The Orlando real estate market is constantly changing and evolving, and unless you’re a full-time real estate agent, it can feel like a challenge to keep up. You don’t need to know all of the ins and outs of the market to buy or sell a home, but it doesn’t hurt to have a basic understanding of what’s currently happening and what might change in the future. This article will better prepare you for what 2023 might have in store for the real estate market in Orlando and the surrounding cities.
Home values will increase
Home prices in Orlando have remained steady over the past year, and most agents expect prices to remain high in 2023 due largely to low inventory. This may sound good in theory, but the reality is that the market has slowed down considerably from where it was in 2020 or 2021.
After the COVID-19 pandemic first hit, interest rates dropped to historically low levels. Many buyers jumped at the opportunity to shop for a home and lock in a lower monthly payment. Sellers found they could command several offers well above the asking price without worrying about appraisal contingencies because buyers were waiving them. Times have changed, and with interest rates remaining above six percent, many buyers are hesitant to enter the market. At the same time, current homeowners are choosing to stay where they are rather than upgrading their lifestyle. This is especially common for homeowners who are locked into a lower interest rate.
Interest rates will rise slightly
Many real estate experts are hopeful that rates hit their peak during 2022, but there is still a chance that rates will increase this year. Although the Federal Reserve has expressed interest in lowering rates, it’s unlikely that this will happen until inflation gets under control. The market will retain some level of volatility until investors have a clearer sense of direction about where things are headed.
Cost of rent will increase
Florida was one of the five states with the highest rent increases between 2021 and 2022
. Even if it doesn’t make the list this year, it’s likely that rent prices will continue to rise in the area. Landlords understand that people would prefer to wait to shop for homes until interest rates come down, and they will look to capitalize on the opportunity to maximize their profits.
Winter will be the most active season
In most parts of the country, spring and summer are the busiest seasons for the real estate market. Some people are eager to use their tax returns to fund their down payment, while families with young children hope to move shortly after the school year ends. Perhaps the number one reason the market picks up in the spring is because of warmer temperatures that make for a more pleasant experience when getting out and seeing homes. This isn’t a major issue in Florida, where temperatures are warm throughout the year.
Many people will look to move to Florida during the winter because it means they can escape from harsher climates elsewhere. Summer will still be an active season for the reasons mentioned above, but nobody should be surprised if average sales prices begin to rise in November and December because of an increase in demand.
Foreclosures will go up
Florida ranked 12th among all 50 states
for the number of foreclosures in December 2022. This shouldn’t come as a surprise since Florida is the third-most populous state in the country. Nearly one in every 4,000 homes in Florida is in foreclosure. Orange County was not among the top five counties for foreclosures, but Orlando foreclosures nearly doubled in 2022
. Part of the reason for the surprising increase is likely that foreclosures were on hold during the first part of 2021 because of temporary rules put in place to combat the financial effects of the COVID-19 pandemic. There’s still a chance that more foreclosures and evictions will happen in 2023 because of continued economic challenges and uncertainty.
The market will be fine
Many people will hear about high-interest rates, heavy inflation, and rising foreclosure numbers and worry about the future outlook of the market. While this isn’t necessarily a good position for the market to be in, there’s reason to believe that these issues are only temporary setbacks. Time and time again, the market has shown an ability to respond well to various challenges. There is also evidence to suggest that the market is in better shape than it appears. For example, the mortgage delinquency rate at the end of 2022 was as low as it’s been in some time
. This is a key statistic that many experts believe tells a greater story about the current health of the housing market.
Many people will wish they didn’t wait to buy a home
There are a number of people who are waiting for interest rates to come down before they begin to shop for a new home. The truth is that their patience may not pay off as much as they hope. Demand is down right now, but this won’t be the case once rates drop. Many people will be anxious to start shopping for homes, which will cause average sales prices to come up. Buying a home now means you’ll face less competition when shopping for homes. You’ll also have a chance to lock in a lower sales price and begin building equity. You also retain the option of refinancing your loan later when rates are lower.
Ready to enter the Orlando real estate market?
If you have more questions about the Orlando real estate market, reach out to Marissa Crawford. Marissa is an experienced local agent with a wealth of knowledge about the current state of the local and regional real estate market. Contact her if you’re looking for more information or if you’re ready to begin shopping for homes for sale in Orlando.