Sunny Days Are Here Again for Orlando’s Housing Market
These are sunny days for the city of Orlando.
Employment in Florida’s “The City Beautiful” isn’t just up; it has become the envy of the state and of the rest of the nation. Last year, Orlando became Florida’s first major metropolitan area to recover all of the jobs it lost during the thick of the economic recession.
The housing market is also making a comeback, buoyed largely by the sale of foreclosed homes. Sales of existing homes increased by 13 percent in the final quarter of 2014 from the same quarter in 2013, according to a report from the Orlando Economic Forum. A Florida court system that was once overwhelmed by the flow of foreclosed homes is now sending a lot of these properties back into the marketplace (foreclosed homes made up 29 percent of home sales in Orlando in the month February, according to the Orlando Regional Realtor® Association).
Today, Orlando has the highest owner-occupant sales rate in Florida, according to recent Fannie Mae data (Fannie Mae is the publisher of The Home Story).
Then there are the city’s big developments. The SunRail, the Orlando area’s first ever commuter train, is now in its first phase of development. There’s also the Dr. Phillips Center for the Performing Arts, the newly renovated Citrus Bowl Stadium, and the Orlando City Soccer Club, the city’s new Major League Soccer team.
“I believe that many people are starting to realize that central Florida has a lot to offer, more so than living on one of the coasts,” says Rich Yelenich, a broker for LIFE Realty Inc. in Lake Mary, Florida.
From the Courts to the Marketplace
By the time the housing crisis was taking the entire country by storm, Florida was already “ground zero for foreclosures,” says Mercedes Henriksson, a REO sales director for the state of Florida for Fannie Mae.
There were a “significant” number of properties and mortgage loans throughout Florida that went into default, says Kathy Rentas, an associate general counsel for Fannie Mae. This left both mortgage servicers and the Florida court system facing a huge backlog of foreclosure cases to tackle.
“With the volume in Florida, it was almost like a double whammy,” says Rentas. “You had these loans that were delinquent, significant numbers of them, and entities and organizations that weren’t ready for it.”
To help borrowers in distress and to find ways to better manage default properties, Fannie Mae set up a loss mitigation platform, says Rentas, which helped deal with the volume of these cases.
The Florida legislature also approved millions of dollars in funding for temporary court staffing, including more clerks and judges, to provide help to an already overwhelmed court system. Over time, the added personnel proved to be helpful. In Orange County (where Orlando is the county seat), the number of pending cases was at 4,930 at the end of March, a steep drop from the nearly 30,000 cases in 2011, according to Bloomberg News.
For those loans where loss mitigation, short sales, or loan modifications could not be of help, says Rentas, they had to be liquidated through the courts.
“Once you do that, you now have property that you can sell to investors, new homeowners, and get (those loans to be) performing mortgages — and hence you have recovery,” says Rentas.
It All Boils Down to Timing
The timing of the news of Orlando’s improving job market came just as properties were making their way through the courts and back into the marketplace.
By having these foreclosed properties go through the courts, many of these unoccupied homes, which had been languishing in vacant neighborhoods and had fallen into disrepair, could now be spruced up (like mowing lawns and throwing away old newspapers) to make them more presentable to homebuyers.
“One of our goals is to put owner-occupants back into homes and to stabilize neighborhoods,” says Henriksson.
“Getting these properties through the foreclosure process and into Fannie Mae’s inventory allows us to start the process of having the necessary maintenance and repairs completed,” she says. In doing so, she says, it “prepares the property to become someone’s home.”
In an effort to further expand an owner-occupant’s opportunity to become a homeowner, Fannie Mae expanded its First Look™ timeframe from 15 to 20 days.
“The decision to purchase a property is time intensive and complicating,” says Henriksson. “Having those extra five days gives prospective buyers a greater opportunity to really explore their options.”
In January, Fannie Mae sold 63 percent of its Orlando foreclosures to owner-occupants, an increase from 58 percent the same time last year, according to Fannie Mae data. Properties under contract increased by 66 percent between January 2014 and 2015, and total sales increased by 46 percent.
After buying a foreclosed home in Lake Nona, a mixed-use community in Orlando, Carole Wright, a longtime Florida resident, says she has found the “perfect” home in the perfect location.
“When I was a kid, I never thought I would live out here — this was just all forests, and there was nothing here,” says Wright.
“Now it’s beautiful, and I think it is one of the sought after neighborhoods,” she says. “As they say, ‘It’s a great place to live, work and play.’”