Orlando housing market heats as home prices outpace wages

With Orlando home prices rising six times faster than wages in the last year, competition has revved up for condos and townhouses, a new report shows.

The smaller, more affordable residential options represented just 12 percent of the 3,508 home sales in an area of mostly Orange and Seminole counties last month. But prices of those units rose at more than triple the rate of single-family houses during the last year, according to a new report by Orlando Regional Realtor Association.

What the market has essentially done is come full circle with rent versus purchase, and right now, the pendulum has swung to purchase.

Condo and townhouse prices have spiked to the point where developers will likely look at building another condominium tower in downtown at some point during the next two years as average sales prices continue increasing above $300 a square foot. It’s been about a decade since the urban core saw a new condo tower.

The mid-point price for a single-family home in the core Orlando market during March was $249,900, which was up 6 percent from a year earlier. Prices for condominiums and townhouses were about half that amount and increased more than 19 percent during that time.

Stress on buyers continues to mount in Central Florida with midpoint wages of $58,406 remaining roughly flat for the previous yearlong period, while home prices have grown about 6 percent. Interest rates remained flat from a year earlier and edged down slightly to 4.29 percent in March from February.

In addition, the supply of listings has shrunk to near-record levels of 2.2 months, which is down from a year and a month earlier.

From a month earlier, the overall median price for all types of Orlando-area housing in March was largely flat at $230,000 despite the downturn in supply. Sales were also relatively flat from February.

Orlando’s housing market continues to be tugged by opposing factors, such as low inventory and high demand.

Of the four counties in the Metro Orlando area, only Osceola showed an increase in year-over-year sales with 5.9 percent growth. Lake County sales declined 4.4 percent; Seminole County was down 3.7 percent; and Orange County sales slipped 2.9 percent from a year ago.

To learn more about the Central Florid real estate market, contact 9 Core Realty.

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Realtors say NABOR’s latest numbers don’t come as a surprise

Sales of homes above $1 million in Naples during the first quarter of 2018 drove the market, increasing 61 percent compared to the same quarter of 2017, according to the First Quarter 2018 Market Report released by the Naples Area Board of Realtors. NABOR tracks home listings and sales within Collier County (excluding Marco Island).

January’s results led some to question expectations for the year when compared to last, yet in February the market gained its stride, accelerating in March with closed sales shooting ahead to end the first quarter on a very impressive note. According to NABOR monthly reports, January had 672 closed sales, February reported 672 closed sales, but March kept agents very busy with 942 closed sales, driven by a strong high-end which included a number of new construction condominiums just delivered.

Pending sales in the first quarter of 2018 increased 3 percent to 3,177 compared to 3,097 in the first quarter of 2017. Although pending sales for both single-family homes and condominiums over $1 million increased by double digits, it was the $2 million and above condominium market that raised eyebrows among brokers who reviewed the reports.

Tourism was up in our area this season compared to last year, so it’s not surprising that we would end with strong pending sales for the quarter. But experts weren’t expecting to see a 109 percent increase during the quarter in pending sales for condominiums over $2 million.

Coco Amar, a managing broker at John R. Wood Properties, said the condominium market offers some very good investment opportunities, especially at both ends of the market. “The top and bottom price categories are where both the inventory has grown and the prices have dropped.”

As reflected in the market’s year ending statistics (the 12 months ending 1Q 2018 versus the 12 months ending 1Q 2017), there was a 69 percent increase in closed sales of condominiums in the $2 million and above market, and a 17 percent decrease in the median closed price to $2,450,000 from $2,962,000 in 2017. Despite rocket sales in this high-end sector during the 1Q 2018 (179 percent increase) and a drop in median closed prices for the first quarter (24 percent decrease), the inventory increased 5 percent. Similarly, median closed prices for condominiums in the $300,000 and below price category dropped 1 percent to $199,000 from $200,000 in the first quarter of 2017, but inventory increased 3 percent in 1Q 2018.

The NABOR First Quarter 2018 Market Report provides comparisons of single-family home and condominium sales (via the Southwest Florida MLS), price ranges and geographic segmentation and includes an overall market summary.

 

Florida real estate market healthy but challenged

The Florida real estate industry is healthy, though several thorny challenges confront residential sales. Last year, foreign buyers bought $23.8 billion in Florida real estate, more than double the figure from a decade ago. Seventy-three percent of those 2017 purchases were all-cash because wealthy international buyers don’t need mortgages. The foreign property purchases account for 11 percent of the value but only 6 percent of the sales volume, indicating those purchases were primarily high-end homes.

The top international buyers of U.S. real estate last year came, in order, from China, Canada, Mexico, India and the United Kingdom.

Although most of the Chinese purchases were in California, the Florida market certainly has a larger share of foreign investors.

The state is also raising the confidence of foreign buyers with safe property investments that are bound to appreciate.

At the same time, the trend lines indicate a decline in international buyers.  The potential outcomes of higher tariffs on Chinese imports and the impacts of NAFTA’s demise on Mexico could boomerang on the U.S. and cause a global recession.

During the first quarter of 2018, a rising number of households expressed more confidence in the economy and their financial position, but only 68 percent of consumers felt now is a good time to buy a house, the lowest percentage in two years.

Income, debt and anxiety are stopping some from buying. The very, very competitive nature of the current residential market — with inventory down 13 percent, prices up 9 percent and mortgage rates expected to rise again — is being met with caution.

From 2011 to 2017, income grew by 15 percent but housing prices surged by 48 percent. This is a big concern for renters and an obstacle to converting to home ownership.

Consumers should not wait for mortgage rates, at 4.5 percent now, to fall, not with the Federal Reserve forecast to raise its benchmark interest rate two more times this year and three in 2019. Two years from now, mortgage rates could be 6 percent. Don’t take the current rates for granted.

While national existing home sales rose last year to their highest level in 11 years, the pending home sales index has stalled and inventory continues to fall.  Builders have been under-producing and the annual increases in construction since the subprime disaster have been very minimal.

To invest in the Florida real estate market contact an expert member of the 9 Core Realty Team today!

 

Naples has 15th-richest ZIP code in America

A Naples ZIP code ranked number 15 among the top 20 richest in America. To no one’s surprise, Naples’ 34102 ZIP code made the charts with the help of neighborhoods such as Port Royal having some of the most sought-after estates in the country.

According to a 2015 Internal Revenue Service data analysis done by Bloomberg, Fisher Island, just off Miami, was named America’s richest ZIP code. Atherton, Calif., was second and Palm Beach was third.

Naples is home to celebrities and some of America’s wealthiest families, who are willing to spend a lot to be close to the pristine beaches and enjoy some privacy in paradise.

Celebrities with homes in Naples include Judge Judy Sheindlin; Shahid Kahn, one of America’s richest people in 2018, according to Forbes; legendary rock musician Bob Seger; retired PGA champion Fuzzy Zoeller; and Gov. Rick Scott, who owns a beachfront mansion in Port Royal.

The Port Royal area has been called one of the most prestigious neighborhoods in Southwest Florida and is considered a landmark community with its white sand beaches off the Gulf of Mexico and 500 residences, many of which are multi-million-dollar mansions.  Last month the 34102 ZIP code had 17 home sales, according to Collier property appraiser data, with 13 of them  for $2 million or more.

Vacant lots in Port Royal have sold for as much as $4 million and waterfront homes with canal access for $5 million. If you want a beachfront mansion, expect to spend double that.

According to the Census Bureau, the median value of owned homes in the 34102 ZIP code was $770,000 in 2016.

Currently, the most expensive home on the market in Naples is a Port Royal beachfront mansion listed for $60.9 million.

A five-bedroom island colonial home in Port Royal sold in February for $16.1 million, making it the most expensive home sale so far this year. The waterfront mansion at 4295 Cutlass Lane sold for $1 million less than last year’s most expensive sale of $17.7 million at 3750 Rum Row in Port Royal.

However, the most expensive home sale in Naples within the past five years was a $46 million home in Port Royal in 2015.

There are currently more than 30 homes priced at or above $10 million in Naples. That represents about 2½ years of inventory based on the 2017 absorption rate.

With neighborhoods such as Port Royal and high-end home sales on the rise in Naples, one would expect the average income of Naples’ residents to match the lifestyle.

Unlike Fisher Island, with an average income of $2.5 million, Naples’ average income in 2016 was estimated at only $84,830, according to the Census Bureau.

The majority of luxury homeowners in Naples are “snowbirds;” retirees who own a second or vacation home and return north after the winter or spring.

Naples also recently was named the best place to retire in the U.S. and the sixth-best place for secondary home markets nationwide, according to a study from SmartAsset.

To learn more about investing in the Naples real estate market, contact an expert member of the 9 Core Realty team today.