Judy Chapman, REALTOR® ~ Short Sales / Luxury & Lake Properties

Start with the World Wide Web ... with emphasis on the word ‘world’.

Add e-mail, mobile phone communication, plus global delivery options, and a long-distance purchase can easily come together.

Granted, purchasing a house sight-unseen—or should I say, only seen via photos, description, and virtual tour—isn’t for everyone. But if you’re living overseas and want to ...

1) invest in America

2) purchase a vacation home or

3) re-patriot after a sojourn away from our shores

... buying a house over the Internet is not only doable, but done every day.

So this is my invitation: Come to Orlando, FL, where the temperatures are balmy, the palm trees are abundant, and the fun is inexhaustible.

My major service area is in the east Orlando corridor, which includes East Orlando, Lake Nona, Vista Lakes, and Oviedo. The housing on this suburban side of town is generally single-family homes and townhomes. Many properties were built over the last 10 years and offer buyers sound construction, upgrades galore, large square footage, easy access to major toll roads, and proximity to important sites like the University of Central Florida (UCF), the Kennedy Space Center, Orlando International Airport, and Disney.

Below you will see homes for sale in just one of our many east Orlando neighborhoods.

The following graphs are intended to give you an easy-to-understand summary of what’s been happening in the Orlando real estate market over the past year.

# of Homes Sold Annually

As can be seen by the first graph, the last couple of years have been tough for Orlando-area homeowners trying to sell their houses. After seeing a high of nearly 27,000 houses sold in 2005, by the time 2008 came to an end, we experienced a sharp decrease to less than half this rate.

Though the full year of 2008 was down to the lowest levels we’ve seen in several years, not all is doom and gloom. Even if 2008 began at a low level, it progressively improved through mid-year.

From late summer into autumn, though, the market showed signs of weakening. By year-end, however, the trend was starting to look hopeful with a very strong uptick in December. The last month of 2008 improved 25% compared to prior month and a 24% compared to December 2007.

Foreclosure Sales

The percentage of homes sold due to foreclosure difficulties steadily increased from 12% in January 2008 to nearly half of all sales, or 48%, by December.

This indicates that buyers are definitely out there, but many are searching for ‘short sale’ or ‘bank-owned’ properties. These are homes whose prices have been slashed in order to relieve both financially troubled homeowners and overburdened mortgage lenders. Understandingly, this has put downward pressure on home prices across the board, as demonstrated in the following chart.

Average Price of Homes Sold

Full year 2008 saw a sharp 17.5% decrease in the average sales price. Most of this weakness occurred in the second half of the year, most likely the direct outcome of increased short sales.

If there is any good news to be drawn from this chart, it’s this. Anyone who purchased their home prior to mid-2005—provided they didn’t borrow against equity—are in a strong position to sell their house without being in an upside-down position, that is, owing more on their loan than their house is worth.

Inventory

The number of houses available for sale rose to an all-time high of over 20,000 in 2007. With less and less buyers out in the marketplace, more and more home sellers were forced to wait months and months, sometimes up to a year or more. However, the end of 2008 showed a strong improvement in the inventory level, which decreased by nearly 14% compared to a year ago.

Generally, when inventory levels rise, sale prices tend to stabilize or, as we’ve seen recently, drop. Conversely, when inventory levels shrink, prices tend to go up. Even so, given the hard economic times we’re currently experiencing, we may have to be content to merely see sale prices stabilize. This would be a good ... no great ... outcome.

Conclusion

If you’re a homeowner who has been in a wait-and-see mode — yet you really want to sell, either to move up to a bigger house, downsize to a smaller house, or relocate to another area — stop waiting. The real estate market here in Orlando isn’t about to recover overnight. And when you do sell, you’ll be in a terrific position to buy.

If you’re a renter or first-time homebuyer, this is a great time to take advantage of recent price drops. The worry, of course, is that prices will continue to erode. But if you go into the purchase with the idea that you intend to stay in your home for at least 5 years, then go ahead and make the plunge. With inventory finally decreasing, we may well have already, or will soon, see the bottom of this market.

The statistics shown below indicate how fast ... or s-l-o-w ... houses are selling in your area.

If you have to sell your house, you must take into account your community’s Absorption Rate. The concept is easy to understand once you understand the formula.

First, you must know how many homes sold over the last year.

Then you must determine the Absorption Rate, or average number of homes that have sold on a monthly basis.

From the Absorption Rate, you can easily estimate how fast the current inventory of available homes will sell.

The larger the current inventory—or ‘active listings’—the longer it will take any one home to sell.

If there are twice as many active listings available for sale than the current absorption rate, it will take twice the amount of time, or 2 months, to sell out current inventory, provided no new homes enter the market.

If there are three times as many active listings for sale than the current absorption rate, it will take three times the amount of time, or 3 months, to sell out current inventory.

The longer it takes for the current inventory to deplete, the more necessary it becomes for sellers to price their house in a strong competitive position versus all the other houses currently for sale.

It follows that the lower the price, the faster the sale.

If you’re a homeowner looking to sell your house in 2009, remember this:

‘Denial’ isn’t a river in Egypt.

Denial is clinging to the notion that you can sell your house for more money than a buyer in today’s market is willingly to pay.

This is where a knowledgeable real estate agent becomes more important than ever, because the more familiar your agent is with the fluctuations of the current marketplace, the quicker you’re likely to sell your house. And in this unsure market, that means putting more money into your pocket.

Good news for year-end 2008!

December Sales for Orange & Seminole Counties Combined wase up 25% compared to prior month and 24% compared to a year ago.

The trendline indicates a nice increase since the dramatic lows in the second half of 2007.

Of the 1,110 closed sales for December 2008, 530 were foreclosure, short sale, or bank-owned properties, which represents 48% of total sales. This percentage was down compared to the prior month's 51%, itself an all-time high. At the beginning of the year, a total of 77 foreclosure-type sales represented only 12% of total sales.

The statistics shown below indicate how fast ... or s-l-o-w ... houses are selling in your area.

If you have to sell your house, you must take into account your community’s Absorption Rate. The concept is easy to understand once you understand the formula.

First, you must know how many homes sold over the last year.

Then you must determine the Absorption Rate, or average number of homes that have sold on a monthly basis.

From the Absorption Rate, you can easily estimate how fast the current inventory of available homes will sell.

The larger the current inventory—or ‘active listings’—the longer it will take any one home to sell.

If there are twice as many active listings available for sale than the current absorption rate, it will take twice the amount of time, or 2 months, to sell out current inventory, provided no new homes enter the market.

If there are three times as many active listings for sale than the current absorption rate, it will take three times the amount of time, or 3 months, to sell out current inventory.

The longer it takes for the current inventory to deplete, the more necessary it becomes for sellers to price their house in a strong competitive position versus all the other houses currently for sale.

It follows that the lower the price, the faster the sale.

If you’re a homeowner looking to sell your house in 2009, remember this:

‘Denial’ isn’t a river in Egypt.

Denial is clinging to the notion that you can sell your house for more money than a buyer in today’s market is willingly to pay.

This is where a knowledgeable real estate agent becomes more important than ever, because the more familiar your agent is with the fluctuations of the current marketplace, the quicker you’re likely to sell your house. And in this unsure market, that means putting more money into your pocket.