Those who thought things are so bad they can't get worse are wrong yet again as central Florida median prices for existing homes drop the most in at least 15 years.



The raw numbers look ominous, but the figures are distorted by foreclosures and short sales. Not counting distress sales, prices declined 3%. That is still a big drop.



The Orlando Sentinel discusses the situation in Orlando-area home prices plunge 14% in January.



President Barack Obama announced plans to funnel $1.5 billion of foreclosure relief to Florida and four other states. But the Orlando Regional Realtors Association also reported that the median price of the area's existing-home sales fell 14 percent in January from the month before — the biggest such drop in at least 15 years.







The culprit: bank repossessions and short sales, which made up 73 percent of all resales last month in the core Orlando market. As a result, the median price was only $103,000 in January — down from $120,000 in December and $264,436 at the market's peak in July 2007.



Kathleen Gallagher McIver, chair woman of the local Realtors group said "This distorted median price does not equate to an across-the-board loss of value for traditional homes in good condition," she said. The association noted that resales of "normal" homes had a median price of $169,990, down less than 3 percent from a month earlier.



Only about one-fourth of the January resales in the Orlando Realtors' core market — mainly Orange and Seminole counties — were "normal" homes. About half were bank-owned sales, and their median fell to $69,550. About one-fourth were short sales, and they fetched a median of $115,000.

Math Including And Ignoring Distress Sales

Including Distress Sales

Ignoring Distress Sales

Orange County Shadow Inventory Analysis

Us : Your study says that five million of the 7.7 million delinquent homes will go through foreclosure or a “foreclosure-related procedure.” How is this likely to occur?



Wayne : Of the 7.7 million delinquent homeowners, we actually think that only about 1.6 million will be able avoid losing their homes, and that the remaining 6.1 million will lose their homes. We say that there is 5 million units of shadow inventory because we estimate that about 1.1 million delinquent homeowners already have their homes listed for sale, and we would not classify those homes as “shadow.”



Us : Any indication how bad the problem is in Orange County?



Wayne : Orange County has about 13 months of shadow inventory, which is above the national average, but lower than other Southern California metros.



Us : What are the key implications of your findings?



Wayne : Our main conclusion is that prices are likely to keep steady, despite the massive shadow inventory, because the tremendous affordability we have today will create a floor for pricing. However, if the economic recovery stalls or mortgage rates spike, we’re going to see prices tumble again.

Amazing Conclusion