According to a forecast published last month, the Orlando, Florida real estate market could be one of the hottest in the nation during 2019. This is largely the result of limited housing supply and steady demand from buyers.
‘Hot’ Forecast for Orlando Housing Market in 2019
In January, the real estate information company Zillow published a forecast that ranked what they feel will be the hottest housing markets of 2019. Specifically, the group looked at the 50 largest metropolitan areas across the United States. They ranked them based on a number of supply and demand indicators and other economic factors.
According to that forecast, the Orlando, Florida real estate market is expected to be one of the hottest in the country this year. It came in at #9 among the 50 largest metros.
The chart below (generated by Zillow) shows their home value index for Orlando, dating back to 2014. As you can see, prices have followed an upward trajectory in recent years.
The median home value in Orlando was around $238,000 at the end of January 2019. Prices rose by nearly 10% over the past year or so, according to at least one source.
Supply and Demand Imbalance
Orlando’s real estate market is generating positive forecasts for 2019. And that’s not surprising when you look at the current supply-and-demand situation in and around the city.
The short version is there are many buyers in the market actively seeking a home, but not enough properties available to meet that demand.
At the end of 2018, the Orlando housing market had about a 2.6-month supply of homes for sale. That is well below the 5 to 6 months that economists consider to be a balanced real estate market. This supply shortage is putting upward pressure on home values, and is partly why prices in Orlando are outpacing the national average.
Population growth is another factor contributing to the positive forecast for the Orlando real estate market in 2019. According to data collected by the U.S. Census Bureau, the population of Orlando rose by more than 17% from 2010 to 2017. By comparison, the U.S. population as a whole rose by around 5% during that same period.
Steady population growth increases demand for housing on both the rental and purchase side. When you combine this with the limited inventory mentioned earlier, you have all of the ingredients for ongoing home price appreciation. And that’s exactly what we are seeing right now.
A Booming Job Market Enables Buyers
Orlando also benefits from having a strong job market. As of December 2018, the metro area’s unemployment rate was around 3%. That’s a big improvement when you consider it peaked above 11% in 2009, toward the end of the Great Recession.
The Zillow housing market report also mentioned the strong job market in Orlando:
“A booming job market, Orlando has the fifth-most job openings per person of all major markets, even though the metro’s population has grown faster than all but one large market (Austin, Texas).”
Low Mortgage Rates: Another Good Reason to Buy a Home
Home buyers in Orlando and elsewhere across the nation have another good reason to “seize the day.” Mortgage rates dropped again this week, sinking to their lowest level since April 2018. That’s according to the weekly survey conducted by Freddie Mac.
As of this week, the average rate for a 30-year fixed mortgage loan was 4.41%, with an average of 0.4 fees / points paid at closing.
On February 7, 2019, the research team at Freddie Mac wrote:
“The U.S. economy remains on solid ground, inflation is contained and the threat of higher short-term rates is fading from view, which has allowed mortgage rates to drift down to their lowest level in 10 months. This is great news for consumers who will be looking for homes during the upcoming spring homebuying season.”
Low mortgage rates. Continued home-price appreciation. A strong local economy. These are just some of the reasons why 2019 could be a good year to buy a home in the Orlando area.
Disclaimer: This article includes forecasts for the Orlando, Florida real estate market through 2019 and into 2020. Those predictions were offered by third parties not associated with the Home Buying Institute. Economic and real estate forecasts are the equivalent of an educated guess and should be treated as such.