Saw a good article from the Orlando Sentinel earlier in the week about Orlando’s Real Estate Market showing continued signs of improvement.
Orlando new-home sales, home construction are up
Business has picked up from last year for Orlando-area homebuilders, and at least some of their new customers are an unlikely group of buyers: former foreclosure victims.
It has been three years since foreclosures peaked in Orlando, and that is the time period foreclosed homeowners have to wait before they can try qualifying for a new mortgage backed by the US Federal Housing Administration.
“People who thought three years ago that they would never be able to buy a home again are now finding out that they can,” said Brad Hunter, chief economist for the real-estate-research firm Metrostudy Inc. “Buyers who did a short sale three years ago can once again qualify for an FHA loan.”
Sean Strickler, vice president of sales in North Florida for PulteGroup Inc., the nation’s largest homebuilder, said it’s difficult to quantify the number of homebuyers today who faced foreclosure just a few years ago, though some of them are beginning to get loans and purchase new homes.
Beyond those customers, new communities in Metro Orlando continue to draw buyers from South America and the United Kingdom, both large “feeder markets” for the region’s tourism industry. In addition, homebuyers from feeder states such as New York, New Jersey and Illinois have begun selling their existing homes much faster than anticipated and now want to move up the construction schedule for their new homes in Florida, Strickler said.
By any measure, home construction and new-home sales are up in the Orlando area:
* Metrostudy reported this week that new-home starts were up 16 percent in the first quarter in the metro area compared with a year earlier and up 12 percent during the most recent quarters.
* First-quarter construction starts jumped by a third from a year ago in an area slightly larger than the four-county metro area – while new-home closings were up 37 percent.
* The U.S. Census Bureau reported a 9 percent increase in Metro Orlando building permits during March compared with a year earlier.
The growth rates may vary, but housing analysts agree that one reason for the big numbers is that, because so few houses have been built in Central Florida in recent years, any increase can seem impressive on a percentage basis. Keep in mind that the Orlando metropolitan area (Orange, Seminole, Osceola and Lake counties) had about 6,000 housing starts last year versus 30,000 in 2006.
“What’s happening is that a lot of the hard-hit ‘bubble’ markets are starting to move past the bottom of the market, which was in 2009 in terms of constructions starts,” said Hunter.
Hunter noted another oddity about the local housing market, which cooled down during the Great Recession as much as it heated up during the bubble in the mid-2000s: Buyers are being drawn to communities that are so new they have no foreclosures in them – and are less likely to have them because prices have dropped so much from their peak.
The dearth of resale homes on the Orlando market – now a three-month supply, when six months is considered normal – has also benefited homebuilders as prospective buyers search in vein for a suitable house.
“We’re seeing people looking at the resale market and feeling the urgency of the market,” Strickler said.
Former California homeowner Keith Riley said his family sold their home in the Lake Tahoe area and decided to move to Central Florida so he could be near his contract employer, Walt Disney World. After looking at 30 to 40 resale houses during a three-day period, he said he found new-home prices to be as competitive as those in the resale market, and so he recently purchased a four-bedroom house in Berkshire Park, a community in the Windermere area.
“To be honest with you, it came down between two homes, and one was a resale; it had been listed a few years earlier in the $600s and it was down to $410,000. We offered $360,000 – and it was lakefront,” Riley said. “That would have been a steal. But comparing that to a new home, we just saw more value here.”
One unknown that could affect the timing or pace of any recovery in new-home construction is the shadow inventory of distressed homes that have not yet hit the market. CoreLogic reported last year that 54 percent of the mortgaged houses in Metro Orlando were “underwater” – that is, worth less than the balance on their mortgages – the highest distress rate in the state at the time.
Still, builders are enjoying the recent increase in new-home closings.
If you or your friends and relatives are at all interested in a bargain-priced Florida villa now, as the market turns around, could be the perfect time to strike – and not miss the boat!