Back in 1984 (I think) I went to the Enzian Theatre in Winter Park, Florida with my girlfriend and another friend of ours to see the concert film by The Talking Heads. Twenty seven years later, that movie's title "Stop Making Sense" seems very appropriate for describing the Orlando real estate market. Last week I closed on a property that I have been working on since September of 2008. I have had no trouble getting it under contract, but the short sale approval was another story. I believe I actually had it approve four times before we finally were able to get the deal closed. It started out as a Countrywide short sale, but while we were under contract the first time, it was transferred to Bank of America. The delay cause by the change caused us to lose our first buyer. Then BofA moved their short sale department, and they through away everthing they were working on (seriously, that is what they told me). This delay caused us to lose the second buyer. Then they approved a loan modification for the sellers - who never applied for it, etc, etc, etc.
The banks, especially Bank of America have gotten much better in communicating with us on short sales, but still need to work on their approval processes. Right now, there is a real shortage of homes for sale here with only about a four month supply of inventory. This should benefit the short sales we are working on right now, because buyers I believe are willing to allow for a little more time. There are still over 7,300 short sales pending and 3,000 active - this IS the shadow inventory. This shadow is the main reason we are not seeing bigger price gains. Inventory is down more than 40%, but prices are only up about 7%. Of course, tell that to the seller who recently listed their house at $1,250,000 when the last sale of the same floorplan in the same neighborhood closed a few months ago for $725,000. That's more like 70% not 7%. Somebody got their decimal point in the wrong place. The banks are also trying to cash in on the lower inventory. I have it from a very reliable source some of the bank owned properties are being priced substantially higher than their broker price opinons. They are "testing" the market to see if they can push prices up a bit. You see, many of the bank owned sales are all cash deals and so there is not an appraisal issue. Of course, at least one that I believe is a test property is over priced by 30%. If they went 10% over they would probably get it sold.
What does make sense is to buy in Orlando. Currently, affordability numbers are through the roof. Rents have been on the rise, and it is now far more expensive to rent in Orlando (over 30% higher) than it is to own. Prices are low and so are interest rates. Now is definitely the time to take advantage of the market, but be patient not much else makes sense.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone
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