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More new and existing homes appear to be needed on the market to keep housing affordable and new residents coming in.
More new and existing homes appear to be needed on the market to keep housing affordable and new residents coming in.

The Orlando housing market is becoming very tight and threatening the affordability of living in the area.

Evidence of this is found in the August home sales report issued Tuesday by the Orlando Regional Realtor Association, which shows available residences are becoming more scarce.

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The situation, if it becomes acute, could put a crimp in businesses trying to attract workers to the area.

There was a sharp drop-off in what is on the market, with the amount of previously owned homes for sale in August declining 11 percent relative to this month last year.

Also, inventories of homes on the market showed at a 3.77-month supply against the pace of sales in the Orlando area, which is on a par with July's 3.31-month supply. The 3.77 means it would take that many months at the current pace of sales to deplete the number of homes that are for sale.

The ratio compares with a 5.15-month supply in August 2014, which is closer to the 5.5 ratio that shows a good balance, said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.

When the number gets down around three "you can start having less buyers and more rapid increases in home prices," Snaith said. "Affordability becomes an issue."

Indeed, the median home price rose by 11 percent in August from a year ago, which marks the greatest month-over-month percentage increase this year.

Home prices in Osceola saw the biggest increase at 27 percent. The price in Orange County grew 12 percent. Seminole County rose 9 percent and Lake County saw a 2 percent gain.

While the data are for existing homes, Snaith said new home construction should also be considered.

Even though the area is seeing an abundance of building, "Housing starts still have not ratcheted up to meet the job and population growth we have seen," Snaith said.

Roughly 27,000 people moved to Orlando between 2013 and 2014, according to the most recent statistics available from the US Census Bureau.

If there are to be difficulties, they may be further down the road. Despite the higher prices and relative scarcity, homes continue being bought at a rapid clip.

August sales rose 22 percent, continuing the year's strong run, the Orlando Regional Realtor Association reported.

Single-family home sales increased 26 percent, while condo sales decreased 0.87 percent.

Have a tip about Central Florida development? Contact me at ktalley@growthspotter.com or (407) 420-5176. Follow GrowthSpotter on FacebookTwitter and LinkedIn.

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