In the second quarter, 0.8% of metro Orlando homes sold for at least 30% more than list price, according to an Aug. 17 report by Zillow Group Inc. That number may seem puny, but it represents 99 home sales in metro Orlando, based on second-quarter home sales data recorded by the Orlando Regional Realtor Association.
Homes that sell way over list price are becoming more common in Central Florida, as only 0.3% of homes sold for at least 30% more than list price in the first quarter, Zillow reported. Plus, one local home sold a jaw-dropping $1 million over list price last quarter.
These numbers represent the extremes, but they highlight a reality of today’s housing market: Homes selling above list price is the norm. In June, the average Central Florida sales price of $383,113 was more than the average list price of $383,045, according to the Realtor association. In July, they were practically the same.
These numbers reflect the intense demand for homes. Low interest rates boosted the housing market across the U.S., and a flood of new residents into Florida supercharged the Orlando residential real estate sector. However, a shortage of homes turned house hunting into bidding wars, driving up prices and worsening affordability.
Seattle-based Zillow (Nasdaq: ZG) in another study reported mortgage payments in metro Orlando are becoming less affordable. Homeowners in metro Orlando on average spend 19.9% of their monthly income on mortgage payments, but Zillow projects that will rise to 21.6% by the end of the year.
The rapid price gains are creating some hesitancy among local buyers who want to up-size or down-size to a new house, said Christine Elias, Realtor and founder of Winter Park-based Urban Dog Group at Coldwell Banker Realty.
Meanwhile, the growing number of listings hitting the market could reduce competition and cool the industry, Zillow Data Analyst Treh Manhertz wrote in the report. “The market’s runaway growth is showing signs of slowing. Inventory halted its long downward slide and has grown for the last few months, which should translate into reduced competition.”
Still, many expect the market to remain hot for some time. Demand from out-of-state buyers and investors, who tend to have deeper pockets than local buyers, is as strong as ever, Elias said. Experts including PNC Financial Services Group Senior Economist Abbey Omodunbi and National Association of Realtors Chief Economist Lawrence Yun previously said the housing sector will remain a seller's market even if it slows a bit.