Is the Orlando Real Estate Market About to Crash?

What are you supposed to do if you’re trying to buy a home in Central Florida? Will waiting a year help you get a better deal? What if you have to rent for a year? Will it still be a better deal if you’ve just blown $30,000 on rent? Only you can know what’s right for you or your family but my goal in this video is to arm you with some information. And stay tuned to the end because I’ll be predicting the future - the real estate crash in florida. Let’s tackle that today. 

So we’re going to be looking into some statistics that affect our housing market here in the Orlando area. Orlando remains a strong destination for people moving. 

In 2022, California had the biggest loss, with 343,230 people leaving, followed by New York’s 299,557. Where were they going? Florida! We gained about 320,000 new residents last year. Out of all the places in the US that saw inbound move gains, Ocala Florida topped the nation. Ocala – here is a video I made on Ocala a couple of years ago with my realtor friend Andrea of Great Expectations Realty. But out of the top ten places with inbound moves across the nation - Florida filled six of those spots. Deltona, right here in Central Florida – little Deltona – was also in the top ten. And what happened year on year in Deltona? Housing prices went up 14.5%! I remember, I kid you not, it was back in 2010 looking at a 4 bedroom pool home in Deltona that was a foreclosure and it was $48,000 and I remember thinking it was overpriced. That house sat on the market for THREE MONTHS before it finally sold.

Since I haven’t already mentioned it, my name is Krista Taurins and I’m a realtor in the Orlando area. I’ve been selling real estate around here since 2009. If you’d like to tap into my expertise, please feel free to reach out to me. My contact information can be found below this video. And if you find this content useful, please consider subscribing and giving my video a like, as it does help to push along this information to similar viewers like you.

So where were we? Well, hand in hand with this inbound movement, we have a couple of other things going on. Right? Rents are up. The average rent price for all property types is $2184 per month. Let’s say you just need something simple like a studio apartment or condo – the average for those is $1,600. I do think some of the rental issues were caused by an influx of people from areas hit hard by Ian waiting for their homes to be rehabbed. As they return home that may help the rental situation somewhat, but remember insurance costs are up, property values are up, which means taxes are up, and many Condo Assocation Fees, which I’m not going to get into in this video are up. The sum total is that landlords are forced to pass that along to the tenants

So rents are up, maybe you should consider buying – but what’s keeping those prices up? I mean we all know we have an insurance crisis and let’s talk about that for moment. Seven insurers have gone insolvent in the past year and experts are warning that insurance premiums could jump by 20%-25%. Insurance agents are slammed with calls from customers begging them to find cheaper policies. And by the way if you are stuck in this situation, make sure that your insurance carrier knows about any improvements you’ve made to your home, consider bundling your home and car insurance with the same carrier and if all else fails your last path is to increase those deductibles. We all can read in the news about people being hit with $10,000 insurance renewal policies but for the most part unless they are coastal homes, most people are able to significantly reduce those heart attack inducing rate hikes.

Insurance is up and while that may be forcing some people to sell their homes there is another awfully big factor that’s keeping people from selling and that’s interest rates. If you have a 3.5% interest rate, chances are you’re going to find it very difficult to move and take on a new higher rate, buy a much less expensive house when year on year housing prices are still up. Today’s interest rate is 6.96% for a 30-year fixed.  And so that’s still keeping inventory relatively low. The only place for people to move to to alleviate some of these issues is out of state – not so simple obviously if your home, life and job are in Central Florida.

So with all this, why are prices still strong? Florida’s home prices saw the highest year-to-year price increase of any state with 15.2%. There were 5% fewer listings this January than in January of 2022 – and we were already at a low level then.

So my question is how long can florida keep riding on the net migration wave and will this continue to keep our prices going up? Or are people going to throw in the towel and start leaving in which case demand will slow and accordingly prices should drop. According to new figures from the Florida Department of Highway Safety, 10,824 New Yorkers swapped out their licenses in the first three months of this year. That’s down from 14,000 in the first quarter of 2022. Florida is still affordable – for New Yorkers. In January, the median sale price of a home in New York state was $486,200. In Florida, it was $386,500. What about other states trying to move to Florida? Well a lot of people seem to be able to tap into the equity from selling their home in whatever state they are moving from to offset the costs of their florida home. Our housing dilemma is being caused by a big migration inward and less movement by home sellers. 

So what about the future? Florida home values have risen by about 80% over the past 5 years and a positive trend is forecasted for the next 5 years. But at the same time, buyers are definitely starting to have a slight advantage, particularly with older homes that may need some work. Gone are the days that even the dogs sold in 35 seconds with multiple offers. Homes with deferred maintenance or those in less desirable areas are now facing an increased time on the market and buyers are more likely to be able to negotiate a better deal. But are we facing a crash?

Some reasons why I don’t foresee that are low months of supply – although that’s getting better, we certainly are not at what we’d call a balanced market. 

There is a lot of new construction, but not as much as pre-2007. There are a lot of people still moving into Florida, which is keeping demand strong. Lending standards are strict, unlike in 2007 when if you could fog a mirror you could qualify for a loan. There aren’t very many foreclosures – because so many people have equity in their homes so walking away from them would simply be stupid and very unlikely. Also, importantly, our iBuyers have greatly slowed down their purchasing or stopped altogether – iBuyers like Opendoor, Zillow, Offerpad and the like who buy a home and resell it within a week for tens of thousands of dollars more are not very active any longer around here.

I know there are those of you who say “oh she’s a realtor of course she’s not going to say we are headed for a crash” but ultimately it’s for you to decide. If you need to buy a home now, the best thing you can do is concentrate on getting yourself the best deal possible. Negotiate like crazy, look for motivated sellers, avoid the bidding wars – because yes, they do still exist – and try to hope and plan for a time when you can refinance into a better interest rate.