Since the hard-hitting economic downfall, people have been doing what they can to recover, but in terms of real estate local residents still find themselves asking: well, now what? Is now the right time to buy a house? What trends are happening in the market? Should we ever expect a full turnaround? Is there some relief in sight?

While most of these questions depend upon the circumstances of the buyer, there are certain situations that are emerging as trends.

The biggest trend that appears to be dominating the market is short sales. A short sale is what the name suggests: it is a sale that is being sold short. The sale amount will be short of the owed amount because, for example, the bank realizes that it will not be able to get back the full amount of its loan.

Potential buyers are also looking at real estate owned (REO) properties and possible foreclosures.

“They obviously realize there are some opportunities there to purchase homes at discounted pricing because of that,” says Shad Tome, president of Harmony Development Co. Harmony is a sustainable community in Florida with high-energy efficient homes located in Osceola County, just outside of the medical city in Lake Nona, according to their website.

While most buyers are taking advantage of the discount of bank-owned homes, real estate agents are seeing some new construction because of an upward movement that is happening on the pricing on the bank-owned transactions.

“It’s usually in select situations where people are looking at a short sale and the amount of work they may have to do post-closing with the bank,” says Tome.

Tome explained that they are also seeing unique cases where the appraisal is coming in a “few dollars” - using the example of a $1,000 or $2,000- over what the contract price is. It is an occasional situation because of the amount of transactions that are taking place and the multiple offers that are submitted on the same home.

“We haven’t seen that happen before in our district for quite some time,” Tome says. “I would say probably the last two or three years.”

The other “buzz word” right now is strategic default, says Karen Spell, an East Orlando real estate attorney located on Alafaya Trail. Strategic default is when borrowers decide to stop making their payments. It’s a decision to not make their payments despite having the financial flexibility for them.

“Homes are on the market for a shorter period of time,” Spell says. “There are less homes on the market than when we were at the worst. We are not back to what I would consider normal and we won’t be for a while.”

In addition to these up-and-down trends, there are a few challenges the market will face before reaching some kind of stability. One of the obstacles, Tome explained, is that the federal government ran a program for “first-time homebuyers” that expired at the end of April where a $8,000 credit could be received toward their purchase.

“We’re in a period where the really challenging thing will be if the [federal government] doesn’t come out with a new program that will be sustainable, will people still be out looking to purchase without having that incentive or that carrot that was out there with the $8,000 tax credit?” Tome says.

As a result of the lost incentive, Tome said that some builders are offering their own incentives to entice those that used the tax credit to come back into the market. He believes that it’s a challenge because potential buyers may be waiting for the federal government to extend the program that offers credit.

“We’re easily looking at another year until we’re at a point where we can confidently feel like we’re able to predict month to month the amount of transactions that we can do without the requirement of some type of federal incentive to make it happen,” Tome says. “That people are purely buying homes based on the fact that it’s a good purchase, they feel stable at their job, the economy’s improving and they’re buying because that’s right American thing to do.”

Article by Shayla Silva

How many shopping plazas do you drive by on an average day? And how many of those plazas have empty storefronts? Odds are the answer is “most.” It’s no secret that the commercial real estate market has seen a decline over the past 18 months or so in Central Florida, but are we past the worst of it?

“The commercial real estate market is a lot like a lot of industries in the United States today in that the industry has experienced a significant decline in revenue recently,” says Jeff Sweeney, SIOR, president and managing principal at Grubb & Ellis|Commercial Florida. “But this industry is experiencing positive signs - there is more activity, more interest on both buyers and tenants, and the banks and lending institutions have started to dispose of some of their distressed assets which has created opportunities for viable companies to acquire facilities at historically low prices.”

Translation: things are looking up for the industry, but they are not completely out of the woodwork just yet. With so many available properties and storefronts, there will be a measurable lag between recovery and expansion. With that said, however, Sweeney notes that interest is on the rise again in commercial property due, in large part, to increased overall consumer confidence and spending.

“The difference between today and a year ago is that business owners are again saying, ‘You know what? Business will go on,’ and, ‘We’ve passed the worst of the recession - we will slowly climb out of this,’” Sweeney says.

As business owners have been able to search for, and successfully identify, the proverbial light at the end of the tunnel, so to have consumers. Florida was especially affected by the recession because of its large reliance on consumer spending, tourism and new construction. Because of this, political and business leaders have begun to aggressively shift and diversify the economy to encompass new industries, such as medical modeling and simulation, to supplement the leading money makers in Florida.

In fact, much of the immediate growth in the East Orlando region will come from companies within these industries seeking more commercial space. “Orlando is ideally suited to provide [commercial medical training] of simulation technologies,” says Waymon Armstrong, president of Engineering & Computer Simulations (ECS), whose office is based just outside of the University of Central Florida. “We see this market growing steadily for us, with anticipated hires occurring in 2010 as a result.”

The continued growth and expansion of the medical city in Lake Nona will also play an increased role moving forward. With so many healthcare powerhouses locating there, the commercial industry around the Southeast Orlando area has improved significantly. “Obviously there is a lot of interest in being in close proximity to all of those exceptional medical entities,” says Sweeney.

Avalon Park is also planned to expand with an 80,000 square foot assisted living facility scheduled to begin construction this year and open in late 2011. Total development costs are estimated at more than $15 million.

Still, in the immediate future, Central Florida is primarily a service-based economy that relies on consumer spending. “Anytime the confidence level improves and people are spending money, it’s good for the economy,” says Sweeney. “It’s a domino effect but consumer confidence rising is a great bellweather that we’re going to see improved sales throughout the entire system.”

“I know for my family and I personally, we have started to go out to dinner more,” says Richard Dillon of Lee Vista. “And it seems like my wife has started to go to Target a lot more,” he jokes.

For the Dillon family, it has been business as usual as they pass empty storefronts. “Honestly, I don’t really notice them anymore, I used to but not anymore,” he says.

Dillon offers a unique perspective about the new businesses that will move in as well. “They will have a leg-up on those that they’re replacing because they don’t have to weather the same storm, or maybe they already did so they’ll be apt to provide better products and services to us,” he says. “I look forward to seeing what changes new stores will make, if any, once they move in.”

Speaking of moving in, Sweeney believes that for those companies or individuals looking to invest in commercial real estate, there may not be a better time than right now. “Commerical real estate is again becoming a viable investment, there’s no question,” he says. “The oldest saying in the book is, ‘buy low, sell high,’ and we’re at historic lows right now; in fact, it’s probably one of the best times to purchase in the last 50 years.”

Article by Corey Gehrold

All you’ve done your entire life is work with your hands. Building, wiring, framing. It’s a tough job, but it’s one you own - the bitter taste of long hours in the sun are offset by the tangible sweetness an honest, good-sized paycheck brings home to your wife and two children. Work is booming and a hard days’ work has never gone further - until, one day, the phone stops ringing.

Welcome to the life of former Bithlo area resident, 29-year-old Kenneth Cross. Several years ago, Cross worked in the construction industry, partnered with his brother Leo, framing roofs of residential homes at a hectic pace. But, as the economy took a downturn in Central Florida, the residential housing market crashed and Cross was left with no work and little hope.

“About three years ago it started to get so slow and if there was work, no one was paying anything,” he says. “My brother and I were just getting into making good money and if it had lasted just a little bit longer, we would’ve been alright.”

Instead, Cross was forced to take up an on-again, off-again landscaping position to help make ends meet. His family has been forced to use food stamps to eat. His wife has become almost the sole supporter for the household, still struggling to survive and raise two young children.

When the calls stopped coming in, Cross remembers being concerned first, then angry at what was going on around him. “I was concerned because we were hurting for money,” he says. “After doing so well for a long period of time, working steady - to go to not making money was rough.”

Then the anger set in. According to Cross, when there was work, it was being given to illegal immigrants who would underbid projects and work for pennies on the dollar. “You just couldn’t do it as cheap or as fast because they had so many guys,” he remembers. “There was nothing we could do to compete.”

Down but certainly not out, Cross decided that it was time for a change. He was going to use his construction skills for something else - he was going to build himself a new career.

Deciding to temporarily put down the hammers and pick up the books, Cross enrolled himself at Valencia Community College and began pursuing a degree in engineering. “I wanted to stay in construction because I’ve already got the experience there,” he says. “My goal for the future, what I’d really like to do, is design the roof trusses on houses after the architect gets done with the initial plans.”

However, with just a few semesters to go before earning his degree from Valencia, an old contact came calling - he had work installing siding on apartments. Not wanting to turn the opportunity to make money and provide for his growing family, Cross stepped away from his education to become the chief family earner again. But, just like the construction industry, the work isn’t steady.

“I work whenever he has work, sometimes it’s a few days a week, sometimes it’s more; last time I worked four days straight, but I’ve been out of work for a little over a week because he hasn’t had any for me to do it,” says Cross. “It’s sporadic at best.”

Cross has now missed the last two semesters of school in favor of providing for his family. But, perhaps most importantly, through the entire situation, he has never given up.

“Its been a tough road, but we’ve made the most of it,” he says.

Article by Corey Gehrold

Total taxable property values are down 12 percent from this time last year resulting in an estimated loss of about $77 million to Orange County’s budget. With property tax as the largest revenue source for the county government, leaders are now forced to find new ways to make up the lost revenue again this year.

Two years ago, the county collected $726 million in property taxes. Last year, that number was reduced to $641 million. This year, the number is expected to land at about $564 million.

“When your major revenues are going down by $77 million and your other revenue sources, such as sales tax, are stagnant, you have to act accordingly,” says Randy Singh, manager of the Orange County Office of Management and Budget. “If there are no additional revenue sources or tax increases, the only way to achieve the goal of a balanced budget is to cut.”

Although the next fiscal year will not begin until October 1, Singh says that the county has been anticipating and planning for the lost revenue for some time. “We’ve been in the mode of cost-cutting for the past few years so, fortunately, the fact we have to cut doesn’t come as a surprise and we were able to take certain measures earlier in the year,” he says.

Some of the “measures” the county plans on taking include cutting budgets of all their departments and outside agencies as well as releasing employees, declining salary increases and limiting the amount of capital improvement projects.

“We’re very fortunate we can maintain the tax rates without an increase and, for the most part, retain the same level of services for the citizens,” says Singh. “As a government, one of our main concerns is public safety; so the fact that the sheriff can reduce his budget by 3 percent and make a commitment that there will not be a reduction in deputies or the level of service is a tremendous accomplishment.”

The county also plans to eliminate around 160 staff positions this year, bringing the total eliminated close to 500 positions in the past two years. They’ve also asked employees to begin contributing more dollars toward their healthcare costs to lighten the burden felt in the county budget. “There’s a combination of things being put into place to get us to where we need to be as far as a balanced budget goes,” says Singh.

The 2010 tax roll values that have created the 12 percent shortfall are reflective of property sales occurring during 2009. Homesteaded property values decreased 32.8 percent, excluding new construction.

“Over 60 percent of the residential sales reviewed were bank owned properties,” says Orange County Property Appraiser Bill Donegan, whose office was responsible for compiling the information. “Every area of the county has been affected and neighborhood values have taken a beating from the fallout of foreclosures.”

Orange County’s total taxable value for 2010 is $84.1 billion, according to Donegan’s office, down 12 percent from the previous year. New construction, both residential and commercial completed in 2009 added $1.43 billion in taxable value - a notable 43 percent decrease from the prior year.

“Of course, the continued decline of values shouldn’t come as a shock to anyone,” says Donegan. “As long as the housing and commercial markets continue to fall, so will tax roll value and…recouping tax revenue will be a much, much slower process for the cities and county.”

The first draft of the county budget will be released in early July, followed by a three day work session beginning July 20 that the general public is welcome to attend. The work sessions, however, are not public hearings - those are set for September with the final budget for next year going into effect on October 1.

As Orange County develops and adapts new strategies to manage the budget and lower levels of government revenue, Singh assures one thing: “We’re stretching things as much as we can stretch them.”

Article by Corey Gehrold

You may have heard that throughout Central Florida there is a surplus of housing and commercial property available. Obviously, that’s not news. But, what you may not have heard as much about is the way that East Orlando has dealt with the recession, the real estate burst and how the area is positioned to grow and become stronger than ever.

For starters, East Orlando is inhabited by thousands of smart, talented individuals and families. In the 32828 zip code alone, which houses Avalon Park and Waterford Lakes, 15 percent of the population have a bachelor’s degree or better - Metro Orlando sits at only 8.5 percent. Because East Orlando is so densly packed together, there are 784 individuals with advanced degrees per square mile, which is roughly four times the Orange County average at 216 per square mile.

Why does that matter exactly? Well, according to local experts, these statistics are some of the main reasons that the recession and real estate fallouts have played out somewhat different in the community. “When we talk about East Orlando, we’re talking about an economic environment that really doesn’t exist anywhere else in Central Florida,” says Jim Spaeth, president of Remora Partners, a capital investment group focused on East Orlando.

Anchored by the major metropolitan research entity that is UCF and the Orlando International Airport, Spaeth says the area has taken on a new shape, spurring a new type of economy known as the “innovation economy” that revolves around the mass production of ideas rather than the mass production of products.

“The influence of those two large economic drivers is pervasive,” says Spaeth. “What they end up doing is creating industries and offspring industries that otherwise wouldn’t appear in the scheme of things.” He is referring to industries that create high-paying jobs such as optics and photonics; modeling and simulation; digital media; and even biotech and life sciences in Lake Nona.  These industries and the thousands they employ, at least partially, help fill the void of houses and commercial space in the area.

According to Spaeth, East Orlando has experienced a different recession than the rest of Central Florida. “I think that there hasn’t been the recognition in the community that East Orlando has gone through a different manner of the recession when compared to Central Florida,” he says. “The media hasn’t really shown that so, consequently, the perception in the community is that East Orlando is struggling - and certainly some people are - but, if you dig behind that and look at vacancies, foreclosures and the state of real estate stock, you’ll find that the area has weathered the economic storm better than any other place in Central Florida, at least that I’ve been able to find.”

Again, Spaeth contributes the resilience of the area to the innovation economy harbored there. “East Orlando will stay ahead of the curve because of the evolution taking place there; someone will come up with an idea that was better than the last and it takes hold, thus pushing the economy forward,” he says. “The key is to have plenty of smart, motivated individuals living and working in your community that are engaged in those new industries or working to create new ones; and East Orlando has done a good job of attracting them there and fueling those innovations.”

Compared to the rest of Central Florida, whose growth was often stimulated mostly construction, East Orlando never relied as much on families moving into the area to create income. “Unfortunately for other areas, when the recession came and people stopped moving here, that’s when you saw vacancies go way up and prices go way down,” says Spaeth.

In East Orlando, however, the educated population leads to stronger job retention, according to Spaeth. “The people that live in East Orlando live there because they are employed in good industries that are still hiring today,” he says. “Those regions that relied on the housing and construction industries to fuel their growth are in much worse shape than East Orlando.”

For the future, Spaeth says that the area is definitely on the right path. “As long as you’re creating a place where those smart, talented people want to live than the real estate in the area is going to be in good shape, because they’ll need somewhere to work and a place to call home,” he says. “As far as recovery goes, I think that we’ve never really gotten off the path of progress, we just haven’t recognized that yet.”

Article by Corey Gehrold