Orlando Housing Market: Prices, Trends, Forecast 2023

By Marco Santarelli

The Orlando housing market has been showing significant activity in recent months. The housing market is still very hot in 2023. The future of the Orlando housing market is uncertain, but most experts predict that it will continue to be strong in the next few years. Zillow projects a 6.5% increase in home values over the next year.

However, there are some factors that could cool the market, such as rising interest rates and a potential recession. If you are thinking about buying a home in Orlando, it is important to be prepared for the competitive market and high prices. You should also be prepared to act quickly when you find a home you like, as it is likely to sell quickly.

Orlando Housing Market Trends

The real estate landscape in Orlando, Florida, has been a topic of keen interest for both buyers and sellers alike. The July 2023 housing market report from the Orlando Regional REALTOR® Association sheds light on the trends and challenges affecting the area's residential real estate sector. This report highlights crucial data that reveals how interest rates, inventory levels, and other factors are shaping the Orlando housing market.

Interest Rate Hike and its Implications

The most notable feature of the July 2023 housing market report is the rise in interest rates. Recording a rate of 6.8%, this marks the second-highest interest rate Central Florida has experienced in the last two decades. This increase is just a slight uptick from the 6.7% rate observed in June. For a point of reference, October 2022 holds the record for the highest interest rate in the past 20 years at 7.0%. This surge in interest rates has created ripples across Orlando's housing market.

Buyer Challenges Amidst Rising Rates

According to a survey conducted by ORRA, 43% of Orlando REALTORS believe that the upward trajectory of interest rates is the most significant challenge facing buyers. This phenomenon has led to a shift in buyer behavior, with some potential homebuyers opting to wait before making their purchases or considering properties at lower price points. The apprehension stemming from this interest rate surge is tangible, impacting the market dynamics.

Sales and Inventory Trends

The numbers reflecting home sales in July are telling. Overall sales experienced an 8.7% decline from June to July, with the figure dropping from 3,124 to 2,852. Furthermore, the sales numbers for July 2023 were 13.8% lower than the same period in 2022, which witnessed 3,309 sales. The relationship between rising interest rates and reduced sales becomes evident as buyers take a step back in response to the altered economic landscape.

In contrast, the inventory levels exhibited a 5.0% increase from June to July. Inventory figures in June stood at 5,450, which then rose to 5,720 in July. Interestingly, a separate survey conducted by ORRA highlighted that low inventory levels ranked as the second most prominent issue confronting buyers.

Fluctuations in Median Home Prices

July 2023 marked a significant shift in the median home price. Recording a figure of $380,000, this month saw a decrease from June's $385,000. This reversal is noteworthy as it's the first instance this year where the median home price has fallen. However, it's important to acknowledge that the median home price for July 2023 closely mirrors that of July 2022, when it was recorded at $380,900.

DOM Statistics and Seller Perspectives

Homes spent an average of 39 days on the market in July, a decrease from June's 41 days. Nonetheless, this still represents an 85.7% increase from July 2022, during which homes spent just an average of 21 days on the market. This is indicative of a significant shift in the selling process.

Interestingly, a change has been noted in terms of how quickly homes are being sold. Last year, 63% of Orlando REALTORS reported that clients were selling their homes in 10 days or less. In contrast, this year, only 34% shared the same sentiment. This shift underscores a change in buyer behavior, with the urgency to purchase diminishing in light of changing market dynamics.

The President's Perspective

In response to these trends, Lisa Hill, the President of the Orlando Regional REALTOR® Association, remarked, “Approaching the end of summer with interest rates at nearly their highest level in 20 years, we are seeing an impact on both buyers and sellers.” She elaborated, “More homeowners are being locked into ‘golden handcuffs’ – where they’re choosing to stay in their current homes to keep their low mortgage rates, which could be 3% or lower – and more buyers are choosing to wait in hopes that rates go down.”

Market Snapshot: A Deeper Dive

• Interest Rates and Pending Sales: The comparison between July 2023 and July 2022's interest rates is stark, with this year's rate at 6.8% compared to 2022's 5.4%. Moreover, the trend in pending sales witnessed a decline, with 3,808 pending sales in July, down from June's 3,964.
• Distressed Homes and Inventory Trends: The market's resilience is evident in the distressed homes category. Distressed homes, including bank-owned properties and short sales, accounted for only 0.9% of total home sales in July. This figure marks a 10.7% decrease from June's 28 distressed home sales.
• Inventory Fluctuations and Market Balance: The Orlando area witnessed a 5.0% increase in inventory from June to July, with June's inventory at 5,450 rising to 5,720 in July. This increase led to a shift in the supply of homes, which reached 2.01 months in July, up 15.0% from June's 1.74 months. Notably, a balanced market is defined as having a six-month supply.
• New Listings and Market Dynamics: The dynamics of new listings were notable in the transition from June to July. A 7.8% decrease in new listings was observed, with the number dropping from 3,703 to 3,413 homes. This reflects a shift in seller behavior, as fewer homes were introduced to the market during this period.

Is Orlando a Buyer's or Seller's Market?

Orlando Housing Market Forecast 2023-2024

The Orlando housing market has been a topic of interest and speculation for buyers, sellers, and real estate enthusiasts alike. As we delve into the current state of the market, it's equally important to gaze into the future and explore the forecasted trends that could shape the Orlando-Kissimmee-Sanford area's real estate landscape. With data insights provided by sources such as Zillow, we can gain a glimpse into what might lie ahead for this vibrant housing market.

Present Reality: A Snapshot of the Orlando Housing Market

As of July 31, 2023, the average home value in the Orlando-Kissimmee-Sanford region stands at $389,109. This value reflects a marginal increase of 0.3% over the past year, underscoring the steady nature of the market. Moreover, homes in this region are gaining traction, with an average time of just 11 days on the market before they move to the pending status.

Typical Home Values and 1-year Value Change:

The typical home value of $389,109 serves as a foundation for understanding the current market landscape. With a modest value change of +0.3% over the past year, it is evident that the market has maintained relative stability.

Market Forecast

Zillow's 1-year market forecast for the Orlando-Kissimmee-Sanford area is notably positive, projecting a growth rate of 6.5% by July 31, 2023. This forecast is indicative of the market's resilience and potential for appreciation, making it an attractive prospect for both buyers and investors.

Median Sale to List Ratio

As of June 30, 2023, the median sale to list ratio stands at 0.989. This ratio provides insight into the extent to which homes are being sold for their listed price. The figure approaching 1.0 suggests that homes are selling close to their list prices, reinforcing the balanced nature of the market.

Percent of Sales over and under List Price

The distribution of sales in relation to list prices further underscores the dynamics of the Orlando housing market. As of June 30, 2023, 23.0% of sales were recorded as being over the list price. This reflects the competitive nature of certain segments within the market. On the other hand, 55.7% of sales were under the list price, indicating the presence of negotiation and opportunities for buyers to secure deals.

Median Days to Pending

The median days to pending, as of July 31, 2023, is a key indicator of how swiftly homes are being snapped up. With a median of 11 days, homes are finding buyers relatively quickly, which aligns with the overall active and dynamic nature of the market.

The Road Ahead: Interpretation and Considerations

As we look ahead to the future of the Orlando housing market, the forecasted growth rate of 6.5% by July 31, 2023, presents an intriguing prospect for potential buyers and investors. However, it's essential to remember that real estate is influenced by a multitude of factors, including economic shifts, interest rates, and local market conditions.

The relatively balanced median sale to list ratio and the varying percentages of sales over and under list price highlight the nuanced nature of the market. Buyers and sellers should recognize that certain segments might still offer opportunities for negotiation, while others may require more competitive offers.

The median days to pending, standing at just 11 days, underscores the fast-paced nature of the Orlando-Kissimmee-Sanford housing market. This aspect demands a proactive approach for buyers and a strategic outlook for sellers, emphasizing the importance of informed decision-making.