The Euro and British Pound valuation to the American dollar is at an all time high.
Florida attracts approximately 26% of the foreign buyers each year and with the valuation of the dollar so low to the Pound and Euro our real estate is extremely attractive. This is especially significant for Central Florida as our inland location
is geographically more desirable than coastal areas which are much more problematic relative to obtaining insurance. Bottom line is our location,
downward price pressure and large inventory combined with the increased valuation of foreign currencies continues to make Central Florida very attractive to foreign nationals looking for vacation and 2nd homes.
ORRA statistics also reports that the
average mortgage rate at our peak in
March 06 was 6.17%; it was 6.04% as
of November.
The collapse of the sub-prime market has
created havoc across the real estate industry. However, for those with decent to excellent credit the ability to purchase a home is still significant given our low interest rates.
Several national home builders,
DR Horton, Taylor Morrison, & Centex to name a few, not only continue to offer
incentives but are heavily advertising the discounting of their base pricing.
This is a significant metric that I believe indicates the approach, if not the arrival, of the bottom of our market slide. It may take most of 08 to maneuver through the downward price pressure but it is a necessary evil that we must face in order to see some normalcy return to the market both nationally and regionally. Additionally, when national
builders begin reducing their pricing it acts competitively to signal existing home sellers that they must also consider new homes as competition and make adjustments accordingly. As a result we should see listing prices continue to adjust downward
into 2008 which should stimulate a slight increase in buying activity.
The Orlando Sentinel reports the area unemployment rate of 4% is lower than the state’s overall rate of 4.3%.
We continue to experience a resilient economy that is producing jobs and consistent employment opportunities. Central Florida also continues to attract
corporations and industries. Just this morning the Orlando Sentinel reported Air Train committed to maintain and build their operations center in the Orlando area. The same edition reported on the simulation industry making continued gains with the announcement of a joint effort by the defense and medical industries. “The Army Research, Development & Engineering Command’s simulation
training unit in Orlando plans to establish the medical work by partnering with the University of Central Florida’s new medical school.”
While the aforementioned news items and events that I have articulated are positive signs I am not suggesting we are out of the woods from our real estate down turn. But I am suggesting that we are near, if not at the bottom, and are beginning
to see signs of a pending recovery. A recovery may take the entire year of 2008 with many
“experts” predicting the pricing declines will hit
bottom this year. Patrick Esswein reported in a Kiplinger.com article that “We at Kiplinger’s Personal
Finance magazine believe housing prices nationally
will bottom out in 2008.” He also predicts the pricing “recovery” will be slow. But frankly most experts agree a recovery needs to be slow, methodical and deliberate to ensure a return to a sustainable and justifiable pricing structure supported
by local economy factors. And finally, our state officials are working to correct fundamentals of real estate economics in the areas of taxes and insurance which complements current and potential
further action by the FED Bank on reducing prime interest rates.
What does this all mean for our very local sellers and buyers? For sellers it means that with the new year we may have buyers who believe they have held off long enough and now must make a purchase. So sellers must price their homes correctly
as it is critical to capture the attention of buyers who may be coming off the fence. For buyers it may mean that you have waited long enough and the bottom of the market is in sight. Who knows for certain how long it will be at the bottom and waiting additional time may be too great a risk. If you need a home and your ability to afford the mortgage is at hand then you may not find a better time to make the purchase. All things point to an eventual up turn so don’t try and make a housing
purchase as if this is the stock market and you are attempting to time it just right. After all, treating the housing industry like the stock market is one
of the reasons that precipitated this real estate problem originally.
Our homes and housing are long term
purchases and assets, not a commodity. Every-
one, including sellers, buyers, mortgage brokers,
realtors and the entire spectrum of the real
estate industry will be best served if we all go “Back to Basics.”
