Orlando home-sales market cools as number of listings grows

Posted on by Listify Me

The once-sizzling home-sales market has cooled off this summer in the Orlando area as sellers face increasing competition and buyers no longer have to wait in line with investors to buy houses.

The days of prices rising as much as 2 percent or 3 percent a month appear to be over in a market that has been rocked by record highs and lows for more than six years. Last month, in the midst of the busiest sales season of the year, the median home price in the core Orlando market edged up only a fraction of a percent, increasing $100 to $165,100.

The number of listings, meanwhile, has ballooned. In June 2013, about 7,600 houses were listed in the core Orlando market, which primarily covers Orange and Seminole counties. It’s still considered a seller’s market, but last month the area had more than 11,500 listings, according to the Orlando Regional Realtor Association.

Bottom line: It’s unlikely that homeowners will see values rise as much during the next year as they did during the past 12 months. Prices in the core Orlando market have risen 10 percent since June 2013.

“I think in the next 12 months, we’re going to be pretty much flat,” said Winter Park real-estate agent David Welch. “With some good things happening in the Orlando area, we could see prices increase 3 percent, but we will likely see the median price soften at the end of the summer.”

Orlando median prices peaked during the real-estate bubble at $264,436 in July 2007 and bottomed out at $94,900 in June 2011.

One shift that has just started in Orlando could help determine future prices: Investment groups are bundling the single-family homes they own and trying to sell them in bulk.

A year ago, investment groups blanketed distress properties in the region with offers. The Blackstone Group and others bought foreclosed houses throughout Central Florida. Now at least some of those groups are trying to sell to other real-estate companies that want homes for rental income. Last week, for example, a Naples-based group offered a portfolio of 43 houses in Orlando, Deltona, DeLand, Daytona Beach, Mount Dora, Sanford and Apopka for a total price of $3.1 million.

The prospect of investors selling off properties and lenders auctioning off their foreclosures could further increase the supply of home listings and reduce prices.

“When there’s too much inventory on the market, there’s a dark cloud in the distance,” said Orlando resident Justin Stamper, who has bought and sold about 90 foreclosed homes since the recession for Investment Homes Direct. “If the [investor groups] do unload their inventory, prices are going to go down. If they don’t, then prices will rise steadily.”

In addition, last year’s rising prices built equity for homeowners who can now sell because they are no longer underwater on their mortgages. About 30 percent of the mortgaged homes in the four-county Orlando area were underwater during the second quarter — down from more than 50 percent three years ago, according to a report released last week by RealtyTrac.

For buyers, the additional supply of listings allows more room to start negotiations at a lower price than during last year’s heated market. For homeowners considering listing their properties, real-estate agents offered a range of advice.

Christina Rordam, an agent with Florida Realty Investments of Orlando, said sellers can often get $10,000 to $15,000 more by spending a few thousand dollars on paint, carpeting and fresh landscaping.

Rordam, who is more optimistic about appreciation than some other agents, predicted that prices could rise 8 percent during the next 12 months and that sellers can make more money if they wait to list their property. But, she added, they also should consider the toll that another year will take on aging roofs or air-conditioning systems and whether they’ll be forced to discount their price in recognition of repairs and upgrades that become more expensive with time.

Another gamble sellers take when they play the waiting game is that they may face a smaller pool of prospective buyers with expected increases in interest rates. Rates on a 30-year, fixed-rate mortgage have been less than 5 percent for more than four years. Economists for the National Association of Realtors have predicted rates will average 4.7 percent this year and 5.5 percent next year.

“The majority of buyers understand rates won’t remain low forever,” she said.

For houses priced to attract first-time buyers, sellers should consider offering a home warranty, she added. Basic plans range from $350 to $500.

Rordam advised sellers to quickly drop their price if the house doesn’t attract several showings and possibly an offer in the first two or three weeks it’s on the market.

Welch suggested that sellers study the homes listed for sale in their neighborhood to determine pricing by weighing the amenities, features and general condition of the competition.

And Stamper said sellers can be more competitive by slashing the price from the beginning.

“If you list a house for $10,000 more than what you know it is worth, it will sit on the market longer,” he said. “If you list it for $10,000 less, it’s almost like blood in the water. Hopefully you’ll get multiple offers and bidding.”

mshanklin@tribune.com or 407-420-5538

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