Orlando’s housing inventory hit a record low this year, signaling the continued turnaround from the Great Recession but also the tight squeeze on a region already dealing with a severe shortage of affordable homes.
In January, there were just 7,030 homes on the market for sale, according to the most recent report from the Orlando Regional Realtors Association, a 15% drop from the year prior and a nearly 60% decline since the end of the recession in 2009. While the shrinking supply is a reflection of the strong local economy — a stark contrast from the 25,000 homes for sale following the financial crisis — it leaves a shortfall of 6,595 homes and makes it all the more difficult for residents looking to buy a home.
“There’s a tremendous amount of new residents moving into Central Florida, and we’re not able to build houses fast enough, and that’s where we see that drop in numbers,” said Aldo Martin, owner of Bellavista Building Group in Maitland. “And that will probably go for a while until this migration into Florida flattens.”
The greatest shortfall is still among more affordable homes, with the median price of a home in Orlando hovering around $245,000, a nearly 8% increase since last year. Martin pointed to rising land values, competition for skilled labor and increasing material costs in explaining why it’s become less lucrative and more difficult for developers to build affordable homes.
The Orlando area is also ranked dead last among U.S. cities for affordable rental housing by the National Low Income Housing Coalition, with just 13 affordable and available rental homes for every 100 households who need them.
ORRA reports that there’s only a little more than a two-month supply of single-family homes priced below $300,000, almost three months worth of those priced between $300,000 and $399,000. By contrast, there is a nearly 81/2-month supply of homes priced above $700,000 and more than a 17-month supply of those going for more than $800,000. Generally, a six-month supply indicates a market balanced between buyers and sellers.
“There is demand, but we’re struggling to feed that demand. If the consumer could afford a $400,000 home … we can produce that today and make a profit. But that’s not where the buyers are. The buyers are $300,000 and below. I still have buyers that come in and all they can afford is in the high $100,000s,” Martin said.
In general, though, consumer confidence is at a high, in part because of the stricter lending standards and other regulations that were put in place after the recession.
“There’s a lot more buyer confidence,” said Veronica Figueroa, an agent with eXp Realty. “We’re passed that trauma of, ‘Do I buy a home and lose my home?’ We’re not having those conversations as much as we were five or seven years ago. Now we’re selling our homes quicker to buyers who are serious.”
While no significant bump in inventory is expected in the near future, Zillow’s chief economist Jeff Tucker anticipates Florida will see a steady influx of homes over the next 20 years as baby boomers downsize, move into retirement communities or pass away. Zillow estimates about 14% of homes currently occupied by seniors will come on the market in the next decade, 32% by 2037.
Tucker said Florida, a retirement hub, will be one of the states most impacted by what Zillow is calling a “silver tsunami.”
“It’s kind of a grim topic…but it’s fact of life,” Tucker said. “As this wave of baby boomers, as they pass away — or many of them along the way may be moving into nursing homes or assisted living — that will open up a lot of homes in the market.”
Reese Stewart, elected president of ORRA in January, said he’s discussed the inventory shortage with local leaders and has also previously spoken to the importance of protecting the state’s Sadowski fund, an often-raided pot of money that’s supposed to help subsidize affordable housing projects. It’s unclear how much of the fund will remain untouched after the House of Representatives unanimously approved a budget that would sweep $240 million from the fund for other things.
Orange County this year also approved a 10-year housing plan that calls for establishing an affordable housing trust fund to collect $160 million over the next decade.
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