BRITISH HOMES GROUP
April 9, 2010
From today’s Orlando Sentinel – Mary Shanklin
Home prices edge up in March
Sales of existing homes in Orlando increased and prices rose about 5 percent from February to March, signaling the approaching April 30 deadline for a federal homebuyer tax credit.
Anxious for a recovery in the recessed market, the association noted that closings for March had increased more than 40 percent from a year ago. And it reported that its members filed 4,662 new sales contracts during March, bringing the area’s pending sales more than 10,000.
“The record number of pending sales confirms the strong increase in demand as buyers try to take advantage of the tax credit before the April 30 deadline,” said the association’s Chairman of the Board, Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “If homebuyers want this tax credit, they must act now.”
Buyers must have a contract signed by April 30 to qualify for the credit, which is worth as much as $8,000. The sale must be closed by June 30.
Prices, meanwhile, had improved from February to March but were still down 19 percent from a year earlier. The median price for an existing home in the Orlando area last month was $110,000, with “normal” sales prices increasing 2 percent to $166,500 and short sales prices rising 10 percent to $105,000.
Homes of all types spent an average of 92 days on the market before coming under contract in March 2010; a year early they were on the market for an average of 11 days longer. The average home sales prices was 94.36 percent of its list price, up from 92.74 percent a year earlier.
And, in another indication of how the market has changed during the last year, the current pace of sales translates into 7 months of supply; a year earlier the region had a 12-month supply.
Long road back home
Forecast: Housing prices in Orlando, Miami won’t return to 2006 peak until after 2039.
Orlando’s single-family home prices are unlikely to return to their 2006 peak for the next three decades, according to a newly released survey of more than 370 U.S. cities.
Prices have fallen 60 percent during the past four years in Metro Orlando, one of seven markets not expected to recover until some time after 2039, according to the analysis of Case-Shiller historical home-price trends released Thursday by Fiserv Inc.
The study went on to predict that Central Florida housing prices would fully reach bottom during the second quarter of 2011.
“The difficulty with Orlando and the other markets that got caught up in the housing bubble is that prices fell by more than 50 percent,” said David Stiff, chief economist with Fiserv. “Even if you have average appreciation of 3 percent annually, … it takes 30 years to get back to the peak.”
Another challenge facing Orlando is an oversupply of housing built during the boom, Stiff added. Federal home-buyer tax credits have been attracting buyers in recent months, but that demand may subside once the credits disappear this spring, he said.
Investors are rushing in and purchasing properties in Orlando and other markets, but that kind of activity isn’t likely to further “destabilize” the market – as it did during the housing run-up – because speculators now are largely cash buyers with mortgage payments that reflect local rental rates. Four or five years ago, investors used easy financing and then could not get charge enough in rents to pay off their mortgages.
Sean Snaith, who directs the University of Central Florida’s Institute for Economic Competitiveness, said the Orlando area’s recovery from the housing slump is likely to take some time. But he said the national Fiserv survey may not be taking into account employment forecasts that show relatively strong job creation for the region. The university, he added, foresees Orlando’s job market growing faster than that of other cities in the state.
“A lot can happen in three decades. This is one of the fastest-growing parts of the state. It will still have high growth again,” Snaith said. “We’re in a deep hole – we’re not buried alive.”
Bradley Hunter, a Florida economist for Metrostudy, a real estate research firm, said it’s “fanciful” to even poise the question of when prices will return to the peak of the buying frenzy. Speculating investors drove prices to levels that were inflated far in excess of the rental market and of what buyers could afford based on their incomes.
“I do agree it’s going to be a long time,” Hunter said of the recovery. “Some areas will begin to improve this year and other areas, next year. But getting back to peak levels? That’s asking for a lot, because those were unsustainable and unrealistic.”
Within Florida, the Fiserv/Case Shiller indexes showed Miami, Naples, Punta Gorda and Orlando all taking until at least 2039 to rebound to their peak prices. Other parts of the state would recover sooner: Gainesville, 2017; Jacksonville, 2020; Polk County, 2026; and Brevard and Volusia counties, 2027. The data economists analyzed originated from the Federal Housing Finance Agency and Moody’s Economy.com.
“Nationally, Fiserv Case-Shiller data point to a further, 7 percent decline in home prices through the end of this year, with a prolonged recovery beginning early in 2011,” Stiff said. “In many markets, the emphasis is on the word ‘prolonged.’
Mary Shanklin can be reached at mshanklin@orlandosentinel.com or 407-420-5538.
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