Tarre Beach
Unless you have lived under a rock, you probably noticed that Central Florida’s (Orange, Seminole, Osceola and Lake counties) real estate market shifted dramatically over the last few years. Median home prices skyrocketed, and interest rates climbed, making it difficult for many middle-income local families to find and afford the house of their dreams.
What can we expect now? While nothing is certain, local experts point to some indicators that could help you understand the market better and put you in a better position to buy soon.
Market Matters
According to Robin Delaney, a Realtor® with Keller Williams Advantage III who has 25 years of real estate experience, Central Florida’s red-hot seller’s market may be cooling off just a little. “Despite steeper interest rates, we have low inventory, indicating we are still in a seller’s market. However, we are nearing three months of inventory which is an improvement from last year’s lows of less than one month,” Delaney says.
While it may still not yet be a buyer’s market, that does not mean buyers are without negotiating tactics. “Days on market is often a gauge of a seller’s willingness to negotiate. While there are not many ‘bargains’ available, investors are enticed by lower cash offers as sellers have been surprised by longer sell times,” Delaney says.
To middle-income families who might feel priced out of the market, Delaney suggests searching for smaller homes. As trends change, you may find you can up-size later on.
Nurys Watts, a Realtor with LPT Realty, says she has also directed some clients to think smaller and look outside of Metro Orlando, where they can get more bang for their buck. Like Delaney, Watts says educating home buyers is her favorite part of being a Realtor. “I work with all kinds of home buyers: high-income individuals, single moms, and immigrant families. I love helping a family get the home that is a good fit for them,” Watts says.
Delaney and Watts say having a real estate professional is essential in navigating a changing and sometimes confusing housing market. “At the end of the day, do you want someone in your corner who can find solutions that you otherwise could miss,” Delaney asks.
Construction Function
Construction exploded all over Central Florida, partially making up for low home inventory. According to Home Builders Weekly (HBW), a periodical for the commercial home construction industry, in the third quarter of 2022, there were 15,355 new housing starts (a term used for approved building permits, which helps gauge inventory) in Central Florida, reflecting a 4% year-over-year increase in new home construction.
Out of the counties included in the report, the bulk of housing starts originated in Orange County. However, the Florida State Department of Economic and Demographic Research reported that the increase in new construction homes in Orange County was only 1.9% year over year in 2021, the latest numbers available, compared to the 14.8% increase in Lake County’s housing starts in the same timeframe.
Raising Rent
Zumper, an online long-term home rental search site, listed Orlando as number 20 for the most expensive cities to rent in the last year. Rents in Orlando increased 9.70% year over year in 2021. Compared with Miami’s 22.60% increase and Fort Lauderdale’s 10.40% increase, there is no wonder even locals are moving to lower-cost Central Florida.
According to Watts, the rent increase drove many people to want to buy a home of their own. “My own family was part of this trend. We bought our house in 2020 in Lake County to invest in our family rather than our landlord’s property,” Watt says.
Delaney points out that those living in the most expensive housing markets like New York City, Boston, Jersey City and California’s Bay Area either decided they were done paying so much in rent or sold their homes for a nice profit and moved to Central Florida which offered no-income state tax and warmer weather. “The trend of out-of-state remote workers may have helped sellers, but it sure did not help middle-income locals who may not have had as much to spend on purchasing a home,” Delaney says.
Crystal Ball
Both Watts and Delaney say while the market is still changing, no one can predict what will happen next. They both believe interest rates will eventually stabilize, but that may not occur for possibly as long as a year. “Sellers are open to more negotiations than last year, but the market has not normalized yet,” Delaney says.
They both agree that if you are in the market for a home, instead of relying on “crystal ball” forecasts, getting help from a real estate professional is the ideal way to get the best deal on your investment.
Housing Stats
Orlando Realtors State of the Market Report gives a residential real estate snapshot of home sales, inventory, and interest rates over the last three years.
2020:
Median home price increased 10.4% year over year
Interest rate average of 3.10%
Inventory decreased 30.9% year over year
2021
Median home price decreased 1.47% year over year
Interest rate average of 3.38%
Inventory decreased 44% year over year
2022
Median home price increased 45.5% year over year
Interest rate average of 6.6%
Inventory increased 136.3% year over year
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