Orlando Real Estate Market - Lower Prices and Lower Inventory

Orlando First-time buyers continue to take advantage of attractive affordability.

Buyer traffic continued its momentum, as our traffic index came in at 61 in September, up from 58 in August (any reading above 50 indicates traffic levels above expectations). Agents highlighted increased demand from first-time homebuyers, encouraged by the upcoming expiration of the $8,000 first-time buyer tax credit. The uptick in traffic was focused on the low end, specifically foreclosures and short sales. According to one agent, “The market is heavily weighted to foreclosures, short sales and distressed sales. The activity is up, but values are lower.” Another added that, “First-time homebuyers are rushing to beat the tax credit deadline.” Agents also noted investor interest in the area, motivated by falling prices and increased foreclosure activity.

Still pricing pressure, but strong demand leads to lower inventory. Home prices fell further in September, as our price index fell to 23 in September from 36 in August (any reading below 50 indicates sequentially lower home prices). Increased foreclosure activity has put pressure on prices, though strong demand for the REOs has led to lower inventory levels more recently. Our home listings index improved to 75 in September from 72 in August (any reading above 50 indicates lower inventory levels). However, this drop in inventory may not last, as banks are facing a growing backlog of foreclosures and many modification efforts likely won’t be successful.

Comments from real estate agents:

■ “We have seen more and more interest in lower priced homes, especially from
those seeking investment opportunities.”
■ “The $8,000 tax credit pushed demand further than we anticipated.”

Source: October Credit Suisse Research

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