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TAKE SOME INDEPENDENT ADVICE FIRST Orlando’s housing market is in excellent shape with very little danger of its bubble bursting, according to an analysis of the area carried out by the National Association of Realtors. In fact, according to the study, the Orlando market has the potential for significant housing equity gains, particularly for homebuyers who plan to remain in their houses for the long run. Although many of the points made in this analysis are positive, there are a number that require more detailed analysis; this is carried out at the end of the article.   ‘The local market is likely to appreciate at an above normal rate because of the strong job growth and the steadily rising number of retirees and foreign homebuyers expected to purchase homes in the coming years,’ says the president of The Orlando Regional Realtors association. ‘And the good news for buyers is that Orlando’s impossibly hot market is actually slowing down to a palatable level, with an increase in inventory and a median price that has remained stable for the last few months.’   Though home prices have risen faster than income in recent years, a more relevant measure is the mortgage servicing cost relative to income, which has been well within historic norms. This implies no widespread financial overstretching to purchase a home in the region.   In addition, the median price of an existing home in the Orlando area has risen 73 percent over the last three years. There have been 102,000 new jobs created in the last five years, and 110,000 new family homes have been constructed in the same time frame. These market fundamentals, combined with tight inventories of existing homes available for sale in Orlando, mean that there is solid demand from buyers in comparison with the supply of homes on the market.   Additional findings of the analysis:   ·          Mortgage rates declining to 45 year lows have been a major force in boosting home prices in recent years. Lower rates allow homebuyers to obtain a larger loan without necessarily increasing monthly mortgage payments. ·          Baby boomers in their peak earning years have been active in purchasing second homes, which many consider their future retirement homes. The baby boomer impact could continue for another decade. ·          The Orlando area is a retirement destination. The local market benefits from both second home purchases by American baby boomers as well as wealthy foreigners. ·          Price declines in the local market are unlikely according to a ‘stress test’ applied by the study’s researchers. In fact a price decline of 5 percent will occur only under extremely unlikely scenarios. For example mortgage rates rising to 10.5 per cent in combination with job losses totalling 64,000. ·          Scenarios that could cause a decline are highly unlikely. Most credible forecasts predict the Orlando area will create at least 60,000 jobs over the next 24 months and mortgage rates will hover around 7percent.     This is an interesting perspective; however there are particular circumstances, where caution should be observed.   A significant number of overseas property buyers in Greater Orlando have been swayed by heavy advertising, particularly in the UK. This marketing has emphasised specific developments around Kissimmee, Reunion, Celebration and Davenport as well as condo-apartments. The language in the marketing of such developments is heavily sales rather than information based. A number of these advertisements have emphasised euphemistically named ‘Guaranteed rental schemes’   Many buyers on such developments have a comparatively high ratio of mortgage borrowing to purchase price and therefore require a regular number of rental weeks to cover all their outgoings. This has a number of implications.   ·          Many guaranteed rental schemes are both untested and flawed – some are based on the premise that the client pays a higher price when buying the house. ·          Many guaranteed rental schemes take an extremely optimistic view of continued growth in the Orlando holiday market. If there is a reduction in the stream of overseas visitors to the area-who is going to pay the guarantee? -  has the Company adequate reserves? If you have to resort to law and sue who will pay your legal costs? Will the Company still be in business and the million dollar question – How do you intend to recover your monies through the Florida judicial system?   The British buyers of Orlando rental investment properties best equipped from an investment perspective have bought on well balanced developments. The most astute ones have taken responsibility for their own rental bookings, joining one or other of the various self help clubs or groups for British owners of property in Florida.   If you would like details of detailed briefings given by Andrew covering all these points and much more please click here.   If you are interested in a property in Orlando, for investment, rental or as a second home, click here. Andrew Bartlett can recommend a particularly good company based in Orlando, who share his philosophy and realistic concerns on the market and adopt an information based approach rather than directing you towards a few developments offering higher commission rates. Andrew Bartlett an acknowledged expert on property trends and relocation in Florida, writes articles and answers readers’ questions for several British publications including Florida Magazine, Escape Magazine, Place in the Sun, Homes Worldwide, Sunday Times, America, and The Red guide to buying Property in America   and is regularly consulted by journalists and broadcasters. His consumer web guides have received numerous accolades. Andrew was a Senior British Government Official for 20 years before relocating to Florida several years ago, where he was headhunted to set up specialist British property and relocation teams for America’s largest estate agents Coldwell Banker and Remax. He then established a uniquely impartial and independent relocation and property-briefing company working between Britain and Florida. He has written a number of watchdog style articles on overseas property and emigration selling techniques, and advises City investment companies on the Florida property market.