Orlando Real Estate Still On The Upswing

Although Orlando real estate still has one of the more affordable housing markets in the US, it’s evident that the price of residential real estate in “The City Beautiful” is steadily on the rise.

In the month of May, home buyers in Orlando spent an astounding 18% to 20% of their income on the mortgage payment. I don’t know about you, but this sounds really high to me. Especially, when you consider that at the height of Orlando’s low point in 2010 [after the big crash of 2007] buyers were only spending 10% to 12% of their income on the mortgage payment. What’s wrong with people??!!

Have you ever heard the joke about how Johnny’s dad wouldn’t buy him a $200 bike because of an $80,000.00 mortgage. Although it would be perfect to include in this post, I can’t write about it here because of the adult content that it contains, but if you’re over 18, you should Google it!

There’s nothing wrong with people [for the most part] per say. It’s that they have no choice but to do what needs to be done in order to provide food and shelter for their families. If that means having to spend a nice chunk of their income to keep a roof over their heads, then so be it! We can only do what the market permits us to do.

Check out these numbers; the median home price in Orlando back in 2010 was $1000,000 and just 2 months ago [June 2014] it was up to $165,000. I’m not sure what that exactly means but… Holy Cow! That’s a big increase! 

Orlando Real Estate Market Keeps On Growing and it Shows No Signs Of Slowing.

Even with this huge increase, affordability levels are still relatively low when you look at historical averages. This means that we’re not done growing yet, even if mortgage rates go up a point. Here’s how it works; If mortgage interest rates would go up a point, let’s say from 4% to 5% on a thirty-year mortgage, it would mean that homeowners instead of spending 18% to 20% of their income on a mortgage payment, they would be spending 20% to 22% on their mortgage. According to RealtyTrac this also includes property taxes.

Consider Renting Over Buying

Orlando is said to have one of the most affordable housing rates for buyers in the nation. However, for renters it’s ranked as one of the LEAST affordable places to live in the US… Hold on to your hats! Renters in Orlando spend an average of 34% of their income on paying the rent! Now that’s crazy right?…  Not always.

There are many advantages to renting as opposed to buying a home in Orlando. Here are a couple of advantages of renting over buying.

You don’t have to qualify for a mortgage- Probably the worst part of buying a home is qualifying for it. Unless you have impeccable credit and have never missed a payment in your lifetime, chances are whatever lender you try to get a mortgage with will make you jump through more hoops than a show dog with no guarantees that you get approved. If you rent a home, this is a non-issue and you don’t have to worry about plopping down 20% at the closing table

There’s no commitment- When you commit to a mortgage, you agreed in writing to pay back the entire amount of the loan to the lender or they reserve the right to foreclose on you putting your credit and probably your spouse’s credit at risk. When you rent, you’re only committing to the term of the lease and you can easily pack up and move on. This is why renting is especially attractive to people who are uncertain of there future because of a new job or some other circumstance that would cause them to have to move.


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Average Home Price in Orlando Rises to $165K

The average price of houses in Orlando rose in May, making it the fourth successive month to touch $165,000. According to Orlando realtors, this has been a peak period since 2008.

According to reports published by Orlando Regional Realtors Association, prices inched up about 1.5 percent in April and about 13.7 percent in May compared to the rates of last year. The report of the association mainly reflects the sales which occurred in Seminole and Orange counties.

The previous time prices of homes were this high, was in December 2008. At that time the prices were $167,500 – a sharp dip from a high of $264,436 achieved in July 2007.

The statistics

Members of the Orlando Regional Realtors Association closed approximately 2,651 sales in the month of May. Sales were down approximately 1 percent in the period starting from April, standing at approximately 11 percent. The available inventory rose from about 3.9 months during April to about 4.1 months during May. This is quite below the six-month level but is adjudged normally.

Probable causes

Zola Szerences, the Association Chairman, said that sales decline can be partly attributed to investor decline. The investors went away from Orlando real estate market as the prices increased. While foreclosures add sorely required inventory injections, they are responsible for slowing the sales. Like Orlando’s short sales, transactions due to foreclosures take more time to process compared to standard transactions.

After many years of shrinking proportions, foreclosures rose about 15 percent in May this year compared to the same period of 2013. Normal sale of homes lowered a little but still comprised approximately two-thirds of total sales. Orlando short sales went down by 62 percent in the period between May 2013 and May 2014. The highest decrease was recorded in the sales of Orlando’s condo market, which fell by 24 percent from last year.

Immediate future

According to Moe Musleem of Re/MAX Legacy, the reason for such an occurrence is that a number of foreclosures are now appearing in the market as the loans are being acquired by a number of loan servicers. He added that the construction of residences has quenched a little of the demand, but not their prices. Musleem is hopeful that a greater number of foreclosures will appear in the market. Since a lot of construction projects are coming up in Seminole and Orange, a large number of properties will sit out in the market.

 

 

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Sale of 203 Condo Units In Orlando

A Madison Capital Management affiliate has been advised by Cushman & Wakefield in the context of the sale of 203 condominium units within 272 Heritage Estates, a Class A community in Orlando. The firm has also garnered about $15.7 million in debt and has organized equity financing by a joint venture from Centersquare Investment Management. Center square is BNY Mellon’s investment boutique for real estate deals. This was done on behalf of the buyer. Five-year financing was provided by Key Bank.

Fractured nature is not a concern

According to Dave Karson, the Executive Managing Director of Cushman & Wakefield, this kind of excellently located community attracts capital from those who seek comparatively lower returns than they were accustomed to for the past several years. The condominium’s fractured nature does not have an effect in such circumstances. He added that the improvement of the equity and debt markets has made such kind of capitalization possible.

Karson’s team members included Chris Moyer, Suraj Ravi, Sridha Vankayala, and Steve Kohn in the Debt & Structured Finance group of Cushman &Wakefield.

Heritage Estates was constructed in 2003 and is sandwiched between Orlando International Airport and the University of Central Florida. It is situated in the University of Central Florida/East Orange submarket. The property has been invested by Madison as either direct owner or lender since 2005. The company has established a stellar record of first acquiring units and then converting those to rentals.

In real estate, relationships are the key

The business of real estate depends on relationships. It is about service as well as trust. Clients do not trust entities that they do not know. For any real estate buyer, it is not simply about searching and then getting home. It is actually the first step in a methodical process from starting the contract to closing the contract. A large number of steps take place after a home is found, and the function of a good Orlando real estate agent becomes apparent at that stage. The task of meeting appraisers, ensuring that the inspector arrives as scheduled, does an adequate job, and sends his or her reports on time.

A realtor juggles communications between the title company, contractors, and sellers and keeps things on schedule as previously planned. Agents have to anticipate and have the requisite knowledge and skill to adjust to situations that even a frequent buyer of homes may have not endured through.

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