It's amazing! You go on vacation and even though you may prepare for such work wise - you inevitably come back to more work than you thought. Do not get me wrong, I am not complaining. It's just almost laughable to me and unfortunately because of such I have not been able to post here.
So, let's talk about the Real Estate Market as it is today. And that right there is the point - today! The market has changed and is always evolving, sometimes more quickly than others. Yet, we have to be prepared for this, especially myself as a realtor. But so do you, so that you can understand the market and how it affects you - the consumer.
To say the least, we are in a buyers market and anyone who thinks differently is just deluding themselves. There are more listings available in Orange & Seminole counties (which makes up probably the majority of the Greater Orlando area) than has been in a very long time. As of right now, there are 9527 single family homes listed on the local MLS for sale as well as 3223 condominiums, townhomes & villas for sale. That is a lot of homes and approximately 6 months worth of inventory. I've been tracking the available homes for sale for many months and have found that except for one week, there has been an additional 250+ more homes available for sale than the previous week. This takes into consideration homes that have gone under contract and so forth. A little over a month ago, there was just 10K homes for sale, now we are at over 12K. So what is happening and how does this affect you?
Because there is so much involved, I will not be able to answer this question in just one post, but let's get started. Firstly, I must mention that I am not a doomsayer, and many of you who know me, know that I consider myself a Realistic Optimist. So with that said...
The market is in what some call a correction right now. We've been very lucky for the past couple of years with the increases that we have seen in what for some of us is our most valuable asset. That’s been great for most of us. The reality of it is that through most years we will only see about a 6% or so increase in the value of our homes. This year I expect us to be basically flat. That is not a problem, but there are many factors that lead to this. Right now we are seeing interest rates creep up. The fed is, or at least should be, concerned about inflation. And it will be interesting in how they handle their next meeting. Will the rates go up? They have increased them for the past 16 consecutive meetings. They have to be concerned about increasing it again and possibly fueling inflation. Even with this occurring, it has only been recently that the mortgage rates have been consistently creeping up themselves.
Lenders, of course, have become more conservative & rightly so. The creative financing that has been going on has been incredible and personally somewhat ridiculous. Interest only loans with a balloon payment – oh lordy? Here you are hedging a bet in that the value of your home will go up to create equity, because you are surely not creating any by only paying the interest and still have the full principal left to pay. Unfortunately for many, as the interest rates increase so do their payments & they may not be able to afford this additional expense. And more unfortunately, what we are going to see in the future (& not too distant at that) are foreclosures on a lot of these loans.
Then we also have investors, or I should really say and forgive me for saying this, but wannabe investors. These people saw the increases that were happening in the market and decided that if others can do it so can they. Unfortunately, many got into the market too late and now are finding themselves with a house payment for a home that is most likely vacant & they can’t move it because they are not only competing against the builder/developer but also other investors & homeowners. I read an article recently that mentioned already starting to see these loans going into foreclosure.
I could keep on writing forever about this & will expound on this topic more so in the near future. As always, please don’t forget that your comments and questions are quite welcome.
Till next time – Marc It Sold!