National Pending Home Sales Index Declines Despite Some Regional Increase

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Orlando Real Estate Market Update 07/06/07

Gitta Urbainczyk, P.A.

First of all, I hope each and every one of you had a very pleasant 4th of July holiday! While the weather certainly wasn’t the best, I hope it didn’t play too much havoc with your planned festivities!

For the first time in six months, the available inventory of homes actually dropped by 300 units! I hope this is a trend and not just a 4th of July holiday fluke. Having the amount of units for sale drop like this is a great thing and would be conducive to maintaining or even increasing prices. Let’s hope this is the beginning of a positive trend in the marketplace. Keep your fingers crossed!

As for the headline above, that’s the conclusion from the latest information distributed by the National Association of Realtors. That report indicated that the pending index at a national level fell to the same levels as seen in 2001 for the month of May. Essentially, the ‘pending level’ is a very solid indicator for future home sales. A home is placed into pending status when it becomes under contract and is near closing.

The Pending Home Sales Index*, based on contracts signed in May, rose in the West and Northeast but fell in the Midwest and South. The national index stood at 97.7 in May, down 3.5 percent from a downwardly revised April index of 101.2. It is also 13.3 percent lower than May 2006 when the reading was 112.7. In April, the index was 10.4 percent lower than a year earlier.

The good news for Florida, our main feeder market, is the increase in pending home sales for the Northeast. Hopefully, this will give home sellers in the Northeast the opportunity to move to Florida, which will in turn aid our marketplace.

I am spending the 4th of July holiday in Naples, Florida where the real estate market is in very bad shape. For all intents and purposes, it is close to dead. I spoke to a mortgage broker here in Naples about their market. From their account, the main factor behind the slow market here is the outrageous cost of property insurance. The broker I spoke with lives in a 2100 sq.ft. home that is not even located on the water. His homeowner insurance is a massive $6,400 per year. Similar home insurance (inland) in Orlando might be only $1,200. If you add together a $12,000 per year property tax and a $6400 insurance bill, your monthly cost just for taxes and insurance would be $1,500 and that excludes your house payment!

How does this all add up? Homeowners in the coastal areas can’t sell their homes. First-time buyers can’t afford to buy. Plus, people from out of state are not encouraged to relocate here because we have out-priced ourselves in insurance and property taxes. It is tough to find a way around this issue. The state government will have to deliver with legislation in order to get the housing market back on its feet.

Out of the five counties we are tracking, Seminole County is the only county where homes are moving reasonably well. Last month, 9% of all homes in Seminole County were selling versus 6% in Orange County, 6% in Volusia County, 3.8% in Osceola County, and 5% in Lake County.

Thank you and have a great weekend!

Gitta

“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”

-Albert Einstein

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