More than one-third of all residential real estate sales in Orlando in 2015 were paid for in cash, according to Jim Gilkeson, director of the University of Central Florida’s integrated business degree.
In fact, cash accounted for about 37 percent of residential real estate sales last year, while conventional loans accounted for about 35 percent and FHA loans accounted for about 28 percent, according to data presented by Gilkeson at a CFA Society of Orlando event on March 23.
Gilkeson believes the high level of local cash sales is being driven by investors who are not convinced the stock market is steady enough for their extra cash and recognize the opportunity with the currently-low interest rates.
“People around the world recognize that residential real estate still is a good investment,” he said.
Also, as of 2015, Florida had the fourth-highest inventory of foreclosed homes, Gilkeson said. However, from 2014 to 2015, Florida came in first for the number of completed foreclosures at 74,303. Across the country, 472,659 foreclosures were completed in that same time frame.
As far as volume goes, the number of new homes being built locally still is low, partly because the excess from before the economic downturn still hasn’t been fully absorbed, Gilkeson said. Plus, people are weary.
“I’ve never thought of home builders as cautious people,” Gilkeson said. “But, we aren’t often seeing people buy up lots of acres to build hundreds of homes on like before.”
That weariness may come from various factors including the economic downturn and millennials, which seem to prefer to rent longer than previous generations. That’s because they often jump around from job to job and don’t stay in the same area for years at a time, therefore finding renting to be a more attractive option.
“Millennials are an incentive to invest in rental houses,” Gilkeson said. “The local rental market is strong.”
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