I talk about supply and demand a lot in my blog, because it all boils down to those two economic fundamentals. Some other blogs recently have quoted my posts to support somewhat different conclusions about the Orlando real estate market. This and a question from one of my collegues, made me wonder how our market has changed since last year. In August 2010 we had 16,544 homes for sale in Orlando. In August 2011 that number has dropped 42.7% to 9,474. So, the supply has dropped significantly, what about demand? A year ago there were 2,287 sales, but this year that number climbed 6.6% to 2,437. Not as dramatic as the decline in inventory, but a solid increase in demand. The effect on the median price is in between. In August of 2010 the median sales price was $96,000, and it climbed 19.8% to $115,000 this August.
Here is where the supply and demand curves get a little tricky. I am not completely sure that I would say prices are increasing. The mix of sellers has changed though over the last year. In August last year there were 1,136 bank sales with a median price of $66,900. The number of bank sales dropped 41.6% to 663 as the availability of REOs has declined significantly. Even though the number of sales has dropped, the median price of bank owne properties has been driven up 17.3% to $78,500. The opposite has occurred in short sales and equity sales. In August 2010 there were 498 closed short sales with a median price of $98,500. In August 2011 there were 778 closed with a median price of $93,450. Short sales increased 56.2% while the median price of short sales dropped 5.1%. The same happened with equity sales. In August 2010 there were 654 normal equity sales with a median price of $165,000. In August 2011 there were 1,183 equity closings with a median sales price of $156,000. That is an 80.9% increase in the number of sales while the price dropped nearly 5.5%.
This may be illustrating the point that buyers are still in the stronger negotiating position. They will buy, but only if they feel they are getting the right price. It could also be the result of sellers, short and equity, reducing their prices to be more competitive in the market. Bank owned properties are already priced lower, and with fewer available have not had to be as competitive on price. Regardless of the conclusions you may draw from this, the facts are: far fewer homes are for sale, the number of sales is up slightly, and the median price is up. Supply and demand appear to be working, but probably need a closer look.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone
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