March 9th, 2009 8:53 AM by Alan Martin
Silver lining: Area homes affordable again
Jerry W. Jackson | Sentinel Staff Writer
March 9, 2009
The outlook for residential real estate in the Orlando area has improved in two ways, according to University of Central Florida finance professor Stanley D. Smith: affordability relative to the rest of the country, and affordability relative to local income.In his latest report to the Mortgage Bankers Association of Central Florida, Smith noted that "our affordability is becoming attractive again." He said an index that is widely used by chambers of commerce, economists and researchers shows that Orlando's cost of housing has slipped back below the national average.The ACCRA Cost of Living Index uses 100 for the national average, and the Orlando area's housing-cost index fell to 88.6 late last year. The area's housing index had been below average for years, and was still a below-average 87.8 in the third quarter of 2004, but then it began rising with the housing boom, peaking at 105.9 in the third quarter of 2006, Smith said — up 20.6 percent in only two years.Not only has the local housing index now dropped back below average, Orlando's composite cost-of-living index, which includes grocery items, utilities, transportation, health care and miscellaneous goods and services in addition to housing, also has receded. It rose from 97.7 in the third quarter of 2004 to 106.6 in the third quarter of 2006, but has dropped since then, to 101.3 in the third quarter of 2008 — close to the national average.
Smith said the cost of buying a home in the Orlando area also has plunged relative to household income. The median household income is about $52,136, and that's more than enough to afford the area's median-priced home, now about $148,000, Smith said. The median home price in the area has dropped by about one-third in the past year, while household income has stayed roughly the same, making it easier for people to qualify for a mortgage based on income.