The Orlando housing market is a dynamic space where trends shift as quickly as the Florida weather. With its scenic landscapes, theme parks, and vibrant community, Orlando has attracted a wave of new residents and investors alike. Interestingly, as of July 2024, the area's median home price is recorded at $390,000, reflecting a slight decrease from the previous month’s peak of $395,000. Inventory levels have been on the rise, marking the seventh consecutive month of increases. This sustained growth in inventory offers hope for buyers feeling the pinch of higher prices and interest rates, ultimately creating a competitive, yet balanced environment.
Orlando Housing Market: Insights and Trends for 2024
The Orlando housing market continues to showcase an intriguing mix of challenges and opportunities for buyers. July 2024 revealed a nuanced landscape where buyers face persistent interest rates, yet are met with increasing inventory and stabilizing home prices. The median interest rate saw a slight decrease to 6.6%, down from 6.7% in June, as the market adjustment continues.
Key Takeaways:
- Stabilizing Market: The Orlando housing market shows signs of stabilization, shifting from an aggressively competitive environment to a more balanced one.
- Rising Inventory: Inventory has increased for the seventh month in a row, offering more options for potential buyers.
- Median Home Price: The median home price has decreased slightly to $390,000, from the record-setting highs seen in June.
- Days on Market: Homes spent an average of 55 days on the market, reflecting a longer sale process compared to July 2023's 39 days.
- Interest Rates: Interest rates remain a critical factor for buyers, with 52% of REALTORS citing them as the top challenge.
As outlined by the Orlando Regional REALTOR® Association (ORRA), the inventory of homes available for sale reached 11,158 units in July, marking a 3.4% increase from June. This represents a significant 95.1% increase year-over-year, with the last time inventory was at this level being in November 2015. With more options available, buyers can take their time and explore the market without feeling rushed. However, new listings dropped by 1.8% month-over-month, from 4,143 in June to 4,067 in July.
Despite challenges such as elevated interest rates, the Orlando housing market shows resilience. In July, there were 2,652 sales, representing a 2% rise from June’s 2,601 sales. This implies that even with some buyers holding off due to costs, overall demand remains steady, contributing to a balanced environment.
Understanding the Inventory Dynamics
The increase in inventory is pivotal for the Orlando housing market as it provides relief for buyers who have had few options in recent months. The supply of homes available rose to 4.21 months, which still indicates a seller's market, although a balanced market is typically considered to have six months of supply. This suggests that while the prices and demand may normalize, available inventory is still lower than the level needed for a comparative balance.
The number of distressed properties remained static, with 25 distressed homes (bank-owned and short sales) accounting for just 0.9% of all home sales in July. The consistent presence of these properties suggests stability in the overall housing market, as high foreclosure rates typically indicate economic strain.
Sales and Pending Transactions
The month of July experienced a notable 1.5% increase in pending sales, climbing from 3,940 in June to 3,999. This upswing demonstrates that while some buyers are cautious about interest rates, there’s a persistent demand for homes as families are eager to settle before the new school year begins. The average days on the market (DOM) increased to 55 days, compared to 54 days in June. This represents a significant increase from the average of 39 days in July 2023. The rise in days on the market indicates that homes are taking longer to sell, an indication of market softening which could play into the buyer’s hands.
Critical Challenges for Buyers
The Orlando housing market poses challenges for many prospective homeowners. According to ORRA’s recent survey data, 52% of respondents listed interest rates as their primary concern. Higher interest rates tend to slow buyer engagement, forcing many to reconsider their purchasing power or explore lower price points. Additionally, home prices are still a significant hurdle, cited by ORRA as the second biggest issue.
Forecast for the Orlando Market
Looking forward, the Orlando housing market is expected to continue its trend toward stability. With interest rates holding steady in the upper 6% range, the market is likely to see an ongoing increase in inventory, which can provide buyers with more options and potential leverage in negotiations. Experts foresee that as families begin to settle into new homes post-summer, the urgency for immediate purchases may decrease, leading to further inventory growth.
As we move into the latter part of 2024, overall sales may remain steady, given the interest rate stasis and increased availability of homes. Buyers can expect to see some competitive pricing as sellers adjust to the new market dynamics. However, the upcoming winter months may also influence market activity as seasonal changes tend to reduce the number of transactions.
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 2024 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 |
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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 March 2024, the median rent for all bedroom counts and property types in Orlando, FL is $1,960. This is -2% lower than the national average. Rent prices for all bedroom counts and property types in Orlando, FL have remained the same in the last month and have decreased by 3% in the last year. The monthly rent for an apartment in Orlando, FL is $1,805. A 1-bedroom apartment in Orlando, FL costs about $1,659 on average, while a 2-bedroom apartment is $1,990. Houses for rent in Orlando, FL are more expensive, with an average monthly cost of $2,400.
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
- Baldwin Park
- Southport / Lake Nona Estates
- Lake Fredrica North
- Azalea Park South
- Countryside
- Park Central
- Engelwood Park North
- Lake Buchanan
- Beacon Park
