A new housing report from the Orlando Regional Realtor Association published Monday shows November home sales have declined and inventory is building as interest rates have quickly cooled the real estate market.
Home sales plunged 6.9% last month to 2,575 while the number of homes for sale jumped to a 3.3-month supply, the largest inventory build in more than one year.
Real estate agents have told the Orlando Sentinel that interest rate increases have completely removed buyers from the market.
“There has been a shock in how quickly interest rates have gone up,” said Eric Soto, a real estate agent and co-owner of TC Orlando Homes based in Altamonte Springs.
What is happening in Orlando mirrors trends nationally: Existing home sales have peaked, reflecting declining affordability, greater price reductions, and deteriorating housing sentiment.
As we have mentioned before, real estate markets across the country are at turning points, where housing prices have not just plateaued, but could soon experience a noticeable drop in 2019.
In Greater Orlando, November single-family home prices stalled from the month before.
“But though there are more homes available, it’s still far from a buyers market,” Soto said.
“There may be more homes than there were a few months ago but only a few hundred,” he added.
Jeff Tucker, a Zillow economist, said inventory is steadily building in many markets across the country. However, he did not call it a huge increase, yet.
“This is certainly not looking like an inventory spike,” he said. “It’s just coming up from really low levels.”
In other words, the real supply is still to come, which could trigger when homeowners realize that prices are trending lower as the economy starts to slow.
“A five- or six- month supply of homes is a good equilibrium between buyers and sellers,” Tucker said. “Even at a 3.3-month supply, sellers still have control over the market,” he said.
“It’s a bit of a breather for buyers, though,” Tucker said. “But there is a downside with interest rates rising.”
Tucker warned rising interest rates might remove buyers from the market because of affordability factors.
Alex Vastardis, a Dr. Phillips area real estate agent with Coldwell Banker, said the slowdown in November was largely seen in homes for less than $300,000.
Despite the slowdown, Vastardis said he still has some customers coming into his office looking for new homes. “December is usually a pretty positive month because people want to sell their homes or get into a new one before the end of the year.”
No one knows how far and how fast real estate markets could drop in 2019. It certainly seems that interest rate rises in Greater Orlando have entirely shut off demand for less than $300,000 homes.
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