HOT MARKETS: ORLANDO
Slow and Steady Growth With housing recovery complete, Orlando is poised for continued growth in values.
ing these basics with attractive cap rates and appreciation potential makes Orlando one of the hottest markets in the country and an attractive place to invest. An objective look at the numbers shows a limited supply and plenty of de- mand for homes. Logic says this should lead to higher prices. Orlando’s invento- ry has now seen 12 consecutive months of year-over-year declines with the month of June recording an 11.85 per- cent drop, the steepest to date. This has already produced a 15 percent increase in the median price over the past year ($180,000 to $207,000). The Orlando median home price has now experienced
year-over-year increases for the past 59 consecutive months. As of June, the me- dian price is 79.22 percent higher than it was in July 2011. The outlook for continued strength is highlighted by the fact that normal homes sales are increasing while foreclosure and distressed sales are down dramatically. Inventory is down to just a three-month supply, and average days on market is down to 62. This is more evidence of a seller’s market and upward price pressure. Another way to look at this market is the fact that it remains cheaper to own a starter home than to rent. Increasing prices could change this eventually, but this doesn’t
appear to be an immediate concern since there is a huge demand for rental homes. Rents are increasing as much or more than prices, thanks to extremely low vacancy and turnover rates. This continues to at- tract investors (30 percent of sales are still all-cash) and drive demand because the attractive cap rates are still above mortgage rates and the risk-adjusted returns of other investment vehicles. The market forces of supply and demand will continue to drive prices in favor of Orlando real estate investors. Perhaps the better question is, “Is the market too hot and could we again face speculation or another miniature bubble?” While I believe steady growth is more likely, this is also a possibility. Either way, it appears there is still time for the short-term investor to capitalize on the market. For the long- term investor, it shouldn’t matter. The future is bright for Central Flor- ida, and Orlando will continue to shine in the Sunshine State. at $415 million, but lowest out of these 10 states on an ARM ratio at 5.8 percent ($1,363 average monthly rent/$281,000 average home value). With these types of numbers, focus on vacant primary or sec- ondary homes where the borrowers won’t contest the foreclosure. The one market to avoid currently would be Atlantic City, as unemployment is rising and property val- ues are falling due to trouble with the major employers (casinos) in the area. • of residential and commercial transactions and flipped hundreds of homes. Layland has expertise in all aspects of real estate invest- ment, foreclosures, management, marketing, 1031 exchange and syndication. He founded his first brokerage in 1994 and later sold it to start InvestOrlando Realty in 2007. He now operates this “boutique” investor-focused brokerage to provide acquisition and management services to individuals, small groups and large invest- ment funds. He can be contacted at 407-937- 2200 or lenny@investorlandorealty.com. www.investorlandorealty.com Lenny Layland has over 25 years of experience as broker, investor, prop- erty manager and investment pro- vider. He has completed thousands
by LENNY LAYLAND
C entrally located in the Sunshine State, Orlando has always been a popular destination—not just for tourists, but for relocating families and investors, as well. The weather and job growth witnessed decades of slow, steady growth in population and real estate
values. This healthy growth turned into rampant speculation during the housing boom. Of course, the bubble burst and Orlando participated in a big way. A glut of foreclosures created an overcorrection in prices. Institutional investors discov- ered this market and took advantage of
what they considered a new asset class. With foreclosure inventory back to nor- mal levels, the recovery is complete, and Or- lando is poised for another era of continued growth in values. This is in part due to the strong diversified economy. With this comes more population and job growth. Combin-
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