Trouble in These Three Orlando Areas | Orlando Housing Market

August 9, 2024

Introduction

You have to live under a rock to not see all of the headlines pointing to the fact that Florida is leading the nation in a massive shift in the housing market. This leads us to wonder, all of us here in Orlando, if you own a home here now, or you’re considering buying one, what exactly are these changes going across Florida doing to our housing market? You have to understand there is a web of different micro-crises going on throughout Florida that are affecting the housing market.

The Hidden Costs of Ownership

Number one, we already know there’s a massive hidden cost of ownership, and it’s slipping into the Orlando data, particularly the cost of insuring your home. I’ve been saying for weeks and weeks and have been gently mocked multiple times in my comments as I’ve pointed out that Disney World’s traffic has been incredibly low this year, and the summer months never took off. I visited many weekends during May, June, and July—timeframes I would never visit the park—only to find empty parking lots and shorter waits on some of the most mainline attractions. Surprise, that’s slipping into our data.

The Impact on Central Florida's Housing Market

As it turns out, we are a heavy Airbnb market supporting that economy. So if the traffic is down, maybe, just maybe, that could throw a wrench into the housing market in parts of central Florida. In today’s video, I’m going to break out for you a few trends you need to pay close attention to in the Orlando metro area. I’ll also show you three to five different markets in the Orlando Metro zip codes that are at very high risk of toppling prices in the next 18 months. Conversely, I’ll show you three to five zip codes in the Orlando market that are undoubtedly still a seller’s market or at the very least, the handful of zip codes that have held out.

Orlando's Market Overview

You’re going to pick up on some threads that will show you exactly which markets are hot and which aren’t so great so that even if your zip code’s not listed, you’ll have an analysis of just how it might be doing. I’m Jerry Jones. If you’re new to the channel, this is my Orlando-focused channel doing consistent deep dives and data analysis for the Orlando Metro and maybe some close surrounding suburbs. If you appreciate the research I’m bringing to you, go down below and smash the like button so as many people as possible can see it. It helps the channel, and I appreciate it. Consider subscribing so you do not miss a solid update on what’s going on in the Orlando market.

Alright, my friends, let’s jump into the data. Let me show you what we’re looking at. This is a high-end software program that I’ve purchased where we aggregate all the data from realtor.com and a bunch of other sources like Zillow. Out of it, we aggregate some key sources of data to determine whether or not these are buyer’s markets or seller’s markets. You’d say, “Jared, well, how do you figure that out?”

Data-Driven Insights

Well, number one, we take the entire marketplace and aggregate how long it takes to sell, how many price cuts you’re seeing in a specific zip code, how much unsold inventory is stacking up against history—is it high, is it low, is it growing? There’s a factor for days on market to see if there are extenuating for-sale times. Lastly, we’re also considering the mortgage calculation. What is affordability like in a given area based on income? Because ultimately, we all know buyers have to purchase these properties, and if the local income does not sustain the high cost of mortgage rates at a given time, then ultimately that’s also going to affect and create a forecast for what home prices might do in a given area.

The Hottest and Coldest Markets

With that in mind, let’s start by talking about the hottest market to see if we can figure out what’s going on in the Orlando marketplace. Number one, if you jump ahead of me, you’re going to ultimately see there’s a lot of blue in the Orlando marketplace. Zillow has recently come out and measured us as a neutral market, meaning we’re kind of in the middle between buyer and seller. That is true for some markets, but some of our zip codes have fallen completely into buyer strength where buyers have more control of the negotiation, sellers are at their mercy, and ultimately it’s a changing time for a lot of marketplaces around Orlando.

So, let’s take a look. To start, we’re going to go right downtown in Orlando. Right here, you’re going to see the very hottest populous marketplace is 32803. This particular market, you can see, was at the peak of 2022 at its strongest point. Sellers had complete control of the marketplace right here. This was probably February of 2022 and particularly the end of 2021 when you would have to put in multiple offers. You’d have competition; you’d waive all of your contingencies; you couldn’t get an appraisal. You’d even consider giving them your firstborn and maybe let them have the keys to your car in order to get them to accept your offer.

Shifts in Market Dynamics

Now, look what happened after interest rates climbed. It started to slide into the beginning of last year, and then many of these markets gained some sea legs back and pulled strength towards the seller side again. But you can see that even though this is the strongest marketplace, there is a middle line here at right around the 50-point mark. When it drops below a calculation of 50, it tells us that all the five metrics relating to buyer affordability, price cuts, and how prices are responding in a given zip code drive it to become a buyer’s market against the seller’s side.

You can see that ultimately it is changing, but yet 32803 remains one of the strongest populous markets in our area.

Understanding Market Variations

Now, look at this. You would see, “Hey Jared, I see three areas that don’t look blue.” Are they all voting for Trump? No, that’s not a political map. This is actually 32789, which is Winter Park, dead even at 50. Then you have 32804, which is, if memory serves, the College Park zip code. Again, this is downtown, historic homes, desirable, and affluent. You’ll remember I did a Winter Park update not too long ago on this channel, which got a pretty good view count—three to four thousand people, I think, watched that. I was noticing that in the affluent market of Winter Park specifically, you say, “Jared, what makes it affluent?” Well, it’s the average price. The median sale price is higher than the rest of the market.

Affluent Markets and Resilience

So Orlando in the metro area is around $400,000 in median—$399,000 to be exact. And you’ll find that Windermere, Winter Park, Golden Oak area (32836), and some of these markets we’re going to see today, are much higher—$700,000 plus. So they’re nearly 100% higher in median sale price. What’s happening in those markets is a twofold situation. Sellers can be more patient because maybe they’re not getting to the bottom of their cash reserves like a lot of other people in the market are. And if there are potentially layoffs or other economic challenges, it increases inventory.

We are seeing unemployment rates rise in Florida, as well as nationally, and we’re also seeing credit card debt going through the roof. Ultimately, that affects different bases of the population differently. But, look what’s happening—ultimately, these affluent markets are not settling into buyer markets as fast as some of the others.

The Unaffected Luxury Market

Now, you might say, “Jared, I see two more areas right there.” Yes, you do. But you don’t see Horizon West, by the way, which is in Winter Garden. You actually see that well into buyer territory. But look at Windermere and 32836. Both Windermere and 32836—what are these areas known for? These are known to be high-end, Butler Chain of Lakes, premier waterfront locations. These are going to sell at very good numbers, okay?

Now, the same deal applies here—higher affluence means less pressure to sell. They don’t have to sell; they can sell when they want and maybe are discretionarily choosing not to. The other thing is the buyers—in the luxury end in Florida, I would say that’s $1.5–2 million and up—are less affected by hidden costs. They’re not as impacted by some of the issues facing the lower and middle markets.

The Foreclosure Threat

You have to understand that the HOA can then foreclose on that person for not paying their HOA bills. We already know the state’s not gonna wait for you to pay their bill for property tax, but it needs to be understood that if people go behind on all these high costs for these buildings, they become extremely motivated to sell.

Simply put, what these investors are doing is swooping in, hoping to buy enough properties in a building in order to dissolve it and demolish the building. Sounds crazy, but it’s happening. I’m gonna show you case evidence right now.

The Middle Market's Challenges

You might ask, “Isn’t a million-dollar home a luxury home in these areas?” No, it’s not. It’s an upper-middle-class home, okay? No offense to anyone selling around a million dollars, but take a look at it. You know, that’s a $500,000–$600,000 house from five or six years ago, and that is our middle class. But the point I’m making is that across the data nationwide, the luxury end seems to be healthier and less affected. The entry market and the middle market, where people are selling their first home and moving to a second home, are under more pressure.

I tell this to everyone on the marketplace when we’re doing these kinds of updates: you have to understand that you need people moving up the ladder. You can’t just have the upper end trading and the bottom end falling. It’s going to precipitate into negative realities, and you’re seeing those changes right here in front of us.

Outlier Markets

Now, if we pull back, do you see any other outlier markets? Yes, there are some. These are not highly populated. For example, Geneva—no offense to Geneva, but I think there’s like 5,000 of you out there. Your market still looks pretty strong—32709. Again, these are very low-population areas. Kenansville, again no offense, those are not big markets; no one lives there. They’re probably going to be buyer markets forever.

The Markets in Serious Trouble

Now, let’s go to the other side of the category. You might ask, “Jared, where do I see some dark blue?” Well, look at this. I think this is Altamonte Springs and Sanlando Springs. These are older houses. They blew up during COVID and now, all of a sudden, they’re not the prettiest on the block. I think ultimately that’s what’s happening. You see the areas where changes are happening. But you see a ton of blue in the south, which is Osceola County. We’re going to come back to that in a second. But let’s talk about the worst of the worst.

The Struggles in Davenport and Beyond

By the way, Davenport is considered Metro Orlando by locals. If you look at the edge of our metro map, the government stops it right here. But if you look, this is Highway 27 and Four Corners. This is Disney right here; this is outside of the map, which I’ll come back to. But these areas are leading the way as some of the worst buyer markets. I’ll come back to that at the end of the video, but stay tuned for that. But I want to highlight and say, “Okay, if it’s not those, those officially aren’t in our metro, where are the weakest areas inside of our actual marketplace?”

You have these areas right here. I see one right here, one right here, and one right here. Let’s talk about them. Are there any common threads? Well, as I mentioned, Altamonte Springs and Sanlando Springs have older, one-level homes built in the seventies. These people were lucky to get $250,000. No disrespect, I know there are a lot of nicer homes with higher prices, but this was affordable, right? Can we all agree to that?

The Day of Reckoning

Jump in the comments, tell me if you agree that 32701 was affordable five years ago. But now, it’s harder to insure, it’s hard to get insurance on, and it needs a lot of rework to close. I would say that’s true of every single one of these zip codes. They used to be affordable, but now they’re not so affordable. I think buyers are now pushing back, saying, “I want affordable, otherwise, I’ll go somewhere else.” That could be the case.

Look at the other areas: 32839 is an older area around John Young Parkway and Rio Grande, just outside of the Mall at Millenia. Tell me in the comments if you want to live here. Let’s just put it that way, okay? I’ll let you guys talk about it in the comments.

The Affordable, Yet Struggling, Markets

Look over here. The top three—this is 32822. Now, this is around Cimarron Boulevard, going almost all the way to the airport. You have Holden in here somewhere. I think Curry Ford Road runs through here. We’re not quite to 417; we’re in the southeast. This area was developed a long time ago. There’s a lot of manufactured housing, a lot of older homes, and maybe some newer stuff sprinkled in. But ultimately, this area used to be affordable.

Some of this is just a day of reckoning. These homes are sitting longer, buyers have more choices, and it’s a microcosm of more options being available. But these areas are having a lot of inventory stack up. Days on market are getting tougher, and affordability is a challenge, affecting that buyer bracket.

Kissimmee and the Struggles in Airbnb Markets

If you’re not in these three areas, you might ask, “Jared, what’s next? What’s the next weak link?” Look over here at West Kissimmee. So you have 34747, and everyone in Celebration, let me hear from you in the comments. You’re in the same zip code, but that doesn’t necessarily mean you’re probably impacted. This is why you have to do your research in a given market.

I would guess that maybe Celebration is over-indexing. I didn’t do my research on it and don’t care to, but Celebration has higher property values. You can buy a $500,000 condo in Celebration. The houses there are $700,000 base entry on up to multimillion. Over here, you have the luxury market and Airbnb. What’s 34747 known for? It’s massively Airbnb. This is Reunion, this is ChampionsGate—highly popularized by Airbnb.

Inventory Challenges in South Kissimmee and St. Cloud

Now, that’s a 30 on the market—that’s way down there. But look at this one: some of the lowest in the area, 28 and 29. So you have 34746, which is South Kissimmee, going all the way down to West Lake Toho. If you zoom out, look where this is—way at the bottom of the market. They’ve built a bunch of real estate here.

And when we talk about these areas like 34771 in St. Cloud, these areas have had a major increase in supply over the past five years. A lot of houses have been built in these areas. It tends to skew the numbers. If I pull 34771 and show you how many homes are for sale now versus five years ago, there’s way more homes for sale in that area against history—more than has ever been on the market. Yet, it doesn’t seem to be tipping over in real time. You might scratch your head and wonder, “How come there are so many homes on the market, like more than ever, more than in 2018?” We were selling a lot of homes in 2018 and 2019, but our sales are way off in 2024. There are a lot of homes on the market in that area. Is it tipping over? And the answer is not yet.

Market Dynamics and Predictions

Listen, the reason why is that over five years, the inventory has probably gone up 30%. Housing units are way higher in some of these markets. So, you have to understand that you are seeing more inventory, but that’s also because there are simply more houses than there were in history.

Not all of these markets are facing the same situation. For example, 34746 and areas north of Poinciana in 34758 are having a particularly hard time. Sellers in this market, you have to pay close attention because you are facing real challenges in most of these markets. If you’re thinking, “Oh, I’m going to try and see if I can get what my neighbor got three years ago in 2021,” you might be in for a long wait. The market dynamics have shifted, and it’s important to adjust your expectations accordingly.

Final Thoughts and Recommendations

If you’re planning to sell, time isn’t necessarily on your side now. If the market is shifting in your area, it might be the best time to sell if you know you need to. Otherwise, plan to hold onto your property for a very long time. For those in stable financial positions, who can handle the high costs of taxes and interest, these market shifts might not pose a significant risk.

But for everyone else, it’s crucial to stay informed about what’s happening in your specific neighborhood. Every community responds differently, and it’s vital to know how your area is reacting to these market changes. Jump down below, tell me what update you want to see in the Central Florida market next, and what kind of video topics you’d like to hear about. I love hearing from you, and your insights help guide my content.

Why Choose Jared Jones?

As a top real estate agent with nearly 4,000 homes sold and over 20 years of experience in the Florida real estate market, I have the expertise needed to help you navigate today’s evolving landscape. Whether you’re looking to buy or sell, my deep understanding of market trends and personalized approach will provide you with the insights and strategies required for success.

Best Realtor in Orlando, Florida - Reach Out Today

If you’re ready to make a move in Florida’s real estate market, don’t hesitate to reach out. Contact Jared Jones at 407-706-5000 (call or text) or email info@jaredjones.com for professional guidance and personalized service that will help you achieve your real estate goals.

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