2019 should certainly be a year of "change" in the metro-Orlando real estate market.
Looking at the 3-year period from November 2014 to November 2017, the metro-Orlando median price increased by 36%, from 165,000 to 224,000. This was annual growth of 12% annually during this period of time. Our total inventory also went from 12,121 homes (Nov 2014), to 8,294 homes (Nov 2017), a decrease in inventory of 32%.
The latest trend however, from November 2017 to November 2018, shows a markedly different trend starting. Our median price increased only 4%, from 224,000 to 233,100. Our total inventory also increased to 8,432 homes available for sale (Nov 2018), as opposed to 8,294 for sale (Nov 2017), or a 2% gain in overall inventory.
In addition, the total number of sales year over year has decreased by 5%.
What do all these statistics mean to us?
It means that prices may start to plateau this year. We do not have an investor-driven market locally, as we did in the years leading up to the mortgage and financial melt-down. Lending standards are more stringent, and that helps to temper buying. Interest rates were on the rise over the past year, and many thought that rates would top 5% by now. It hasn't happened, in fact, rates have lowered and are now averaging 4.25% - 4.5% -- still not far from historic lows!
What we appear to have now, is the kind of slow, steady growth that is indicative of a healthy, balanced real estate market. Our market does still favor sellers, and is still deemed a "seller's market".
But that trend may shift as we approach the spring/summer selling season. More homes come onto the market then, and we may find ourselves in a perfect, "balanced market". I don't think we will shift to a buyer's market this year, as inventory levels are remaining low. When housing inventory rises sharply, that's a sign that the market is about to shift - and it hasn't happened.
Millennials will start becoming the largest block of home buyers nationwide. The largest group of millennials will be turning 29 next year, and peak first time buyer activity takes place in the late 20s to early 30s.
Gen Xers will be the next most active buyer groups, followed by the Baby Boomers, who are older, and likely comfortable in their current housing. Exceptions are retirees, so areas like the METRO-ORLANDO AREA will see strong activity from the Boomers, as they sell their homes in northern areas, and move to the Sunshine State of Florida!
Overall, our market appears more healthy and better balanced than it has been in many years.
Article written by Frank Plesko, Broker-Associate at Watson Realty Corp. Sales data compiled from the Orlando Regional Realtor Association, with housing graphic supplied from Realtor.com.