Key Points:
- • Nearly 40% of Davenport’s housing inventory supports short-term rentals like Airbnb.
- • Airbnb stock dropped 14% in one day as profits declined sharply.
- • Davenport home prices have fallen by over $50,000 in some areas since their peak in 2022.
- • Zip codes like Champion’s Gate are experiencing up to a 33% reduction in home prices.
- • Second home mortgages in the area are down 59% compared to pre-pandemic levels.
Davenport's Market Faces Major Shifts: What You Need to Know
There are incredible changes unfolding in the southwest part of the Central Florida marketplace here in the Orlando Metro, Davenport, Florida. And you have to understand what is happening, particularly with the second home Airbnb market, because it is making some serious waves as investors try to sell in droves, driving prices down. Now, Davenport on its own has some of the highest amount of sales in the entire Orlando Metro area.
It’s led only by Orlando itself and Kissimmee. Davenport ranks third as the largest municipality with big turnover because there’s a lot of homes in this area, but you have to understand the story behind this market, which is the fact that nearly 40% of all the inventory in this particular market here in Davenport happens to be developed, meaning the homeowners association in that particular community allows for short-term renting. And also Davenport itself falls under a municipality here in the southwest, which allows for day-to-day week-to-week without any owner’s restrictions from the city.
So Airbnb thrives in this particular part of the market. You cannot do this throughout most of the area of Orlando. So the centerpiece of this, you need to understand this marketplace is largely affected by the leisure marketplace and tourism.
Well, what do we know about that? Well, Disney just recently came out and said, Hey, investors, don’t be shocked. We’re going to miss earnings bigly in the third quarter of this year. Airbnb just a few weeks ago said, Hey, our profits are way down.
We’re just not taking as much revenue in and their stock plummeted 14% in a single day. I’m not going to take you completely down the rabbit hole, but if you go online and you look at some of the largest Airbnb groups in our marketplace, you’re going to find a common narrative where people are saying, you know what? I’m just not leasing my property out the same way in the past three years. It’s now largely unleased.
I have a lot of open dates and people are just reporting that their revenue is falling off. And as you hear about the pressures that consumers are taking on, it’s not a surprise. We all know that the consumer stress to the max, their credit cards are through the roof.
The percentage of amount of that they’re actually able to save is at record lows because most of their money is just going to pay the cost of things, the grocery bills, the insurances, the rent, you name it. But getting back to Davenport and understanding the fact that our housing market here is largely like a small business opportunity. You have all these people with individual businesses, these houses themselves need income because we all know an evermore.
Soaring Expenses and Falling Demand
So the investors in this market know we have a lot of expenses when it comes to owning a piece of real estate in Florida right now. We know by multiple accounts in 2024, that the average investor is paying anywhere from 8,500 to $10,500 a year just to insure their house. We know that due to the inflation alone since 2020, just the simple replacement cost to run these Airbnbs, all these items like sheets and blankets and repainting rooms and putting carpets down, that cost is up 55% in just the past four years.
Add to that the aggressive appreciation, particularly in the Davenport area, which ranges anywhere from 50 to 65% over that amount of time, directly impacts the property taxes, which largely gets passed to property investors, not the primary residence homeowners, investment owners and second homeowners do not have the good fortune of a homestead exemption, which isolates and protects them from a limited amount of driving up of property taxes as home values shoot through the roof. Now you add to that the fact that consumers are getting squeezed and Airbnb for many other reasons again, which I won’t cover here are just falling out of popularity. People are not appreciating all the fees, they’re not appreciating all the additional rules.
They’re staying in hotels. We’re seeing that this is also being reported in Florida, that people are just opting to go stay in hotels. Hotels are earnings are up at the same time. Airbnbs are down and all of this for the second home Airbnb investor. And I say second home, you have to pay attention. A lot, a lot of second homes are also purchased in this particular market. People that live somewhere else want to have a property they can lease out half of the year and they stay in it the other half. They want that income to help offset the cost of owning that snowbird mansion or whatever the house is that they stay in here half the year. The problem is this is affecting them now too.
For all the reasons I just told you, the income is going down. The expenses are through the roof. This is driving a lot of these investors saying enough’s enough. I’m not going to hold this any longer. Many investors now going month after month in the red are deciding that, you know what, on top of this, I’m watching the data and Davenport. I’m seeing the prices are dropping.I am not staying in this situation any longer. So with everybody deciding to hit the door, inventory is ballooning. And as I mentioned, price in most of these markets are now down more than 5% off of the peaks from 2022 and you see an interesting data coming out. This was just this week from Redfin saying demand for second home mortgages is off the charts down. So investors now looking at actually getting a mortgage is down 59% for pre-pandemic levels.
So now you’re in a situation where there’s a lot of inventory in the market. And I’m going to show you in a minute, you’re going to see inventories like double what it was pre-pandemic. And yet the available buyers to absorb that massive bulk of inventory isn’t there. It’s way down. In fact, this is a bad recipe for those looking to sell, but it’s a big opportunity for those looking to buy. Lest I be seen as only looking at this on one end of the equation. I’m not just going to go over and show you the data in this particular market. So you can understand what’s going on, especially if you’re looking to buy here, you own here now, but I’m also going to show you an example of just what kind of price cuts you can expect to see in the market. And as we jump into the data, jump down below and smash the thumbs up, let’s get started.
Key Zip Codes See Price Drops as Buyer’s Market Emerges
You can see we’re cutting down the middle of the state here. You can see this is the Orlando metro area.Davenport is right here on the Southwest edge. So I’m going to zoom in and we’re going to spend most of our time looking at this particular section of the marketplace. The main zip codes we’re going to focus on is eight, nine, seven, which is the North goes all the way up here to the four corners area.
Disney is right up here, but we’re talking four corners. Claremont line starts here and goes North. Kissimmee starts here and goes West. So we’re now down here. So we’re talking the zip code. Number one is right here against the highway 27 going all the way to I-4. Secondly, we’re going to talk about zip code eight, nine, six, which is this middle blue area right here. This is right off of I-4.
This will be known as the champion’s gate exit or the champion’s gate area, which is largely zip code 896. And the last zip code we’re going to cover is 837, which is this area right off of I-4 in South. Now, 837 is a largely primary residence. You do have a little bit of Airbnb, you know, kind of sprinkled in here, but most of the development for my enlarge in this particular area was primary. Now, not to say there’s primary residences in here and there’s primary residences in champion’s gate as well.
There is a very big mix across the board, but I’m just saying it falls way off. The further South you go going towards Hanes city here to the South. Now, what you’re looking at right now is a forecasting tool. You can see right now by click on this particular zip code, you can see that going back to 2021, it’s been going straight down. Now this middle line right here represents the balance between buyer and seller. So the higher this line goes up here, it’s a seller favored market. Seller has control. There’s usually low inventory. There’s usually price dominance.
Buyers have to do whatever, when it goes up, you can see the trend is that it’s going flat down into buyer’s territory. Now, all of these markets that you’re going to see, all three of them are in the high 20 twenties range. So you have 27, a 28, a 29. You say, Jared, what the heck is a 20 and how to even get it. It just means inventory is really high. Prices are dropping in a lot of listings there.
It’s taking a lot longer to sell and recent appreciation is being impacted. In fact, these are also representative of actually declining prices. But the point is when you see something in the twenties, it is a price down presentation of the future for this particular market.
Davenport Home Prices Trending Down
The next thing I want to show you is the home values for this particular market. Now up here to the North, you have a 371,000 average price, $389,000 average price in the South has a $365,000 average price. One of the biggest things that I want to tell you is why do people buy in Davenport? That becomes the question. You know, what’s the interest? Well, besides the fact of Airbnb, a lot of primary residence owners buy here because by default it’s cheaper. This market is below the median price for the greater Orlando area.
It’s under producing. So meaning if you’re of lower income, it’s easier to get here. Now there’s other factors. It’s close to Disney that drives a lot of people’s reasons for living here. And it’s reasonably convenient from the standpoint of commuting either to Tampa or to downtown Orlando doesn’t mean it’s a short drive, but it, you know, you can get to a freeway pretty fast. You can see that in August of 2022, it peaked price-wise at 379,000.
You can see it’s declining steadily today. It’s at 369,000, not a huge move. Um, but some of these it’s a little bit more so. So if I were to put on a live trend, look at this price. So you peaked up here around 402,000 for zip code eight, nine, six, which is champions gate.
Look at it. It’s almost unabated, just falling South. Uh, this one has a little bit more, I think price dropped than the other one. This one’s around 387,000. This indicates that some homes in this area are probably even beyond what you see as a percentage. Okay.
Eight, three, seven performing much the same way peaked around $380,000 today. It’s around $363,000. So you can see, uh, again, it’s not about creating chaos on the internet and saying, Oh my gosh, price is falling, but it’s trending down. By the way, if you’re a home seller, this is where home sellers are getting stressed. This is what’s happening in the market. Okay.
So if you price your home, so home sellers historically think, well, if someone just sold for three 85, I should price it up this chain somewhere. I should be a little North of what it’s sold for. You don’t do that in a falling market. Remember you can only sell your house. If you price in the path of where the market is going, if the market is dropping dots lower and lower, you have to get next house down. You can’t, you can only price upward. This is a very complex thing for sellers.
If you show it to them, most agents don’t even know to show them this. You can only price over a last sale and have success. If the market’s going up, you have to plot. You have to price your house in the path of the market. The market’s going down. You have to price down.
You also have to be aggressive in price reductions. You’re going to see, I’m going to show you many examples here in a second of people not doing that. And they’re taking a Royal beating in the price department.
Davenport Market Overvaluation: Are Home Prices Set for a Correction?
Now, next chart I want to show you is called the overvalued percentage. Now, this is something that will be debated in the comments, but I’m going to show you right here, eight, nine, seven, overvalued 39% champions gate overvalued by 29% the South market overvalued by 27 and a half percent. Jared, how is it overvalued? It takes the price of homes, the median, and it has census data imported for the zip code for the median income and it shows you what a person in that level can afford. Okay. So if the marketplace is going to continue to trade in the income level that exists there.
So we’ve got to understand when a marketplace is no longer inflated by easy money and remote buyers, you know, I can work from home in New Jersey and I can come live in Dab. When all that stuff that outside sizzle fades, your market becomes a la natural.
It’s the fundamentals. It’s the base. What do people make? What do people make there? And is the house reachable? Cause the same LA, you know, it’s, it’s gotta be able to, you gotta have a public that can afford what you’re selling. Otherwise price comes down to meet it. And ultimately that might be the larger story. And I know people are going to the comments like, ah, I know you’re using this app and this app is bringing in data and they want to argue with what it says. By the way, factoring current mortgage and current price in the zip codes, this is the salary you have to have. So people would say, yeah, this isn’t necessarily true. This isn’t how it works.
Look at this salary to afford an eight, nine, seven is $98,000. Okay. Not knocking anybody that lives in a nine, seven, but do you know the income levels of people that live in Davenport champions gate, the salary needed against today’s cost and the median prices there is $105,000 and in the South again, $97,000. This is, these are not six figure income earners that want to live in Davenport.
This is not upper middle class. No disrespect. I’m not disrespecting anybody. I’m just telling you that this is when you are like, Hmm, things might be shifting. Things might have some room to balance itself. There might be some equilibrium being gained here.
Factor all that in the fact that we’re about to see fed rates being cut. And that is all because they believe there’s about to be pain in the income account that they’re coupled out with the fact that you have the federal reserve about to cut rates. And there happened, that’s, that’s coming because of uncertainty in the job world, right? UPS just came out this week, announced another 12,000 people being laid off because they’re not delivering stuff.
I mean, and on top of that, they told the management people that were being fired or the people that were going to be left behind, you know, Hey, look, by the way, the rest of you that stay as they’re laying off 12,000, the rest of you to stay after report to work five days a week, remote workers are getting the squeeze Jared, who cares? Because we have remote workers all over central Florida. They live here and work for San Diego or for Seattle or forever else. They telecommute to next.
Is Now the Time to Buy a Home in Davenport?
Let’s look at the percentages of price cuts in these particular markets up here in the North. You have a 29% price cut on existing listings. So that’s one out of three down here. You have 33% in the South and in champions gate, you have 21%, which to me seems a little soft. Like there’s a, probably be higher in a few more months but as I flip to the median list price year over year, I kind of understand why champions gate is seeing fewer price cuts. They’re asking prices are starting way, way low than last year. So take a look at this.
This is the asking prices in 2024 versus the same month last year, the asking price or the listing price that someone brings to the market is a leading indicator that tells us that when it finally goes to sell, it will indicate that there’s either going to be a price down moment or a price up moment, right? Think about it. If I take my house and I’m listing them all my houses in a given area, I’m putting five homes on the market and I’m asking way less than I did a year ago when they finally sell, are they going to sell for what I’m asking? No, they’re going to negotiate even further down than that. And they’re going to sell quite below last year.
This is a future leading indicator. It’s one of my favorites to kind of get a feel for where opportunity is. I see massive opportunity in champions gate because look at this right here. You’re break even you’re at zero in eight, nine, seven, which is mind boggling to me. I’d like to see the history here. Hang on a second.
This is fascinating. Eight, nine, seven, man. They’re just fighting it.They’re staying right at the zero line. So eight, nine, seven really has not pulled their price down in terms of what they’re asking against last year. They start very comparable to last year.They don’t, not really bucking price, but look in champions gate champions gate is way down. Notice the trend folks.
This is how important of a data point. This is, this is the zero line in history and champions gate from 2017 till now. You’ve always had asking price over 1%. No one’s ever gone below zero in champions gate from the index from the end. I say no one, no point in time do you see this? This is telling. Okay.
So you have prices asked last year, same month, four 98. So listings in the market last year, four 98 listings in the median. This is taking out the highs and lows. This is about as middle as you can get to understand what’s shifting in a marketplace, 445,000. It’s almost 50,000 down a year over year in the South.
It’s 7%. And you’re gonna see the same thing. Look what I’m telling you folks right here. You had it drop in 2019 and you had one moment in time in 17, but you can see how important this data point is. It’s largely positive and normal times. You do not have that particular data point going negative and I wanted to go back to home value for a second because I found it interesting how eight, nine, seven, which is the four corners down to I four, the North side of Davenport. I was like, how in the world is it, how are they even, but you can see they peaked and they’re, they haven’t eroded a ton of value. And it’s important to call this out because everybody thinks, you know, I’m here to sell the heat. You know, I’m trying to sell scare look right here. Okay. So if you’re an eight, nine, seven, I’m pointing it out that you are seeing a very different picture than the other two major zip codes in Davenport.
This also means as a buyer, you’ve got to be realistic. The fact that if you’re over in champion’s gate and you’re seeing one reality, you may not necessarily see the same thing over here.
What Rising Months of Supply Mean for the Market
I’m now in the back end of the realtors board. You got to have a real estate license, actually access this data. I’m showing you historic data going back to 2012 for the zip codes. And we’re starting with a historic view of active inventory. Okay.
So if you start to see inventory stacking way up, look at another way of saying this is unsold inventory. It’s the amount of homes that just kind of sitting there and lingering. And that’s obviously not good for home sellers. If everybody around you is for sale. So we’re looking at supply side, look at this eight, nine, seven North. We’re up on the four corner side, going down the I four.
You can see it’s been on a one year run, just going straight up. Okay. Right now, inventory levels in eight, nine, seven, which seem to be, you’ll remember a second ago, the healthier portion of the marketplace but you can see that also I would imagine that as it’s approaching 250 listings, this is probably you look back, this is what it ran back in 2017. Interestingly enough, 18 and 19 pre pandemic was actually a little tighter than it is now. So for whatever reason, I mean, this could have been still recovering from the GFC in 2008.
I mean, sometimes these, you had this long sloping timeframe where they were still just trying to absorb high inventory, but ultimately where eight, nine, seven is now it’s not necessarily high compared to history. It is way high compared to last year. Now let’s look at champion’s gate, which is not the case.
Then you could see right here, this graph goes all the way to 2013. So you have a 11 year history right now. They are at 300 units, which is a, which is, which is a hundred listings higher than before the pandemic.
And everybody’s like, why are you saying before the pandemic? What’s the implication? Well, the pandemic, we had a bunch of cash at the market and everybody was buying like crazy and there were no homes. So this is anything but normal. It’s kind of like saying when was normal, what was normal like and so it’s very important to make these kinds of comparisons with those timeframes. Now looking South, this is below the I four section of eight, three, seven, you can see it’s pushing 500 units, which is double a lot of the pre pandemic months. So there is a very, very high inventory.
837 saw a lot more units released. I think too, there was a lot more development. Remember the areas that are right up on Disney were largely developed over the past 10 to 15 years over the past pandemic years, three, four, five years, when you had a big surge and permitting and things of there was a lot of opportunity and I think a lot of this is new units being resold, but there’s not withstanding, look at the data down here below. So the last six months, it’s ranged from being as 21% over prior year to now being 46% over prior year. There’s a lot more real estate on the market now than there was in January.
So it’s kind of going on an uphill trend. It looks like it might be flattening out though, and finding an equilibrium around 500, hopefully it doesn’t keep going. Cause if it does, you’re gonna have a really soft market here in a moment.
I’m gonna show you a few homes in Davenport that are absolutely getting bombed on price, but real quick, let me show you one of my favorite data points called months of supply. You get this number. For instance, we’re sitting here in eight, nine, seven, which is the North side. It has a 6.3 month of inventory or months of supply. This is how you factor the true health of the market. If it’s really slipping, this number is getting out of hand because months of supply, the way you get to it, you imagine if no one listed any more houses, you just take, for instance, 500 houses that are in the eight, three, seven zip code based on how fast they’re selling, how many they’re selling every single month. How long would it take for just what’s sitting there to finally just sell off? Also keeping in mind every single month, 40, 50, 60 new listings are coming up. The point is it’s like checking the blood supply of an existing housing market.
It’s very effective to understanding the market health, but look at this. Okay. So this one, again, this is the marketplace that seemingly shows the tightest price. You can see that if you look pre pandemic, they were anywhere from two months of supply to as high as six months of supply. There must’ve been something crazy on this market because most of the markets in Orlando, you don’t have this weird stretch of like high inventory and really sluggish market. This is very unique. So this is something you don’t see in the history, but ultimately, you know, this marketplace inside of September of 2017, the last several years, it’s been anywhere from two to three months of supply coming in the pandemic. So this is normal. I don’t know what this was.
This might’ve been this marketplace still had a bunch of short sales in it that were just still not processed through from the last market collapse. Currently you have 6.3 months of supply. This is a number that this marketplace has not seen. There’s not been a higher number since August of 2015. Last president was Obama when that took place. I mean, so you have a long time in the market and if you map it back, except for maybe March of this year, this has been going up straight up since April of 2023 unabated. So it is just going and it hasn’t stopped. I mean, we could expect it next month’s print is going to be 6.5 or something like that. And the higher that goes, you’re going to see price buckling. Could be people fighting it too. Like people are just not aware in eight, nine, seven, that things are getting harder. Right? So you have, you know, you’re starting to see price reductions.
That’s the first tipping point. Remember in eight, nine, seven, we did not see the actual list price setting lower. They’re still putting fairy tale list prices in this particular market, but you are seeing price reductions escalated. So when people get into the market, they go, Oh, it’s on like Donkey Kong and I have to fight to get my house sold. But they, they’re, they’re finally learning, but here’s the deal. The worst, this slips. This just means you are deep in a hole. You are one of six months of other people waiting to get out and if you thinking of where you’re sitting in time, people there may not realize how deep in a well they are. If they took a, took a look around on Zillow, they probably see tons and tons of competition that they just don’t realize exist. And again, this is considering the sellers in this particular market.Again, 896 looks similarly had this elevated timeframe all the way till the end of 2017. And then the marketplace really stayed just inside of four months of supply. But now it’s at 6.9, which, which is kind of nice. It looks like it found a ceiling because it was at 7.2 months of supply 7.3 back in March. So it’s actually settling a little bit and kind of running flat. And again, this is the champion’s gate market.
This represents some of the highest months of supply on record for this market going all the way back to the 2008 crash. There’s a lot of inventory for sale here. And as I mentioned at the beginning of this video, they’re just obviously some headwinds from people being able to come in and purchase them. They’re just for whatever reason, just saying the numbers aren’t right yet. Now we’re in the South and you look down the numbers, it’s at 3.7 months of supply. So that’s 32% over last year.
You can see it’s running flat and an elevating the last three months going towards four months. But you can see that this is largely this doesn’t surprise me as a primary residence neighborhood or primary residence kind of community of people, because this is very similar to the general populace of Orlando. Most of Orlando is running three and a half to four months of supply for neighborhoods that are primary residents.
But for 2019, you can see same month back five years ago, it was 3.2 months of supplies. So they are elevated a little bit. You can see again, like much of the history of Davenport, there was some wicked high months, even back in 2014, 15, 16 ongoing.
Sellers Struggling to Keep Up
All right, let me show you some of the price reductions that are going on in this marketplace. Take a look at this. This is a five bedroom, four bath, 3,100 square foot home built in 2022. Highly likely this is a single owner home just purchased one time. It’ll be also interesting to see how this person is doing if they bought this home a couple of years back, how are they hitting the price they paid? Are they losing money to sell over a two-year span? So you can see down here at the bottom, they purchased this property November of 2022 for $456,400. If you come up to the top, they’re now selling it for 435,000 and not for trying folks. They listed this house January of this past year for $520,000. By February, they reduced to $499,000.
Another month later, they reduced to $489,000. And then in September, they came to where they are now at $435,000. Now folks, again, they paid $456,000 for this property. They probably put about $10,000 in closing costs at least to purchase it. Now consider what are they paying on the way out? $25,000, conservatively. Just their cost reasonably between the purchase and sale, they’re netting $400,000 and that’s if they can get full price at this point, which puts them around $55,000 to $60,000 in a loss from what they paid for it. Now builders are not immune. Take a look at this.
This is a reduction from a D.R. Horton build. This is a five bedroom, three bath, 2,601 square foot, brand new house competing with the resale homes in the area. They just reduced it by almost $25,000. They’re probably also giving you $20,000 to $40,000 in incentives to get you an interest rate at 3.9% or four and a half percent, something of that effect. Now back to a typical homeowner.
This particular property in Davenport asking $460,000. Now remember, I just showed you a new construction home that was 2,600 square feet. This one’s 2,565 square feet and they are asking $410,000 and they’re more than likely going to buy your interest rate down to a very low price. Now again, this is a little different. This is a big lot. Looks like it’s got a nice patio, pavers, screened enclosed lanai, different benefits to this particular property that the homeowner probably put into this.
Take a look down here at the bottom. They started this price off at $525,000 and then in May they reduced it to $524,000, then to $515,000, then to $510,000, then to $499,000, then to $470,000 and now they’re at $460,000. Remember, when you have price declining, remember I showed you that chart, most likely what these people are doing is they started above the market and then they finally saw a neighbor sell and it was well beneath them. They came down a little bit more, but they’re chasing the market down and in a market that is declining, time is not your friend. These people are learning that the hard way. You want to be the next person to sell.
It means you got to take the hit quickly and up front. Most people, they’re very squeamish and I understand that can be nerve-wracking for an owner to do that, especially when you’re taking a loss to sell a property. All right, last one I’m going to show you.
$365,000 property, four bedroom, two bath, 1,882 square feet. This was built in 1995 and this is in the zip code of 897. Now you can see at the bottom here, June of last year, they list this property for $455,000.
The same month they reduced it to $445,000. A month later, they reduced it to $415,000. Then a little after that, they reduced to $399,000.
Later into last year, they reduced to $390,000 and they stayed at $375,000 for an entire year before going to $365,000 where they are today. That’s the update. You might be thinking to yourself, do I even want to live in Davenport? Is Davenport an ideal place based on my lifestyle choices, things of that nature? Well, I’m glad you asked.
I made a very detailed pros and cons video outlaying just what it’s like to live in Davenport. Honestly, if you are ever considering this for your next home, you for sure can find great values in this marketplace now and into the future, I believe, but there are some crazy pitfalls and this particular market may not be for everybody. Click right there.
I’m going to drop the link so that you can check that video out next. As you can imagine from this update, there are deals abounding in the central Florida marketplace. If you are looking to sell or you’re looking to buy a home, put mine and my team’s 20 plus years, nearly 4,000 homes of experience to work for you.
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If you’ve watched this far, do me a huge favor to in fact, smash the thumbs up and drop in the comments and say, hello, tell me where you’re from. Tell me what you’re seeing in your marketplace. Tell me which area of central Florida you’d like me to cover next.
Thanks for watching and we’ll see on the next one.
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