The Equity Crises in Orlando’s Housing Market

January 11, 2014 by · Leave a Comment 

Orlando Homes UnderwaterThe housing market in Orlando saw it’s fair share of positive trends during 2013. Home values have made big strides in returning to their historical averages, but it’s not been all positive. The Orlando area also had one of the largest concentrations of underwater properties in the country.

Nearly 36 percent of homes in the four counties that comprise the Orlando metro area are buried in home loans exceeding the present home value by 25 percent or more. The rate of underwater residential properties in Orlando outpaced the statewide number of 34 percent.

(Investor Fact: The highest rate of financially troubled properties was 38 percent which was reported for the state of Nevada.)

The Long Road to Financial Stability

Over the last year, the average prices for homes throughout the Orlando metro area increased by nearly 28 percent! This has certainly helped build equity for homeowners– but many of them still have a long climb to become financially stable.

Just remember that this is only one side of the coin. There is a significant percentage of homeowners who are equity-rich. Reports show that it is nearing a point where more and more will be expected to list their Orlando home for sale. This is expected to provide a nice boost for the Central Florida housing market during this year.

Speaking of predictions, the rate of homeownership is expected to take another dip during 2014. This could have an impact on some people’s decision to list their home in the near future. Reports have also shown that Orlando is a nationwide leader in all-cash home sales. The more saturated housing inventory will likely continue to attract investors looking to turn distressed properties into new rentals.

Which Parts of Florida are Underwater?

“There are still millions of homeowners who are in such a deep equity hole that it will take years for them to regain their equity,” explains Daren Blomquist, vice president for RealtyTrac. “The longer these homeowners remain in a negative equity position without relief in the form of a principal loan balance reduction, the more likely that foreclosure will become the path of least resistance for them.”

Orlando Residents Struggling with Home Equity

So what areas in Florida had the greatest concentration of underwater properties? Here’s how it broke down:

  • The Lakeland metro area came in first for financially troubled properties with 38 percent.
  • The Orlando metro area followed suite with 36 percent of its homes underwater.
  • Sarasota had the lowest concentration of equity-starved houses at 30 percent.

(Fast Fact: Orlando has one of the lowest rates of “equity-rich” properties – home values that are double the total mortgage still owed – in the nation.)

Haggling for a Good Mortgage Rate

Despite this news, first time buyers may find applying for a mortgage easier this year— possibly due to the higher rates. They’re expected to exceed 5 percent for a 30 year mortgage by the end of 2014. These rates had fluctuated between 3 and 4 percent for most of 2013.

Don’t be surprised to see lenders get more aggressive when it comes to locking down potential buyers as the mortgage-refinance market continues to lose value. These rates are predicted to continue moving back to their historical averages.

About Mike

Mid Florida Investment Properties, LLC owner Mike Calvert has been buying and selling real estate in Central Florida for over 10 years. Get a seasoned investor as your partner for a fraction of the profit. We handle the transaction from start to finish!

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