"When do You Think The Market Will Stabilize?"

"When do You Think The Market Will Stabilize?" I was asked today by an asset manager about a condo in an area in Kissimmee. Here is how I responded.

"Hidden Cove is in an area that is economically dyeing in town. The low cost of housing has brought crime in the area. This community is slowly deteriorating. This is a gated community, but the gates don't work. Stabilizing will start when unemployment gets back to single digits. Our county is already at 10.4% which is above the national average. Tourism is the biggest part of our economy. Hotels and the theme parks are down with projections of 2010 not being any better.

My wife works for Marriott hotels in her 25th year. Next years bookings are down and the projections are not good. Property values are still declining and with Home Valuation Code of Conduct (HVCC)rules, I don't see any change. I sold a 2009 home last week for $215,000 only to have the appraisal come in at $135,000. This was a brand new home. The appraisal did say the replacement value was $195,000. So if builders are going to lose 30% of value on completion, they won't build. If they don't build, foreclosures are going to rule the appraisals under HVCC. So, until the economy picks up, and the foreclosures stop. the values here in one of the top 3 foreclosure markets in the United States has no chance of recovery.

This market is not stabilizing yet, and it will be one of the last in the US. Values are down about 25% in single family homes over the last year. Condos, because of the number of condo conversions that took place from 2004-2006, the condo market is down almost 40% in the past year. HOA dues are not being paid, so the community deteriorates.

I hope this helps. Sell as quick as you can, or wait 2+ years.

This sounds grim, but it is what I believe we are looking at. Maybe if we abandon conventional financing, and only use the Government programs, offered by our Government lenders Freddie & Fannie, we have a chance. Seems convenient.

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