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Wednesday, February 22, 2006

Suddenly, In Florida

An interesting article about the real estate market in Orlando, FL:

Suddenly, for-sale signs are everywhere.The Orlando Regional Realtor Association
reported Monday that the record 12,015 existing homes for sale in January in the core Orlando market was nearly four times the number available a year earlier. And most of those homes hit the market in January, when members entered 6,172 homes with the Mid-Florida Regional Multiple Listing Service, compared with 2,970 in January 2005.

The article lists offsetting factors, such as more sellers listing with realtors in a less favorable market, but:

Jerry Smith, 58, a retiree in Lake County, has had his former home in north Apopka on the market for about five months and has cut the asking price from $400,000 to $320,000. Smith, who built the 1,570-square-foot house in the 1970s, and has added a new kitchen, concedes "it's your average home." The competition for sales is heating up, he said, with two other homes on his road sporting for-sale signs."

The signs are popping up everywhere," Smith said.

The Florida RE market has been very hot. In southwest Florida:
"684 price reductions in Cape Coral alone in the last 24 hours," said Mishelle Montgomery. Montgomery is selling her salt water canal home. Last year, it may have sold in days, now she's waiting.

"October - the very beginning of October and we had no idea we'd still be sitting here today having not sold our home," said Montgomery.

"We've lowered our price $70,000 and we will probably have to lower it even more," said Montgomery.

Take a look at this San Jose Mercury News, CA advertisement. It lists reductions on new development homes of over 20%. Some people who have bought on these low-payment ARMS or interest-only mortgages and have put little down are going to be wiped right out. There are a shocking number of first-time homebuyers who put very little down. Nationally, about 1/3 of mortgages in recent years have been ARMs. In the very pricy areas, as many as 30% of the new mortgages last year were interest-only.

Orlando real estate is not the only market seeing a slowdown. Where I am in Boston the inventory is rising very high.

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