Orlando Property Prices Are Rising Faster Than ‘Normal’

Orlando Property‘House prices are returning to normal’ said the headline on CNN this week. They were of course referring to the USA as a whole. What isn’t normal, is the speed of growth in Orlando’s property market, which has taken even us by surprise – and we saw it coming.

I recently highlighted in this blog that Metro West, one up-and-coming area in Orlando has seen property prices rise by 21% year- on- year which was well above the average growth of around 5% for Orlando and the USA average in 2012.

So what is behind the surge in property prices in Orlando?  One explanation is that prices dropped by a cumulative 51.9% between 2008 and 2010 in Orlando, therefore it is clear that real estate values may have fallen far too low and a bounce was on the cards.

CNN’s headline about the US housing market returning to normal goes some way to supporting one theory which is that Orlando property prices are simply returning to where they should be.

But there has to be something more going on than this I thought.

So I decided to look at the economic picture in Orlando as a whole and what I found was evidence that an economic recovery is also underway. More importantly, incomes are starting to increase and there are predictions from local economists that we will see them rise by 4% in 2013. With inflation at 1.6%, this will be one pay rise worth having.

Naturally they are also predicting that house prices will rise roughly in line with wages, but comparing house price to earnings doesn’t really tell us much.

What is more likely is that investment from outside is helping to drive up prices.  More people from North America could well be deciding that on balance Florida now has a lot to offer compared to where they live. A friend of mine is doing just that after deciding that he was fed up of the cold winters where he lived in the North East.

His money also stretched a lot further in Florida when it came to property.

A one bed apartment where he lived in Atlantic City set him back a king’s ransom of $1,000 a month, yet he could find a 3-bedroom property close to the beach in Florida for the same amount. So he packed his bags and headed south.

Florida is a large state and Orlando is another one of those areas popular with overseas investors who wish to retire and spend their days out on the golf course.

Metro West happens to have a very good golf course and it is no coincidence that the quality of life Metro West offers to second home buyers has been one factor in pushing up prices.

This is why I suggest we have yet to see the end of this latest boom in Orlando property, particularly in micro markets such as Metro West where property is still available at a fraction of what it cost at the peak of the last boom.

What are your thoughts on investing in Orlando in 2013? Please leave your comments below:

Kind Regards

Brett Tudor
Property Expert

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