Real Estate Tips

Where is the real estate market going in Orlando area?

A lot of people are wondering about the stability of the real estate market in Orlando, Florida. The two main cycles that real estate market goes through are expansion and recession. The cycle of expansion started in 2002 and it was at the highest point during the summer-autumn of 2005. That period registered record high sales for 4 consecutive years.

Today we are experiencing an oversupply of real estate. This causes prices to adjust. The market will continue to cool; price appreciation will still be positive but very slow. Depending on the area in central Florida, there is a housing supply capable of lasting somewhere between one to three years. That’s a lot of For Sale signs! Houses in $100-$200K price range are still in high demand but homes in the $300K+ range may not sell even after 4 to 6+ months on the market. A lot of sellers are already experiencing this cold reality.

There are several factors that caused the cooling of the market. Mortgage interest rates have been going up which raises the monthly payments associated with buying a home; therefore, eliminating some potential buyers. Raising rates can also result in higher delinquency and foreclosure rates. For example, a traditional 30 year mortgage rate is around 6.7% for those with immaculate credit. If rates go above 7%, some areas will experience price softening. Housing prices continue to rise which further complicates the issue. In summary, increased interest rates combined with rising home prices have made housing unaffordable for prospective buyers.

Is there light at the end of the tunnel? Yes! Based on the number of people moving to Florida and constant demand for housing, the market should bounce back by 2007. The rest of the country may see a slower trend but Sunny Florida continues to attract home buyers interested in warmer climates