Channel 2 News November 8, 2007

Fortune Magazine: Orlando Housing Prices Should Fall


A new national report shows Central Florida homeowners could really get nailed in the slow real estate market.

Fortune Magazine puts Orlando at the top of the list of the most overvalued markets in the country -- where prices should fall.

According to Fortune magazine, home prices in Orlando need to drop significantly so investors will get back into the home-buying game.

Right now investors aren't interested because the mortgage they would have to pay exceeds the rent most people will pay.

A house in Orlando now worth $522,000 needs to drop to $343,000 in the next five years, according to Fortune magazine.

"Guesses don't work. What we can tell you is this: the fact of the matter is prices will come down more over the next year. That's for sure. Thereís no guessing about that, but five years from now, that may be accurate. Itís kind of like throwing darts in a dark room," Realtor Gary Balanoff said.

Fortune magazine said housing prices will drop another 20 percent...

5-yr home price forecast: -34.2%

Home price/rent ratio:
15-yr average: 14.9

Note: People typically won't spend more in monthly costs to own a home than they would to rent. While prices soar from time to time, sending the ratio to exceptional heights, the relationship eventually should return to its historical average