Despite talks of a recession, the Orange County, Florida rental market remained strong in 2022. Median rent prices rose 6%, even higher than the 4% increase in 2021 [Fig. 2]. Luxury submarkets have flourished, thanks in large part to the record-breaking wealth relocating to the state of Florida, four times higher than anywhere in the country. Affluent areas like Doctor Phillips, Celebration and Windermere have benefited the most, with the highest rent increases in 2022, ranging from 18-24% [Fig. 1].
A significant factor contributing to rent increases is the lack of inventory in Orange County and the large number of relocations to the area. The active number of rental listings has dropped 43% since 2020 [Fig. 3]. In addition, Orlando has a 97% occupancy rate and 73% renewal rate. With over 1,000 people relocating to Central Florida weekly and many existing tenants opting to renew their lease, inventory will likely remain low until new construction outpaces demand.
For those considering adding to their investment portfolio, 2023 may be an interesting opportunity. Increased interest rates and rising resale inventory have created more options for some buyers while eliminating others. For example, a $400,000 home with a 3% fixed interest rate in 2021 versus a 7% rate in 2022 is a $780 monthly difference. This has contributed to a 16% increase in active resale inventory from 2021 to 2022 and a 1% decrease in median sale prices from Q3 to Q4 of 2022. Although a 1% decrease isn’t a major dump in value, it is a trend worth monitoring. Cash buyers and those willing to refinance after purchasing may find worthwhile opportunities this year. Where we go from here all comes down to interest rates, inventory and more importantly, the macroeconomic environment. Bull or bear market, our team has the experience and knowledge to guide you as we start the new year.
Disclaimer: All investment strategies and investments involve risk of loss. Nothing contained in this article should be construed as investment advice.
Sources: Stellar-MLS, SmartAsset, RentCafe, US Census Bureau, Orlando Economic Partnership, Fannie Mae, Freddie MAC, Orlando Regional Realtor Association