David Welch

October closed out our fifth month in a row with over 2,000 closed sales. So far 2,004 have been posted for the month with a median sales price of $130,500. We have been hovering around $130,000 for seven months now ranging between $125,000 and $135,000. Of the 2,004 closes sales 832 or 41.5% were bank owned, almost 21% were short sales with 415 and the remaining 757 were "normal" sales. As usual we are seeing a pretty big difference in the median prices of these three groups. REO's came in at $80,000 while short sales were just under the over all median with $127,000 and "normal" sales had a median sales price of $180,000. The 415 short sales closed represent only about 7.5% of the total number of short sales under contract.

Total pending sales stand at 9,072 with 1,782 being REO'snd a whopping 5,544 classified as short sales. That leaves on 1,746 "normal" pending contracts. The "normal" sales tend to be higher priced homes, but also tend to close a bit more quickly once they are under contract. Short sales continue to be a drag on the entire real estate system taking six to eight months to obtain approval. The total inventory is down slightly to 15,778 with 1,255 bank owned properties and 5,583 short sales. Combined distressed properties represent just over 43% of our active inventory.

My blog post about the extension and expansion of the home buyer tax credit was featured on www.Talk.Realtor.com.

Orlando Real Estate, David Welch Real Estate Optimist

In the last seven days there were 12 sales in Baldwin Park ranging in price from $431,300 to $714,900. So far this month there have been 27 contracts written on two condos, one townhome and 24 single family homes. The prices have ranged from $210,000 to $799,000 with a median list price of $449,900. Currently, there are 99 active listings in Baldwin Park and 62 pending sales with 151 closed so far this year. The median list price of the active listings is $437,500. The properties receiving contracts have a median list price of $349,500 while the closed sales have posted a median sales price of $332,000 on a list price of $359,900. The most recent month seems to be bucking the trend for the year with a median list price $80,000 and $90,000 higher than closed sales and pending sales thus far.

Overall that does not appear to be the case. Orlando Realtors have written 3,516 new contracts in October that are still pending (3,337) or closed (179). Of these only 943 or 27% are "normal" sales with bank owned accounting for 34% or 1,183 contracts and the remaining 1,392 almost 40% categorized as short sales. The median list price of the contracts this month is down around $117,900 which is far below the median sales price of $129,900 so far this month. This is probably in part due to the last big push by first time home buyers to take advantage of the tax credit expiring at the end of next month.

Orlando Real Estate, David Welch Real Estate Optimist

I posted on Twitter the other day that it was 90 degrees with the wind chill here in Orlando. Several people liked that. Our sales are continuing to persist like the summer time weather. We have over 1,500 closed sales so far in October, and it looks like we will have our 5th month in a row with more than 2,000 sales and our 7th month with a median sales price hovering around $130,000. It would be even hotter if every contract we write actually closed. Since April we have been writing more than 3,300 contracts each month with just over 2,000 getting to the closing table. Short sales are still slow to close with well over 5,000 pending of the 9,000+ contracts pending in our market place. REO's can be a little challenging, but close almost as well as "normal" sales. I can't remember if I have had a closing this year that actually happened on time because of delays in financing. This too shall pass, but I hope the strong demand continues for a while. Our inventory level seems to have leveled off just under 16,000 which is just about an eight month supply. First time buyer tax credit is set to expire in just over one month. I do not think we will notice much difference in demand here.

Orlando Real Estate, David Welch Real Estate Optimist

Mary Shanklin covers the real estate market for the Orlando Sentinel, and had a great article this morning on the state's attempt to turn the tax credit into down payment assistance. When this went into effect back in the summer, I checked with every lender I know. Every one of them had questions about how the assistance was going to be administered. Some were really trying to figure it out, and others just gave up immediately. With millions of dollars going unused, it appears to be another example of government cheese. If you remember back in the 80's the government gave away cheese. It was a program that really did not seem to help anyone other than the late night comics looking for good joke.

Down payment assistance for first time home buyers is not a joke. I believe the biggest obstacle to home ownership for most first time home buyers is the down payment. The FHA minimum down payment on the median priced home in Orlando of $130,000 is $4,550. Add to that closing costs that could also be around $4,500, and that is $9,000 the buyer needs to get into their first house. Many sellers are willing to put up the 3% toward the buyers closing costs, but well priced properties are frequently drawing multiple offers. The buyer with more cash wins that contest more often than not. Fully funding the existing state and local down payment assistance programs would be a better use of money than the tax credit. Some argue that the credit is supposed stimulate purchases after the closing of the home, but if the buyer does not have the cash to close in the first place there won't be a sale. Existing systems, processes and procedures are already in place, they just lack funds. We don't need more cheese, we need solutions that work.

Orlando Real Estate, David Welch Real Estate Optimist

You can go to my webpage www.DavidWelch.com/taxcredit to keep an eye on the countdown clock for the tax credit. Keep in mind, this countdown is until closing. You must close your transaction by November 30, 2009 to be eligible for the tax credit. We are finding that a lot of transactions are being delayed, so I do not recommend setting a closing for the last day of the tax credit. That also happens to be right after the Thanksgiving holiday. If you are writing a contract today, push to close before Thanksgiving or you may miss the credit completely. Surveys seem to indicate that only about 15% of first time home buyers say the credit was a primary influence on their decision to purchase. The first time buyers that I have been working with agree with that sentiment.

Considering this, why would the government consider extending the credit. First time buyers probably make up less than half the buyers, so the credit is probably accounting for fewer than 8% of the sales. Here in Orlando sales are up nearly 50%, so the credit while appreciated, is not really doing much to stimulate additional sales. Low prices and low interest rates have much more to do with the increased demand in Orlando. The banks cannot get all the sales closed anyway with pending contracts rising to more than 9,100 here in the City Beautiful. In stead of extending the credit, let it expire and see what happens with demand for homes. If we actually see an appreciable drop as some speculate, then maybe the credit should be reconsidered.

On a side note, reports suggest that real estate and manufacturing are leading the country out of the recession. The two hardest hit segments of the economy are doing the most to turn things around. Go Real Estate!!!

Orlando Real Estate, David Welch Real Estate Optimist