Record Inventory As Condo Sales Slump: Orlando
The Orlando Sentinel reports on the areas May numbers. “Condominiums have finally joined single-family homes in the Orlando area’s sales slowdown and are contributing to the year-over-year decline in existing-home deals overall, according to a report released Monday.”
“The number of condos resold in May slipped to 419 units, down 12.2 percent from the same month a year ago; the first time this year the condo sector has turned negative, according to the Orlando Regional Realtor Association’s monthly report.”
“‘People all around us, units are just not moving now the way they did,’ said James Colligan, sales manager for The Azur at MetroWest. To keep sales moving, the converted apartment complex in west Orlando is ‘the lowest-priced in the MetroWest area,’ he said, with two-bedroom units starting at about $180,000.”
“‘We’re working with people, first-time buyers, to make it work for them,’ Colligan said.” “The number of single-family homes resold in the Orlando market, down every month so far this year, dipped again in May to 2,070 houses, a 4.4 percent decline from a year earlier.”
“Nearly 7,000 more homes of all types were added to the local Realtors’ MLS in May, pushing the inventory of properties for sale in the Orlando area to a record 18,179, the group reported. ‘I wouldn’t be surprised to see us at 20,000 by the end of the year,’ said (broker) Scott Hillman in Winter Park.”
“For some property owners in South Florida, the Orlando market still appears to have value, particularly in condos, said Leanna Fruin, who has a contract pending on a unit at a condo-hotel planned near the Orange County Convention Center. ‘I see potential for growth in the Orlando market,’ said Fruin. She said she is buying a one-bedroom unit with a price ‘in the mid-$300,000s’ and plans to use it for herself, family and friends for part of the year, then renting it out the remainder of the time.”
“May was the third month this year in which the inventory represented more than six months’ worth of sales, the biggest such buildup of housing stock since early 1998.”
“‘In the past years, we’ve had trouble finding enough adjectives to describe the torrid pace of homes sales,’ says ORRA President Beverly Pindling. ‘In many cases a slowing from a hot market is a good thing because a solid housing sector is needed to provide an underlying base to an area’s economy.’”
Orlando, and especially area condos, were one of the last hold-outs of strength in Florida. Once again, inventory eventually weighs on a market. Also, can locals give an estimate of how many FSBO’s are in these counties?
The local board only counts it’s listings in seminole and orange county but on the sales side they include all sales in the MSA. They load the dice in other words. They have 30,000 in MLS in MSA. Based upon my appraisal work and a review of subdividions in the area on a daily basis we have about 50-60,000 FSBO’S, MLS, Discount brokers and 1-800 listing in the Orlando market at present. Listings are outpacing sales by 3 to 1 easily. It’s gonna suck soon.
As for condos, FSBOs here in central Florida are very difficult to count because many local governments don’t allow signs to be posted on the right-of-way and often that is the only green area outside the parking lot. It would take a lot of searching on craigslist and FSBO sites to come up with even a close guess.
That said, FSBO condo owners who can’t plant an arm sign out front are at an extreme disadvantage, since the brokerages have beaucoup listings already. An agent can search listings for the ones where the FSBO pays a company low bucks to get the condo into the MLS, so there might be useful data to be mined there.
As for converted condos — “real” condos will be available at decreasing prices, so why buy a converted unit that has nowhere near the same space and amenities? The exception, I suppose, would be one that is so cheap, it beats buying a trailer.
Except that your “association fees” are a LOT lower for your trailer!
TRAILERS 1
CONDOS 0
“…a solid housing sector is needed to provide an underlying base to an area’s economy.’”
…a solid housing sector like this?
http://tinyurl.com/mvsxt
“she is buying a one-bedroom unit with a price ‘in the mid-$300,000s’ and plans to use it for herself, family and friends for part of the year, then renting it out the remainder of the time.”
Yeah right, good luck renting to people for less than six months at a time plus paying your security deposit lady. Another bag holder enters the renatl market knowing nothing.
my sentiments exactly
Let’s run the math. A 4-star room on I-Drive, near the convention center, should run about 70% occupancy with an ADR around $160. The resort owner will fill their rooms before passing guests on to the inidvidual owners, so they might get 50% occupancy. Half of the room rate goes to the condo-hotel as a management fee, that leaves about $14k/year to cover the mortgage and all other costs. I do not see that coming anywhere close to covering a mid-$300k loan. It might pay the property taxes & room taxes, but that’s about it.
And you can bet the time she will use it is Christmas and New Year’s — the peak rental months.
http://iprecom.tempdomainname.com/trendg/images/palsld.PNG
Above is the latest housing trends for Palm Beach County, Fl. Over 22,000 units for sale and only 1221 sold in May. Maybe my math is wrong but that looks like 18 months of inventory. In one year the average price for sale has dropped from $732,000 to $565,000, while the average price sold only wen t from $405,000 to $432,000.
What is scarier is the # of home for sale in the $300,000 to $500,000 range, which is the “middle class” homes here. That number has gone from 2135 for sale in May of 2005 to 7815 in May of 2006 or a staggering 366% increase. The number of homes sold went from 572 in May of 2005 to 405 in May of 2006 or a 30 % decrease. Presently with 7815 homes for sale that equates to 19 months forward supply.
It is worse for $500,000 to $1,000,000 homes where there is a 2 YEAR supply and the supply has gone up over 300% in a year.
My question is- who are these people going to sell to? Simple supply and demand dictates prices must come down another 20-30% at least.
Quick time to manufacture some Greater Fools.
David
http://bubblemeter.blogspot.com
I check the active listings on r.com for my former zip code, 33467 every two weeks or so. This morning, there were over 1700 listings of which single family residential was over 1000. There are listings in my old neighborhood that were active when we listed our house right after Thanksgiving 2005. Some of these folks have owned for several years, but took out equity and are now upside down to the market. By the way, we sold in less than 60 days because we priced based on the trends, not the history.
Nice work. You did the right thing.
““For some property owners in South Florida, the Orlando market still appears to have value, particularly in condos, said Leanna Fruin, who has a contract pending on a unit at a condo-hotel planned near the Orange County Convention Center. ‘I see potential for growth in the Orlando market,’ said Fruin. She said she is buying a one-bedroom unit with a price ‘in the mid-$300,000s’ and plans to use it for herself, family and friends for part of the year, then renting it out the remainder of the time.””
There are still some greater fools left.
David
http://bubblemeter.blogspot.com
She is absolutely nuts to pay that much money for a 1BR, even if it were directly on the ocean.
It angers me when articles talk about inventory piling up and how buyers are holding up (this one does not seem talk about buyers holding up) Buyers arent holding up, buyers CANNOT buy. as if servicing a debt of 160000 were easy, imagine 300000
says ORRA President Beverly Pindling. ‘In many cases a slowing from a hot market is a good thing because a solid housing sector is needed to provide an underlying base to an area’s economy.’”
Huh? Do all these people like Lereah and App-Young and this gal all go to the same school? These people are just not smart people. They may be educated, they may be experienced, but they are not smart. I guess that it what is meant by a “shill”. Someone willing to just make something up in order to put on the happy spin.
What she is saying does not make any sense whatsoever.
I taught mathematical proof and logic to students at a small liberal arts college for several years before taking a job at Cornell. You would be surprised what is considered “reasoned argument” by many educated people today. All opinions are equally valid, and there is no reason to back anything up with evidence because no bit of evidence is better than any other (that would just be elitist).
Of course it doesn’t help that our collective notion of debate has dropped from “Firing Line” to the empty rhetoric of “Crossfire” and O’Reilly.
Good point. I have professor friends who would enthusiastically second your comment on the sad state of academia.
Re debates on TV: At least Crossfire had two sides. O’Reilly just agrees with himself.
Pedagogically, my experience is that two sides using talking points to talk “across each other” (i.e. not agreeing on definitions or first principals necessary for debate) is worse than bare opinion. The audience uses the balance to give credence to weak or nonsensical arguments. It is like saying physicists and Ludwig Plutonium are two sides of the debate (though in Crossfire, the two sides were usually equal part physicist and equal part Ludwig).
I take your point. Yet at least Crossfire promoted the idea of debate, even if, as you suggest, it’s two sides shouting political talking points. On the other hand, since many viewers seem to swallow O’Reilly’s “fair and balanced” claim whole, the need for any debate at all is called into question.
Yeah, right. The day they have fair debate on CBSABCNBC is the same day that I’ll eat my hat.
What ARE you smoking? (I’d like some!)
The major networks’ reporting leaves a lot to be desired, I agree. But you can’t seriously be defending Fox as “fair and balanced” though, can you?
What ARE you injecting? (I’d like some!)
you’re right Walker -
As one of those right wing, “intolerant”, fundamentalists / conservatives, what I see as “moral relativism” in our anything goes culture could have its equivalent in the academic sector as “intellectual relativism”.
As you pointed out, “no bit of evidence is better than any other”!
Our national ship is adrift.
A brief update from Northwest Florida per a local Pensacola, Florida agent:
“During May, 2006, 725 homes were sold in Pensacola and the outlying areas. The average Days on the Market was 99 days. The average sales price was $210,885. Homes sold for an average of 96.4% of the listed price.There are currently 6493 homes for sale in the Pensacola area.”
http://realtytimes.com/rtmcrcond/Florida~Pensacola~millyburleson
Inventory is up to 9 months but prices are still holding which is in line with my review of the local MLS listings over the past two months. I have noticed recently that properties are coming back on the MLS with agents citing problems about buyer financing which is a new development.
Interesting. In the last week, I’ve noticed in my Atwater, LA neighborhood two “in escrow” signs disappearing and the properties be reclassified as “active” on the MLS.
That’s been happening a lot lately, which means in the past year, at least in the NY area.
Probably a result of would be FBs realising that they are about to bite off more than they can chew. Quite normal in a descending market.
The real problem is the anticipated investment gain premium has been removed. Who wants to buy a home today only to be upside down tomorrow? How much are you willing to pay for that “bonus”?
Prices have to go down. The industry, the sellers, they can all fight it. But resistance is futile. Supply and demand set the price. With prices at outrageous levels, rates rising and lending standards tightening, demand is dropping like a rock. Add skyrocketing inventory, due to foreclosures, shaky mortgages, ARM resets, and…we don’t need to be an economist to see where this is going.
Just be patient. The upside was surprising. The downside will be too.
Nice post.
Thanks. Should be a very interesting year or two.
inventory in orlando is pushing 6 months, and even though the month by month sales closed number is just a bit less then the same time last year, the number of new listings is double what they were last year.
20000 by end of the year? more like end of july or august if the current pace keeps up.
Don’t know if anyone has posted it, but hot off the press is the news from Dataquick that Southern California sales were the worst in any May since 1999 last month. Down 10%+ or so from a year ago as well. No link available right now, but thought I’d give a heads up.
Here’s a link for those SOCAL numbers, by the way:
http://tinyurl.com/kjjup