The Pulse of East Orlando Real Estate, With a Focus on Waterford Lakes

By Mary Shanklin, Orlando Sentinel

A new real-estate forecast ranks Orlando as the nation's worst housing market by the end of this year.

Fiserv Inc., a financial-services provider, said Monday that single-family home prices in Metro Orlando are expected to have fallen another 19 percent by the fourth quarter of 2011 compared with a year earlier. That would cut the four-county metro area's median price from $155,000 as of last year's fourth quarter to $110,050 by the end of this year.

A rebound, though, could begin in early 2012, the company said.

The local housing market should bottom out during the first quarter of 2012, Fiserv predicted, and prices are expected to rise more than 2 percent between the end of 2011 and the end of 2012. Although a slight price increase, it would put Orlando in the middle of the pack for U.S. housing markets next year — unfamiliar territory for the metro area since the housing bubble burst several years ago and home prices began to slide.

Fiserv chief economist David Stiff said he would be more likely to buy a house in Orlando early next year than this year because he expects prices will be lower then.

"One of the problems [this year] is the huge supply of foreclosure homes," Stiff said in an interview Monday.

Orlando's near-term real-estate outlook depends largely on when stalled foreclosures begin working their way through the courts again after delays sparked by allegations of improper documentation. Orlando's recovery could be further delayed depending on how quickly, or slowly, banks initiate new foreclosures on properties behind on their mortgage payments and in default, Stiff said.

The direction of Orlando's home prices will depend on whether there are enough investors and other buyers to create a demand for those foreclosure properties that have yet to hit the market, he said.

The four other metro areas that made Fiserv's list of the five worst markets in the country as of this year's fourth quarter are: Detroit; Miami; Riverside, Calif.; and West Palm Beach. The five best U.S. markets as of the end of this year are expected to be Tacoma, Wash.; Memphis, Tenn.; Pittsburgh; Boise City, Idaho; and Rochester, N.Y.

Fiserv relies on data for 375 metropolitan areas from both the Case-Shiller Index and the Federal Housing Finance Agency. Its rankings also take into consideration unemployment and foreclosure data, and are based on Moody's Analytics.

MetroStudy Inc. economist Brad Hunter said Monday that not all areas of Central Florida will recover at equal rates.

"There is a large overhang of empty homes and empty lots, which will certainly put downward pressure on home prices," Hunter said. "But this will impact the more remote parts of the Orlando market more than the 'close-in' submarkets, inside the beltway."

Walter Maloney, a spokesman for the National Association of Realtors, said Fiserv could be correct in predicting that Orlando's single-family home prices won't hit bottom until the first quarter of next year, but he questioned the double-digit-percentage price drop projected for 2011.

The national Realtors group expects to report on Tuesday that Orlando prices slipped only 1 percent during the first quarter. Expecting them to fall another 18 percent by the end of the year seems a little drastic, particularly given the significant drops in price that have already occurred in recent years, Maloney said.

Single-family-home prices have fallen 51.8 percent since mid-2006 in the Metro Orlando market, which comprises Orange, Osceola, Seminole and Lake counties. The most severe 12-month price decrease was 30 percent, from early 2008 to early 2009.