Summary: In this article, learn about what’s happening in the Central Florida real estate market. Hear from RealWealth® investment counselors and the local property team. Topics also include: how COVID-19 impacted Central Florida’s economy, what our members say about investing in Central Florida real estate, and an exciting new real estate market in Palm Bay, Florida.
A new year didn’t bring much change to the real estate market in the Orlando metropolitan area. Orlando made Zillow’s Top 10 Buyers’ Markets list for 2021 along with Tampa and the Miami-Fort Lauderdale metropolitan areas.
The state of Florida makes up 6% of the total U.S. housing market, worth $2,175 trillion. The only other states that represent a bigger chunk of the national housing market are California and New York.
Good news for investors is that Florida is a very landlord-friendly state (i.e. it’s easy to evict), and no state income tax!
How Central Florida Real Estate Has Fared During COVID-19
Because Central Florida’s economy relies so heavily on tourism, the impact of COVID-19 was sudden and extreme. With over 463,000 jobs directly or indirectly tied to the tourism industry, the greater metropolitan area experienced record-high unemployment rates when the pandemic hit.
Universal Studios and Disney World contribute to Central Florida’s some 75 million visitors a year. It’s also the nation’s epicenter for conventions. With the sudden appearance of the pandemic, theme parks closed, hotel bookings dropped and conventions were cancelled.
Since last April, Central Florida’s economy has reversed its economic and employment skid and has started to recover. One of the big contributors to the Central Florida’s economic recovery is a strong real estate market, thanks in part to the remote working trend. Many more people can live and work from wherever they want.
With sunny weather and affordable home prices, Central Florida is a great choice. It has been attracting new residents and the pandemic isn’t over yet. The trend of people moving away from so-called “virus centers” continues along with a migration into areas with more space and fewer people. Many experts expect this trend to continue even after COVID-19 is no longer a problem. A significant number of companies are also expected to keep the remote working trend alive.
Central Florida Housing Market Summary
Taking a look back at Central Florida’s housing market summary over the last year, a few key trends stand out. Central Florida has rising home prices and a limited housing supply. And it isn’t just Florida. These trends are affecting and will likely continue to affect housing markets across the country moving forward.
Home Prices Continue Going Up
Average home values continue to rise. Last year, the average home in Central Florida cost $274,195. Another recent report released by Zillow showed that home values in the Central Florida metro grew by $15 billion in 2020. The report also found that the value of homes increased $2.5 trillion nationwide–which is the largest annual growth the U.S. has seen in 15 years.
Real estate market predictions show that home values in Central Florida should continue their strong appreciation growth, at least through 2021.
Low Supply Keeps Demand For Housing High in Central Florida
Housing inventory in Central Florida hasn’t been this low since 2005. Which is one major reason median home values keep going up in Central Florida real estate market. COVID-19 also played a part in higher home prices last year, as supply tightened in the midst of continued high demand.
Here’s why there’s so little housing available in Central Florida…
A Migration of Millennials to Central Florida
Did you know that 10,000 people per week are moving to the state of Florida? It’s the #1 migration state in the country. Central Florida is one of the fastest growing pockets of the country with population growth outpacing the national average by 252%.
There are approximately 2.6 M residents who live in the Orlando metropolitan area. Since 2010, the population has increased by 22%. The largest demographic moving to Central Florida are Millennials. As Millennials are reaching the “perfect” age to buy, this is an exciting time to invest in Central Florida real estate because many of them won’t be able to buy their own home.
An expanding job market across various industries has helped fuel Central Florida’s impressive population growth, especially over the last 10 years.
“Central Florida has a very diversified economy and is considered a growth market,” says Aristotle Kumpis, RealWealth® Investment Counselor. “There’s no state income tax and landlord-friendly laws make it a great place to invest.”
An Influx of New Construction Homes Coming to the Central Florida Real Estate Market
With so little inventory on the market, not only in Central Florida but nationwide, there’s been an influx of new construction homes being built. In fact, as of December 2020, the number of new construction homes went up by 1.67 million units nationally.
Last year, the south region or “Sunbelt” of the U.S. has made up over 50% of all new construction residential sales. This 14-year high will undoubtedly present more opportunities for real estate investors, particularly in the south. Did you know that 60% of the land in Florida has not been developed?
Keep reading to learn why our members are choosing to invest in the Central Florida real estate market–and particularly Palm Bay.
What Our Members Say About Investing in Central Florida
“Units are filled relatively quickly. New construction with infrequent, minor issues in the first year. Good cash flow on a new construction home.”
“I have two more properties under contract in this market. The Property Team secured a tenant even before my property was finished for $75 over the highest rental projection on pro forma.”
Why Invest in Palm Bay Real Estate
The Palm Bay real estate market is poised for strong appreciation growth and solid cash flow in 2021. Here’s why…
Palm Bay Has Location, Location, Location!
Welcome to the Space Coast! The only place in the U.S. capable of launching a person into space! Approximately an hour from downtown Orlando, Palm Bay is home to incredible beaches and breathtaking views of a complex area of barrier islands. And a hurricane hasn’t hit the area in 99 years! (Although hurricane insurance is recommended).
Palm Bay, located on the east coast of Florida is ranked #7 in Best Cities to Buy a House in America by niche.com. Palm Bay earned an overall grade of A-. This grade is based on the following categories: public schools, housing, good for families, crime and safety, nightlife, and diversity.
With close proximity to A+ rated schools, retail shops and entertainment, Palm Bay is an incredible place to live and an even better place to invest.
Jobs, Jobs, Jobs in the “New Silicon Valley” of Palm Bay
The Palm Bay area offers diverse employment opportunities in travel, high tech, and aeronautics. The city of Melbourne, right next to Palm Bay, is home to 400+ tech companies. Tagged as the “New Silicon Valley,” this area is home to companies such as Boeing, Blue Origin, OneWeb, SpaceX, Firefly, United Launch Alliance (ALU), Relativity. Amazon and FedEx.
Port Canaveral is the second busiest port in the world with over 4.6 million multi-day passengers in 2019. Additionally, the port’s revenue (including cruise and cargo ships) was $110M in 2019.
Clearly there is an immense number of jobs already here and more are moving to the area every day. Another major reason the Palm Bay real estate market is on the rise.
Palm Bay Real Estate Has Strong Appreciation Growth and Solid Cash Flow
RealWealth® Investment Counselor Leah Collich explains what to expect when investing in Palm Bay real estate. “Property values are slightly higher here, with most of the inventory ranging from $180,000-250,000.” Collich says, “You will find the cash flow a little thinner than our other Florida markets, but strong appreciation is likely. Here you will find plenty of beautiful A-class properties.”
Many of our investors prefer new construction properties because they generally have very minimal repair costs for the first five years. This translates to less money out-of-pocket and more cash flow.
Palm Bay Sample Investment Property Pro Forma
3 beds - 2.5 baths - 1,368 sq ft - Townhome
Here is an example of a rental property located in Palm Bay. (Keep in mind these numbers are estimates.)
Property Highlights:
- Tenant-resilient homes: i.e. granite/stone countertops, tile floors, etc.
- Built to the newest codes
- Expected to last 15-20 years
Conclusion
The Central Florida and Palm Bay real estate markets have been a bright spot for the entire state of Florida, especially during the COVID-19 pandemic. While the economy has suffered, people keep moving to the Sunshine State in droves and homes continue to appreciate. This makes Central Florida and Palm Bay real estate unique opportunities for equity growth and decent cash flow.
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Sources:
- Local Palm Bay Property Team Data
- Niche.com
- Forbes.com
- Orlandosentinel.com
- Bizjournals.com
- Geekwire.com
- Zillow.com
- Orlandorealtors.org
- Realtor.com
