David's Orlando Real Estate Blog

Wrapping Up Orlando Real Estate 2009

David Welch (Remax 200 Realty) — Tue, 01 Dec 2009 10:47:48 -0600

I looked back at my predictions for 2009 last December, and I have to say with the exception of price we have exceeded every expectation I had. I was hoping to see sales in the 1,600 per month range through the second half of the year. We have actually been seeing sales above the 2,000 mark since June. I was also hoping to see our inventory level drop below 22,000. The faster sales, slower foreclosure rate and the MLS rule requiring short sales to be pended has pushed our inventory down to just over 16,000. Foreclosures and short sales are continuing to pressure prices lower with a median sales price in the $120's in November. Our "normal" sales, however, are typically around my forecast $180,000 mark. Later this month I'll take a shot at forecasting 2010.

Right now, November sales are not disappointing at all. I posted yesterday on Twitter that our closed sales stood at 1,788 with a median sales price of $123,250. Jeffrey Sachs with FBC Mortgage texted me when he saw this pop up on Facebook. Jeffrey wanted to let me know that his company had 43 closing scheduled for yesterday to add to that total. FBC does close a fair amount of loans in our market, but there are a number of other lenders in and around Orlando that also had home purchase loans closing yesterday. Jeffrey and I have been working together for ten years, and I highly recommend Jeffrey Sachs and FBC Mortgage for your financing needs. I closed two transactions last month with Jeffrey, and both were ready ahead of schedule. Both buyers were pleased not only with the loans that they received, but also the service that Jeffrey and his team provides. Contact Jeffrey for your loan, then contact me for your home.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters

Orlando Condos

David Welch (Remax 200 Realty) — Mon, 30 Nov 2009 09:39:57 -0600

There is an article in the Orlando Sentinel today about just how bad our condo market is here. Economics is about supply and demand of course, but sometimes consumers demand something that they do not have the cash to purchase. In these situations, consumers turn to financing options. The real estate market thrives on the availability of mortgage funds. When those funds are not available the market (buyers) shrinks. Sellers who must sell have a couple of options: reduce their price to a point that there are buyers who can pay cash, or offer seller financing. In the case of the Orlando condo market, these sellers are mostly the banks at this point. They won't offer financing, so the only option they have left for themselves is reducing the price. The article mentions the option of FHA financing for some complexes. Unfortunately, even FHA has tightened up their guidelines (recently loosened slightly). Even FHA approved condominiums are scrutinized for the number of investor owned and second home units. Hello - this is Orlando - it is very hard to find a condo community that does not have a majority of the units owned as either investments or second homes. While this does not prohibit financing it does require higher down payments limiting the number of buyers who qualify.

I suggest the banks come up with at least some form of financing for condos without huge down payment requirments. Take a page from their own commercial lending operations, and put in 10 year balloons. This could open up the pool of potential buyers, and get these condos turned around in a hurry. The other thing that could help turn the condo market around quickly is the approval of short sales. A Bank of America executive actually told our office that they make more money on a foreclosure than they do a short sale. I thought how can that be? For the most part the banks don't own these loans; they just service them. Apparently, they get paid more to handle a foreclosure than they do to negotiate a short sale. If you are one of these investors holding mortgage backed securities listen up. Short sales that are closing in Orlando are averaging about $40,000 higher sales prices than the foreclosures. Since The Fed is buying up these bad securities, you might want to consider making the negotiation of short sales a priority. Better yet, take it away from the banks altogether. Bank of America is exceptionally incompetent at handling the short sale process as are most other large banks. However, I did just close on a Wachovia short sale that was approved in four days (it was the second contract). My understanding is that they have put an incentive in place to get these deals approved. Amazing how quickly the process works with the right incentives.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters

Vote Early and Often

David Welch (Remax 200 Realty) — Thu, 19 Nov 2009 10:04:19 -0600

You are running out of time to vote for www.RealEstateOptimist.com. Tomorrow is the deadline to choose David Welch's Orlando Real Estate Blog as the top real estate blog in Orlando. Google already says David Welch has the top two blogs for Orlando real estate. Check for yourself, just google "Orlando real estate," and see who has the top two spots. This is organic not paid results. Thank you for your vote.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters

Housing Starts Fall in October

David Welch (Remax 200 Realty) — Wed, 18 Nov 2009 08:40:35 -0600

Reuters reported that housing starts fell over 10% in October compared to the rate being built in September. At least a part of that was caused by a huge drop in multi-family. These types of project are up and down, and with commercial real estate on its heels right now it does not surprise me that these projects are so volatile right now. The single family side of the equation has to be evaluated in the context of everything that is going on. The first time home buyer tax credit was quickly approaching expiration, and I believe earlier in October there was sentiment that it might not be extended. Although talk of extending the credit has been around since July and August, what seemed like a sure thing ran into some challenges. First, the deficit for last fiscal year came in at a whopping $1.4 trillion. Second, there was not a lot of evidence that the tax credit was creating a turnaround as much as helping to stabilize the housing market. Third, news broke in October, I believe, that there were 100,000 suspected fraud cases related to the existing credit.

I believe that this growing sentiment that the credit might be extended guided some buyers toward resales. Even when it became apparent the credit would be extended and expanded there were rumors out there that if you contracted before December 1st, you would not qualify for the new credit. This type of misinformation, could have also had the effect of buyers putting off decisions to contract for a new home if they were hoping to take advantage of the new tax credit provisions. Maybe I am completely off base with my analysis of this situation, but here in Orlando we saw tremendous sales in October with more than 2,200 sales closed last month and nearly 4,000 contracts (not offers, contracts) written in Ocotober. I believe that was the most contract written so far this year. I continue to say if banks will start making decisions on short sales, REO's and getting loans closed we will get through this faster and healthier. Orlando continues to post around 9,000 pending sales, while our active inventory remains around 16,000.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on HGTV's House Hunters

It's Easy to Be a Pessimist

David Welch (Remax 200 Realty) — Mon, 16 Nov 2009 08:59:03 -0600

I titled my blog Real Estate Optimist for a couple of reasons. First, the obvious one is that I sell real estate. I became convinced that I wanted to have a career in real estate in graduate school at Rollins College. In one of my Investments classes we discussed a study the University of Chicago conducted analyzing all types of investments along what is called the efficient frontier. The efficient frontier is a curve that defines the optimum portfolio return for a given level of risk. The only investment found to be in every efficient portfolio was...wait for it...wait for it...real estate. They did not just include the typical stocks and bonds type of investments either. Commodities, art, wine, coins and stamps and other types of investments were included in this study that went back to the stock market crash of 1929. It made intuitive sense to me since, owning your home provides a sense of security and safety from market factors.

But why Optimist and not Realist? Let's face RealEstateRealist.com would be a great play on words, but I have seen time and time again on my customer surveys that my enthusiasm is what attracted people to me. Believe me, I get down in the dumps too, it's easy to be a pessimist. When was the last time you picked up the newspaper and read good news. OK, if you are a UCF Knights fan like myself, the Orlando Sentinel has had lots of great articles about UCF's first ever win over a top 25 ranked team. Our men's basketball beat UMass in their season opener, and our women's soccer made the NCAA's ranked in the top 20. So there has been a lot of great news for UCF athletics this weekend. I have been a fan since 1982 when I started at UCF. I have traveled to Troy, and sat through pouring rain in 27 degree weather, and Georgia Southern, Eastern Kentucky, Georgia, Georgia Tech and a couple of trips to Florida. There was not so much good news back then, but I was optimistic.

Real estate has been a reliable investment in the past, and it is again now that the market has stabilized. If you don't believe me, what about all those investors buying up foreclosures?

Orlando Real Estate, David Welch Real Estate Optimist, As Seen on House Hunters

Back to Reality

David Welch (Remax 200 Realty) — Fri, 13 Nov 2009 06:54:51 -0600

Well my world premier video aired last night on HGTV's House Hunters, and friends from all over the country watched with me. I want to send a big thank you out to Doug and Lisa, the buyers, because if it was not for them I would not have had the opportunity. I would also like to thank the crew and producers who managed to keep me from looking too goofy. I didn't even look that fat - yeah! If you did not get to see last night's show, it will be on several more times over the next couple of months. You can check the HGTV website for other dates and times.

Today, it is back to reality. I have a walk-through this morning, closing this afternoon, contract extension, a buyer's CMA, and an offer to follow up on. If it was only as easy as it is on tv. Show three houses, pick one and move in. For more on buying and selling real estate, check out my homepage www.davidwelch.com. I have a number of tools right on the main page for buyers and sellers. Right at the very top of the page you can search for Orlando area real estate. This is a new tool I have just added to give you a complete listing search of our area. Sellers, I also have tools right on the front page for valuing your home as well as several pages devoted to helping you with marketing tips. Let me know how I can help you with all your real estate needs.

Orlando Real Estate, David Welch Real Estate Optimist

Tonight at 9:00pm

David Welch (Remax 200 Realty) — Thu, 12 Nov 2009 07:55:04 -0600

Which house will the choose? I cannot say, because I am sworn to secrecy. Watch HGTV's House Hunters tonight at 9:00pm (check your local listings outside Orlando) to find out which home Lisa and Doug will pick. I would love feedback from everyone on my performance as "the Realtor". I am not only a Realtor in real life, but after tonight I can say that I play one on tv too.

I am also pleased to say that my blog is getting a lot of attention. One of my posts has been quoted by the Colorado Springs Business Journal; I have had my posts quoted in the Orlando Sentinel; and I am now a featured blogger at Realtor.com - the number one real estate website in the world. Go to Talk.Realtor.com, and look for me on the right side of the screen. My posts are regularly featured, and I have also been asked to answer questions on Ask A Realtor. My blog is also in the running as one of the top blogs in Orlando. Please vote for me by clicking on the Orlando Sentinel.

I sell real estate here in Orlando too, so tune in tonight then give me a call tomorrow and we will talk about your real estate needs.

Orlando Real Estate, David Welch Real Estate Optimist

House Hunters in Orlando

David Welch (Remax 200 Realty) — Wed, 11 Nov 2009 07:25:49 -0600

Tomorrow, Thursday November 12th at 9:00pm look for me on HGTV's House Hunters. The last time I checked, my episode was still scheduled to air at that time. Check your local listings though to make sure. I want to thank Lisa and Doug for asking me to be part of this home search, and also for applying to be on the television show. I would not have thought to apply to be on the show myself. Since being part of this, I have been checking and House Hunters has actually already been to Orlando a few times this year. My friends at Talk.Realtor.com tell me that Orlando is pretty much at the top of the list for real estate searches.

I cannot think of a better place to be practicing real estate. Despite all the negative press you read every day, the bad times only last for a little while. I suspect we may very well be dealing with foreclosures for another three years as the banks work through their backlog. In the mean time, we are writing 3,500 contracts (not offers) a month and closing more than 2,000 transactions. The closings are what I would expect for our market, and the contracts are exceptionally strong numbers. I believe these numbers indicate a renewed demand in Orlando real estate. It is no wonder Orlando real estate searches have been so strong on Realtor.com and so many House Hunters episodes have been filmed here in The City Beautiful.

Orlando Real Estate, David Welch Real Estate Optimist

Look for Real Estate Prices to Drop in Orlando in November

David Welch (Remax 200 Realty) — Mon, 09 Nov 2009 08:47:10 -0600

Orlando real estate prices have been very stable for seven months now bouncing along the bottom between $125,000 and $135,000 since April. With the big push by first time home buyers to get into a home before the November 30th tax credit deadline, I am expecting prices to take a tumble this month. First time home buyers purchase less expensive homes for the most part, so I expect prices to be a bit lower in November and probably December. Looking at the pending inventory of nearly 9,000 homes, there are 3,775 that are expected to close this month with a median list price of $124,500. There are a couple of factors to consider though. First, 3,775 will not close this month. Looking at recent history, we can probably expect about 2,000 of them to close including the 250 or so that have already closed. The other consideration is the role short sales will play regarding prices. A lot of the ones that will not close are short sales which have much lower prices than "normal" sales. However, the short sale prices are typically much higher than the REO's. In the end it has typically been a wash with short sale prices hovering just below the overall median price.

With the list price running at $124,500, I expect our median sales price to be around $120,000 this month. While the impending end of the tax credit might have accounted for more lower priced sales this month, the extra competition for well priced homes likely pushed offers closer to the asking price. With the extension of the tax credit, I suspect many of these sales will end up closing in December as the urgency to close by November 30th wanes. With the extension and expansion of the tax credit, I am expecting the tremendous demand continuing well into next year. Until hiring picks up though, look for our prices here in Orlando to stay in a very affordable range. I do believe that we will see a slight tick up in hiring in the first quarter. I believe we may already be seeing a little improvement in hiring this quarter, but nothing to get too excited about yet.

By the way, watch for me on HGTV's House Hunters this Thursday November 12th at 9:00pm. Check your local listings.

Orlando Real Estate, David Welch Real Estate Optimist

Tax Credit Extension and Expansion Awaits President's Approval

David Welch (Remax 200 Realty) — Fri, 06 Nov 2009 07:19:57 -0600

The extension and expansion of the home buyer tax credit is on it's way to the White House for the President's signature as part of a broad financial package that will extend unemployment benefits. Notice that I did not call it a first time home buyer credit, because it is more than that with the expansion. First time home buyers (those who have not owned a home in the past three years) still qualify for up to $8,000. The income restrictions have been raised significantly to $125,000 for singles and $225,000 for joint tax filers. However a limit of $800,000 has been placed on the value of the home purchased. So, if you have been waiting to cash in that trust fund to purchase your first $1 million McMansion try scaling back to $800k to qualify for the credit. This latest extension of the credit begins December 1, 2009 and is good for closings through June 30, 2010. You must be under a binding contract by April 30, 2010 however to qualify for the credit.

Repeat purchasers get a little less back from Uncle Sam. If you have owned and used a home as your principal residence for five consecutive years out of the last eight, you can qualify for a credit of up to $6,500. The same income and home price restrictions apply. It is also important to note that the credit is only for primary residences. Repeat purchasers cannot use the credit for a second home. I cannot understand why this was important to law makers. Frankly, if you look at the states that need home buyers the most, they are also the states that probably have the greatest number of second home buyers (Florida, Nevada and California). There are other provisions in this legislation to help deter fraud, but I have not heard specifically what they are. Personally, I see the April 30 to June 30 period as having a tremendous potential for fraud as buyers and sellers once again come under pressure of the deadline.

On a completely unrelated subject; my House Hunters episode is tentatively scheduled to air November 12, 2009 at 9:00pm. Check you local listings.

Orlando Real Estate, David Welch Real Estate Optimist

Orlando Homes Sales Remain Stable in October

David Welch (Remax 200 Realty) — Tue, 03 Nov 2009 06:33:43 -0600

October closed out our fifth month in a row with over 2,000 closed sales. So far 2,004 have been posted for the month with a median sales price of $130,500. We have been hovering around $130,000 for seven months now ranging between $125,000 and $135,000. Of the 2,004 closes sales 832 or 41.5% were bank owned, almost 21% were short sales with 415 and the remaining 757 were "normal" sales. As usual we are seeing a pretty big difference in the median prices of these three groups. REO's came in at $80,000 while short sales were just under the over all median with $127,000 and "normal" sales had a median sales price of $180,000. The 415 short sales closed represent only about 7.5% of the total number of short sales under contract.

Total pending sales stand at 9,072 with 1,782 being REO'snd a whopping 5,544 classified as short sales. That leaves on 1,746 "normal" pending contracts. The "normal" sales tend to be higher priced homes, but also tend to close a bit more quickly once they are under contract. Short sales continue to be a drag on the entire real estate system taking six to eight months to obtain approval. The total inventory is down slightly to 15,778 with 1,255 bank owned properties and 5,583 short sales. Combined distressed properties represent just over 43% of our active inventory.

My blog post about the extension and expansion of the home buyer tax credit was featured on www.Talk.Realtor.com.

Orlando Real Estate, David Welch Real Estate Optimist

Tax Credit Extension and Expansion

David Welch (Remax 200 Realty) — Fri, 30 Oct 2009 08:58:49 -0500

Buyer beware. The tax credit has not I repeat has not been extended yet. It is looking more likely with key Senators agreeing to extend the current credit through the end of April and even as far as July 1, 2010. There is also an agreement to expand the qualifications for the credit to higher income buyers and repeat buyers who have lived in their home for five consecutive years out of the last eight. Right now this agreement has not even been voted on in the Senate. This is just a tentative agreement to go forward with legislation. There are still a number of obstacles in the way including the House of Representatives where concern over fraud from the exisiting program may hold things up. It is estimated that up to 100,000 of the tax credits submitted may have been fraudulent. That is a lot of zeros, and adds up to an $800 million ripoff.

Many in the Realtor community believe that it is just a matter of getting some fraud protections in place before the credit is extended and expanded. For now, it is not a done deal so govern yourself accordingly. Get your deal closed by November 30, 2009. Be careful with that date too, because many lenders are taking an additional day to fund transactions. November 30th is also just after the Thanksgiving holiday. A lot of lenders and title agents like to take that time off too. I would really recommend trying to close before Thanksgiving just to be safe. If the tax credit is extended and expanded, I will have the details on my tax credit web page.

Orlando Real Estate, David Welch Real Estate Optimist

What's Selling in Baldwin Park Orlando

David Welch (Remax 200 Realty) — Thu, 29 Oct 2009 08:37:59 -0500

In the last seven days there were 12 sales in Baldwin Park ranging in price from $431,300 to $714,900. So far this month there have been 27 contracts written on two condos, one townhome and 24 single family homes. The prices have ranged from $210,000 to $799,000 with a median list price of $449,900. Currently, there are 99 active listings in Baldwin Park and 62 pending sales with 151 closed so far this year. The median list price of the active listings is $437,500. The properties receiving contracts have a median list price of $349,500 while the closed sales have posted a median sales price of $332,000 on a list price of $359,900. The most recent month seems to be bucking the trend for the year with a median list price $80,000 and $90,000 higher than closed sales and pending sales thus far.

Overall that does not appear to be the case. Orlando Realtors have written 3,516 new contracts in October that are still pending (3,337) or closed (179). Of these only 943 or 27% are "normal" sales with bank owned accounting for 34% or 1,183 contracts and the remaining 1,392 almost 40% categorized as short sales. The median list price of the contracts this month is down around $117,900 which is far below the median sales price of $129,900 so far this month. This is probably in part due to the last big push by first time home buyers to take advantage of the tax credit expiring at the end of next month.

Orlando Real Estate, David Welch Real Estate Optimist

Orlando Real Estate Sales Still Hot!!

David Welch (Remax 200 Realty) — Wed, 28 Oct 2009 08:44:48 -0500

I posted on Twitter the other day that it was 90 degrees with the wind chill here in Orlando. Several people liked that. Our sales are continuing to persist like the summer time weather. We have over 1,500 closed sales so far in October, and it looks like we will have our 5th month in a row with more than 2,000 sales and our 7th month with a median sales price hovering around $130,000. It would be even hotter if every contract we write actually closed. Since April we have been writing more than 3,300 contracts each month with just over 2,000 getting to the closing table. Short sales are still slow to close with well over 5,000 pending of the 9,000+ contracts pending in our market place. REO's can be a little challenging, but close almost as well as "normal" sales. I can't remember if I have had a closing this year that actually happened on time because of delays in financing. This too shall pass, but I hope the strong demand continues for a while. Our inventory level seems to have leveled off just under 16,000 which is just about an eight month supply. First time buyer tax credit is set to expire in just over one month. I do not think we will notice much difference in demand here.

Orlando Real Estate, David Welch Real Estate Optimist

More Government Cheese

David Welch (Remax 200 Realty) — Mon, 26 Oct 2009 12:05:15 -0500

Mary Shanklin covers the real estate market for the Orlando Sentinel, and had a great article this morning on the state's attempt to turn the tax credit into down payment assistance. When this went into effect back in the summer, I checked with every lender I know. Every one of them had questions about how the assistance was going to be administered. Some were really trying to figure it out, and others just gave up immediately. With millions of dollars going unused, it appears to be another example of government cheese. If you remember back in the 80's the government gave away cheese. It was a program that really did not seem to help anyone other than the late night comics looking for good joke.

Down payment assistance for first time home buyers is not a joke. I believe the biggest obstacle to home ownership for most first time home buyers is the down payment. The FHA minimum down payment on the median priced home in Orlando of $130,000 is $4,550. Add to that closing costs that could also be around $4,500, and that is $9,000 the buyer needs to get into their first house. Many sellers are willing to put up the 3% toward the buyers closing costs, but well priced properties are frequently drawing multiple offers. The buyer with more cash wins that contest more often than not. Fully funding the existing state and local down payment assistance programs would be a better use of money than the tax credit. Some argue that the credit is supposed stimulate purchases after the closing of the home, but if the buyer does not have the cash to close in the first place there won't be a sale. Existing systems, processes and procedures are already in place, they just lack funds. We don't need more cheese, we need solutions that work.

Orlando Real Estate, David Welch Real Estate Optimist

First Time Home Buyer Tax Credit Running Out of Time

David Welch (Remax 200 Realty) — Thu, 22 Oct 2009 07:36:08 -0500

You can go to my webpage www.DavidWelch.com/taxcredit to keep an eye on the countdown clock for the tax credit. Keep in mind, this countdown is until closing. You must close your transaction by November 30, 2009 to be eligible for the tax credit. We are finding that a lot of transactions are being delayed, so I do not recommend setting a closing for the last day of the tax credit. That also happens to be right after the Thanksgiving holiday. If you are writing a contract today, push to close before Thanksgiving or you may miss the credit completely. Surveys seem to indicate that only about 15% of first time home buyers say the credit was a primary influence on their decision to purchase. The first time buyers that I have been working with agree with that sentiment.

Considering this, why would the government consider extending the credit. First time buyers probably make up less than half the buyers, so the credit is probably accounting for fewer than 8% of the sales. Here in Orlando sales are up nearly 50%, so the credit while appreciated, is not really doing much to stimulate additional sales. Low prices and low interest rates have much more to do with the increased demand in Orlando. The banks cannot get all the sales closed anyway with pending contracts rising to more than 9,100 here in the City Beautiful. In stead of extending the credit, let it expire and see what happens with demand for homes. If we actually see an appreciable drop as some speculate, then maybe the credit should be reconsidered.

On a side note, reports suggest that real estate and manufacturing are leading the country out of the recession. The two hardest hit segments of the economy are doing the most to turn things around. Go Real Estate!!!

Orlando Real Estate, David Welch Real Estate Optimist

Short Sale Article in Orlando Sentinel

David Welch (Remax 200 Realty) — Tue, 20 Oct 2009 07:52:57 -0500

There is a pretty good article in the Orlando Sentinel today by Mary Shanklin about short sales. The only thing I question is the statement that banks were approving short sales in seven weeks back at the beginning of the year. I have not seen that as a typical or average response. There are short sales that receive approvals very quickly, but they are generally limited to smaller banks that only have a handful of short sales that they are negotiating. Currently, there are just over 5,100 short sales pending and 199 have closed so far this month. We have seen between 350 and 450 closing each of the last few months which represents less than 10% of the total number of short sales with contracts on them. I typically see about half of the closings occurring by the 20th of the month, so if we double the short sale closings so far to 398 the closed to pending ratio is just under 8%. Let's compare that with "normal" sales of 354 so far this month. If you double that to 708 and as a percentage of pending "normal" sales of 1432, the closed to pending ratio is just over 49%.

This is where I have come to the conclusion that the average short sale that actually closes is around seven months. The closed ratio for "normal" sales is about seven times that of short sales. Unfortunately, time is the biggest enemy of a real estate transaction. While waiting on a short sale approval, how many more properties will come on the market or reduce their price luring the short sale buyer away. How many times can the bank or banks in a short sale ask the seller to bare their financial soul to them before it becomes disrespectful as the person in the article states. Realtors have been calling for banks to adopt a uniform streamlined process for dealing with short sales. Sometimes I do not believe the banks have a process at all.

If the banks did have a process it would go something like this: Step 1-Fax all the paperwork to the bank; Step 2-Call the bank (they did not receive the fax); Repeat steps 1 and 2 until the bank acknowledges receipt. This usually takes one to two months; Step 3-Call to check the progress (this takes another one to two months); Step 4-Phase 1 Negotiator assigned (re-send all the information you sent in step 1); Step 5-Broker Price Opinion ordered by negotiator; Step 6-File sent to Phase 2 Negotiator (re-send all the information you sent in Step 1 and Step 4); Step 7-Phase 3 Negotiator assigned. At this point the actual transaction could be approved or the negotiator will want to negotiate the sales price, the Realtor's commission, and the release of hostages to this process. Add a second mortgage or home equity line of credit to this situation, and things take even longer and become more difficult to resolve. Currently in Orlando there are 5,100 pending transactions going through this "process" with another 5,400 active short sales waiting in the wings.

Orlando Real Estate, David Welch Real Estate Optimist

Florida's Foreclosure Rate Drops

David Welch (Remax 200 Realty) — Thu, 15 Oct 2009 06:44:56 -0500

Check out Mary Shanklin's article in the Orlando Sentinel today, and see my quote at the bottom. Like the article states there are a number of possible causes for the slow down. Of course, if you read my last quote, I am holding out hope that we are really turning the corner on this trend. The three hardest hit states were also areas where the most speculative buying was taking place. The foreclosures I was seeing a year or two ago were frequently new or nearly new homes in fantastic condition. Investors were the first to just walk away from these properties, because they had little invested in them. Like the gentleman in Clermont in the article, most real home owners have struggled to hold on, but real estate crash has also taken its toll on the economy. This has made it difficult to impossible for many people to keep up. The second wave of foreclosures effected more families as ARM's adjusted and taxes soared. A lot of these properties suffered from more neglect as people let maintenance slip as they tried to hold on.

As all of this has played out over the last three years, prices have been on a continuous slide until about six months ago. Our median price in Orlando has been hovering around $130,000 since April. That is about half of the peak median price back in 2006. Also since April, new contracts have been piling up at better than 3,300 every month with over 3,800 written in September. If demand remains this strong, I do not expect to see prices drop any more. The price stability may also be having an impact on short sales and foreclosures. If you factor in the expected growth finally taking place in the economy and improvement in confidence, I believe we may be seeing a turnaround in the foreclosure trend. "Holy smokes!" I hope so.

Orlando Real Estate, David Welch Real Estate Optimist

Back to the Future, 2003

David Welch (Remax 200 Realty) — Wed, 14 Oct 2009 08:05:18 -0500

Pricing properties these days is tricky, with all the short sales and bank owned homes on the market. When you factor in all the people that bought homes in 2005-2008 you can see how current prices can be tough to swallow. I do believe I have some good news for people who bought in 2003 and before. This week I sold two homes that were essentially priced where they were in 2003. Both homes were purchased in 2003, both were priced within $5,000 of their sales price in 2003 and both homes brought a lot of attention and contracts in a relatively short period of time. They were both in excellent condition and easy to show. One home was priced in the $170's and the other one was priced close to $300k. This supports my thoughts that there is strong demand out there for good homes that are easy to show and priced correctly.

If you purchased a home in 2003 or before, and need to sell, find out what homes in your neighborhood were selling for in 2003. Compare that with the most recent sales and see if my observations are correct. I am sure there will be areas of town where this will be off, and it will be impossible to apply this to new areas that were developed after 2003. I would love to hear some feedback from you though if you think this works in your neighborhood.

Orlando Real Estate, David Welch Real Estate Optimist

Orlando October Real Estate Sales So Far

David Welch (Remax 200 Realty) — Tue, 13 Oct 2009 08:57:24 -0500

Active listings in Orlando remain basically unchanged with 16,045 homes on the market. There are 1,292 REO's or about 8% of the total active listings, and 5,385 short sales or about 34%. Pending sales continue to climb with 8,968 properties under contract. Over half are short sales with 4,972 or 55% being identified as being in a short sale situation and another 19% or 1,723 are bank owned. Closed sales so far indicate another good month with 490 closed with a median sales price of $131,500. Exactly 40% or 196 of these sales were bank owned with another 22% or 109 being short sales. The 109 closed short sales only accounts for about 2% of all the pending short sale contracts.

Orlando Real Estate, David Welch Real Estate Optimist

Challenges Facing the Real Estate Market

David Welch (Remax 200 Realty) — Mon, 12 Oct 2009 07:42:59 -0500

"I feel a blog coming on." That is what I told a customer of mine a couple of days ago as she and I went out again to look at some new listings that had come on the market. She put an offer on a Fannie Mae property on September 7th, Labor Day and today is October 12, Columbus Day. We have no answer, just that they are really busy and have not had a chance to get around to looking at the multiple offers on the property. Just in case you don't have your calendars out that is five weeks with no response from Fannie Mae. On top of the wait, is my concern that they may not accept her offer because it is contingent on Neighborhood Stabilization Program down payment assistance. She has already qualified for this assitance and the property is in the target area, so it is a done deal. Unfortunately, nobody seems to know what the NSP is. It is a part of the stimulus package that nobody seems to know about. In Orange county this money is being used for down payment assistance in specific target zip codes. If you have a question about it contact David Holbrook at Waterstone Mortgage at 321-945-1434.

Then I see this article in the Orlando Sentinel yesterday http://www.orlandosentinel.com/business/orl-first-time-home-tax-credit-101109,0,3568996.story. This reminded me to blog about what we are seeing here in Orlando. Since April we have been writing more than 3,400 contracts a month, not offers but contracts, but the most we have been able to close in a month is around 2,200. Demand for homes is fantastic, but actually being able to negotiate a contract is a challenge and closing the deal is almost as tough. If my experience is typical in the market, I would say the average buyer is writing a minimum of five to six offers and I have heard of people making more than a dozen to finally get a property under contract. That is just a result of the demand for properties. The greater frustration is that you wait for days and even weeks to find out that your offer has not been accepted by the bank. It is much easier to put a contract on a short sale, because they tend to be the last resort for some buyers. With only 10% of the pending short sales closing in any given month there is a lengthy wait and uncertainty if the deal will close at all.

Once you clear the hurdle of going from offer to contract there is still the financing contingency to clear. I have read that up to 1/3 of mortgages are being denied. A year after the financial meltdown and it is still difficult to obtain financing for a lot of potential buyers. The government has responded with appraisal guidelines that have made the process more convoluded and lengthy and new disclosure requirements that help nobody. In stead of changing the rules every month why not just return to basic lending principles, and make loans for borrowers who qualify.

I really do not believe we need an extension of the tax credit from a fiscal perspective or as a demand stimulus. I feel badly for the people who will not get to take advantage of this program. I feel even more badly for the people who have tried, but were unsucessful because the banks and Feds just do not have their acts together. Most first time buyers in our market are looking forward to the tax credit, but the low prices and super low interest rates are the big factors in making the homes affordable and driving demand. There are fantastic buying opportunities, great prices and low interest rates. Keep a stiff upper lip, and keep writing offers.

Orlando Real Estate, David Welch Real Estate Optimist

Surge in Orlando Real Estate Searches

David Welch (Remax 200 Realty) — Wed, 07 Oct 2009 08:23:11 -0500

I mentioned the other day that one of the great things about the internet is that you can measure everything. Realtor.com looked in searches by city and here are the top year over year increases http://www.realtor.com/realestate-news/Year-Over-Year-Home-Search-Increase-August2009.aspx

Florida dominated the top 20 with 10 cities and one regional search having some of the biggest year over year increases in searches. Orlando came in at number eleven with a 67.7% increase over last year. Central Florida as a regional search came in at number ten with a 67.8% increase. These numbers are definitely true to the sales numbers we have been seeing. Our sales in Orlando are up around 50% compared to last year, and could be much higher than that. New contracts are up around 100% from last year, but the banks have created such a log jam with short sales and REO's and making loans. Last month there were around 3,700 new contracts but fewer than 2,200 actually closed. I read recently that banks are only approving about 2/3 of loans. Of course the only thing slower than the banks is the government. I have a customer that made an offer on a Fannie Mae foreclosure over three weeks ago, and all they can say is that they are too busy to give us an answer.

The surge in interest and demand for homes here is definitely great news. If the banks can just get up to speed, we will see tremendous improvements.

Orlando Real Estate, David Welch Real Estate Optimist

Business Planning for Short Sales

David Welch (Remax 200 Realty) — Tue, 06 Oct 2009 09:24:39 -0500

Short sales undeniably make up a considerable portion of our market here in Orlando. They account for about 5,500 of our 16,000 active listings and about 4,400 of our 8,700 pending contracts. They only accounted for about 450 of our 2,100 closed sales last month, and that was a big increase over August's 350. I believe this might be the start of a trend. The Fed is continuing to purchase mortgage backed securities through the first quarter of 2010 but at a slower pace. When this practice ends, banks I believe will be forced to begin addressing short sales seriously. Right now though only about 10% of the pending short sales are closing each month. This made me start thinking about what it would take to make a business out of short sales.

Let's assume you want to make $100,000 per year selling short sales, and also assume a commission split with the broker of 50%. That means you have to generate $200,000 in commissions selling short sale listings. Assume for this example you only work short sales from the listing side. This would require selling $8 million in real estate with a commission of 5% split with another broker. The average selling price of the short sales in our market in Orlando is about $160,000, so you would need to sell 50 homes. Let's just call that four houses per month. With only about 10% of the short sales closing in any given month, you would need to have 40 pending sales to see four closed. If you look at the market averages, you would need to carry about 90 listings to have 40 pending. If you have a one year listing agreement, then you will probably lose about seven listings a month between expireds and foreclosures. You will need to replace the four that close. Typically about 1/3 of deals fall apart, so you are likely to lose some of those listings. If you lose half of the deals that don't close that adds another six new listings you need to replace your inventory. By my count, you need to list 17 homes a month to keep up the pace.

You will definitely need at least a couple of assistants to help with this kind of volume. There goes the profit margin. Of course with that kind of listing inventory, you should be able to keep a couple of buyer's agents very busy. That should help with the profitability of your business.

Best of luck.

Orlando Real Estate, David Welch Real Estate Optimist

Summer Sales Roll Into Fall

David Welch (Remax 200 Realty) — Wed, 30 Sep 2009 09:04:20 -0500

It feels like Fall outside with high temperatures today only reaching the mid 80's and very little humidity. This morning almost felt crisp and cool. My wife told me she saw it snowing somewhere on the news the other day, and I really feel sorry for people that are already facing old man winter. We usually don't see a real cooling trend until about the end of October, but today's weather is a nice reminder of how fantastic Fall and Spring are here in Orlando. Even though the weather may be succumb to the season, our sales seem to be continuing the Summer trend. As of this morning there have been 1,706 sales posted for September, and I suspect that number will continue go up and pass the 2,000 mark by the time all the sales are recorded. I also can see October shaping up to be a pretty good month for sales as well. Frankly, October is typically has a bit of a surge before the holiday slow down. With the first time home buyer tax credit expiring at the end of November, I expect the surge to continue through November.

Our pending sales continue to rise with over 8,900 homes under contract as of this morning and more than 3,700 new contracts written this month. It appears we are continue to outsell the banks' ability to keep up with short sale, REO and loan approvals. I personally could close eight more transactions in October that require bank cooperation. I expect I will close one of those deals in October, maybe two. Talk about a boost to my own personal economy and the personal economies of the title agents, loan officers, appraisers, surveyors, and inspectors involved in these potential sales. I have read that up to 60 people "touch" each real estate transaction that closes, so let's keep the summer time sales rolling in.

Orlando Real Estate, David Welch Real Estate Optimist

Orlando Median Price Article in Orlando Sentinel

David Welch (Remax 200 Realty) — Mon, 28 Sep 2009 06:59:39 -0500

I was called by Mary Shanklin from the Sentinel to comment on this piece, but I have been sick for the last few days, and not so quick to return calls and e-mails. http://www.orlandosentinel.com/business/orl-bk-home-resales-florida-092409,0,6291593.story Mary, thank you for calling, and I apologize for not getting back to you in a timely manner. Please keep me in mind in the future. While Orlando's median prices are lower than the state average, I believe that was actually typical prior to the 2005 boom and bust. As far as the lower condo prices in Orlando are concerned, you have to keep in mind that the other big condo markets around the state are on the coast. We don't have any ocean front or gulf front condos to pull our condo prices up.

My only other comments I have to share involve the impact of distressed properties on our market. There are over 5,000 active short sales and more than 4,000 pending short sales listed by Orlando Realtors in our MLS. These make up roughly a third of our active inventory and half of our pending inventory of homes. That is definitely having an impact on our marketplace right now. Fewer than 10% of the pending short sales have been closing each month though as banks continue to show no discernable method to their short sale approval process. Bank owned properties also have had a big impact on our market, although making up a much smaller percentage of the active and pending listings. REO's are making up a considerable percentage of our actual closed sales. About one in thirteeen active listings is bank owned, one in eight pending sales belong to the banks and about one in three of the closed sales is an REO property. If the banks could get things approved and closed we would be seeing huge sales each month. As it is, our sales are running almost 50% better than last year. That is not a bad start.

Orlando Real Estate, David Welch Real Estate Optimist