Sales are up! For the past couple of months we've been closing over 2000 homes a month. We haven't seen numbers like that since mid '06. Of those sales, 58% were what would be considered ‘normal' sales and 42% were either bank-owned or short sales.
The pending sales, those under contract, increased as well for the sixth straight month. While this used to be a good indicator of future closings, I don't feel it is as accurate as it used to be since many under contract do not make it to the closing table.
Inventory has been pretty much steadily dropping for the past year - down over 7000 properties to 17,231. We still have a long way to go as during a normal cycle we would see an inventory of about 7K homes.
The affordability index for Orange & Seminole counties is 181.48. An affordability index of 100 tells you that a median income family can qualify for a median priced home. Therefore, a higher index number shows you that they are more than qualified.
Current low interest rates should also be fueling increased demand as is the $8K tax credit.
So why are so many people still on the fence?
Well some do have the legitimate fear of losing their job. That is wholly understandable and should be a major consideration when undertaking a purchase of a home. But at the same time many are still frightened that prices will still drop. I can only talk about the Greater Orlando/Central Florida region, but I doubt if that will happen unless something catastrophic occurs. But that's out of our control in almost any situation, anyway.
The other side of the coin is that interest rates will rise. That is an inevitability that we have to face. They will not stay at these levels much longer. That will also affect affordability in that as they rise homes become less affordable.
I think we are on the road to recovery. Granted, it won't happen overnight, but neither did the debacle that we're dealing with. We can not lose sight of the fact that real estate is a long-term investment. The run up and run down of the market has put us below the level where we should be at this time. But we will get back there. It will take time. Real estate is not supposed to appreciate like we saw, but at the same time it is a good investment. But as with any good investment, you have to put into it and nurture it & not take out from it and rape it (home equity loans).
Till next time...Marc It Sold!