Orlando Real Estate News

Housing Stimulus Bill signed into law today - H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:

• GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
• FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
• Homebuyer Tax Credit - a $7500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
• FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
• Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
• VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
• Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
• GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
• Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
• National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
• CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
• LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
• Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

U.S. home sales fall slightly - Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 2.6 percent to a seasonally adjusted annual rate1 of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5 percent lower than the 5.75 million-unit rate in June 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said there is something of a quandary in the current market. “A recent online survey of Realtors® shows nearly a quarter of potential home buyers are waiting on the sidelines,” he said. “However, timing the market can be very tricky, which is why home buyers should always have a long-term view to build wealth.”

Total housing inventory at the end of June rose 0.2 percent to 4.49 million existing homes available for sale, which represents an 11.1.-month supply2 at the current sales pace, up from a 10.8-month supply in May.

Lawrence Yun, NAR chief economist, said first-time home buyers are critical to the health of the housing market. “About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up,” Yun said. “With many potential first-time home buyers on the sidelines, a first-time buyer tax credit would have a significant positive impact on both housing and the economy. Combined with permanent increases to mortgage loan limits and enhancing the FHA loan program, the housing stimulus package working its way through Congress would go a long way toward helping consumers and boosting the overall economy.”

The national median existing-home price3 for all housing types was $215,100 in June, down 6.1 percent from a year ago when the median was $229,000.

Yun said there is a downward distortion in the price data. “With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,” he said.

Despite the overall sales decline, unpublished snapshot data shows existing-home sales rising significantly from a year ago in Bakersfield, Calif.; Fort Myers, Fla.; and Las Vegas.

“Sales are now beginning to pick up in Orlando, Fla., Phoenix, and Oakland, Calif.,” Yun said. “Interestingly, sales fell in Atlanta, Houston, and Kansas City, Mo., despite affordable home prices and solid local employment conditions.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.32 percent in June from 6.04 percent in May; the rate was 6.66 percent in June 2007.

Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.27 million in June from 4.41 million in May, and are 14.8 percent below the 5.01 million-unit pace in June 2007. The median existing single-family home price was $213,800 in June, which is down 6.7 percent from a year ago.

Existing condominium and co-op sales rose 1.7 percent to a seasonally adjusted annual rate of 590,000 units in June from 580,000 in May, but are 19.7 percent below the 735,000-unit level a year ago. The median existing condo price4 was $224,200 in June, which is 2.2 percent lower than June 2007.

Regionally, existing-home sales in the West rose 1.0 percent in June to a pace of 1.03 million but are 6.4 percent lower than a year ago. The median price in the West was $288,400, which is 17.2 percent below June 2007.

In the South, existing-home sales fell 3.1 percent to an annual rate of 1.85 million in June, and are 18.1 percent below June 2007. The median price in the South was $185,300, down 2.4 percent from a year ago.

Existing-home sales in the Midwest declined 3.4 percent to an annual pace of 1.12 million in June, and are 17.6 percent below a year ago. The median price in the Midwest was $175,300, up 2.8 percent from June 2007.

In the Northeast, existing-home sales fell 6.6 percent to an annual rate of 850,000 in June, and are 15.8 percent below June 2007. The median price in the Northeast was $256,700, down 12.6 percent from June 2007.

 With a little more than two weeks left before Congress leaves for the August recess, NAR is working hard to get a Housing Stimulus bill on the President’s desk.

         In the latest edition of the NAR’s President’s Podcast, NAR’s Chief Lobbyist Jerry Giovaniello explains what is included in this complicated legislation and why it is so important to REALTORS® and the housing market.

June home sales closed higher for a 5th straight month –  Indicators that Orlando’s housing market is marching toward a balance continued their onward progression in June, led by a four-month decline in inventory that has resulted in a 46.18 percent decrease in the months-of-supply since January. Other positive signs include an increase in the median home price and an ongoing increase in the monthly number of pending sales.

Members of ORRA sold 1,443 homes during the month of June 2008, which is 7.13 percent above the May 2008 tally of 1,347 home sales but 5.31 percent below the 1,524 homes sold in June 2007. To date, 6,905 homes have been sold by ORRA members during 2008; at this time last year that number was 9,588 (a 27.98 percent decrease).

The median sales price of a home in the Orlando area in June rose to $217,500, a 2.89 percent increase over the May 2008 median of $211,400. (The median sales price for June 2008 is 13.86 percent below the June 2007 median of $252,500).

The increase in the median home price to $217,500 means that the area’s affordability index dropped in June to 99.44 percent. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $51,677 can qualify to purchase one of 8,824 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $216,282 or less.

The first time homebuyer affordability index decreased to 70.71 percent from May’s 75.91 percent.

There are currently 3,329 homes in the MLS with pending sales contracts (an indicator of future sales activity), up from 3,225 in May; 2,853 in April; and 2,398 in March. The number of homes that came newly under contract in June increased slightly to 2,031; there were 2,010 homes newly under contract May, 2,012 in April, and 1,679 in March.

The area’s average interest rate was 6.35 percent in June 2008, up from 5.94 in May and 5.77 percent in April.

Homes of all types spent an average of 123 days on the market before being sold in June 2008; the average home sold for 93.38 percent of its listing price. In June 2007 those numbers were 98 and 94.91 percent, respectively.

The majority of single-family homes (265) that changed hands in June 2008 were sold in the $200,000 - $250,000 price range. Another 171 homes sold in June for between $250,000 and $300,000. Four hundred twenty-six homes sold for less than $200,000 in June, and 326 sold for more than $300,000. On the far ends of the scale, 19 homes were sold for $1 million or more while 9 homes sold for less than $50,000.

Orlando Housing Inventory

There are currently 24,575 homes available for purchase through the MLS. Inventory decreased by 440 homes in June 2008, which means that 440 more homes left the market than entered the market. June marks the fourth month in a row in which inventory has declined.

Compared to last year, the May 2008 inventory level (24,575) is 5.20 percent lower than it was in June 2007 (25,923).

The current inventory level reflects a 17.03-month supply at the current pace of sales, which reflects a five-month pattern of month-to-month decline (May 2008: 18.57; April 2008: 20.66; March 22.74; February: 27.32; January 31.64). Altogether, inventory months-of-supply has declined 46.21 percent since January 2008

There are 18,298 single-family homes currently listed in the MLS. Most (3,161) are listed in the $200,000 - $250,000 price range. Condos currently make up 4,254 offerings in the MLS, while duplexes/town homes/villas make up the remaining 2,023. Most condos (610) are priced at $120,000 - $140,000. The majority of duplexes/town homes/villas (387) are listed in the $200,000 - $250,000 price category.

Condos and Town homes/Duplexes/Villas

The sales of condos in the Orlando area declined by 29.89 percent in June: A total of 129 condos changed hands in June 2008 compared to 184 in June 2007. In a month-to-month comparison, June 2008 condo sales (129) decreased by 9.15 percent from May 2008 (142). Year to date, condo sales are down 48.61 percent, with 684 condos sold so far in 2008 compared to 1,331 sold through the same time in 2007.

In June, the most (19) condos that changed hands were in the $120,000 - $140,000 price category, while an additional 18 sold condos fell in the $100,000 – $120,000 range. In May most sold condos (24) were in the $100,000 - $120,000 range, while in April there were 21 condos each in both the $100,000 - $120,000 and the $120,000 - $140,000 categories. Buyers are clearly favoring lower-priced condos: June saw the sale of 111 sold condos priced $250,000 or lower compared to 18 priced $250,000 or higher (most single family home sales historically cluster around $250,000).

Orlando homebuyers purchased 126 duplexes, town homes, and villas in June 2008, which is a 5.00 percent increase from June 2007 when 120 of these alternative housing types were purchased. Duplex, town home, and villa sales in June 2008 were up as well, by 9.57 percent, when compared to the number of sales that took place in May 2008 (115). Month-to-month increases in the sales of these housing types have been posted in February, March, and April (May sales were down by 4.17 percent).

The majority (23) of duplexes, town homes, and villas sold in June 2008 fell into the $140,000 - $160,000 price category, while another 22 sold from the $160,000 - $180,000.

Orlando MSA Numbers

Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in June were down by 7.56 percent when compared to June of last year. Throughout the entire MSA, 1,712 homes were sold in June 2008 compared with 1,852 in June 2007. Year-to-date, the MSA is down by 27.67 percent, with 8,307 homes sold far in 2008 compared to 11,485 sold through June 2007.

Seminole County’s June 2008 sales dropped 21.99 percent below that of June 2007 (337 to 432), while Orange County fell 1.02 percent (875 to 884). Lake County saw a 9.51 percent decline in the number of sales in June 2008 compared to June 2007 (257 to 284), and Osceola County experienced a 3.57 percent drop (243 to 252).

Each county’s year-to-date sales comparisons are as follows:

Lake: 15.88 percent below 2007 (1,457 homes sold to date in 2008 compared to 1,732 in 2007);
Orange: 29.61 percent below 2007 (4,049 homes sold to date in 2008 compared to 5,752 in 2007);
Osceola: 26.28 percent below 2007 (1,156 homes sold to date in 2008 compared to 1,568 in 2007); and
Seminole: 32.39 percent below 2007 (1,645 sold to date in 2008 compared to 2,433 in 2007).