We’ll be discussing the latest Orlando real estate market trends & forecasts to find out how they can affect homebuyers and sellers in the next twelve months. Tight inventory and buyers returning to the market who were hesitant after the start of the pandemic means Orlando home prices are expected to remain strong in 2022. As per the current market trends, Orlando is all set to remain a seller's market in the next 12 months. In November 2021, home sales in the Orlando area spiked by 12.7% as compared to last year, according to the latest report from the Orlando Regional REALTOR® Association (ORRA).
A total of 3,664 homes were sold which shrank the total inventory by 45.4% year-over-year. However, it was a slight decrease of 2.6% from 3,760 sales in October 2021. The number of days on market (DOM) has fallen to an average of 44 days, which’s down 36.4% from Nov 2020.
Overall State of the Market: “New listings tend to decrease over the holidays and that’s what we’re seeing here with the drop in November,” says Tansey Soderstrom, 2021 Orlando Regional REALTOR® Association President. “With lower inventory, we once again see the median home price increase – keeping the housing market competitive.”
Orlando Real Estate Market Trends (Most Recent)
According to the national real estate brokerage, Redfin, the Orlando housing market is very competitive. In December 2021, Orlando home prices were up 20.4% compared to last year, selling for a median price of $339K. On average, homes in Orlando sell after 12 days on the market compared to 22 days last year. There were 1,233 homes sold in December this year, down from 1,282 last year.
- Many homes get multiple offers, some with waived contingencies.
- The average homes sell for about 1% below the list price and go pending in around 12 days.
- Hot homes can sell for about 2% above the list price and go pending in around 5 days.
According to Realtor.com, Orange County is a seller's market, which means that more people are looking to buy than there are homes available.
- The median listing home price in Orange County, FL is $369,300, trending up 13.9% year-over-year (December).
- The median listing home price per square foot is $205.
- The median home sold price was $365,000.
- Sale-to-List Price Ratio: 100% — a seller would always prefer scenarios that can yield a ratio of 100% or higher while a buyer would prefer a sale to ask price ratio that’s closer to 90%.
- There are 50 cities in Orange County, Florida.
- Lake Butler has a median listing home price of $800, making it the most expensive city.
- Lockhart is the most affordable city, with a median listing home price of $242,500.
- The median listing home price in Orlando, FL is $335,000, trending up 16.4% year-over-year.
- The median listing home price per square foot is $203.
- The median home sold price is $340,000.
- There are 98 neighborhoods in Orlando.
- South Eola has a median listing home price of $624,000, making it the most expensive neighborhood.
- South Semoran is the most affordable neighborhood, with a median listing home price of $145,000.
Below is the latest housing market data for the Orlando Area released by the Orlando Regional REALTOR® Association (ORRA). It clearly shows us that Orlando is a hot seller's real estate market and is bound to remain skewed to sellers over the next twelve months, at least.
HOUSING SUPPLY & INVENTORY
Inventory in the Orlando MSA decreased by 10.57% from October 2021 to November for a total of 3,046 homes on the market in November. Inventory in Nov 2021 was 45.4% lower than in Nov 2020. The supply of homes remained at nearly one month. The number of new listings decreased in November 2021 from October 2021 by 18.12% from 3,940 homes to 3,226 homes.
Housing economists generally consider a five to six-month supply to indicate a healthy market that is balanced between buyers and sellers. Less than that is considered a seller’s market. This shows that Orlando is a seller's real estate market having low inventory combined with lots of buyers looking for properties.
A hot market would lead to a faster sale at or above the asking price. Although buying a home in a strong seller’s market can be difficult, it’s still possible to secure a deal. Don't forget that mortgage rates are still low. The 30-Year Fixed-Rate in Nov 2021 was 3.07% (2.77% in 2020 and 3.70% in 2019).
First Time Homebuyers Affordability Index based on 10% down 90% Loan to Value Ratio – U.S. Housing & Urban Development
- Interest rate: 2.95%
- Median Price: $330,000 (Nov)
- Down Payment: $66,000
- Mortgage Amount: $264,000
- Monthly Payment: $1,106.50
- Income to Qualify: $53,112
- Median Income: $60,914
- Affordability Index: 114.69%
ORLANDO MEDIAN HOME SALES PRICE
Low inventory coupled with high demand continues to drive up home prices. The median price for all types of homes increased by 20.0% from Nov 2020 to Nov 2021. The overall median home price (all types of properties) in the Orlando area is $330,000, according to the Orlando Regional Realtor® Association.
November’s median home price was recorded at $330,000, a new record high and increasing once again after October’s median home price was recorded at $325,000.
HOUSING SALES YEAR-OVER-YEAR COMPARISON
ORRA's latest report shows the number of pending home sales increased by 1.6 percent YTY in Nov 2021. The number of new homes listed for sale increased by 2.6% year-over-year. A total of 3,664 properties were sold in Nov 2021, accounting for a 12.7% increase over Nov 2020, when 3,251 homes were sold.
- 24 distressed homes (bank-owned properties and short sales) accounted for .6% of all home sales in November 2021.
- That represents a 35% drop over November 2020, when 37 distressed homes sold.
Note: ORRA REALTOR® sales represent sales involving Orlando Regional REALTOR® Association members, who are primarily – but not exclusively – located in Orange and Seminole counties.
ORLANDO MSA REAL ESTATE SALES 2021
Year-to-date sales are up 25.73% from last year, with 46,180 housing units sold out until Nov 2021. Across the entire Orlando MSA, home sales grew in Nov.
Each county's year-to-date (Jan to Nov) sales comparisons are as follows:
- Lake: 7,394 housing units were sold.
- Orange: 21,328 housing units were sold.
- Osceola: 9,628 housing units were sold.
- Seminole: 7,833 housing units were sold.
Orlando Real Estate Market Forecast 2022
Orlando's housing market will continue the trend of the last few years as a strong sellers' market. It is also one of the hottest real estate markets for investing in real estate. What are the Orlando real estate market predictions for 2021 & 2022? Let us look at the price trends recorded by Zillow over the past few years. Since Jan 2012, the Orlando typical home values have appreciated by nearly 169% (Zillow Home Value Index). For your information, ZHVI is a seasonally adjusted measure of the typical home value and market changes across a given region and housing type.
It reflects the typical value for homes in the 35th to 65th percentile range. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in Orlando is currently $325,415. It indicates that 50 percent of all housing stock in the area is worth more than $325,415 and 50 percent is worth less (adjusting for seasonal fluctuations). In Oct 2020, the typical value of homes in Orlando was around $268K.
Orlando home values have gone up by 21.3% over the last 12 months alone. The Zillow Buyer-Seller Index (BSI), which is computed monthly, considers Orlando a hot seller’s real estate market. There exists a limited supply of homes in Orlando, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.
Similar growth has been recorded by NeighborhoodScout.com. Their data also shows that Orlando real estate appreciated 118.90% over the last ten years. Its annual appreciation rate has been averaging at 8.15% — more than the national average. This figure puts Orlando in the top 10% nationally for real estate appreciation. During the latest twelve months, the Orlando appreciation rate was nearly 9.54%, and in the latest quarter, the appreciation rate was nearly 3.17%, which annualizes to a rate of 13.28%.
This figure matches Zillow's positive forecast, which predicts that home prices in this region are expected to increase in the next twelve months. The shortage of supply and an increase in the demand for housing from new homebuyers will push the prices higher in the next twelve months. Low mortgage rates will bolster the home buying market and continue pushing up home price growth. For sellers, now is the opportune time to put their Orlando home up for sale. The pricing of homes is trending higher and is more attractive for sellers in the current phase.
Here is the latest housing forecast for Orlando and Orlando MSA until Nov 2022. Orlando is the hub city of the Orlando-Kissimmee, Florida, Metropolitan Statistical Area, colloquially known as “Greater Orlando” or “Metro Orlando”. The area encompasses four counties (Orange, Osceola, Seminole, and Lake), and is the 26th-largest metro area in the United States.
- Orlando home values have gone up 21.3% over the past year and will continue to rise in the next twelve months.
- Orlando-Kissimmee-Sanford Metro home values have gone up 22.1% over the past year and Zillow predicts they will rise 15.4% in the next twelve months.
- Orange County home values have gone up 21.5% (current = $343,382) over the past year and will continue to rise in the next twelve months.
- Osceola County home values have gone up 23.5% (current = $310,939) over the past year and will continue to rise in the next twelve months.
- Seminole County home values have gone up 20.5% (current = $351,484) over the past year and will continue to rise in the next twelve months.
- Lake County home values have gone up 24.4% (current = $310,728) over the past year and will continue to rise in the next twelve months.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until Nov 2022.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? It is quite evident that the ongoing pandemic has not had any major impact on Orlando's housing market. However, it was quite expected that social distancing, higher unemployment, and lower overall economic activity would constrain real estate activity in the near term. And it did happen from April onwards.
The sales took a massive hit in the past couple of months with signs of great recovery in July. After three months of year-over-year declines, sales in July have bounced back. The industry is adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges.
COVID-19’s impact on the Orlando housing market was not that extreme but according to ORRA, any future depression in sales can be attributed to an accelerating lack of inventory. We can see that supply remains very low indeed. The overall inventory of homes that were available for purchase in Nov 2021 represents a decrease of 45% when compared to last year.
What does it mean for homebuyers in Orlando? The biggest mistake buyers make is sitting around waiting for sale prices to decline while their potential mortgage payment plummets. Mortgage rates are at their lowest ever. This is the time for buyers to take advantage before they are increased again. Properties purchased today are expected to continue appreciating over the next 12 months.
In conclusion, we can say that Orlando and the entire metro area market is so hot that it cannot shift to a complete buyer’s real estate market, for the long term. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Orlando can become a buyer’s real estate market if the supply increases to more than five months of inventory.
And that’s not going to happen. We can conclude that demand has not only recovered from the COVID-19 pandemic but has reached heights that make it very strong by any historical standard. Hence, Orlando real estate market remains strong and skewed to sellers, due to a persistent imbalance in supply and demand.
Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Orlando in 2022 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance.
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 2022 forecast for answers on why to put resources into this market. Let’s talk a bit about Orlando 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. Compared to other cities with competitive real estate markets, investing in Orlando real estate makes more sense since it has experienced a 14.6% increase in the median home price (all residential) since November 2019.
Not to mention, the Orlando region is booming in terms of both population and jobs. From the years 2016-2019, Orlando achieved an 11% growth rate, according to the Orlando Business Journal. According to Orlando Weekly, the Central Florida region will have 5.2 million people calling the area home.
The city is ranked #3 on the AdvisorSmiths report analyzing the best cities with job growth. There is a great demand for rental properties due to the high proportion of renters (65.29%). Moreover, Orlando's real estate prices remain highly affordable with a median value of $275,000 (as of Nov 2020). We can say that this is true for the entire Florida real estate market.
According to Zillow, the first-time buyers in the U.S. looking for an affordable home without much competition may have the best luck in the State of Florida, with Orlando real estate market ranked high in the “Top 10 best cities for first-time homebuyers.” Compared to saturation in similar markets in other cities like New York, Orlando has all the indicators of a flourishing growth in the coming years.
Top Reasons To Invest In The Orlando Real Estate Market |
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Let’s take a look at the number of positive things going on in the Orlando real estate market which can help investors who are 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 are 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 January 14, 2022, the average rent for a 1-bedroom apartment in Orlando, FL is currently $1,619. This is a 31% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Orlando increased by 5% to $1,809. The average rent for a 1-bedroom apartment decreased by -1% to $1,619, and the average rent for a 2-bedroom apartment remained flat.
- Two-bedroom apartment rents average $1,895 (a 38% increase from last year).
- Three-bedroom apartment rents average $2,150 (a 23% increase from last year).
- Four-bedroom apartment rents average $2,495 (a 26% 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.
- Shiloh / Dummit Grove
- S Semoran Blvd / Curry Ford Rd
- Boggy Creek Rd / Dowden Rd
- Manatee St / Hoffner Ave
- Omara Ct / S Goldenrod Rd
- E Colonial Dr / Barton Dr
- S Goldenrod Rd / Curry Ford Rd
- Dorado Ave / San Juan Blvd
- Stonecastle Rd / Thrippence Ln
- U of Central Florida / N Tanner Rd
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.
REFERENCES
Market Prices, Trends & Forecasts
https://www.orlandorealtors.org/marketreports
https://www.orlandorealtors.org/housingmarketnarrative
https://www.zillow.com/orlando-fl/home-values
https://www.redfin.com/city/13655/FL/Orlando/housing-market
https://www.neighborhoodscout.com/fl/orlando/real-estate
https://www.realtor.com/realestateandhomes-search/Orlando_FL/overview
Foreclosures
https://www.realtytrac.com/statsandtrends/fl/orange-county/orlando
Reasons to Invest in Orlando Florida
https://www.thebalance.com/the-best-places-to-invest-in-real-estate-4163978
http://www.noradarealestate.com/blog/best-cities-to-invest-in-real-estate-in-2018
https://www.mashvisor.com/blog/orlando-real-estate-market-new-investors
https://www.lee-associates.com/centralflorida/2018/01/15/5-reasons-to-invest-in-central-florida
https://news.orlando.org/blog/orlando-leads-nation-in-job-growth-four-years-in-a-row/
