Interim Real Estate Report (National News Oct 24, 2007)

OCTOBER 24, 2007 INTERIM REAL ESTATE UPDATE (NATIONAL):

It was announced on Oct 24, 2007 that, according to the National Association of Realtors, (NAR), sales of existing US homes fell eight percent in September. This was a higher than expected drop. As stated in my own blog: Florida Blogmentary, I believe this national drop in sales can also be tied to the recent "sub-prime mortgage meltdown." My personal opinion is that the market should "digest" this downturn in sales in the short term. (More on this later).

So, what is a seller to do? First, patience is in order. If we are honest, we should all admit that the pool of potential buyers have narrowed significantly. One year ago, buyers with a 580 credit score could get 100% financing. Now, a 640 credit score, or more, is required for conventional financing. Today, 100% financing is as plentiful as honest politicians.

Creativity: Stay open to other financing possibilities to assist buyers with financing as long as they are compliant with Housing Urban Development, (HUD) guidelines. And of course, check your motivation. If you don't have to sell, don't list your home. Yes, do not list your home. Please do not "test" the market with the largest single asset in your life. Tests are for schools, hospitals, and nuclear detonations in the South Pacific. However, if you need or have to sell, price your home according to the hard facts that an agent SHOULD present to you when you meet.

Sellers should also use this time to prepare their homes for sale if they are looking to place their properties on the market within 6 to 12 months. If you need to take out a home equity loan or refinance, lower rates maybe coming your way within the next four to six weeks as the Fed will be meeting next Wednesday, Oct 31st, and the rumor is another cut will come. Rates may go up after an announced cut, then slowly drift downward again. (Fingers crossed), if all goes well and the rates do continue to fall, more buyers should enter the market.

If you are planning to spend some money on repairs/improvements and need an unvarnished look at your property to give you suggestions on improvements and repairs, ask me for a free, no obligation on-site analysis of your property. Email me at: JTomlinson@AmerivestRealty.com

Sellers, if you take out a home equity loan, only take out what you will need to make repairs and improvements. BTW, check out one of my favorite calculators for renovating homes, CNN Money, you can use the information at this website to find out what the return on investment will be on a planned improvement on your home.

This is the 4th calendar quarter of the year. Traditionally, there is some seasonality in all markets as hearts and minds turn to the holidays instead of home shopping. Maybe a cold winter up North may bring some migratory buyers into the Orlando market, eh?

What is a buyer to do? As I have said before, BUY NOW! Inventory is up, prices of homes are down possibly to their lowest level, and deals are out there. If you have been turned down for a loan, do not stop shopping. If you are planning to buy in the next six to twelve months, check your credit report. If you need to improve your credit, give me a call for a unique program to help improve your credit score.

Don't forget to check out what my, sometimes controversial blog at http://JimSellsOrlando.com

Orlando Real Estate Market Report for October 2007

Reviewing the Orlando and Central Florida home sales statistics reveal some interesting tidbits.

The median price of a home in our area is now $235,000. That's down 6% since the last report. The bright side of this number is that homes are becoming more affordable for buyers. Particularly in light of recent circumstances in the mortgage market.

INVENTORY: Resale home listings in the Orlando metropolitan market remained relatively unchanged from August 2007, (26,310, Aug 07 vs. 26, 313, Sept 07). Inventory had been climbing steadily since DECEMBER 2006! In order to see why this happened, we have to look at the following factors:

NEW LISTINGS: Listings dropped off significantly in September compared to August, (Aug 2007: 5,582 vs. Sept 2007 5,000 new listings. Also, compare the September 2007 number of 5,000 with the Sept 2006 number of 6,297 new listings and you can see that we might see less and less new listings coming onto the market. I always advise sellers to never, ever, ever, "test" the market by listing your property. Once you list, you cannot put the genie back into the bottle. Your property may languish on the market and the "days on market" will rack up and be used AGAINST you in the bargaining process.

BACK ON MARKET: These are homes that were on, then off, now are on the market once more. We had 306 back on the market in Sept 2007. This is the lowest figure besides Feb 2007, (302 BOM).

EXPIREDS: We had the largest registered number of expired listings in September 2007, (2,180). This is the highest number since December 2006. Sellers are letting their listing contracts play out and are quitting.

WITHDRAWNS: No real change here. There were 1,953 withdrawn listings which has been about average. Some months were significantly higher, (approx 2,300 to 2,600). I like to look at withdrawns as they tell me a better story of potential overpricing of homes in a particular neighborhood.

SALES CLOSED: (drum roll please) ONLY 942 sales closed in September 2007. THAT IS THE LOWEST AMOUNT OF LISTINGS SOLD PER MONTH SINCE 1999! Can someone say sub-prime mortgage meltdown? To put this in perspective, this represents all listed properties that closed within a FIVE COUNTY AREA! In the current market, we had been averaging between 1,400 and 1,900 closed sales per month. I have heard some war stories. Another agent friend of mine was sitting with his buyers at the closing table with the sellers. The paperwork had been signed, keys given out, and nervous conversation as each party awaited the funding. After two hours, and multiple calls to the lender, the purchase went unfunded because the lender shut their doors, turned out the lights and went out of business during the closing! If you want to learn about the sub-prime meltdown, surf over to this website: http://ml-implode.com/

BTW, I keep close contact with many investors. One of the activities they practice is "wholesaling" of properties. This is where one investor will purchase, then, sale to another investor. Currently, this activity is relatively slow. Why? Well, with property values slipping, the investor doesn't know what true market value is in the near future. A mistake on calculating market value could be a drag on profits. Also, too much inventory in the market means extended carrying costs. So, when wholesale activity picks up, I'll have a better idea on when we have "bottomed-out" on falling market values.

DAYS ON MARKET: This is a sneaky number. Well, it really doesn't tell the whole story. I still see homes sell in under 30 days. How does that happen? Homes that are accurately priced for current market value that are clean, well kept, and staged will still sell. I hastily add that location, location, location is also important. September 2007's DOM figure climbed to 113. That's up from 108 days in August 2007.

SUMMARY: If you are looking to purchase a home, NOW is the time. There are great deals out there. If this "pause" is the prelude to a downward trend in the inventory, then, sellers will be inclined to hold out or even raise prices with increased demand. I also liked what I saw in the current report. All the trends were "interrupted."
What does this mean? Orlando and Central Florida is a resilient market. This "pause" maybe a tipping point where new trends begin to emerge. It's too early to tell at this point. What will the Fed do for future rate cuts? Will inflation and unemployment play a factor? How about the political environment in 2008?

What did Margo Channing, (Bette Davis) say in the movie: "All About Eve?" "Fasten your seat belts. It's going to be a bumpy night."

Contributed by: Jim Tomlinson, Sales Associate, Amerivest Realty of Central Florida, An independent broker. For more of Jim's blogs and other useful real estate information, go to: http://jimsellsorlando.com/Blogestate

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The opinions expressed in this blog represent the sometimes unconventional views of Jim Tomlinson. Life is short, enjoy a double maduro.