Here's what's ahead for home market in Orlando, US in 2023
Home sales will drop further in 2023 while home prices remain stable, National Association of Realtors Chief Economist Lawrence Yun said in Orlando last Friday.
Why this story matters: Local housing market trends are important, as every home sale in the state has an estimated local economic impact of $112,500, according to the National Association of Realtors. In addition, the housing market often is considered a reflection of the local economy's overall health.
The housing market across Central Florida and the U.S. cooled significantly this year as mortgage rates and peaking home prices have discouraged buyers. Concerns of a brutal economic recession or housing market crash abound, but Yun's forecast calls for a housing market slowdown that doesn't come close to a crash.
Yun forecasts home sales to decline 7% year-over-year in 2023 while prices actually will tick up 1%. His outlook for Florida and Orlando were particularly hopeful.
That's because Florida sports the third-highest increase in payroll jobs since the start of the Covid-19 pandemic in March 2020, indicating a stronger economic situation in the Sunshine State compared to most of the U.S.
Plus, data shows house hunters are moving to new parts of the country at unprecedented rates, Yun said. The median distance between a U.S. homebuyer's old house and new house this year is 50 miles, more than double the median distance every year since at least 2005, according to data Yun presented in Orlando. This is likely to benefit Central Florida, which already has proven to be a relocation hotspot.
Central Florida's housing market shifted quickly this year after two years of rampant home price growth and record home sales. Metro Orlando home sales in September fell 28% year-over-year to 2,717 deals, according to the latest Orlando Regional Realtor Association data.
Plus, the median price dropped 3.4% month-over-month to $365,000. Still, the median price was up nearly 15% year-over-year.
The difference between the housing market of the past year and what's ahead is stark. For example, the typical metro Orlando home value climbed 11% between March and September, the third-highest six-month change in the U.S., according to a Business Journals analysis of home value data from Zillow Group Inc. (NYSE: ZG). However, Zillow forecasts the typical home value in the Orlando area will increase 0.3% by Dec. 31 and appreciate 3% by October 2023.
Mortgage rates are the main culprit for the declining housing market. The Federal Reserve this year has raised interest rates multiple time in a bid to combat inflation, which has translated to escalating mortgage rates that make home purchases more expensive. For example, the 30-year fixed-rate mortgage was at 7.08% as of Nov. 10, compared to 2.98% the same time a year prior, according to Freddie Mac data.