Housing inventory balloons

Number of homes for sale in Metro Orlando leaps 32.5%

Jack SnyderSentinel Staff Writer November 23, 2005, Orlando Sentinel

The number of homes for sale in the Orlando area ballooned by more than 2,200 properties last month to hit an eight-year high -- the clearest sign yet that the region's red-hot housing market might be about to cool off.

Orlando's existing-home sales remained strong in October, a local trade group reported Tuesday. Completed deals in the four-county metro area were up more than 27 percent from October 2004, and the median price of those sold in the market's core crept up for the first time in three months to set another record.

But the bidding wars are subsiding, and the inventory of available homes jumped from 6,786 at the end of September to 8,992 at the end of October, according to the Orlando Regional Realtor Association. That's the largest inventory since 9,129 homes were for sale in May 1997.

With the completion of 2,841 resales in October, the metro area was still running 12.4 percent ahead of last year's record sales pace. And after stalling in August and falling slightly in September for the first time in a year, the median home price in the market's core rose in October from $243,900 to $246,790.

That's an appreciation rate of nearly 36 percent since October 2004, when the median (the price at which half the homes sold for more and half for less) was $182,000.

But area real-estate brokers said Tuesday that they are seeing clear signs of an easing in the region's record home-buying activity, with some sellers now willing to reduce their asking prices as the available inventory grows.

Jack and Jancey Craig, who recently bought a home after moving here from Baltimore, were able to consider more than two dozen houses in the Oviedo area before settling on a prime candidate.

"We were choosy," Jack Craig said. "We looked at a lot of homes, and we knew right away we wanted the one we bought."

The home's seller reduced the price from $375,000 to $358,700 and agreed to pay for certain repairs to close the deal, said Troy Hensley, the Craigs' agent and a partner in ERA Breese Craft Hensley LLC.

"Even three months ago you couldn't do that," Hensley said. "The inventory just wasn't there then. It's still a very good market. It's just not a crazy market."

The September-to-October increase in available inventory of 2,206 properties, or 32.5 percent, was the biggest one-month leap in the local Realtors' Multiple Listing Service records, which go back to January 1997.

The group measures existing-home sales from throughout the metro area -- Orange, Seminole, Osceola and Lake counties -- but most of its other statistics, including inventory and median price, are for the core of the market only -- primarily Orange and Seminole counties.

The average time on the market for homes sold in October was 33 days, the second consecutive month in which that statistic has risen, leaving it at its highest level since March.

Some of the properties pumping up the inventory in recent months -- the month-end total also grew more than 20 percent in July, 23 percent in August and 22 percent in September -- is coming from condo conversions that have flooded the Orlando market, said Lydia Pisano, a broker with Keller Williams Realty and immediate past president of the local Realtor association.

Pisano noted another sign of a possible slowing in activity: New-home builders are back to actively courting Realtors to bring prospects to their subdivisions and developments."The waiting lists and the lotteries [for new homes] are gone," she said.

Still, buyers continue to compete for certain properties, said Ronald Mesplay, the broker at Exit Realty Preferred in Lake Mary.

Mesplay said one of his sales associates just sold a condo in Lake Mary after it drew nine offers. "The listing sold for $8,000 over the asking price," he said.

But brokers said that is happening less and less as the inventory continues to grow by double-digit percentage rates. A wider selection gives buyers "room for negotiation, as opposed to a bidding war," noted Beverly Pindling, president of the local Realtor association.

Frank Filippelli, president of Southern Realty Enterprises, said sellers are starting to realize that what their neighbors got for their houses as recently as three months ago doesn't necessarily mean much these days.

"They have to look at what the market is today," he said. "We're still strong, but it's not like it was."

Local existing-home sales set a record last year, despite disruptions brought on by the three hurricanes that raked Central Florida in August and September.

Home sales appear to be on track to set records locally and nationally again this year, even though mortgage rates have been edging steadily upward for weeks.

The national average for a 30-year home-loan rate last week was 6.37 percent -- still at historically low levels but up considerably from a year ago, when the average was 5.74 percent, according to national home-loan buyer Freddie Mac.

In the third quarter of this year, Orlando ranked second in the nation in existing-home price appreciation, with growth of nearly 45 percent from the third quarter of 2004. Only Phoenix did better. The Orlando area's third-quarter median price -- calculated by the National Association of Realtors using a broader database than the one used by the local Realtors -- was $261,300.