We recently commented on this blog about the significant increase in rental prices in Florida. The real estate sector is going through a moment of imbalance between supply and demand. Gradually, the market tends to return to equilibrium, but nothing indicates that this will happen soon. The last indicator highlights this critical scenario, placing the city of Orlando in third place in the ranking for destinations that had the highest increase in rental prices.
Orlando’s Rent Rise Is One of the Biggest in the US
According to a recent report released by Zillow, the jump was approximately 25% in the average rent since the spring of 2020. Orlando is second only to the cities of Tampa and Miami, also located in the state of Florida. Tampa saw a 28% increase in average rent, and Miami nearly a third.
The expressive and sudden increase lit alert in the state legislators. A cap on rent increases is an idea under discussion.
Investors exacerbate imbalance
The imbalance between supply and demand in the real estate sector has been intensified by the presence of investors. They are domestic and international buyers who, seeing the possibility of obtaining significant capital gains from the rising market, buy numerous properties to speculate.
The investor’s presence is a problem for local residents, who now have one more player to compete in the dispute for residential homes, in a segment that is already quite competitive.
Also due to the presence of investors, Florida reached a new record indicator. According to the U.S Census Bureau, the state of Florida is at the top of the ranking of states with the highest number of unoccupied properties. There are 1.68 million vacant properties in the Sunshine State.
Significant increases in rental prices have created a social problem in the Greater Orlando area. Prices have risen more than the average worker’s wage. Families are being “priced-out” from their communities in search of more affordable housing in distant regions.
This movement on the part of workers and families creates, in turn, a negative impact on the local economy. Companies begin to lose employees, which contributes to a shortage of skilled labor in the region.
In this context, the Disney Group decided to contribute by announcing an affordable housing project with more than 1,300 residences in an area of 80 acres. Read on to learn more about this project that will come at a great time and will greatly help the central Florida real estate market. There are more than 325,000 square meters in southwest Orange County, the same county where the city of Orlando and Disney parks are located. The idea is to contribute to the community and make a difference locally, facing what is now one of the biggest challenges in the state of Florida: affordable housing.
Rising interest rates can cool the market?
There is hope that the gradual increase in US interest rates by the FED (US Central Bank) will cool the economy and bring the real estate sector closer to normal levels. However, there is also great skepticism in this regard, as several indicators show that the uptrend continues.
The inventory of homes available for sale on the market remains low and demand is only growing. At the same time, according to official data, the state of Florida is predicted to receive 849 new residents per day by 2026.
All these new residents coming from other states and countries only adds to the imbalance. The only way to bring the market to pre-pandemic levels would be to deliver new properties, which is no easy task for builders. It can take up to 6 years between the approval of a project and the delivery of the keys. The lack of free land for construction, scarce labor and lack of material on the market contributes to the worsening of the situation.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida. If you want to know more about the opportunities in the real estate market in Orlando, Miami and Tampa, contact me right now and chat with me on WhatsApp: +1 305 318 6968 (Heloisa Arazi).