Please take note of the title. The key word is "was." There are a lot of experts out there still prediciting declines in the national real estate market this year. There is no national real estate market. Real estate is local, and each local market is interdependently connected to the other local markets. Each market is influenced most by its own local economic situation though. Here in Orlando there have been a number of economic influences positively effecting our market. Improving tourism, the new medical city and the coming commuter rail system are a few of the good things going on in The City Beautiful.
So, back to my original question in the title of this post. When was the bottom of the Orlando real estate market? That depends on how you define the bottom. There are a few different measures we can look at, and I will suggest my pick.
First, you could define the bottom by the number of sales. If that is the measure 2008 was the slowest sales pace since the market changed direction in 2006. January of 2008 was the slowest month I can recall in forever with only 813 closed sales. While that was the slowest month, I have a hard time calling that the bottom when the average price was still north of $300,000 that month.
Second, price is an obvious measure of the bottom. Which measure of price do we look at though? The most commonly report measure of real estate prices is median to take out the effect that very large sales can have on the average. We actually had two months last year where the median price hit rock bottom. January and February of 2011 both marked a median price of only $95,000. The other measure of central tendancy is average. Interestingly, the lowest average price we have had was also recorded in February of last year at $133,000.
Finally, I thought about total sales volume. For this one, I went back to 2007 and multiplied the total number of sales each month and the average sales price to come up with the total sales volume. I discovered the absolute lowest sales volume we have seen here in Orlando occured January of 2009. There were a pawltry 1,050 sales at an average price of $187,200. This accounted for a sales volume of $196.5 million.
Ultimately, price is the number one concern for sellers and buyers alike, so my pick is February 2011. Even though the number of sales is an important factor, sales are strongly influenced by price. Since February of 2011 saw both the low point for median and average price, I am calling that the bottom. Prices have been on the mend since then, and we have had nine months of year over year price increases. At the same time our inventory has declined significantly, so I don't see this trend changing for the time being.