Orlando Housing Market Update: Prices Drop 23%!

Prices Drop 23% in Orlando’s Evolving Market | Orlando Housing Market Update

October 14, 2024

Previous Update: Orlando Florida’s Inventory Levels Hit 9-Year High

Key Points:

• Massive Price Cuts: Nearly 29% of Orlando listings have undergone price cuts, with significant reductions across Seminole, Osceola, and Orange counties.

• High Inventory Levels: Inventory in Orlando is up 60% year-over-year, with over 12,000 unsold homes currently on the market.

• Lower Asking Prices: Many Orlando neighborhoods are seeing asking prices drop below last year, with some markets down by up to 15%.

• Market Slowdown Across Price Ranges: Homes in the $200,000 to $450,000 range are particularly affected, with increasing unsold inventory and fewer closings.

• Buyer’s Market Emergence: With unsold inventory reaching eight-year highs, buyers have more negotiating power and options than in past years.

Record High Inventory, Falling Prices, and What It Means for Buyers and Sellers

My friends, we have more changes unfolding in the Orlando housing market as we have unsold inventory piercing eight-year highs. And that’s the newest data. This came out this week.

We have the most recent report showing that now coming into September, this is some of the most transitionary time when you’re considering the fall of 2024. This is a seasonality that we see where people really start. If they didn’t sell already, pull the house back off the market.

And if they are looking to sell, they really are just waiting it out. They’re not really putting houses in the market right now. But my friends, something is happening because even now we see the numbers getting even higher and they’re really high as it is.

Well over 12,000 units for sale. And again, that may mean nothing, but you understand this. You look at that number, how many are sitting unsold is a number that we have not seen nearly a decade.

The phenomenon gets even weirder when you consider the fact that right now you can get a low six or even a high 5%, 30 or fixed to go in this market and buy a home. These are some of the lowest rates that we’ve seen in 18 months going on two years. And yet buyers are still resistant, citing affordability issues.

So on today’s video, if you own a home right now, if you’re considering selling one in the near future, or if you’re in the market to relocate or you’re buying one soon, today I’m going to walk you through the Orlando market using two of my favorite indicators to show you where price cuts are happening at the highest level, where most sellers hair on fire, cutting those prices in order to get those houses in the marketplace and get them sold beyond price cuts. I’m going to show you the areas around Orlando where home sellers are starting their home prices way lower than last year. This is obviously very, very important.

If prices are already coming into the market, asking prices are already falling below last year. Then it’s a clear indicator that once the buyer negotiates that even further, there’s a very good chance that you are going to see falling prices against prior year in these particular markets. And if you appreciate the data and the time it takes to put this together, do me a huge favor, drop down below, smash the thumbs up, consider following the channel specifically for Orlando updates.

Let’s get into the info. Now, as we get into the data, you’re going to see a cross-section of central Florida here. These are the Metro areas I’m telling you about.

So this Orlando marketplace right here really encompasses Seminole County, Osceola County, Orange County, and South Lake County. Now, as I take you into a deep dive, you can see right here that nearly 29%, nearly one-third of every single listing in the Orlando marketplace has undergone a price cut already in order to sell. This is a live look.

You can see Tampa St. Pete over here lit up red because 35% of its marketplace is undergoing a price cut, which is probably the highest in the state. Obviously I can see Jacksonville tucked away up here, 32%. You got to understand there’s going to be marketplaces inside of each of these that are over-indexing that percentage, even their half of the listings in a specific area might be cutting because people are just not moving there and people are struggling to sell houses.

As we dive into the data, understand what we’re also looking at is the percentage of price cuts that the marketplace is used to against the history of the same market. So at a pulled back view, you can see here that the red and the orangish areas are seeing the highest amount of price cuts. We’re going to zoom in here in a minute and actually take a look at some of these zip codes piece by piece.

So you can see the percentages, but let me tell you what is happening at a high level view with Orlando right now. Right now, as I told you earlier, the entire inventory in the area is up 60% year over year. It is somewhere around 400% higher than it was at the inventory floor that we had back in 2021 when it was a mad grab for whatever was for sale.

It’s much, much higher multiples higher than that now, but we are seeing a few categories in Orlando specifically from 200,000 to 450,000 really struggling, way more inventory, way fewer closings. And how many buyers do we have under $450,000 in Orlando? I would say that is a huge pocket of a buyer in our marketplace. That’s most likely just opting to rent.

And you might be watching this and saying, well, Jared, how does the next range up? How does look from 450 to 600? How does it look from six to nine and from nine and a million beyond? Well, the funny thing is the deeper you go up in price, the more healthy the numbers get, even though, let me tell you this, even though a million plus is the healthiest price range that we have on record, it is lagging big time in comparison with the rest of the country. You don’t want to look at what I’m saying is, Oh, I have a $950,000 house. So there’s a huge market for my home and it’s going to sell really fast.

No, no, no. What I’m saying is that all the markets are lagging in Orlando. They’re all slowing.

They’re all increasing price cuts. They’re all shifting to a buyer favored marketplace where buyer has strength on all tables of all of these inventories all the way up. However, the best way I can describe it is the marketplace is like a top down pyramid where the very pinnacle at the top, if you were to see the very top of the pyramid, a million plus, and then the next level down six to 900 and the next level down 450 to 600.

And the base of the pyramid being those bottom ranges, the further down you get, the more dead the markets are. And they’re dying off. Meaning closings are dropping.

Pendings are dropping unsold inventory up new listings, hitting the market with very little buyers. Now here’s the problem with all this. If cash buying ceases, if cash buying pulls back and it has some most recent updates, we’re seeing cash percentage of buyers falling off a cliff from March of this year, whatever it is, the winds of change are hitting and you are seeing a lot of the cash interest pulling back out of the market.

Now, where does the cash come from? Well, cash doesn’t just come from a bank account. It comes from selling something somewhere else. So here is the deal.

Everybody along the pyramid, think of it as a pyramid or a ladder. Everybody that moves to a specific price point started somewhere lower in the pyramid and moved up because they sold out and someone bought them out. They themselves moved one level up and then the person who sold their house, they moved up based on the cash proceeds from the sale.

The market being gummed up, slowing in the mid and lower ranges is going to be a problem for the upper ranges because ultimately there’s only so many retirement accounts sitting in cash that can just buy out the available inventory as it’s sitting, even in the higher price ranges. It needs sales down the line. It also, we need sales from other states.

So if those other states are slowing that are coming here and feeding our market with these high sales, you’re going to have a problem because ultimately what we’re seeing is a pullback and people choosing to rent across the markets in Florida due to the unaffordability of buying something and getting into the game. There’s going to be buying opportunities as a result. So that’s what this video is about.

Let’s take a look. So I’m in the heart of downtown. You have Fairview Shores over here, 32804, 36% price cuts.

Look at Conway, 32812, 46.5% price cuts. 32822 to the east, 38%. 34% in 32828, which is over here on the east side of town.

Winter Springs, 42%. Longwood, 57.7% and 750. Altamont Springs as well, 42%.

37.7% price cuts across Altamont Springs. And even ones I didn’t call out, look at this. These are some of the more affordable markets.

Look at 32818, 35% price cuts. This has been one of the most popular areas for affordability, particularly for first time home buyers, because it sits on the outside of Ocoee and it’s just on the other edge of Pine Hills. This market has been super popular for investors and users.

And this has been one of the holdouts. Now, as we go north, Sanford and 771, 33.5%. You can see some of the northern markets. I think this is Sorrento, 35% price cuts, 33.7%. Umatilla, 39%.

Eustis, 39%. Groveland and South Claremont, both bordering 34% each in price cuts. Now to the south, don’t let all this blue fool you.

If you are looking for a bargain, you can find it in these areas. Even though these folks right here are holding out and being a little bit belligerent in their price cutting. These markets here in Osceola are all flooded with inventory.

You might have a situation where you have a stunned market. There’s literally so much for sale that they’re all standing there looking at each other saying, what do we do with it all? Now, the folks that are reducing in these areas, these are the only ones that are going to sell. And I’m not knocking it.

I’m not against Kissimmee. I’m for you, but there’s a lot of inventory for sale here. The next data point we’re going to look at is asking price versus last year.

Now, this is one of my favorite leading indicators because when it starts to fall, it gives us an indicator that sellers are looking around. They’re seeing a lot of inventory where they are and they’re feeling like demand for their home isn’t going to be great. So they’re bringing the prices down against what they would have asked a year ago.

Now, this is also a very unusual pattern in the history of real estate. You always have a little bit escalating asking price over prior year. It’s incredibly a rare data point and a sign of a shifting market whenever it drops negative.

OK, so people are negative in terms of what they’re asking to prior year. It just doesn’t happen. So the other point to make is it’s a leading indicator, meaning they’re starting low and that’s before they negotiate even more before they get that buyer under contract.

So let’s take a look at the markets that are going negative. Now, my friends, let me show you a pullback view so you can see the entire market. The marketplaces that are in blue are the ones asking well below prior year.

Price Cuts, Inventory Surges, and What Homeowners Should Expect Next

Let me pull up Dr. Phillips, for example, to show you what I mean. Look back in history, 2017, they were asking 6% over prior year. 2018, almost 4% above prior year.

Then in 2019, asking prices went 13% over the year prior. Then for a moment in time, the lockdowns take place and look, it drops negative. Now, look at the right edge of the graph.

It is now posting 15% down. Now, look at the heart of downtown. You have 807, 32792, 32707 in Castleberry, which is negative 13%.

701 in Longwood, negative 13%. Longwood in 779 down 6.7%. Winter Springs, negative eight. Again, over here in Oviedo, just tip negative.

And here’s the thing, some of the stronger markets out here, they’re just going below zero. So some of these Eastern markets like Oviedo here on the east side near UCF, these are some of the strongest marketplaces really running. I mean, these markets stay strong even when the rest of the market takes a breather, slows a bit.

These seem to do okay. But now Oviedo is even dropping negative. 817 is negative 19.

32825, negative 2.6. 32828, negative 5.46. Some of these outer rural areas still pulling strong. Look at 32732, people looking to buy land and get on the edge of town. And they’re still asking big numbers out here.

All right, moving to the north, you can notice a correlation I want you to see here between what we saw earlier in the price cuts. You’ll remember the northern markets here. This is Sanford 32771 up 4%.

Then over here, Mount Plymouth, Sorrento, look at this up 7%. Does it make sense? Well, you’ll remember these particular markets have a massive percentage of price cuts. And ultimately, if you start your asking price at 4% over prior year or 7% over prior in these markets, what happens is these people go on the market and get ghosted.

Like see a showing for two or three weeks. And now all of a sudden before long, the 7% positive goes negative quick. Folks in the north, don’t believe me.

Let me show you what I mean. Remember earlier when we were looking at Kissimmee and you’re baffled, I was particularly baffled. I was like, why are there higher price cuts? There’s only 18, 20%, one out of five people down here cutting their price.

But look at where they’re starting them. Every single market is negative. Most of them around 6% negative main street area.

Lakeshore negative 5.75, three, four, seven, four, six along Westlake down here in Pleasant Hill road, negative six, negative five, eight, negative three, eight. So you’re already starting to see the marketplaces starting to build it in Umatilla used this area. You see this for yourself.

You can pause this Leesburg out here, Howie in the hills coming down to Groveland. Claremont is dead. Even three, four, seven, one’s a 0% winter garden, three, four, seven, eight, seven, negative 7%, which by the way is an improvement.

I think there were 10 or 11% negative last month. Claremont’s been very popular. Remains very popular, has a lot of buying demand because of its affordability and all the growth that’s going on, but still hitting zero.

Some of this, these were positive five, positive six month after month takes time before they hit zero. And it wouldn’t surprise me going to the if you start to see Claremont even going negative for the first time in a long time as inventory there continues to climb as well. Certain markets you still see having a hard time with price discovery.

The higher the price of the local market, the more ambiguous these kinds of data points will look, particularly with areas like Windermere showing positive 27%, three, two, eight, three, six, which has golden Oak over at Disney. These are super pricey houses and the numbers here will be all over the map to find median. Median is going to bounce around and this will be ultimately very tough to pinpoint.

By the way, for the luxury viewer, I am looking to do some specific data and market updates just for you because you cannot look at broad picture stuff. You have to do some very detailed research because it is much more valuable and it’s tucked in with the rest of the market. Stay tuned for that in the future.

Metro West down 7%, Bay Hill, Dr. Phillips, negative almost 16%. Hunter’s Creek. Again, this is kind of like the affordable luxury area.

It’s upper middle class for bordering Osceola County, negative 15%. You’ll notice some of the price bump. Look at this.

Ocoee, negative 2.4. Remember that marketplace I showed you earlier that had really high price cuts, like 35% here in 818. This market again, tucked between Ocoee and Pine Hills is positive 6.75%. Remember, it’s asking more. So these people are still stuck in an old paradigm.

But ultimately, if you’re going on the market here, you’re just taking a longer period of time. When you start to overlist your property and then you start to suffer a pattern of price reductions, you then start to be stigmatized to the buyer. This is not a good plan.

And ultimately what you’re seeing happen in real time for markets like the affordable markets, you’re seeing the affordable markets also taking a turn. Some of the upper middle higher end stuff like Winter Garden has already. This was one of the first marketplaces out of the entire city that actually starts to trend down.

So let me not confuse you on this. Five or six months ago, if you look at all the zip codes in the Orlando market, just stare at it, all of them were zero and above. They’re asking more than zero over last year percentage wise.

There was not a negative. There wasn’t a decline by and large. This was 80% of the markets coming into January, February, March, April.

And this, by the way, that would be if you were to look back three, four years, that would be what you would see. Okay. That there was very few markets, very few zip codes on the map, actually negative asking less dropping asking price in the face of demand.

And ultimately that’s what happens. The vibe here is a seller gets with an agent. They talk about what’s going on the market.

They look at it. They go, I don’t think there’s high demand here. They start to bring the number down.

But what I’m going to tell you, Winter Garden, for instance, some of the more pricier markets, they started earlier. They’re already starting to cut because they’re already starting to face the headwinds of a lot of inventory. Okay.

Some of these growth markets, but now in ultimately what you’re seeing is we’ve seen the asking price ripple from the, really the upper middle class and start to go to some of the luxury markets and on down to what has been the hottest markets based on affordability. So markets like I told you up here, 32818, Hunter’s Creek, some of the Kissimmee markets, like popular Kissimmee markets, like BVL, Buena Ventura lakes, three, four, seven, four, three. Some of these markets stayed hot forever.

They were like, they were the hanging on as all the other markets that were a little bit more pricier. And there are, they’re also turning. So now the chart is flipped.

You have 80 to 90% of all the zip codes in Orlando coming into the fall for the first time. This is probably one of the highest percentages of all the communities in the Orlando area kind of going negative on their asking price as a group. Okay.

So this is a shift. And again, I know everybody likes to watch my channel and get frustrated when I’m talking about the data. Okay.

The data doesn’t do anything to you and I’m not shading the data in any way. Okay. I’m not saying this is precipitating a crash or a correction or anything like that.

Those things are really outside of the Orlando marketplace. Those are economic level things. So if the economy itself starts to go into recessionary pressure, you will see a greater correction going into the spring months of next year.

Okay. If we don’t see recession, if somehow we stay magically strong, which is weird, right? If you’ve been watching the numbers for employment, you’ve been watching wage growth and all these kinds of things, everything’s a head scratcher. Like none of it, very little of the data makes sense.

You’re seeing a lot of employment data being corrected negatively, meaning they were, they’re positioning that there’s a lot of job growth or a lot of job creation. And then that’s not the case. Lately you saw Jerome Powell come out and say, maybe we don’t need more rate cuts or maybe we need fewer rate cuts because apparently Americans have more money.

They’re still doing fine. They still have income. They still have growth of income.

They still have savings increasing because some of the data a month, two months back was showing that Americans were actually spending more than they’re making. Okay. Which is very bad sign.

Right. And ultimately that trickles down into the housing market very quickly. Okay.

And what I mean is our month of supply, the amount of inventory we have on the versus buyers to buy them. The volume of buyers right now is very anemic. It’s very weak.

And we’ve been okay with that through 2023 because there was just a lot less inventory, but now inventory is still piling on. And even with some of these interest rates that have been a little bit lower, it still hasn’t brought the buyers back. And that shouldn’t be a surprise to anyone because the builders have been offering 5% for a long time.

And they’ve got inventory levels of completed homes over a hundred thousand units, which is a number we haven’t seen in their inventory levels at that range since 2009. So the interesting thing to watch, if you own a house, now you’re curious what’s coming. It’s going to be the economy.

It’s going to come down to the economy, 100%. So if you start to see an increase in layoffs, you’re gonna see more inventory. The problem we have right now is what people have been saying on CNBC and all these other channels is a lot of these new jobs, they’re not big jobs.

They’re not full-time jobs. They’re not high paying jobs. They’re part-time jobs.

Okay. So you don’t have an American that’s getting stronger economically. They’re just at best lateral moving laterally from one job.

Some cases they’re losing hours. They’re not making as much. And they’re trying to add three other jobs to it to make it make sense.

And that’s not a fertile place to grow your housing market from. And that’s why we’re seeing some of the bottom end of the market really struggling. The only thing that I see bring us out of this tailspin, I think this tailspin continues.

It’s just a prediction. Okay. You go in the comments and tell me what you think.

I think you’re going to see a continued increase in Americans borrowing more to get by. Data recently came out that more than half of the refinances that are happening right now with these low rates are cash out refinances. It means people are pulling, Americans are pulling money.

They’re using the house ATM all over again. Now these are massive numbers. Okay.

But there’s a lot of borrowing going on where people are saying, I need the money. And we know what they need the money for. They’re not running the Home Depot.

They’re not putting a third floor on their house. A lot of this is just to support their household in the face of suffering wages. So if we don’t have any other major bailouts, which they’re going to be less likely to do that kind of thing in the marketplace we’re in now, because the last time they built everybody out, inflation blew up and it’s, it ended badly.

And it’s been a long recovery from the inflation caused by that. So why do it again? So I don’t know that the bailouts are coming this time. There might be some little forbearances and loan products that are going to come out and help people, but we might have some pain, particularly in the low to mid price points sooner than later.

So we’ll see how it all unfolds. Let’s continue the conversation in the comments below. Tell me what you’re seeing in your area.

And also don’t forget to include where you’re at when you make the comment. Also give me some thoughts on what you want to see in your next video. Give me a video idea.

I’d love to hear from you on that. And I always like to offer for those that are in the Orlando area, if you’re looking for a good Bible-based church, join me at the Grove Bible Chapel. There’s a link on the screen and I’d be more than happy to be a familiar face to welcome you there one Sunday.

That’s it for now. Thanks for watching. And we’ll see you on the next one.

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