Wednesday, February 07, 2007
Inventory, interest rates set the stage for a healthy housing market in 2007
As widely predicted the Orlando housing market in 2006 logged the second greatest number of home-sale transactions ever, trailing only 2005 and topping the previous record of 2004. In 2006 a total of 27,378 homes changed hands through members of the Orlando Regional Realtor® Association (ORRA), while 2005 posted 31,230 transactions and 2004 had 26,088.
Despite a lower number of sales taking place, compared to 2005, the median value of Orlando homes continue to appreciate at a steady rate. The median sales price in December 2006 rose 4.21 percent over December 2005 to $250,000. Interest rates also continue to play a major role in the dynamics of the Orlando housing market: Interest rates in December dropped to 5.74 percent, the lowest point since September 2005.
“The economic standard for a healthy pace of home-value appreciation is 3 to 5 percent per year,” explains ORRA President Randy Martin, GRI, RE/MAX 200. “When home values appreciate at a skyrocketing pace — as happened in Orlando in 2005 — it creates an environment where home prices far outweigh local income levels. However, a sensible rate of increase is attractive to the type of relocating companies that Orlando planners are seeking in order to create economic diversity, and it helps Orlando’s workforce achieve the American dream of homeownership.
“Orlando’s home sales are now being driven not by speculators, but by strong economic fundamentals in the area, continues Martin. “So the pace of home value appreciation we’re currently enjoying is a sustainable price growth trend, good for the long term.”
The inventory of homes available for purchase dropped by nearly 1,600 homes in December to 19,537, a 7.5 percent decrease from November, and the lowest level since June of lat year. In addition, the pace of new listings being added to the pool has continued its six-month decline: 3,840 new listings were added to inventory in December. Orlando now has an 11.08 months supply of homes on the market.
