The Orlando Real Estate Market: What Investors Should Know For 2020

Orlando is being promoted as the top city in Florida for buying rental property and one of the top ten markets for flips. Many real estate investors believe that buying homes in the Orlando area is a smart investment for the next several years.

There are several reasons why investors love Orlando. Nearly 70 million people visit Orlando each year, drawn by the area’s world class theme parks like Disney World and Universal Orlando, dozens of golf courses, and premium shopping outlets.

While tourism and conventions are big business in Orlando, the city is about a lot more than just fun and games. Orlando is a major industrial and high-tech center with one of the largest research parks in the country. 

Economic growth in the region leaves many cities across the U.S. in awe. Other parts of the country watch enviously as people come to Orlando for the seemingly endless opportunities and great quality of life that can only be found in Central Florida.

Read on to learn why Orlando is can be a smart investment to consider in 2020 and beyond.

 

Population Growth

Located in Orange County, Central Florida, Orlando is among the fastest growing cities in the U.S., according to a recently released report from Fox 13. In fact, more than 60,000 people moved to Orlando in the past year alone, enough to fill the city’s Camping World Stadium where college football bowl games are played.

Key Population Stats:

  • The City of Orlando is home to nearly 300,000 people while about 2.5 million residents live in the metropolitan area of Orlando.
  • Four counties make up the Orlando metro area: Orange, Seminole, Lake, and Osceola.
  • Last year metro Orlando grew by more than 60,000 people, ranking #5 of the nation’s fastest-growing cities, and surpassed only by Atlanta, Dallas, Houston, and Phoenix.
  • Orlando Economic Partnership estimates the Orlando region will add 1,500 people each week and reach a population of 5.2 million by 2030.

 

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Job Market

Forbes ranks Orlando, Florida as the 23rd-best place for business and careers and the 6th-best place in the country for job growth. 

According to U.S. News & World Report, the average annual salary in Orlando is below the U.S. average due to the high number of low-paying service and hospitality jobs. That’s good news for investors, because these types of jobs help keep the Orlando economy strong and the demand for rental property high.

Key Employment Stats:

  • GDP of Orlando (including the neighboring cities of Kissimmee and Sanford) is more than $133 billion, increasing by more than 30% over the last ten years.
  • Job growth in Orlando was 3.7% last year, making the Orlando metro area #1 in the U.S. for employment growth over the past 12 months, according to Forbes.
  • The Orlando Business Journal reports that over the past three years job growth in Orlando was 11% with nearly 129,000 new jobs added to the economy.
  • Average employment in Orlando is projected to grow by 19% by 2030, nearly double the rate of the U.S.
  • In fact, over the next ten years, about 500,000 new jobs are forecast to be created in the Orlando metro area, based on research by the Orlando Economic Partnership.
  • Even though the cost of living in Orlando is about 5% above the national average, unemployment last year was just 3.2% and is currently at 2.7%, according to the Bureau of Labor Statistics.
  • Metro Orlando is home to the seven-million-square-foot Orange County Convention Center with nearly 480,000 sq. ft. of meeting rooms and more than two million sq. ft. of exhibition space, making it the second-largest convention venue in the U.S.
  • Fastest-growing employment sectors in the Orlando region over the next ten years include home and healthcare services, manufacturing and construction, engineering and transportation, and computer systems design.
  • Largest engineering, manufacturing, and aerospace companies in Orlando include Lockheed Martin, General Dynamics, Mitsubishi Power Systems, Siemens, AT&T, and Boeing.
  • Defense employers in metro Orlando include United States Army Research, National Center for Simulation, Patrick Air Force Base, and Cape Canaveral Air Force Station.
  • Disney’s Magic Kingdom, Universal Studios, Disney’s Hollywood Studio, SeaWorld Orlando, Disney’s Animal Kingdom, and Disney’s Epcot are a few of the top rated entertainment centers and theme parks in the Orlando-Kissimmee area. 
  • Creative Village Innovation District is a 68-acre mixed-use development on the west side of downtown Orlando providing residents with paths to education and housing while giving businesses a place to expand with a quality workforce.
  • The 1,027-acre Central Florida Research Park is adjacent to the University of Central Florida and home to more than 100 companies employing thousands of people.
  • Major colleges and universities in Orlando include University of Central Florida, Florida A&M University, Florida State University, and Valencia College.
  • Nearly 36% of the people in Orlando 25 years or older hold a bachelor’s degree or an advanced degree, according to the Census Bureau.
  • Interstate 4 is Orlando’s main Interstate Highway, while SunRail provides commuter train service throughout the four-county Orlando metro area.
  • Orlando International Airport (MCO) is the second-busiest in Florida with airlines including Frontier, JetBlue, Lufthansa, and Virgin Atlantic providing service to nearly 50 million national and international passengers each year.

 

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Real Estate Market

The housing market in Orlando recently reported a 6% year-over-year increase even though inventory dipped by about 1%, according to the World Property Journal

One reason Zillow ranks the Orlando housing market as “very hot” might be because the market in Orlando performs well in any real estate cycle. MarketWatch agrees, recently ranking Orlando as the tenth-best market in the U.S. for protection against a real estate downturn.

Key Market Stats:

  • Median home value in Orlando is $245,600 according to Zillow (as of Oct. 2019).
  • Orlando home values grew by 4.8% this year and are forecast to rise another 4.2% over the next 12 months.
  • Median listing price of a home in Orlando is $290,000 while the median selling price is $244,800.
  • Median list price per square foot of a home in Orlando is $159, higher than the $150 per square foot median list price for the Orlando-Kissimmee-Sanford metro area.
  • Average days on market is 67.
  • During the listing period, 18% of the homes for sale in Orlando have a price reduction.
  • 6.6% of the homes in Orlando have a negative equity vs. 8.2% U.S. average.
  • 1.2% of the homes in Orlando have a delinquent mortgage vs. 1.1% nationally.

 

Attractive Renters’ Market

A just-released report from Orlando Weekly notes that Orlando is the #1 place in Florida to buy profitable rental property. While the soaring rental rates in Orlando are bad news for tenants, rapidly rising rents are music to the ears of real estate investors.

Key Market Stats:

  • Median rent in Orlando is $1,648 per month, about the same as the $1,649 monthly rents in the Orlando-Kissimmee-Sanford metropolitan area and higher than the median U.S. rent of $1,588 per month.
  • Average rents in Orlando increased by 3% over the last 12 months, according to RENTCafé.
  • 46% of the housing units in Orlando are occupied by renters.
  • Only 11% of the units in Orlando rent for less than $1,000 per month.
  • In fact, 54% rent for between $1,001 and $1,500 per month and 28% rent for between $1,501 and $2,000 monthly.
  • Affordable areas of Orlando for renters include Mercy Drive, Rosemont North, and Seaboard Industrial where rents average $985 per month.
  • The most expensive neighborhoods in Orlando for renters are Downtown Orlando, Lawsona-Fern Creek, and Baldwin Park with average rents ranging between $1,722 and $1,827 per month.

 

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Historic Price Changes & Housing Affordability

The FHA 2019 Q2 House Price Index report is used by real estate investors in Orlando to anticipate future changes to home prices. 

The most recent Index shows that home prices in the Orlando metro area have increased by nearly 193% since Q1 1991. Over the past five years home prices have increased almost 53% and have grown by 2.61% from the last quarter.

Kiplinger also analyzes the affordability of housing in Orlando and the other top 100 U.S. markets:

  • Since the last real estate cycle market peak in May 2006, home prices in Orlando have decreased by 16.3%.
  • Since the last real estate cycle market bottom in March 2012, home prices in Orlando have increased by more than 95.7%.
  • Orlando has an affordability index of 7 out of 10, meaning the metro area is one of the least affordable places to own a home in the U.S.

 

Quality of Life

When Niche.com asked 1,400 residents of Orlando how they liked living in city, an astounding 86% rated Orlando as an “excellent” or “very good” place to live. The truth is, almost everything about Orlando makes it the perfect place for living, doing business, and investing in real estate.

Key Quality of Life Stats:

  • Orlando is ethnically diverse due to strong inbound migration from both inside and outside of the U.S.
  • Education is a priority in Orlando, with about 29,000 new teachers needed by 2030 due to the region’s soaring population growth.
  • Film, television, gaming, and entertainment industries in Orlando guarantee there’s always something new to see and do.
  • Some of the top attractions in Orlando include Universal’s Island of Adventure, Universal Studios, and the nearby Kennedy Space Center.
  • Orlando Premium Outlets, The Mall at Millenia, the food and cultural hub East End Market, and the local boutiques along Winter Park Avenue offer some of the best shopping experiences in Orlando. 

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