Throughout the year, home prices continued to rise as buyer demand soared. Between November 2016 and November 2017, Orlando home values rose 9.1 percent, according to the real estate site Zillow, which also predicted they would rise by an additional 4.2 percent this year.
Sales actually slumped during the summer months – typically the busiest time of year for home sales. But that wasn’t because buyers had lost interest. In Orlando, as well as nationally, there simply were not enough homes on the market to meet buyer demand. The median price of a home in Orlando ended the year at $270,000, above the national average of $258,000.
So with 2017 now behind us, it’s worth asking whether the Orlando housing market will have a repeat performance in 2018 — or even improve upon its strong showing in 2017?
A sunny outlook for Orlando in 2018
One of the clearest signs of the health of Orlando’s housing market came in November, when sales increased by 8 percent compared to November 2016, while the median price increased by 11 percent.
That’s significant because Hurricane Irma had struck just two months earlier, and there were concerns that the storm would potentially hurt the state’s economy and housing market.
By October, however, it was clear that both hiring and home sales had bounced back. Both the Florida economy and housing market were strong enough to withstand the impact of that storm.
Although sales rose by 8 percent and pending sales by 6 percent, the other trend seen throughout the year – low inventory – remained a challenge. New listings were down by 0.3 percent in November, while inventory of homes for sale fell by 11 percent. The lack of inventory has been the key factor in keeping home sales lower than expected for such a vibrant market.
But the Orlando area housing market begins 2018 with some great strengths as well. That includes:
• The economy. Orlando’s economy delivered a robust performance in 2017. Orlando’s unemployment rate in October was 3.2 percent, well below the national average of 4.1 percent and the statewide average of 3.6 percent. Among the nation’s 50 largest metro areas, Orlando has experienced some of the highest rates of net job creation in the past three years. As the local economy remains strong and job seekers continue to relocate here, the expectation is that home prices will keep rising.
• Interest rates. The average rate in November 2017 was 3.96 percent for a 30-year fixed rate mortgage, still at historic lows. With the median rental price in Orlando at $1,450, it can be more affordable to lock in a long-term mortgage than to rent a home and risk rent hikes each year. Economists believe that rates on 30-year fixed-rate mortgages, now at around 4 percent, will continue to average 4.6 percent in the next few months. But there are also predictions that rates could hit 5 percent by the end of 2018, which could add some urgency for buyers who want to lock in a lower rate now.
• Median price. Buyers in Orlando can still find homes available for less than $300,000, which is far more affordable than in other major U.S. cities, including Los Angeles, San Francisco, Seattle, and New York.
• Rentals. One reason why so few homes are being listed for sale is that during the housing market crash in 2008, investors swooped in and purchased a lot of homes at distress sales, then turned them into rental homes. According to Zillow, Orlando is close to record levels for single-family homes being used as rentals — one out of five houses in Metro Orlando, in fact. That trend has helped to keep competition high for the few homes coming onto the market for sale.
Housing and the economy in 2018
The economy and the housing market usually work hand in hand. When the economy is strong and people have jobs, they’re eager to get into a home. At the same time, housing has always been a primary economic driver for both the national and local economies.
Since the economy and the housing market have been on a solid recovery, the housing market has witnessed a pent-up demand that’s been very robust. And while affordability has been a major challenge in states like California, that hasn’t been an issue in Florida.
Florida’s population is expected to grow in 2018, and the growth will be seen in the Central part of the state as well. The healthy economy and job growth in the Orlando area will be a key factor in helping to keep demand for housing high throughout the year, economists predict.
Orlando is also a major tourist destination, and another big story for 2018 will be the big additions coming to the region’s theme parks. That includes the new Fast and Furious: Supercharged attraction at Universal Studios Florida and a new nighttime lagoon show there; Toy Story Land at Disney’s Hollywood Studios this spring; and Infinity Falls at SeaWorld Orlando, a new river raft ride.
These attractions are likely to keep visitors coming to the Orlando area. A record number of visitors came to Orlando and Florida in 2017 – which helps bring more dollars to the region’s economy.
Not surprisingly, as home prices have responded to that economic growth by ticking up, so has the cost of renting a home or apartment. That’s become another good reason why many Orlando area residents are looking to buy a home today rather than rent one. With mortgage rates still low, they can lock in an affordable monthly rate and not worry about rental costs going up.
With the economy still healthy and creating jobs, and mortgage rates still at historic lows, all signs point to continued strong buyer demand in 2018.
The affordability of Florida’s homes, which are considerably below the steep prices in states like California and New York, is also expected to keep demand high.
Buyers, though, would be well advised to act now. With prices rising and interest rates still low, for now, the smartest path to take would be to reach out to a respected builder like AV Homes, which constructs homes in communities across Central Florida that are close to the theme parks, business centers and Orlando International Airport.
At the same time, our buyers can live in communities in beautiful locations that give them a sense of belonging and community.
The communities we build in range from growing cities like Clermont and Kissimmee to quieter locations like Davenport, St. Cloud, and Groveland, which are surrounded by nature and offer a charming small-town feel.
Contact AV Homes today at 1-800-AVHOMES and tell us about the kind of community you want to live in, and what you’re looking for in a home. We definitely have a dream home for you!