Florida. The recession has stunted the decades old growth pattern that has been going on here in the Orlando area, but growth will return to our area for the same reasons that fueled the prior growth. California has boomed and busted many times over, but it will boom again. Ultimately, people are drawn to the sea and the weather. I am a native of Central Florida, and I could not imagine living with snow and ice for months on end. I remember the line from the movie "if you build it they will come." In Orlando if we build it they will come, if we don't they will still come. Sunrail will help alleviate a lane of traffic on I-4.
Orlando is consistently ranked as one of the most virtually connected cities in the country, and with Sunrail we will become more physically connected. The presentations that I have seen on this project suggest that very conservative estimates have been made regarding ridership, and they still suggest favorable results. Similar rail systems in other communities actually exceeded ridership estimates. The other positive impact is the economic growth that areas along similar train routes have experienced. Could we have gotten a better deal? Perhaps, but the numbers worked under the current scenario with conservative ridership estimates. Hopefully, we exceed the estimates for ridership, costs will come in lower than original estimates and the trail will arrive on time. Only time will tell for sure, but I believe commuter rail is an idea whose time has come for Central Florida.
Orlando Real Estate, David Welch Real Estate Optimist, As Seen in HGTV's House Hunters
Top spot on Google - the holy grail of SEO. Check out google this morning quick while I hold on to the top spot for Orlando Real Estate. I have been ranking between number 10 and number 12 for a few weeks now, but yesterday noticed I had made a leap to number one. I am not an SEO "expert", but work very hard to post relevant blogs on a very regular basis. Since beginning to to blog almost two years ago, I have been successful at moving my website up from page 10 and beyond to page one and page two results most of the time. My blog has been in the number one spot and usually the number two spot for several months now. So, if you get a chance today check it out. Just go to Google and search "Orlando real estate". Hopefully, I will still be in the top spot. I would love it if you would click and maybe send me a text right from my website to let me know.
Your economics lesson for the day is a simple straightforward relationship - jobs equals rooftops. The employment report came out this morning and the expectation was that 130,000 jobs would be reported lost in November, but the actual number was only 11,000 the better news was that the unemployment rate actually went down a couple of ticks to 10%. It may not be time to start celebrating, but it is close. I posted in my blog a few weeks ago that two different people I know that work for two different boat manufacturers in Orlando said that people were being called back to work. In my opinion pleasure boats are probably one of the more discretionary purchases anyone makes. When these types of jobs start coming back, it is just a matter of time before we start seeing some very positive employment numbers.
I think an even more visible effect of the improvement in the job situation will be automobile purchases. Car sales have been in the dumps for quite a while now, and I suspect there are a lot of people just waiting for their employment picture to improve to make a new car purchase. When car sales pick up, look out for improvement in several other areas. Just like the downward spiral we saw as the market dived into the recession we will see an upward trend that feeds more positive results. As the employment situation improves, people will begin to purchase homes at a more brisk pace absorbing the current inventory. As the inventory begins to go down, prices will begin to rise. At some point, new home builders will begin to see increased sales. They will need to step up production leading to improvements in construction employment. I think we will be seeing some real improvements by the end of the first quarter of 2010.
Home Buyer Tax Credit Extended and Expanded
The first time home buyer tax credit has been extended and expanded to include repeat buyers. It was extended through June 30, 2010 as long as you have a binding contract in place by April 30, 2010. This is still a true tax credit that does NOT have to be re-paid. Below is a countdown clock to keep track of how much time you have left to take advantage of the tax credit. Keep in mind, you must have a binding contract in place no later than April 30, 2010.
Here are a few things to keep in mind for first time home buyers: first, if you are married both parties have to qualify as first time home buyers; a first time buyer is someone who has not owned a home for at least the last three years; there are income restrictions, so speak with your accountant or tax preparer about how this affects you; the tax credit is 10% of the purchase price of the home up to $8,000. (If you purchase a $50,000 condo the maximum credit would be $5,000).
If you are a repeat buyer, the same income restrictions apply, and the tax credit only goes up to $6,500. To qualify as a repeat buyer you must have owned a home for five consecutive years out of the last eight. By the way, the maximum purchase price for a home to qualify is $800,000.
David Welch , Orlando Real Estate Blog , As Seen On HGTV's House Hunters
I looked back at my predictions for 2009 last December, and I have to say with the exception of price we have exceeded every expectation I had. I was hoping to see sales in the 1,600 per month range through the second half of the year. We have actually been seeing sales above the 2,000 mark since June. I was also hoping to see our inventory level drop below 22,000. The faster sales, slower foreclosure rate and the MLS rule requiring short sales to be pended has pushed our inventory down to just over 16,000. Foreclosures and short sales are continuing to pressure prices lower with a median sales price in the $120's in November. Our "normal" sales, however, are typically around my forecast $180,000 mark. Later this month I'll take a shot at forecasting 2010.
Right now, November sales are not disappointing at all. I posted yesterday on Twitter that our closed sales stood at 1,788 with a median sales price of $123,250. Jeffrey Sachs with FBC Mortgage texted me when he saw this pop up on Facebook. Jeffrey wanted to let me know that his company had 43 closing scheduled for yesterday to add to that total. FBC does close a fair amount of loans in our market, but there are a number of other lenders in and around Orlando that also had home purchase loans closing yesterday. Jeffrey and I have been working together for ten years, and I highly recommend Jeffrey Sachs and FBC Mortgage for your financing needs. I closed two transactions last month with Jeffrey, and both were ready ahead of schedule. Both buyers were pleased not only with the loans that they received, but also the service that Jeffrey and his team provides. Contact Jeffrey for your loan, then contact me for your home.
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