Central Florida Homes Are Still Undervalued

Updated February 3, 2022

The List Price Is the Deal!

We have a good number of buyers who want to buy a home discounted off the list price. In the current market here in the Orlando, Central Florida area (Orange, Seminole, Osceola, and Lake Counties), the list price for most homes – and even one or two percentage points higher – is the discount! They are markedly undervalued based on a number of metrics.

Affordability

The affordability index for Central Florida residential real estate in December 2021 was 110% according to the Orlando Regional REALTORS® Association. A family with median income earns 20% more than they need to be able to afford a median priced home. The issue here is that a significant number of homes are being purchased by families moving to Central Florida who earn significantly about the median family income of $61,000.

Demand is Extremely Strong

A market that is considered balanced between buyers and sellers is five to seven months of inventory. As of December 31, 2021, we are sitting at 0.68 months (21 days) of inventory in the Orlando market, only several weeks in some cities like Oviedo and Winter Springs, and even less considering a significant number of homes are overpriced, in poor condition, or both. Homes that are in good condition and priced well are under contract in just a few days and most often with multiple, competing offers.

 

There is No Additional Supply

In Seminole and many parts of Orange County, there isn’t enough vacant, buildable land to make a significant dent in the supply. The Saint Cloud and West Orange County areas still have some room to grow. Even there, new homes can’t seem to be built fast enough to satisfy demand. 

Appraisal Rules are Tapping the Brakes

My experience with appraisals for our buyers and sellers seems to indicate that the Frank-Dodd rules and federal appraisal guidelines are holding the brakes on the housing market to keep home values from rising too fast, too quickly. That’s a good thing! We don’t need a repeat of the early 2000s when home prices were going up at a ridiculous pace. We do need prices to move more easily with market supply and demand.

Now is the Time to Buy!

Even if you have to pay up an extra few percent to have the winning offer, you are still getting a great value. Over the next few years, continued demand, short supply, and the Federal Reserve’s position of only modest interest rate increases for 2022 will cause home values to continue to appreciate at a good clip.

The median home price here in the Orlando market in December 2011 was $108,000. Ten years later, In December 2021 the median home price was $340,000. That’s more than triple and an annual rate of 12.1%.

For December 2021, home values are up 23.6% over December 2020. Home values in Central Florida will continue to appreciate in the 10% per year range until affordability comes down and demand softens enough to bring us to a more balanced market.

Another Real Estate Market Crash?

We are sometimes asked if our market will overheat and crash like it did in the early 2000s? We don’t think so. Here’s part one of a five-part series with the reasons, COVID-19’s Effect on the Housing Market Part 1: Home Prices. Even though the COVID pandemic and its effect on our economy is starting to wane and will be a distant memory soon, the other aspects of this series are still valid. 

The ORRA Market Pulse

The Orlando Regional REALTORS® Association publishes a complete, Orlando area market update every month and we have a recap for you!

Buying and/or Selling Your Home

Jean Scott and I have been in this business for over 20 years. Our team has sold over one thousand homes for both sellers and buyers. For home sellers, we have the strategies needed to generate those multiple offers down to a science. For home buyers, we know what it takes to help you write the winning offer. 

Are you considering a home purchase here in the Orlando area? Call us today at 407-564-2758 or fill out the form below. We would be happy to learn more about your real estate goals, answer all your questions (no cost or obligation) and very much appreciate the opportunity to earn your business! 


JEAN SCOTT

FLORIDA REALTOR®

Sell Your Home

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