Wednesday, June 24, 2009

Orlando Condo Sales up 206%

Orlando Condos sales sky rocketed in May with an increase 206% which was the biggest gain in the state. Many condos priced are 50-75% discounted from 2-3 years ago. There are condos in all prices ranges in all areas. There are condos as little as $50K for 2 bedroom in good metro Orlando areas, but they do not come without strings attached.

Condo prices have dropped for a few reasons, supply of condos is plentiful with all the condo conversions, sales pace of condos slower than single family homes, change in mortgage underwriting, and new fannie mae guidelines for condos. Financing condos are difficult, not only does lender approve the borrower, but they approve the condo community. This is an additional review, not done with single family or townhomes communities.

Because of all the foreclosures occurring home owners have stopped paying on their condo fees. This has caused lack of funds for HOA to keep the communities maintained and HOA fees could go up. If there are too many deliquencies, too many renters, then a lender will not finance a borrower. If a borrower cannot get financing in a community, then prices plummet and purchasers have to pay cash in these condo communities.

So even if you find a community that is "financible", and find a cheapie condo in good condition, chances are it is bank owned with tons of offers. You will have to bid over asking price to get it, and if you are not cash buyer your offer probably will not get selected.

Many condo communities with pricing under $100k will be cash communities, or banks looking for only cash offer, especially if pricing under $50K or if multiple offers have been submitted.

Despite the draw backs in some of the HOA communities, many cash investors are crossing their fingers to make a return on their investment in the future. Many condo communities are in good locations making them marketable for renters, but investor need to know that rents are below normal rental value because of high volume of supply and this is expected through 2009.

Because of the cash investors buying all these cheapie condos, it is not surprising that condo sales have doubled in May. Please contact Buyers Broker of Florida for more information if you are in the market to purchase a condo.