WOW!! The MLS is showing 1,189 closed sales in December with a median price of $169,900. Inventory plummeted with a lot of listing expiring at the end of the year. I’ll re-check next week to get a better indication of where we are. Check back early next week for more detail on these statistics. These are not the official numbers, but look good so far.

David Welch, Remax 200 Realty, Orlando Real Estate

“I purchased a property at the peak of the market in 2005. With my home value down now, how can I get a reassessment on my property taxes? Is it worth doing?”

The short answer is: “It probably won’t hurt to try.” There are a lot of considerations though. First, have property values gone down in your area? I was at a luncheon the week before Christmas, and our property appraiser Bill Donnegan spoke about this issue a bit. Odds are that values have gone down, since one estimate I have read says that 71% of home values in America are lower than they were a year ago. (About 2 out of 3 sellers think their house is the same value or greater than it was a year ago.) The next issue is when the values started going down. You see property taxes are typically assessed in arrears, so your 2008 taxes are, to some extent, based on sales in 2007. Another consideration is how your state allows the property appraiser to treat foreclosures. In Florida, the state does not allow the property appraiser to consider foreclosures in determining property values. Of course Mr. Donnegan conceeded that there are areas of Orlando where the only sales are foreclosures, so he has no choice but to consider them in his assessment. One last consideration to keep in mind is presumption of correctness. This is a doctrine where the government entity in question, Property Appraiser, is presumed to be correct. Therefore, you as the home owner have a very high standard to meet to prove your case.

Going back to my short answer, you probably don’t have anything to lose. Just make sure you know the answers to the questions above before you start. These are considerations for people in Florida, and there may be additional issues where you live. Best of luck fighting City Hall. http://talk.realtor.com/ask-a-realtor/

David Welch, Remax 200 Realty, Orlando Real Estate

So far in December there have been 906 sales closed with a median sales price of $169,990. That is up just a bit from November’s $168,000, but we have not closed out the month just yet. We could end December anywhere between $168,000 and $170,000 with just a few sales making the difference. It does support my thought that we have hit the bottom, since December is usually the weakest month of the year. January is usually pretty close, so if we are still around this same price point 30 days from now, watch for prices to rebound a little into the $180,000 range.

2008 has been a transition year in many ways. We saw sales hit their bottom and transition into what I will call our new normal. The “new normal” is what we have without our typical investor activity. We saw prices finally come down, as short sales and foreclosures began to impact our market. Finally, sellers that have held out for close to two years, gave into the new prices that have taken hold here in Orlando. Look for 2009 to be a stabilization year with sales continuing to strengthen especially in the second and third quarters. Prices will hold steady in the $180 to $200 range for median prices. The inventory will come down faster than 2008 thanks to lower interest rates, and investor confidence coming back.

I think we hit the price bottom in October, and in fact we have over corrected a little. I expect that prices will remain in the $160-$170 range (median) through February, but we will see them get back into the $180 range by March. Sales will begin picking back up in January with things getting closer to 1,400 - 1,600 sales / month by March/April time frame. This higher level of sales will continue through August pushing inventory down to 22,000 before the end of the year. Foreclosures are going to continue to keep prices below the $200K level through 2010, unless investors start buying them up faster. Interest rates are dropping like crazy, and are now below 5%. I think 2009 will be the stabilization year, so things will be better but prices will remain flat.

David Welch, Remax 200 Realty, Orlando Real Estate

I received an e-mail from a lender yesterday that reminded me about some of the benefits of FHA. First, let me say that FHA is not just for first time home buyers. FHA is not a “government” loan; it is backed by the government which makes it a safer loan for the banks. FHA is not just for inexpensive homes, in fact the limit right now is $353,750 which covers around 75% of all the homes for sale in Orlando. That limit is coming down in 2009 to $274,850, which will still purchase most homes in the Orlando area. In today’s tighter money and tougher lending environment, FHA is one of the only programs that allow you to put as little as 3% down. That is also changing in 2009, with the FHA downpayment going up to 3.5%.

About the only programs I know with lower down payments are VA and USDA. Yes, more government agencies with specific purposes. VA is only for our veterens, after all they deserve a break. VA offers 100% financing for qualified veterens. USDA sounds like some program for beef financing, but it is actually a rural loan program. If you are looking in areas surrounding Orlando, like Volusia or Polk county, you may be able to go USDA with 102% financing. There is also a state of Florida bond program for first time home buyers that works with FHA to provide down payment assistance of up to $10,000. So, check out FHA today. FHA also allows the seller to contribute up to 6% of the price toward the buyer’s closing costs, prepaid items and interest rate buy down.

David Welch, Remax 200 Realty, Orlando Real Estate

This will be brief, but I was looking at Orlando real estate sales so far this month. Closed sales stood at 659 as of this morning with a median sales price of $168,000. That price is consistent with November’s number, but the sales number is a bit lower than I would have expected. It is very hard to get much closed between Christmas and New Years, so I will be interested in seeing what our final sales are for December. Hopefully, we will break 1,000. With the first time home buyer tax credit, I really anticipated a big push this month. There are a lot of pendings, so we will see how many get closed. Overall inventory is down, which is typical for December. Distressed properties are continuing to hover around 6,400. I will be adjusting how I measure that number starting next month. I will be including listings that required third part approval. I expect that to push that number up somewhat, as there are agents who prefer that terminology in identifying short sales.

David Welch, Remax 200 Realty, Orlando Real Estate

Earlier this week the Fed announced an historic drop in the rate they charge member banks. They are also taking action to put pressure on mortgage rates that we are seeing take effect. I received e-mails from several of the lenders I know yesterday, and one even said they are thinking they could get lower before the end of this week. This makes homes even more affordable for anyone making a purchase right now. If you are considering buying, please think about this carefully. Rates are heading below 5% possibly, and these are 30 year fixed rates. It is hard to say how long the rates will stay this low in conjunction with lower home prices.

I say this because the lower rate will stimulate both demand for mortgage funds and demand for real estate. When the cost of mortgage money goes down re-financing activity goes up. This actually absorbs a portion of the mortgage money available to be loaned out, and puts upwards price pressure on the remaining mortgage funds. In other words, we should see a rush on re-financing activity, causing mortgage rates to go back up some. Second the demand for real estate purchase mortgages puts upward pressure on real estate values and mortgage rates. For everyone who has been waiting, consider this: The Fed cannot go below 0%. The current target Fed rate is 0% - 0.25%, which is pretty much Zero%.

Here is my forecast for Orlando Real Estate buyers: You have through February to take full advantage of the low prices and low rates. By March rates will start going back up, and so will prices (although prices will move much more slowly.) I think you absolute best time to strike is between now and the end of January. Most people don’t jump into a down market until six months after it has past the bottom. I have already called October 2008 the bottom of real estate prices in Orlando. November did sink lower and December’s numbers are sure to be lower too, but economic fundamentals support Octobers median price of $180,000. We are currently in an over correction that is likely to last through the end of January.

David Welch, Remax 200 Realty, Orlando Real Estate

There is a federal plan gaining some momentum to effectively buy down mortgage rates to something in the 4.5% range. I completed a very short survey yesterday from the National Association of Realtors regarding this issue. There were really only a couple of questions, and I would love to hear your thoughts on them. Basically, have you heard about this? If you have heard about it, does it make you more likely to make a home purchase? Another thing I would like to know is if you think down payment assistance would have a greater impact on you making a purchase.

Here is my two cents on the question or low rate -vs- down payment assistance. I cannot speak for every market, but here in Orlando affordability is not the issue it was over the last few years. We hit an affordability index around 135 last month, and lowering the interest rate basically improves affordability. The issue I find with most buyers is coming up with the cash for the down payment and closing costs. In many, if not most cases, sellers are willing to come up with some or all of the buyers closing costs. That leaves the down payment. When the housing and economic recovery act and the FHA modernization act were being pushed through this summer, my biggest concern was the prohibition of seller funded down payment assistance. If that portion of the law could be repealed, sellers could provide the 3% or 3.5% starting next month to fund an FHA buyer’s down payment. This costs the government and tax payers at large nothing. The home seller would be able to offer this incentive to home buyers, in lieu of investors or going into a short sale.

David Welch, Remax 200 Realty, Orlando Real Estate

I just set up a new page on my website with videos of Baldwin Park. I have a similar page setup with YouTube videos of Gatlin Place in the Conway area. You can also go to www.DavidWelch.com and select YouTube Videos to see videos of other areas as well as homes I have for sale in and around Orlando. I started shooting these because I had buyers from out of state that were building a condo here in Baldwin Park, and I wanted to keep them up with the progress during construction.

Take a look at the new page, and let me know what you think about the drive around videos. I shot one of Blue Jacket Park heading down Lower Park Rd toward Lake Baldwin. I shot another one in the Village Center of Baldwin Park, heading down New Broad St. The third video continues up New Broad St. toward Bennett, showing off the New Broad Street Park and the custom homes. The reason I have chosen these neighborhoods to feature is simple. I used to live in Gatlin Place, and still own a home there. Now I live in Baldwin Park, and my office is just about two miles away in Winter Park. I’ll probably be shooting some video of Park Ave. in Winter Park soon.

David Welch, Remax 200 Realty, Orlando Real Estate

The official numbers are out, and sales continue to show improvement over last year with 1,076 compared to 1,029. Prices continue to show improvement too if you are a buyer. The median price for November was down to $167,025 compared to $234,900 last year. That is a 28.9% decline in the median price year over year. The average interest rate was also down to 6% compared to 6.3% last month. The decline in prices and interest rates has lead to a huge jump in the affordability index to 135. With sales up, so are new contracts and the total number of contracts. New contracts were up to 1,644 compared to 1,193 last year, and the total number of pending contracts is up to 3,326 compared to 1,806 in ‘07. The inventory of homes available for sale was also down by 249 compared to October, but still stands at 24,408.

David Welch, Remax 200 Realty, Orlando Real Estate

First time home buyers have really been tearing it up lately, or at least that is my experience. When I checked the search phrases that people are using to find my website www.DavidWelch.com the number one thing that stands out is the phrase first time buyer. So far today there have been 12 different searches that have resulted in visits to my Orlando real estate site that had something to do with first time buyers. People have been looking for down payment assistance, information about the tax credit, FHA loans, USDA loans and just general questions like “how do you qualify as a first time buyer?” I have had a first time buyer page on my website for probably close to 10 years, but it never stood out as a big search criteria. Now it is dominating the searches that are finding their way to my site.

I think there are three reasons for this: 1, prices are now affordable for first time buyers, and move ups are having trouble selling so they cannot buy; 2, lenders and borrowers are getting creative and looking for special programs for first time buyer down payment assistance; 3, the offer of the tax credit is stimulating demand. I posted last week that most of the buyer inquiries that I have had are either first time buyers (or at least they qualify for first time status) and investors. I would encourage anyone that does not have first time buyer information on their website to add it quick. First time buyers make great customers and really appreciate it when you are looking out for them. They also have friends that are first time buyers.

David Welch Remax 200 Realty, Orlando Real Estate

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