The Orlando housing market has been showing significant activity in recent months. The housing market is still very hot in 2023. The future of the Orlando housing market is uncertain, but most experts predict that it will continue to be strong in the next few years. Zillow projects a 6.5% increase in home values over the next year.
However, there are some factors that could cool the market, such as rising interest rates and a potential recession. If you are thinking about buying a home in Orlando, it is important to be prepared for the competitive market and high prices. You should also be prepared to act quickly when you find a home you like, as it is likely to sell quickly.
Orlando Housing Market Trends
The real estate landscape in Orlando, Florida, has been a topic of keen interest for both buyers and sellers alike. The July 2023 housing market report from the Orlando Regional REALTOR® Association sheds light on the trends and challenges affecting the area's residential real estate sector. This report highlights crucial data that reveals how interest rates, inventory levels, and other factors are shaping the Orlando housing market.
Interest Rate Hike and its Implications
The most notable feature of the July 2023 housing market report is the rise in interest rates. Recording a rate of 6.8%, this marks the second-highest interest rate Central Florida has experienced in the last two decades. This increase is just a slight uptick from the 6.7% rate observed in June. For a point of reference, October 2022 holds the record for the highest interest rate in the past 20 years at 7.0%. This surge in interest rates has created ripples across Orlando's housing market.
Buyer Challenges Amidst Rising Rates
According to a survey conducted by ORRA, 43% of Orlando REALTORS believe that the upward trajectory of interest rates is the most significant challenge facing buyers. This phenomenon has led to a shift in buyer behavior, with some potential homebuyers opting to wait before making their purchases or considering properties at lower price points. The apprehension stemming from this interest rate surge is tangible, impacting the market dynamics.
Sales and Inventory Trends
The numbers reflecting home sales in July are telling. Overall sales experienced an 8.7% decline from June to July, with the figure dropping from 3,124 to 2,852. Furthermore, the sales numbers for July 2023 were 13.8% lower than the same period in 2022, which witnessed 3,309 sales. The relationship between rising interest rates and reduced sales becomes evident as buyers take a step back in response to the altered economic landscape.
In contrast, the inventory levels exhibited a 5.0% increase from June to July. Inventory figures in June stood at 5,450, which then rose to 5,720 in July. Interestingly, a separate survey conducted by ORRA highlighted that low inventory levels ranked as the second most prominent issue confronting buyers.
Fluctuations in Median Home Prices
July 2023 marked a significant shift in the median home price. Recording a figure of $380,000, this month saw a decrease from June's $385,000. This reversal is noteworthy as it's the first instance this year where the median home price has fallen. However, it's important to acknowledge that the median home price for July 2023 closely mirrors that of July 2022, when it was recorded at $380,900.
DOM Statistics and Seller Perspectives
Homes spent an average of 39 days on the market in July, a decrease from June's 41 days. Nonetheless, this still represents an 85.7% increase from July 2022, during which homes spent just an average of 21 days on the market. This is indicative of a significant shift in the selling process.
Interestingly, a change has been noted in terms of how quickly homes are being sold. Last year, 63% of Orlando REALTORS reported that clients were selling their homes in 10 days or less. In contrast, this year, only 34% shared the same sentiment. This shift underscores a change in buyer behavior, with the urgency to purchase diminishing in light of changing market dynamics.
The President's Perspective
In response to these trends, Lisa Hill, the President of the Orlando Regional REALTOR® Association, remarked, “Approaching the end of summer with interest rates at nearly their highest level in 20 years, we are seeing an impact on both buyers and sellers.” She elaborated, “More homeowners are being locked into ‘golden handcuffs’ – where they’re choosing to stay in their current homes to keep their low mortgage rates, which could be 3% or lower – and more buyers are choosing to wait in hopes that rates go down.”
Market Snapshot: A Deeper Dive
- Interest Rates and Pending Sales: The comparison between July 2023 and July 2022's interest rates is stark, with this year's rate at 6.8% compared to 2022's 5.4%. Moreover, the trend in pending sales witnessed a decline, with 3,808 pending sales in July, down from June's 3,964.
- Distressed Homes and Inventory Trends: The market's resilience is evident in the distressed homes category. Distressed homes, including bank-owned properties and short sales, accounted for only 0.9% of total home sales in July. This figure marks a 10.7% decrease from June's 28 distressed home sales.
- Inventory Fluctuations and Market Balance: The Orlando area witnessed a 5.0% increase in inventory from June to July, with June's inventory at 5,450 rising to 5,720 in July. This increase led to a shift in the supply of homes, which reached 2.01 months in July, up 15.0% from June's 1.74 months. Notably, a balanced market is defined as having a six-month supply.
- New Listings and Market Dynamics: The dynamics of new listings were notable in the transition from June to July. A 7.8% decrease in new listings was observed, with the number dropping from 3,703 to 3,413 homes. This reflects a shift in seller behavior, as fewer homes were introduced to the market during this period.
Is Orlando a Buyer's or Seller's Market?
Orange County is located in the central portion of the U.S. state of Florida. As of the 2010 census, the population was 1,145,956, making it Florida's fifth-most populous county. The county seat is Orlando. Orange County is the central county of the Orlando-Kissimmee-Sanford, Florida Metropolitan Statistical Area.
The following Orlando housing market trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded.
Median Listing Home Price and Price per Square Foot
Orlando, FL's median listing home price in July 2023 was $399.9K, marking a 3.6% year-over-year decrease. This trend suggests that the market might be experiencing a cooling period, potentially making it more attractive for prospective buyers. The median listing home price per square foot stood at $244, providing insights into the affordability and value of properties within the city.
Sale-to-List Price Ratio and Seller's Market
A key indicator of market competitiveness, the sale-to-list price ratio in Orlando, FL was an impressive 99.27% in July 2023. This means that, on average, homes were selling very close to their asking prices. Moreover, Orlando is currently a seller's market, indicating that the demand for homes outweighs the available supply. This scenario often leads to quicker sales and favorable conditions for sellers.
Median Days on Market
Homes in Orlando, FL spent an average of 38 days on the market before being sold. This figure provides an essential insight into the pace of the market. Comparing this with the previous month and year, it's evident that the median days on the market have increased slightly. This suggests a potential shift in the market dynamics, indicating that buyers might be taking a bit more time to make purchasing decisions.
Orlando Housing Market Forecast 2023-2024
The Orlando housing market has been a topic of interest and speculation for buyers, sellers, and real estate enthusiasts alike. As we delve into the current state of the market, it's equally important to gaze into the future and explore the forecasted trends that could shape the Orlando-Kissimmee-Sanford area's real estate landscape. With data insights provided by sources such as Zillow, we can gain a glimpse into what might lie ahead for this vibrant housing market.
Present Reality: A Snapshot of the Orlando Housing Market
As of July 31, 2023, the average home value in the Orlando-Kissimmee-Sanford region stands at $389,109. This value reflects a marginal increase of 0.3% over the past year, underscoring the steady nature of the market. Moreover, homes in this region are gaining traction, with an average time of just 11 days on the market before they move to the pending status.
Typical Home Values and 1-year Value Change:
The typical home value of $389,109 serves as a foundation for understanding the current market landscape. With a modest value change of +0.3% over the past year, it is evident that the market has maintained relative stability.
Zillow's 1-year market forecast for the Orlando-Kissimmee-Sanford area is notably positive, projecting a growth rate of 6.5% by July 31, 2023. This forecast is indicative of the market's resilience and potential for appreciation, making it an attractive prospect for both buyers and investors.
Median Sale to List Ratio
As of June 30, 2023, the median sale to list ratio stands at 0.989. This ratio provides insight into the extent to which homes are being sold for their listed price. The figure approaching 1.0 suggests that homes are selling close to their list prices, reinforcing the balanced nature of the market.
Percent of Sales over and under List Price
The distribution of sales in relation to list prices further underscores the dynamics of the Orlando housing market. As of June 30, 2023, 23.0% of sales were recorded as being over the list price. This reflects the competitive nature of certain segments within the market. On the other hand, 55.7% of sales were under the list price, indicating the presence of negotiation and opportunities for buyers to secure deals.
Median Days to Pending
The median days to pending, as of July 31, 2023, is a key indicator of how swiftly homes are being snapped up. With a median of 11 days, homes are finding buyers relatively quickly, which aligns with the overall active and dynamic nature of the market.
The Road Ahead: Interpretation and Considerations
As we look ahead to the future of the Orlando housing market, the forecasted growth rate of 6.5% by July 31, 2023, presents an intriguing prospect for potential buyers and investors. However, it's essential to remember that real estate is influenced by a multitude of factors, including economic shifts, interest rates, and local market conditions.
The relatively balanced median sale to list ratio and the varying percentages of sales over and under list price highlight the nuanced nature of the market. Buyers and sellers should recognize that certain segments might still offer opportunities for negotiation, while others may require more competitive offers.
The median days to pending, standing at just 11 days, underscores the fast-paced nature of the Orlando-Kissimmee-Sanford housing market. This aspect demands a proactive approach for buyers and a strategic outlook for sellers, emphasizing the importance of informed decision-making.
Orlando Real Estate Investment: Should You Invest in Orlando?
Is Orlando a Good Place Real Estate Investment? Many real estate investors have asked themselves if buying rental property in Orlando is a good investment. You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Orlando housing market 2023 forecast for answers on why to put resources into this market.
Let’s talk a bit about Orlando and the surrounding metro area before we discuss what lies ahead for investors and homebuyers. The City of Orlando is nicknamed “the City Beautiful and is one of the most-visited cities in the world primarily driven by tourism, major events, and convention traffic.
Orlando's housing market is expanding at a great pace and people from all over the country and even beyond are either choosing to move permanently or invest here. Orlando has once again proved to be one of the best places to invest in real estate in Florida. Owing to its picturesque beaches, rapidly improving quality of life, booming population, and economy, Orlando is proving to be a secure real estate investment destination for not only local but also international investors.
Top Reasons To Invest In The Orlando Real Estate Market
Let’s look at the number of positive things going on in the Orlando real estate market which can help investors keen to buy an investment property in this city.
Increasing Foreign Investment in Orland0
International investors from all major countries of the world are exhibiting their interest in the Orlando real estate market because of its beautiful scenery, improving quality of life, and ambient weather. It is also extremely popular for foreign investments because of its intercultural connectivity with people from various Latin American countries. In addition to this, many Chinese, as well as Spanish and Middle Eastern investors, are also attracted to Orlando, FL for real estate investment.
Dramatic Population Growth
Owing to people from various walks of life and demographic differences choosing to reside in the suburbs of Orlando, this city is going through major population growth. During the last 3 years, the population in Orlando has been growing at a rate of 7.2% which has never been experienced by this city before. The current population of Orlando in 2020 is 1,964,000, a 2.13% increase from 2019. The population of Orlando in 2019 was 1,923,000, a 2.18% increase from 2018.
Orlando is rapidly becoming a central attraction for businessmen, students, and small families owing to its growing trend of upward life mobility which makes lures investors to invest in the Orlando real estate market. Another reason for the growing economy and population expansion in Orlando, Florida, is the developed transportation infrastructure which makes traveling between destinations more convenient. Generally, Florida has an efficient transportation network that complements its tourism growth as well.
Orlando's Increasing Job Opportunities
While improving the Orlando real estate market and flourishing tourism is two of the most important reasons behind Orlando’s economic stability, these two industries have a lot to gain from the successful economy. This expansion is related to the growing population and job opportunities in this city, this translates to more rental income and tourism leading to a better economy for the city. Orlando is the new hub for many young professionals especially those with various types of technological expertise, including engineers and IT professionals.
This city has experienced annual job growth of around 4.4% and is also one of the fastest-growing metro areas in the country. The city is also set to experience its highest job growth rate in the 10 years to come. A market with high job growth is a great market for real estate investment as well. Orlando metro area is adding STEM jobs at a faster clip than the Bay Area metros. The Orlando–Kissimmee–Sanford MSA was ranked among Forbes’ 15 Best Big Cities for Jobs. They cited Orlando’s science, technology, engineering, and mathematics (STEM) job growth in recent years as one contributing factor.
Orlando's Rental Market
Thanks to a strong economy, Orlando's rental market continues to boom. It is consistently named as one of the best rental markets in the nation and the #1 place in Florida to buy a profitable rental property. While tourism is one of the driving forces in the local economy, Orlando is also an important high-tech hub. Since job opportunities in Orlando are growing, people from all over the country and even some other countries are choosing to move here.
This directly translates to a boom in rental income as there is a resultant increase in the demand for both residential and commercial property rentals, and this means more steady income for investors in Orlando real estate market. The soaring rental rates are good signs for real estate investors. Around 46% of the households in Orlando, FL are renter-occupied.
Current Rental Market Trends
The average size for an Orlando, FL apartment is 962 square feet with studio apartments being the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. About 60% of the apartments can be rented for $1,500/mo or less. 26% of the apartments fall in the price range of $1,501-$2,000, and only 8% are as expensive as $2,000/mo.
As of August 2023, the average rent for a 1-bedroom apartment in Orlando, FL is currently $1,613. This is a 5% decrease compared to the previous year. Over the past month, the average rent for a studio apartment in Orlando increased by 2% to $1,695. The average rent for a 1-bedroom apartment decreased by -3% to $1,613, and the average rent for a 2-bedroom apartment remained flat.
- Two-bedroom apartment rents average $1,900 (a 5% decrease from last year).
- Three-bedroom apartment rents average $2,360 (a 0% increase from last year).
- Four-bedroom apartment rents average $2,800 (a 1% increase from last year).
Flexible Tax Laws
Investing in Orlando's real estate market can help investors to lighten their taxes as Florida is one of the few states with no personal income tax. Its flexible tax laws are a blessing for investors, especially in this climate of a booming economy. Tax laws in Florida are considered to be the 4th friendliest laws in the country which is why a significant number of businesses choose to be based here.
Florida does impose a 5.5 percent corporate income tax. Orlando, owing to its friendly tax environment and affordable real estate can prove to be a vital opportunity for up-and-coming start-ups. Entrepreneurs and small business owners can rent showrooms and shops on better terms than most other cities and states.
Orlando is a Top-notch Tourism Center
Orlando has been boasting of economic stability since the beginning of the year 2018, and tourism growth and opportunities are some of the main reasons for its smooth expansion. Considered to be a “Theme-Park Capital of the World,” Orlando attracts most of its tourism due to the presence of Universal Studios as well as SeaWorld, and the most popular, Disneyland. In addition to this, Orlando’s beautiful beaches and warm weather also attract thousands of tourists every year.
Maybe you have done a bit of real estate investing in Florida but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Speaking about Orlando's real estate market has a high potential for growth considering the current state of its economic expansion and population influx. This market currently has an ideal environment for US investors in housing properties, especially for turnkey real estate investments.
Good cash flow from Orlando rental property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Orlando in a growing neighborhood would be key to your success. When looking for real estate investment opportunities in Orlando or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum of 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental.
That would be the ideal equation for example. Even with rent increases, buying a $500,000 investment property in Orlando is not going to get you $5000 per month on rent. When looking for the best real estate investments in Orlando, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.
Here are the ten neighborhoods in Orlando having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Baldwin Park East
- Lake Fredrica North
- Baldwin Park
- Azalea Park South
- Southport / Lake Nona Estates
- Engelwood Park North
- Monterey / Dover Shores East
- Fox Hunt Lanes
- University Estates
Florida is a great place to invest in real estate with several affordable and growing markets. The state will continue growing by more than 300,000 people a year and will top 22 million residents in 2022, according to a report posted online by state economists. That's equal to adding a city slightly larger than Orlando every year. The report estimated the population on April 1, 2018, at 20.84 million, with it increasing to 21.2 million on April 1, 2019. It is forecast to hit 22.2 million as of April 1, 2022, and be at 22.8 million on April 1, 2024. The population increases will primarily stem from “net migration” as people move into the state, rather than births, which are largely offset by deaths.
Several Fortune 500 corporations call Florida home including World Fuel Services, Publix Super Markets, Auto Nation, Office Depot, Hertz, Fidelity National Financial, and Lennar Corp. With a diverse collection of industries supporting Florida’s economy, it further strengthens the drive for workers to want to live and work here. Those factors in turn create a strong demand for rental properties and increasing rental rates.
While there are investment opportunities in the Florida housing market, major metros are some of the most popular choices, like Jacksonville, Orlando, Miami, St. Petersburg, and Tampa. The real estate in Tampa Florida has been estimated to grow rapidly during 2020. Investors are recommended to buy properties now and hold on to them until good price appreciation for maximum return on investment. The Tampa real estate market has been seeing constant development for the last two years, a trend that does not seem to be stopping any time soon.
Tampa has the headquarters of four Fortune 500 companies which makes it a moderately attractive city for work and economic growth. In addition to this, many entrepreneurs and small businesses are also making their way to Tampa for the search for better prospects and lesser expenses for running their start-ups. Acquiring residential spaces is one of the earliest priorities for such professionals when they move here.
Tampa, FL has a very diverse economy with financial services, STEM, health care, research, education, tourism, beaches, and military bases all making significant contributions to jobs and growth. These factors make the Tampa housing market a hot destination for real estate investors in 2019.
You can also invest in another hot market in Ocala, Florida. Ocala is an affordable real estate market for investors who can still reap a decent return on investment. The area has recovered from the Great Recession, and several factors will insulate it from a future downturn. The Ocala housing market is buoyed by several near recession-proof industries.
It is quite affordable for investors compared to the rest of Florida markets like Tampa where the median home value is $221,500. The median home price in Ocala in 2018 was around $150,000. You can buy several homes in the Ocala FL real estate market for the price you would of one mid-market condo in the Miami real estate market.
Another market that we suggest is the housing market in Lakeland, Florida. The Lakeland housing market presents the perfect balance of currently affordable real estate for buyers and future growth. We can expect the population of the area to grow rapidly, and the renting population will grow even faster. The time to buy real estate in Lakeland is now.
While the Lakeland FL real estate market is cheaper than Orlando and Tampa, it is not a good overall value given the lower average wages of its residents. That explains why U.S. News and World Report gave the city an index score of 5.5 out of ten. This is due to the average resident earning around $23,000 a year, several thousand less than the U.S. average. Median household incomes are no better.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Orlando.
Consult with one of the investment counselors who can help build you a custom portfolio of Orlando turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Orlando.
Not just limited to Orlando or Florida but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Orlando turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Let us know which real estate markets in the United States you consider best for real estate investing!
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Market Prices, Trends & Forecasts
Reasons to Invest in Orlando Florida