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September, 2007 Market Pulse Analysis & Commentary
The Greater Orlando area real estate market has slowed in September and closed sales took a significant month over month drop. We have not yet experienced a drop-off like this but it wasn't unexpected considering the barrage of negative media coverage from newspapers, TV and the Internet! We should get a break from the negativity when the media has the Presidential election to focus on in 2008. Hopefully that will get real estate off the front page and the buyers and sellers "fear" will subside and we'll begin to see an increase in sales. I wasn't expecting a drop in sales quite as steep as we experienced but the buyers have been standing on the sidelines and afraid to move forward. That is changing and I'm getting more phone calls and showings of properties over the last week or two.
This market isn't much different than the early 1990's when we had high inventory, many foreclosures, the RTC (Resolution Trust Corporation) to manage assets and to basically bail out the S&L's after the savings and loan crisis in the late 1980's. There were many naysayers and gloom and doomer's then as there are today. I worked through that market and real estate got stronger and stronger each passing year since that "crisis" so I remain optimistic and I'm firmly convinced that this is a GREAT time to buy real estate!
Sales (unadjusted) for the month were only 924 homes sold, down over 55% compared to last years 2,054 sales in Sept., 2006 according to the latest Market Pulse Report. That's the lowest number I can remember and it would be hard to predict any further decline in sales figures. This report includes homes sold in Orange and Seminole Counties and compares monthly statistics from September 2006 to September 2007. The report covers listings, sales, days on market & important statistics regarding real estate transactions in Orange and Seminole Counties comparing and showing trends for the past thirteen months.
Here's a link to this month's full report:
www.orlrealtor.com/Pages/marketpulse/MarketPulse907.pdf
The active listing numbers (homes for sale) is virtually unchanged this month in the two county area. The record high inventory levels in Central Florida real estate are a concern but it appears we may have peaked and should see a small decline in active listings over the Holiday period. The number of Realtors in our Association is still holding steady which quite honestly is surprising. With over 12,300 agents and only 924 sales in September that would represent only one home sold per thirteen agents this month, or 92.5% of the agents would have zero sales for the month if the remaining 7.5% had only one sale each!
The Absorption Rate, the number of homes for sale 26,310 divided by the monthly closed sales 924, continues to be watched as a key indicator of overall market health. There is currently a 28.5 month (well over two years!) supply of homes on the market! This is by far the highest ratio I've seen in the years I've been calculating this market indicator but the steep decline in sales inflated this number dramatically so it's not too surprising. Another concern is that "New Contracts" (a predictor of closed sales for the next month or two) fell again to the lowest number in the thirteen month period.
I believe we are going to see a few more tough months during the Holiday season which is traditionally not the best time of year for real estate sales. January and February are historically the slowest months but that wasn't true in 2007 so we could be a pick-up in sales in early 2008. It could still easily be mid-2008 before we see any significant jump in sales, and realistically at least into 2009 before we have a balanced market.
On behalf of the entire Marty Hunt Team, we look forward to assisting you with any real estate needs throughout the Central Florida area. Feel free to contact me directly at (407) 869-7779 or (888) 412-8681 with any real estate questions you may have.
Marty Hunt, Realtor®, ABR, CRS, GRI, e-PRO
Realty Executives Orlando
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