It used to be a widely accepted concept: house hunting operates on a seasonal basis, with March kicking off the busy season that runs through the spring and summer.
The season usually extends through Labor Day, and then, as the kids go back to school, the housing market takes a break and things slow down. Normally, sales boom in August as families relocate just before the start of the school year.
But as any Realtor knows, there’s little reason to expect this traditional cycle to be operating in 2017. For one thing, the cycle now seems to be moving in reverse.
Take the Orlando area as an example. Summer is supposed to be the hottest time for the housing market, and the real estate website Ten-X Research just named Orlando the nation’s second hottest market over the summer, right after Nashville.
But at the same time, home prices and sales in the core Orlando market were down in July from the month before during the peak summer buying season.
So how can sales be down when Orlando’s market is so strong?
And why does that bode well for the strength of the market in autumn?
Why is Orlando’s housing market strong when sales are down?
The key reason why sales are down in Orlando – and, as it turns out, in a lot of other major metro areas across the country – isn’t due to a declining interest among buyers. In fact, buyer demand for homes just keeps getting stronger, helped by low mortgage interest rates that enable buyers to lock in affordable monthly payments.
One reminder that this isn’t the year for a normal housing cycle is that summer is typically the season when the largest number of homes get put on the market. This summer, it went in reverse. Sales slowed because inventory was down, making it harder for all the buyers to find what they were looking for.
The limited number of homes on the market is having an impact on prices. The Orlando Regional Realtors Association reports that midpoint prices for houses that sold during June in the core Orlando market were $222,500. That’s 8 percent higher from a year earlier.
Nationally, U.S. home sales in August followed the same trend. Strong demand mixed with weak inventory meant homes sold quickly, only there were fewer homes that buyers found available. For example, the number of home sales in the U.S. increased 2.8 percent in August compared to July, but were down by 0.84 percent compared to August 2016.
As a result, in a typically counter-cyclical way, this year autumn may be another strong season for the Greater Orlando housing market. That would go against older trends, particularly for Florida.
Traditionally, home shopping slows in warm climates regions during the fall months, as states like Hawaii and Florida often experience as much as a 10 percent dip in home hunting.
But with inventory low and buyer demand still quite high, an improvement in the number of homes for sale could sharply reverse that trend in the next few months.
The inventory situation could be improving, according to new research from the real estate website Redfin. Their study indicates that the number of homes for sale fell 11 percent in July, which is the 22nd straight month of year-over-year inventory reductions.
On the other hand, there was a three-month supply of homes in July. That’s up from 2.5 months in June, Redfin reported.
Traditionally, autumn becomes a busy home buying season only in specific regions of the county, like ski resorts within the mountains. That may not be the case this year.
How does the Orlando market look today?
The Orlando Regional Realtor Association noted that sales were not blockbuster this summer, but they cited the slim inventory of listings as the main problem that kept so many first-time homebuyers on the sidelines.
However, Bruce Elliott, president of the association, noted that there’s one silver lining. As prices keep rising — Orlando’s median home price for July was $14,000 higher than a year ago – that’s contributed to a slowdown in purchases by investors, which means first-time buyers are facing less competition now.
There are two other factors that may contribute to a strong market in the next few months.
One is the strong economy in Florida and in Orlando, where the unemployment rate is below the national average and jobs are still being created at a healthy pace. Orlando has experienced record job growth this year, averaging 150 new jobs daily during the 12-month period that ended in June.
That’s bringing more newcomers to the region in search of jobs – and they’ll all be looking for homes here.
Second, just as the price of a home is rising, so is the price of renting an apartment – or a house. Renters in the Orlando area have found themselves confronting spikes in monthly rents due to the high demand.
That’s one reason why buying a home is likely to become far more appealing than renting one. Rental prices could keep rising, even on a yearly basis, but a home buyer can today lock in an interest rate and affordable monthly payments for the next 30 years. In addition, as home values rise, the people who buy a home in the Orlando area this fall may see their home become worth much more a year from now, a benefit not available to those who are renting.
AV Homes continues to construct new homes in some of Central Florida’s most appealing communities. Our homes are close to the job centers in Orlando, as well as the popular theme parks.
Our very affordable homes are ideal for those looking to be a part of a community where they feel a strong sense of belonging. No matter what kind of home you’re looking for, we have one that’s right for you.
Contact us today at 1-800-AVHOMES to learn more about the homes we have available.