Orlando Market Analysis

For those of you waiting for ‘bottom’ in Orlando – ask yourself this question: how will you know when that day comes? Are you waiting for the media to tell you it’s ok to get back in the water? Or are you studying the market yourself each day, watching the numbers like a data-crazed economist; a coiled, human spring ready to pounce at a moment’s notice - proof of funds in hand?

My guess is that most folk will fall into the first category and that by the time the evidence of Orlando’s recovery is available to the masses, it will be too late to capitalize… interest rates will be on the rise again, as will house prices.

I’m not going to stick my neck out and tell you that bottom is here… your bottom is personal after all – but I will present some numbers – and let you decide for yourself. (Click on the table below for the full report.)


Perhaps the most important numbers to pay attention to are inventory and sales. We’re looking for signs that inventory is starting to shrink again instead of growing (supply), as well as signs that sales are increasing (demand).

According to the January report from the Orlando Regional Realtor Association, Orlando home sales increased 17.7 % over the same period a year ago, but the median price fell 33 %.

Last month’s home sales in Lake, Orange, Osceola and Seminole counties rose 37 % from January 2008.

The Association also reported an increase of 123.6 % in pending sales, which is considered a reliable predicator of future sales activity, with 3,830 homes under contract last month. That compares with just 1,713 pending sales in January 2008.

Inventory in the Orlando area totaled 22,613 homes last month, a 12 % drop from the 25,724 homes listed in the MLS in January 2008.

Condo resales in the Orlando area were up 44.6 %. Orlando homebuyers also bought 84 duplexes, town homes, or villas last month, 55.6 % up from January 2008’s 54 sales.

Florida foreclosures were down nearly 22 % in January, to 10,007 from 12,786 in December. That mirrors a nationwide trend, according to the latest U.S. Foreclosure Index report from Foreclosures.com

Additional evidence that a trend change may be under way is a 12 % drop in pre-foreclosures, to 166,860 in January from 190,467 in December.

The low prices mean that Orlando’s affordability index rose to a record high 165 %. An affordability index of more than 100 % means buyers earning the state-reported median income of $52,136 make more than required to qualify for a median-priced home. That much is official – homes are affordable again. And if you want to see some really interesting numbers, see the following post – because interest rates are at historical lows – assuming you can get a mortgage at all of course, but that’s another issue.

The overall trend has been in this direction for the last couple of months. Add to this, Florida is about to receive it’s bailout dollars. Are these signs of a reversal – or just a blip in a continuing slide?

Let’s look at what the average person is saying according to our (very unscientific straw poll) which you’ll find in the sidebar to the right which asks “Has Orlando reached bottom?”

Vote first and you’ll then see the results – or just click on the ‘view results’ link. Scientific or not, the numbers are somewhat telling. 61% say bottom for Orland is 12-36 months away.

All of which brings me back to my first sentence. How will you know when the big day comes? And given the above data, (and fact that reliable data is usually a couple of months old), how can you know that we haven’t crossed over already? If your answer is something like: “I don’t, but I’m not prepared to take the risk,” then understand one thing. Real estate investment is all about risk. No risk typically equalls no return.

Bailout Dollars Hit Florida

The U.S. Department of Housing and Urban Development (HUD) has backed releasing $91 million for Florida municipalities to deal with the foreclosure crisis.

The U.S. Housing and Economic Recovery Act of 2008 awarded the money to the state Department of Community Affairs to be distributed to 26 local municipalities to stabilize neighborhoods. Grantees have 18 months to obligate these funds and four years to spend them.

The Housing and Economic Recovery Act allocated a total of $541 million to Florida for cities or counties to purchase and redevelop abandoned or foreclosed properties. Of that, $450 million was given directly to 48 local governments in Florida.

If you’re lost – don’t speed up!

Another Super Bowl has come and gone.  Congrats to the Steelers for winning, and congrats to the Cardinals for putting on such a terrific back-and-forth contest.  Arguably one of the best Super Bowls I’ve seen in recent history.

And at this year’s Super Bowl party, I heard plenty of people talking about the economy and the hous­ing markets.  Everyone, it seems, knows the correct way for our government to bail us out (and isn’t quiet about it) and wonders why the powers that be ‘just don’t get it’.

Guys and gals, the people who spend every waking second of the day studying this stuff don’t have a solid clue as to what to do about it.  I’m not downplaying the economic ideals of the proletariat, but I am asking that all of you respect the interconnected complexity of this crisis we face.  Every potential method of recovery comes with it’s own unique costs and benefits and will be riddled with various political agendas.

Add on top of that a sense of urgency that must be balanced with ample time to do due diligence.  The upcoming stimulus package is a prime example of just that: we need to get it implemented as fast as possible to prevent more jobs from disappearing and more businesses from failing.  However, if we don’t take the needed time to go through the program line by line, billions of dollars will be lost due to inefficiency, special interest groups, and general corruption.

Damned if you do, damned if you don’t. Read More

Foreclosures are for cash buyers!

I hate to beat a dead horse, but… each day we get folk calling in on Orlando condo conversions – foreclosed –  that cost under $50K – and they want to finance them. When we tell them it will be very difficult, we get the “Oh that’s not a problem - I have a great credit score and good job” line.

But it’s not about good credit scores any more, or even how much you put down in many cases. It’s about whether the condo is FHA approved or Fannie Mae approved; whether it’s has less than 50% owner occupancy, or whether the association is more than 30% delinquent in HOA fees, or whether the condo in question has been blacklisted because of it’s zip code, or any combination of a myriad of factors that seem to change each week.

“But seriously, I have a great credit score!” they insist.

Turn on the TV!” I holler. At which point they usually hang up in disgust.

Ouch.

Things sure ain’t what they used to be.

So let’s get it out in the open. When it comes to bank owned Orlando condos, especially condo conversions that are going for about 35c on the dollar, here’s the scoop:

  • You need to pay CASH in most cases to be in the game – because no one’s going to give you a condo loan until the credit crunch eases – especially if you’re a foreign national – and especially on condo hotels.
  • You need to put down a decent deposit to show the bank that you’re serious.
  • You need to submit evidence of that cash (proof of funds) with your contract – because without it, the bank won’t even look at your offer.
  • Understand that at around 35c on the dollar, the prices your seeing are not usually up for negotiation. These are not short sales. If you want it, offer the full price, or a little more - because the best deals are getting multiple offers and the bank will pick the best of the bunch, i.e. a full price, cash offer with a decent deposit and a 30 day closing.

Think I’m kidding? Try one. With the number of foreclosures flooding the market, we often see 4-6 offers from interested parties – and the banks will only play ball with serious buyers who know what they’re doing.

The Orlando foreclosure market isn’t a place for people who are just looking. It has become both competetive and fast paced. If you don’t know what you want, or you can’t perform, you’ll get short thrift from the banks and become frustrated quickly.

If all of this had made sense to you, and you’d like help with securing one of these deals – get in touch and we’ll lead you through the maze. You could find yourself with equity the day you close!

Fore more info see our dedicated Orlando Foreclosures page.

Orlando First Time Buying Spree

With mortgages so hard to come by, investors who can’t pay “all-cash” are having a hard time scooping up some of today’s “fire sale” deals – which can be incredibly frustrating. It’s like being (a diabetic) kid in a candy store. (I’m diabetic so I know how that feels.)

However since first time home buyers are not subject to the same degree of scrutiny, they don’t generally have this trouble, provided they’re a good, old-fashioned loan prospect. (Imagine that.)

There’s tons of choice, low interest rates and the best prices I’ve ever seen.  You even get an $8,000 tax credit you don’t ever have to repay! A perfect storm if ever there was one.

“If you’re a renter with solid job and a good credit score and you’re not in the market for your own home today, then you belong in a lunatic asylem,” said Marcus Burke, founder and broker for Condo Metropolis. “It’s that simple. I’m seeing condos out there right now that could be paid off in under 5 years with the equivalent of their rent payments. The truth is, if you’re not buying now, then you’ll never be a buyer.”

Hard to argue with that.

The Obama Effect

It’s official: Barack Obama is the Commander-in-Chief, despite some impromptu rewording of the presidential oath.  He even still has that new president smell.  In the midst of two wars, rapidly increas­ing unemployment (Caterpillar, ING, Microsoft, Home Depot, Sprint, Pfizer, and US Airways all cut thousands of jobs today), and a sharp and growing international recession, Americans are hopefully hoping for all that hope that Obama talked about during his campaign.

I can’t personally comment on the hope aspect of things, but I can guarantee you that change is coming in a big way.

One of the first actions taken by our new president is to push through a stimulus package riddled with tax cuts for both families and businesses.  The price tag: $825 billion (so far).  By the time it actually gets implemented, it may top one trillion dollars.  That’s a one with twelve zeroes after it.  Yikes.

Needless to say, since raising taxes isn’t an option right now, Uncle Sam is gonna have to go borrow­ing.  That process is beginning this week and has no end in sight. Read More

A Sobering Empoyment Report From Washington

High-end fraud.

It’s the latest blow that has been dealt to the investment markets.  First, Bernie Madoff misappropri­ated $50 billion dollars of investors’ money in a gigantic pyramid scheme (and no, it was not called Amway).  Those affected include high-net worth individuals, hedge funds, pension funds, even charity funds.  This event undermined the already faltering confidence that John Q. Public has in our financial system.  Now, the owner of Satyam computers (one of India’s largest companies) has just come forth with information that 90+% of the cash on his company’s books was completely made up.

The reason these things are relevant is that these happenings allow the vicious cycle to continue.  Stuff like this causes investors to lose confidence so they stop investing or even pull money out of compa­nies and that causes the companies to start making layoffs to save money so then people get worried about losing their jobs and stop spending money which further decreases company revenues and wors­ens economic indicators which further decreases investor confidence and so on and so on and so on.

Run-on sentence.  I know.  Microsoft Word already alerted me.  But you get the point.

One piece of evidence we can look to is the mounting job losses in America.  December saw 524,000 jobs get cut, bringing our unemployment rate up to 7.2%, the highest we’ve seen in 16 years.  Presi­dent-Elect Obama is of the opinion that the government is the only power strong enough to re-direct us out of this downward spiral.  So, he is pushing Congress to pass a new stimulus package that could carry a price tag of about 800 billion dollars by some tallies. Read More

Orlando Real Estate: Multiple Offers Are Back!

Multiple Offers are soooo 2006… Well if you think so, take a deep breath because while it might seem ludicrous to make an offer on an Orlando condo – or any other home, if it means competing with another buyer, things have started to change. In the last few weeks, there has been a sharp rise in the number of multiple offers on Orlando real estate  – and all because foreclosures are finally making their way through the bank pipelines. Many banks, overwhelmed with homes are pricing their inventory to go fast. And when the price is below market, there will be multiple buyers – and multiple offers.

The first thing the bank will do is have you sign a ‘multiple offer’ disclosure form to acknowledge that the property is being bid on by several potential buyers. This doesn’t mean you have to pay more than the asking price (although it might help). And of course, the highest bidder is not always the winner. There are far fewer financially qualified buyers in the home-buying market today than there were two years ago due to credit tightening, more rigorous financial qualification requirements (particularly condos) and recent stock market losses. In some areas, as many as one-third of home sale transactions fail to close, often due to over-confident buyers’ inability to obtain financing. Cash or a solid financial backing is key to winning the bid.

To illustrate the demand for some of these deals, let me say that it’s been many, many months since I’ve bumped into another Orlando Realtor at a house showing, but the last two properties I’ve shown have had simultaneous visitors show up. Folks, I don’t know if this is “absolute bottom” – but it really doesn’t matter anymore. Some of these properties are going for a steal and if you don’t think you need to move fast on the best of these deals then you’re plain wrong. Because the best are usually under contract within 24 hours. So if you want a bargain but you don’t have ready cash or financing already in place, then you’re probably not behind the 8-ball.

For more info read our recent Orlando foreclosure blog or call us to find out where the best deals are. If you need assistance with lending, we can help. Just call 407-290-3408 or email Info@CondMetropolis.com

Welcome to 2009

The new year is upon us.  2009.  Wow.  This time last year gasoline was over $4.00 a gallon, all five of the major investment banks still existed, our country hadn’t ‘bailed out’ any major institutions, and Barack Obama and Hillary Clinton were still battling for the democratic nomination.  Seems like so long ago already.

2008 shook the very foundations of our country’s financial system.  Between a banking collapse, stock market upheaval, skyrocketing unemployment and a sharp decline in home values, we are arguably in the midst of the greatest economic crisis our country has experienced since the Great Depression. 

But with a new year comes new hope.  Most economists have agreed that 2009 will mark the turning point for the American housing market and, hopefully, the economy at large. 

And so, for the proud few surviving mortgage brokers, it’s go time.  Low rates and bottoming home prices are creating the perfect environment for a new housing boom.  The next generation of smart  homeowners have already begun searching for their future houses.

Consider me your new and improved friendly local mortgage broker. This year, I’m planning to:

  • provide minute-by-minute updates on everything affecting the mortgage market through my website, www.gregwhiteside.com.
  • be your local housing expert whether you own a home, are buying a home now, or will be buying a home in the future: I will help renters negotiate the best deals, I will compare renting versus owning options, I will counsel you to increase your credit rating, I will help you analyze real estate investment options, and I will help you best use mortgage debt to maximize your family’s cash-flow.
  • continue to build my relationship with each and every one of you through listening to your feedback, holding individual consultations, and hosting major social events.

www.GregWhiteside.com      Economic Updates – Market Commentary – Best Website In The Universe

Get your Orlando condo loan before Jan 15th!

What the left hand giveth, the right hand taketh away…

After the good news that Fannie Mae will no longer treat vacant and foreclosed condos as non-owner occupied comes news of ever more underwriting restrictions.

January 15, 2009 is the cutoff date when Fannie Mae toughens its policies on condo properties in the Sunshine state – potentially putting a damper on investors fishing for foreclosures or short sales.

In a memo sent to lenders before in December, Fannie Mae said that deteriorating market conditions in Florida have forced it to require higher minimum downpayments and more extensive underwriting reviews before funding loans.

To protect itself from future losses, Fannie said it will require loan applications for units in new and existing condo projects in Florida to go through an intensive review process by in-house underwriting teams to evaluate the building, its finances and local market conditions.

Previously Fannie Mae allowed lenders to conduct their own expedited reviews. The new in-house reviews not only will take longer but also cost lenders money – perhaps as high as $15,000 for units in large projects, $3,000 or $30 a unit for projects with 100 units or less.

Lenders presumably will look to borrowers to pay the extra costs – and the additional time required for reviews could complicate some transactions.

Fannie Mae said it also wants higher equity up front from non-occupant investors and second home condo purchasers – a minimum 15 percent from investors and 10 percent from second home buyers. Investors will not be permitted to obtain mortgages at any downpayment amount in newly-constructed and recently-converted projects on or after January 15th - unless a full Fannie Mae project review has been completed.

Bottom line for investors here: If you’re serious about buying this year and you need a mortgage, you better nail it now. Or be prepared for a headache. Unless you’re a cash buyer of course. There’s no point waiting for a better deal if there’s no way you can get a loan on it anyway.

Contact Condo Metropolis asap for help with both financing and the best condo deals in town!