This is panic time.
Future shock: Central Florida markets will fall
A short-sale expert says he can predict market slumps by client traffic. Next stop: The Sunshine State.
By Les Christie, CNNMoney.com staff writer
July 6 2007: 12:55 PM EDT
NEW YORK (CNNMoney.com) -- A tidal wave of foreclosures may be heading toward Florida, if you judge by the number of homeowners looking to get rid of their homes as fast as they can.
Duane LeGate, president of House Buyer Network, arranges quick sales for home owners in distress. He claims he can predict where markets will go bad by looking at the traffic on his Web site.
"We can tell you what's going to happen nine months from now," he said. His most endangered market right now is Orange County, Florida, home of Disney World.
"Orlando has blown up. There's been a 700 percent increase in traffic of people filling out our forms," he said. "I could put a bull's-eye on Orlando and write the headline for what will be going on in January and February."
What will be going on could include a large increase in foreclosures as well as lower prices, longer inventories and a slower sales pace.
Here's how the House Buyer Network works: A homeowner wants a quick sale and signs up. The network connects the homeowner with a real estate agent who gets an appraisal for, say, $200,000. The agent markets the home at $195,000. If it fails to sell within the time stipulated in the contract, the agent will buy the house at a prearranged, discounted price of perhaps $180,000.
LeGate estimates the discount from what sellers would get if they didn't need to sell quickly is 5 percent to 8 percent, once all the costs and fees are figured in.
LeGate's forecast runs ahead of the latest home price statistics. According to the National Association of Realtors (NAR), Orlando prices for the first quarter rose 2.5 percent compared with a year ago, which would point to a weak - but more stable - market. Nevertheless, LeGate trusts his indicators.
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