Central Florida Real Estate Woes

OC market declines continue

ORANGE COUNTY – If you have property that you’re trying to sell in Central Florida, you are in for a rude awakening.  At the moment, the greater Orlando real estate market is in turmoil, with no end in sight.  The market has been on a decline for quite some time, and is causing plenty of headaches out there.

Many who jumped in on properties either for personal or investment reasons are now finding themselves stuck in a dire situation.  They simply cannot unload these properties in the current marketplace, at least not for the amount they desire.  Those looking to profit are seeing that margin drop to the point that they may even lose money on the sale.  For those who are trying to wait it out, it is equally difficult to find renters willing to pay the high rent prices just to cover the mortgage payment on the property.  In fact, with so many condo-conversions, apartments, and other developments, the market is flooded with units and not enough renters to go around.

As a result, many property owners who can’t unload their properties also can’t rent them out.  That means they’re responsible for the mortgage payments.  Imagine being a homeowner who has bought a second investment property here in the Orlando area to rent out, only to be caught paying both your original home’s mortgage payment and the payment on your investment property.  Or, imagine you’re a single property owner who elected to go with low payments early, only to find that your payments are ballooning upwards as a result of your adjusted rate mortgage kicking in.  Add to that taxes and insurance and you’ve got the perfect storm for financial trouble.

“Our biggest issues here in Florida are property taxes issues and property insurance,” said Ernst Urbainczyk, Business Manager for Gitta’s Real Estate Team based in Lake Mary.  “We have more people leaving the state and moving to places such as North Carolina or Tennessee because they are more affordable.  With home prices, property taxes and insurance being as high as they are, we are facing a big problem in attracting baby boomers to Florida.”

The current atmosphere is beginning to show on the national level.   Recently, Florida ranked #5 in the nation in foreclosures according to real estate studies.  According to figures released by RealtyTrac, total foreclosure filings in Florida have reached over 102,000 so far.  That’s one out of every 81 households in the state.  Despite recent property tax cuts from the state legislature, the numbers continue to get worse.

“For sellers, in today’s market no seller should put their home up for sale unless they absolutely have to sell,” said Urbainczyk.  “You will not be able to get the highest price possible.”

On the flip side, buyers are more cautious than ever.  The common mentality of a “buyer’s market” is not playing out given the poor selling market conditions.  However, it is a good time to buy.  According to experts, there are plenty of homes available with prices that are negotiable.  Plus interest rates favor the present buyer, as the potential exists for those to increase in the future.  Still, buyers remain equally cautious.

“Buyers and the sellers both are in a precarious situation because both don’t know where the market is going or at least they don’t want to know,” said Urbainczyk.  “Sellers are disillusioned because they see their equity eroding. Buyers are disillusioned because they don’t know if and when to buy because they don’t want to buy a home that loses value.  Plus, if they have to sell their home to purchase another, they would be upside down.”

According to Urbainczyk, sales are down 40% year-to-date compared to the same period in 2005, and those numbers may hit 50% by the end of the year.

“Compared to 5 years ago we are looking at a about an 8% decline at its current pace,” said Urbainczyk.  “This reflects only sales in the MLS system and does not account for FSBO or builders. With the increase in population over the past 5 years sales should be a lot higher.”

What’s the forecast for the market?  Not good, at least not for a couple of years longer.  With problems in the mortgage industry, an over abundance of homes on the market, and previous high selling prices, the real estate market has ground to a halt.

“We are in a kind of a stalemate until something changes, such as an interest rate cut to get buyers off the fence or a drastic cut in property taxes and insurance,” said Urbainczyk.  “If neither one of these things will happen we will continue with this kind of slow grinding market for a long time.  Only until the majority of homes have gone through foreclosure will the market become reinvigorated and turn around.”

Ernst Urbainczyk is the Business Manager for Gitta’s Real Estate Team.  Gitta’s Real Estate Team is a Keller Williams Heritage Realty team located in Lake Mary, Florida.  Gitta’s Team is considered a major producer in the real estate industry as well as a regional authority on real estate matters. They have serviced the greater Orlando area for the past nineteen years and are a leading real estate team for Orlando real estate and other real estate needs anywhere in the six-county area of Central Florida. They also retain a network of 60+ websites professionally developed and designed to aid anyone with interest in Central Florida real estate.

To learn more about Gitta’s Team, as well as access key buyer and seller information regarding properties in the greater Orlando area, visit www.gitta.com, www.orlandoluxuryhomes4sale.com, or www.greaterorlandohomes.com.