Jerry LaRose, ABR, GRI, e-PRO, CLHMS Winter Garden FLorida, Orlando, Windermere FL Real Estate

The question beckons - How Low Can You Go?

How much lower can this crazy Orlando Real Estate market go. Well, Here's my thoughts and one way to look at it.

When a renter can pay only approx. 20-30% more in their rent payment and own a home, They'll Buy!

OK, what does that mean?

Right now a 3/2 home at $200,000 would cost approx. $1600 Principle Interest Taxes & Insurance (PITI).

A 3/2 Home to rent in general is renting for $1200-$1300, meaning that when that average 3/2 home comes down to $200,000 that renter would rather buy instead of rent.

Right now that 3/2 Home is costing approx. $240,000. That means that that average home still has to come down $40,000 or 16% for that average renter to BUY.

OK, that's my opinion and we know what they're like!

No one knows. What's clear, however, is that a seller's disaster may be a buyer's opportunity. A Florida retirement may now represent an opportunity to exchange a high-priced home elsewhere for a bargain-priced home in sunny Florida. However universal the decline, this isn't bad news for everyone. It means a half-empty glass for sellers. But it may also mean a half-full glass for buyers.

An opportunity checklist

Here is a precautionary list for bargain hunters.

• A bargain is about more than price. If the property is an ugly dog, it doesn't matter how low the price is, don't buy it. Remember, many of these houses and condos were built by brainless builders funded by nitwit lenders.

• Avoid developments that are not yet complete. You don't know how, when or if the project will be finished. Equally important, you don't know what the long-term homeowners association costs will be because they may be subsidized by the developer at first.

• Read the homeowners association bylaws carefully. Make sure you understand the restrictions and how they would affect your property. Some would protect you. Others might make it difficult to rent the property or sell it in the future. Pay particular attention to the association reserves. If the financial reserves are small, you could be walking into a major future assessment.

• Remember, Florida is hurricane territory. If your development has canals, docks and other water features, there can be significant assessments for repairs. Don't buy if you don't have the money to cope with special assessments.

• Check the water sources for your community. A long-term drought has reduced the water level in many canals by as much as 3 feet. It also has led to strict rationing of irrigation. Some communities have deep wells for irrigation. Others have shallow individual wells that may run dry.

• If boating is your aim, check the depth of the canal or other access to open water. Similarly, if living on a golf course is your goal, don't assume it will be there forever. Check the finances and membership of the club.

• Check the health-care services in the area, particularly if you have special needs or an unusual malady.

• If you wouldn't be living there full time, make certain the homeowners association is responsible for all yardwork. That determines, in large measure, the appearance of your development and how you would experience it.

• Don't buy a property planning on future rental income. With thousands of rental properties competing for the same renters, you'd likely be playing a game of rental musical chairs.

• Do buy a house or condo if you have a solid personal use for it, such as retirement, partial retirement or family vacation home.

• If you wouldn't be living there full time, explore the ease and cost of air transportation and car rentals. Include a budget for these in your planning.

Though the national index figures reflect the illusion we most favor -- a steady and virtually guaranteed rise in home prices -- a very different picture emerges when you examine price indexes by state or metropolitan area. Here are some examples.

• In Houston, the first Texas city to fall in the oil bust, the home-price index peaked at 108.5 in 1983. It also bottomed early, hitting 81.5 in 1987. But it was a long bottom: The index didn't recover to its 1983 level until 1997. So recovery from the market top took a full 14 years.

• San Antonio peaked in 1984 at 109.7, didn't bottom out until it hit 82.5 in 1990 and didn't recover to its old high until 1995, a period of 11 years.

• Austin peaked in 1986 at 100.1, falling to 72.7 in 1991 and reaching recovery in 1994, about eight years.

• Dallas also peaked in 1986, at 110.1, bottomed at 94.3 in 1989 and regained its old peak in 1997, a period of 11 years.

The Texas template tells us we could be in for a 14% to 25% decline and an eight-year to 14-year wait for recovery. That's real history. It's not hyperventilation from the Chicken Little chorus.

You should also know that big-time housing comedowns aren't unique to Texas. Comedowns also hit other markets. Los Angeles peaked in 1990, bottomed in 1995 and wasn't fully recovered until 2000. Boston peaked in 1988, bottomed in 1992 and hit its recovery number in 1997.

Bottom line: Love your house for the shelter and peace it provides.