Less than two years after metro Orlando led the nation in foreclosures, it’s now expected to post some of the hottest real estate gains in the United States during 2017, two new reports show.
Home values throughout Orange, Seminole, Osceola and Lake counties are expected to increase 5.7 percent during the next year — the highest rate among the country’s top 100 metro areas, according to real estate analytics firm Zillow.
“It’s actually a thriving market in the sense where people can find employment and buy a house,” said Svenja Gudell, chief economist for the company. Wages are still among the nation’s lowest, but analysts see that unemployment remains low and wages have begun to improve in recent months.
If predictions hold true, Orlando home-price growth this year would exceed the 4.6 increase in home prices expected nationally. The forecasts factor in projected increases in mortgage interest rates.
Analysts say the price increases are unlikely to lead to a bubble in the near term because mortgages are not easy to get and Orlando home values remain below their peak from a decade ago.
On Thursday, Krystal Little and her husband Jason saw a townhouse hit the market in the Winter Park school district. Within hours, they signed a contract to buy it for cash with intentions to flip it.
“Everything is moving in hours now,” said Little, who also is chairwoman of the Orange County chapter of the Central Florida Realty Investors nonprofit.
The Littles plan to paint and make modest improvements to their new townhome before selling it within a few weeks of closing. They plan to reap at least a 15 percent return on their investment.
Even though investor activity won’t lead to a long-term housing recovery, that group has helped rehab the region’s inventory of foreclosures. Little said they are finding buyers more easily now.
“Two or three years ago, investors had to go all out improving properties,” she said. “It had to be pristine. We don’t see that now. It’s mostly cosmetic improvements.”
Limited supply, rising home values, ample jobs and income growth elevated Orlando to the nation’s top market position among the 50 largest metro areas for the current quarter, according to real estate analyst Ten-X. Three other Florida metropolitan areas trailed directly behind Orlando in the ranking: Palm Beach, Fort Lauderdale and Tampa — all also among the hardest hit nationally during the recession.
“The top 20 cities in our report include many that were devastated during the foreclosure crisis — especially in states like Florida — and as home prices continue to recover, they still represent buying opportunities for homeowners and investors alike,” Ten-X Executive Vice President Rick Sharga said.
Orlando’s outlook for the coming year follows two years of booming price increases for a region that suffered during the housing bust. In the core Orlando market of Orange and Seminole counties, median prices have more than doubled from a bottom of $94,900 in January 2011, according to Orlando Regional Realtor Association.
But there is room for more price growth in the Orlando area, in part because home prices are 17 percent below their 2007 peak, said Sharga.
Ten-X reported Thursday that Orlando jumped from fourth to first during the last two quarters to overtake Fort Lauderdale as the country’s top market, when all factors are considered.
Orlando had the highest expected home appreciation for 2017, Zillow ranked it as the fourth-hottest market overall — as other factors such as unemployment or income growth kept it behind Nashville, Tenn.; Seattle; and Provo, Utah.
Zillow’s Gudell said that Orlando still has not recovered fully from the bust. About 11 percent of houses are upside down with values below the mortgage owed on them — four times more than normal for a market but far less than five years ago when about half of mortgages in the region were underwater.
Little said she sees few foreclosure deals and momentum continuing into the new year.
“We’ve been watching prices steadily increase. Even in the holidays, we were watching it increase,” she said. “Normally you see a dip at that time of year, but it’s holding steady. That was surprising to me, and it’s a sign of a good, strong market.”