The Orlando real estate market has been the talk of the town in recent years because of its thriving economy and rapid growth. Apart from the fact that Orlando is known for affordable housing options, plenty of job opportunities, and a high quality of life, it's also believed to be one of the top tourist destinations in the US.
Therefore, at a glance, this might seem like the perfect real estate market to dip your feet into. However, as a landlord, property owner, or investor, it's still crucial to understand the market's key trends, the factors affecting the market, the possibility of it crashing, and the future predictions before making a decision.
That's what we're here to help you with today! Thus, without further ado, let's get straight into it.
Orlando Housing Market Trends
We'll be talking about the most recent real estate market trends and projections in Orlando to see how they might influence investors and landlords over the course of the following 12 months.
Theme parks and other tourist attractions are well-known in Orlando, Florida. However, it also has a thriving real estate industry. Orlando's housing market experienced a sharp rise in home sales and median home prices in February 2023. Therefore, let's look at some current trends the market is experiencing:
Decreased Inventory Levels
Inventory in the Orlando area dropped from 6,115 properties in January to 5,555 homes in February 2023, a 9.2% decline. However, compared to February 2022, when inventory hit a record low, it was 140.2% greater in February 2023.
From 3.65 months in January, the supply of housing fell to 2.48 months in February. An adequate supply is one that lasts for approximately six months. Additionally, the number of new listings fell from 2,911 properties in January to 2,820 homes in February, a 3.1% fall.
Condition of the Orlando Real Estate Market
According to the most recent data from the Orlando Regional REALTOR Association (ORRA), the number of homes sold in Orlando increased by 33.8% between January and February 2023, with 2,240 sales in total. However, there was a 30% drop in overall sales when compared to February 2022. Additionally, the number of properties available decreased from 6,115 in January to 5,555 in February. It's interesting to note that the inventory for February 2023 was 140.2% higher than for February 2022, when there were only 2,313 properties available.
In February, the median home price was $358,000, up from $350,000 in January. This is significant since it follows three months in which Orlando experienced declining median home prices.
However, February's interest rate rose from 6.1% in January to 6.4% in February. Additionally, homes stayed on the market for 62 days on average in February, up from 57 days in January. This represents an increase of 106.7% from February 2022, when properties stayed on the market for an average of 30 days.
Factors Affecting the Orlando Housing Market
A few of the major factors affecting the Orlando real estate market at the moment include:
- Population growth: Due to both local and foreign migration, Orlando's population has been steadily growing. People from all over the country are drawn to the area by its pleasant environment, accessible housing alternatives, and economic opportunities. As a result of this population growth, housing demand and home values are supported.
- Economic growth: The strong economy of Orlando is essential to the city's real estate market. Furthermore, the city's tourism industry is well-known and brings in millions of tourists each year. It is also well-established in sectors such as technology, healthcare, and aerospace. The availability of jobs and salary increases influence the stability and demand for homes.
- Inventory levels: The availability of home inventory has an impact on market dynamics. Prices typically climb and buyer rivalry intensifies when there aren't many properties available for purchase. On the other hand, a surplus of properties may result in price drops and a buyer's market. Investors and purchasers can make more intelligent choices by keeping an eye on inventory levels.
- Interest rates: The housing market is greatly impacted by mortgage interest rates. Low interest rates make borrowing more accessible, which increases demand. In contrast, higher interest rates may stifle demand and restrain the rate of increase in prices. Both buyers and sellers in Orlando must keep an eye on interest rate changes.
Will the Housing Market Crash in Orlando?
Not all of Florida's major cities are anticipated to prosper in the next years. Some of the state's most expensive property markets are claimed to be in places such as Miami, Port St. Lucie, and Cape Coral. Orlando, however, benefits from being a city that prioritizes expansion. A robust employment market keeps attracting new residents, and as more American workers choose to work remotely, many of them are moving to warm Florida.
These days, the news can seem a little foreboding, leading you to wonder: Is the property market going to crash? No, it isn't. In fact, Orlando's home market has a pretty solid foundation.
Florida as a whole continues to rank well among places where people want to relocate, and Orlando's long-term population estimate indicates that many of them will be coming here.
Orlando Housing Market Statistics
The following statistics from the Orlando Regional REALTOR Association relate to April 2023. These stats show a decrease in home sales and an increase in inventory, indicating that we could be moving toward a balanced market:
- Inventory increased from 5,052 homes in March to 5,148 in April, which is a 1.9% increase.
- Inventory was recorded as 5,148 properties in April 2023, a 92.8% increase from 2,670 homes in April 2022.
- While there were 2,936 home sales in March, there were only 2,766 in April - a 5.8% drop.
- April 2022 saw 3,800 sales which is 27.2% higher than the number of sales in April 2023.
- The median home prices in April 2022 and April 2023 were the same, which is $370,000.
- In April, the median price of a property was $370,000, up from $365,00 in March. Every month this year, the median price of a property has increased.
- With 3,220 new houses on the market in April as opposed to 3,442 in March, new listings decreased by 6.4% from March to April.
- The interest rate for April was 6.4%, a decrease from 6.7% in March. Interest rates have been increasing for the past three months.
- In April 2022, interest rates were 4.9%. Therefore, the April 2023 interest rate is 29.7% higher than the April 2022 rate.
- Homes stayed on the market for 52 days on average in April, which is a decrease from 57 days in March. In April 2022, properties stayed on the market for an average of 24 days. This represents an increase of 116.7%.
- Pending sales increased from 4,220 in March to 4,485 in April.
Orlando Housing Market Predictions
Many analysts predict the property market in Orlando will remain a strong seller's market, as it has been for the past few years. It is also one of the most popular real estate markets right now for property investment. Let's take a closer look at some market predictions:
Strong Real Estate Market
The Orlando housing market may start to slow down as interest rates climb. It will get more difficult for some buyers to make their mortgage payments on time each month. However, there is a high demand, and homes are selling swiftly.
Property economists typically view a five- to six-month supply as a good indicator of buyer-seller market equilibrium. A seller's market is defined as anything below. This illustrates that Orlando is a seller's market due to the lack of available inventory and the high demand for homes.
In light of everything mentioned, Orlando's housing market will remain a seller's market, as it has in recent years. Furthermore, in terms of housing markets, it ranks among the best for real estate investment.
What does this mean for Orlando home buyers now? The biggest error buyers make is waiting for prices to drop while their potential mortgage payment decreases. Purchasers should act quickly to take advantage of the rising mortgage rates before prices climb again.
Among the 30 major American cities, Orlando has the second-fastest pace of population growth, bringing in more than 1,000 new residents per week. According to Orlando.org, recent immigrants aren't just tourists; they're well-educated and originate from states with weak economic growth.
Furthermore, a recent census indicates that the population in Orlando has increased by about 70,850 people since 2010. Moreover, the population of the Orlando metro region expanded by more than 1.4% in the previous year.
In conclusion, the Orlando area is anticipated to grow by 1,500 people a week by 2030, reaching a population of 5.2 million, according to the Orlando Economic Partnership.
Center for Tourism
Orlando has experienced consistent economic growth since the start of 2018. Its spectacular development is mostly due to two factors: tourism expansion and prospects.
Due to the presence of Universal Studios, SeaWorld, and the most well-known, Disneyland, Orlando, also known as the "Theme-Park Capital of the World," receives the majority of its visitors. Additionally, the wonderful beaches and nice weather in Orlando draw a large number of tourists each year.
Given Orlando's economic success and population growth, its housing market has a lot of opportunity to grow. Therefore, for US investors in residential real estate, particularly for turnkey real estate purchases, it currently presents an alluring prospect.
In terms of employment growth, Orlando is ranked sixth in the US, and it has one of the best neighborhoods to live in. Additionally, Orlando's normal employment is anticipated to grow by 19% by 2030, nearly twice the national average.
The BLS predicts that Orlando's employment in the fields of finance, recreation and hospitality, education and health services, and business and professional services will grow at fast rates over the coming year.
We also notice Orlando's improving unemployment rate, which is down to only 2.6% when it comes to home market projections for 2023.
The Final Verdict
All in all, it's clear that the Orlando housing market continues to look positive as we're nearing the end of the spring selling season. Orlando's real estate market offers a dynamic and vibrant landscape for landlords and investors. Overall, the city is believed to have quite a stable market because of the region's strong economy, diverse housing options, and population growth.
Even though the housing market has experienced price appreciation recently, the prices have been increasing in moderation, indicating a more sustainable environment. Therefore, by monitoring population trends, economic indicators, inventory levels, etc., you'll be able to make an informed investment decision.
You'll be able to navigate the Orlando housing market with confidence by conducting your research, working with experienced professionals, and considering your personal financial circumstances.
Are Vacation Rental Properties a Good Investment in Orlando?
Due to Orlando's popularity as a tourist destination, investing in vacation rental properties can be profitable. However, before making an investment in vacation rental properties, it's crucial to take into account elements such as management costs, local laws, and market demand.
What Factors Contribute to Orlando's Housing Market Growth?
A number of elements have contributed to Orlando's real estate market growth. However, the most prominent factors that have caused growth include a booming tourism sector, population growth driven by mitigation, a strong economy with diverse industries, and an attractive quality of life. These, together with many other elements, have helped contribute to market growth and create demand for housing, which are a few of the factors that make Orlando a good city for real estate investment.
Is the Orlando Housing Market Slowing Down?
Yes, Orlando's housing market has started to ease up after being one of the country's hottest for a large portion of the COVID-19 outbreak. 2,240 homes were sold in the region in February 2023, according to the Orlando Regional Realtor Association, which is more than 550 less than it was the previous year.