David Welch

I have to say that today was a little exhausting. We started at 9:00 this morning in Baldwin Park, and finished in downtown Orlando around 7:00 this evening. It is a lot of fun for me, but really hard work for the director, the camera and sound guys. They all did a great job though, and I felt like we accomplished quite a bit. Of course, what do I know. I have never done anything like this before. All the professionals agreed that we did get quite a bit done today, and we should be a little ahead of schedule. Hopefully, this means our episode will be on sooner rather than later. The couple I am working with Doug and Lisa are terrific too. This was a long day in the heat and afternoon thunderstorms, but they were real pros at this.

I am really excited to be part of this and would like to thank Doug and Lisa for inviting me on this adventure. Keep your fingers crossed that we find the right house for them. Will it be house number one, two or three?

Orlando Real Estate, David Welch Real Estate Optimist

I wrote a little while ago about the state of Florida making it possible for first time buyers to be able to use the tax credit up front. There are couple of issues that seem to be holding this up. First, the state and county governments seem to be a little at odds as to how to administrate and exactly who is fronting the money. Second, I have heard that the plan is to make this money in the form of an 18 month balloon loan, which I understand may be in conflict with FHA policies. Since most first time buyers are using FHA financing this could be a big deal. Finally, the banks are still trying to figure out how this fits into the whole financing scenario.

When you add these issues with the fact that FHA will not allow this money to count toward the buyers' 3.5 percent out of pocket and the fact that we are quickly running out of time (see my tax credit countdown), I believe it is unlikely this will help many people. The good news is that there is still time to take advantage of the tax credit. If you just are not able to find a home and close before November 30 this year, great deals will still be available in Orlando real estate for while. Right now, prices have stabilized and the market has been experiencing solid sales numbers. Until we work through the foreclosures and short sales and the job market begins to improve prices will remain lower.

I do believe that the super low interest rates will begin to rise first as economic indicators continue to turn positive. Then jobs numbers will begin to improve slowing the number of short sales and foreclosures. This will also cause sales to pick up and begin to push home prices back into an upward trend by the end of the first quarter next year.

Orlando Real Estate, David Welch Real Estate Optimist

My dad used to say figures lie and liars figure. I don't know that he made that up, and I don't mean to call anyone a liar. I do want to point out how the same numbers can be used two different ways to make very different points. DISCLAIMER: My blog is RealEstateOptimist.com, so I tend to see the glass half full. Bad news sells papers, so the media tend to report...bad news. Last night on the ABC evening news the government report on new home sales was actually reported in a positive light, as it should be in my opinion. Sales in June were up 12% year over year. The exact same report showed little change in sales compared with May, so the Orlando Sentinel reported "US New Home Sales Flat".

It has been my experience that there is a positive side to many situations. The bible says that God uses everything for good; I just can't always see it. I do believe that there are some good things going on in the real estate market right now. Since prices in Orlando have dropped to half of their highs of 2005 and 2006, affordability is through the roof here. The combination of lower prices and lower interest rates has pushed our affordability to the highest levels I have ever seen. In May the affordability index reported by the Orlando Regional Realtor Association was nearly 200. An affordability index of 100 would indicate the median wage earner can afford the median priced home. At 200 the same median wage earner can afford two median priced homes. June's prices went up slightly as did the interest rates, so the index dropped into the 180 range, but that is still 40 to 50 basis points higher than what we have typically seen in Orlando.

Thank you ABC news for the positive report last night.

Orlando Real Estate, David Welch Real Estate Optimist

I have been a full time agent in the Orlando real estate market since 1997. Around 2000 I began to see a real change in our marketplace here, with sales picking up faster and prices going up more quickly than historical averages. Our systems were not as good as they are today, and our association statistics were not as readily available. So, it was more of a gut feeling than anything else when our market started to really heat up. I know that my own business really took off in 2000 and grew tremendously through 2005. In 2004 was the first time I really started looking at and tracking our inventory to see what was going on. What I saw was that the number of homes available for sale was dropping pretty significantly. I believe it was later that year that the news media really started reporting on our red hot market. By the time Charley came through damaging an estimate 20% of the homes our inventory was really down, and because of damage a lot of people were delaying putting their homes on the market. This additional drop in inventory and a slow down in new home construction lead to the incredible boom of 2005.

Of course, the market at that point continued to heat up to the point that we actually got down to about a one month inventory of homes available for sale. Because this is really just about supply and demand, prices were driven through the roof. People became desparate to purchase a home for fear of being permanently priced out of the market. Sellers, builders, lenders and real estate agents struck while the iron was hot selling anything they could to the highest bidder. We will probably never see another market quite like that in our lifetime. There most definitely will be up markets again, but I just cannot imagine another one like what we experienced.

Then, as if someone turned the light off it all stopped. We did not see a gradual slow down, but an abrupt end to the boom market. Prices did not change immediately, but sales dropped very quickly. This lead to increases in inventory, especially when all the new homes under construction for flippers began to be completed. Prices actually resisted coming down for quite some time. Then bank owned properties started hitting the market and short sales began undercutting the banks early in 2008. When the TARP funds hit the banks in the third and fourth quarter of 2008 REO prices were slashed. Our peak median price in Orlando was just over $260,000. By the time our prices stabilized in April of 2009 the median price stood at half that. I feel pretty confident that with nearly four months of stable prices that values have bottomed. That is where we came from and where we are today. Sales are actually pretty good, but new contracts are fantastic. Inventory is steadily declining with fewer REO's in the active inventory. With prices now finally steady, we can begin to see a recovery in our real estate market.

Orlando Real Estate, David Welch Real Estate Optimist

If you are a first time home buyer, you may have looked into Orange county down payment assistance. Just checking the county website, you may believe that you might qualify for $20,000, $30,000 or even $35,000. Beginning back on June 23rd those numbers have been revised down to $5,000, $17,500 and $25,000. The amount of assistance is still based upon household income, but funding from the state has been slashed to balance the budget. That funding comes from a fund called the Sadowski fund, and it was formed by the state to provide assistance for affordable or "workforce" housing. This fund was established as a result of an increase in documentary stamps taxes on real estate transactions. When the market was really good this fund became quite big, so the state legislature put a cap on it and swept the excess into the general revenue fund. The Realtor association has been asking the state to "scrap for the cap" for years. Now in lean economic times it appears they have completely raided the fund to balance the budget. This has left downpayment assistance programs like Orange county's without funding. Assistance is still available, and there is even a state bond program providing down payment assistance.

Orlando Real Estate, David Welch Real Estate Optimist