This year, people looking to buy a home in Central Florida saw some ups and downs in the housing market, leaving questions about what to expect for 2025.
The Orlando Regional Realtor Association, this month, published its last report of the year for November 2024, providing a snapshot of this year’s numbers.
Trends in 2024 signal a healthier market in 2025
Rose Kemp served as the ORRA president this year and has 25 years of experience as a realtor. She said 2024 was no exception to the lingering effects of the post-COVID economic recovery but that the local housing market is finally showing signs of cooling and balancing out.
“Real estate moves ever so fast, especially in Orlando. We have a unique market when you compare it to the rest of the nation because Orlando is a highly sought-out place for real estate investment,” she said. “We've been going through a lot of changes post-pandemic, and 2024 was no different, but we are seeing more sellers in the market, which shows us that our market continues to stabilize and improve.”
From January through the end of November 2024, ORRA reports show a median home price of $380,000 in the Orlando Metro region. That’s nearly a 4% increase over last year.
But Kemp said that while demand for housing does remain high, inventory has gone up. For the first time in 14 years, the Orlando area has a six-month supply of homes, which means, there are enough houses on the market to satisfy the current demand for at least six months.
This could work well for buyers, potentially lowering home prices, but Kemp said that’s hard to predict. Although housing costs are up from 2023, November’s report showed a decrease in the median home price from October. If inventory increase continues to trend, so could this month-to-month decrease.
“The good news is, we have seen an upswing in the inventory. The market continues to stabilize. We're seeing an even more fair housing market, and buyers are having more opportunities as to what they want to purchase, but also be able to negotiate a home,” Kemp said.
The new year might bring changes
According to the U.S. Census Bureau, the rate of migration into Central Florida is beginning to slow down. Zillow Senior Economist Orphe Divounguy said less people flowing in might eventually lower the housing demand.
He said he predicts a healthier market ahead.
“Remember, in most of the country, housing inventory is still roughly 27% below where it was before the pandemic, and so it’s still somewhat tight, but in Orlando, where inventory is now 14% above its pre-pandemic level, things are improving. That's a good sign,” he said.
Divounguy said that, as Florida becomes less attractive to people because of high housing costs, buyers are expected to flock to other regions with more affordable markets. This, he said, could loosen Florida’s tight demand and potentially lower home prices.
Now, when it comes to mortgage rates, Divounguy said, those are much harder to predict. ORRA’s report shows mortgage rates for 2024 averaged at around 6.52% -- a slight downtick from last year’s rate of 6.8%.
“Mortgage rates are incredibly difficult to predict, but with Federal policy moving in the right direction, we think mortgage rates could ease slightly. They are probably not going to return to the lows that we saw during the pandemic, but they could ease a little bit, and that will help improve housing affordability in the Orlando market,” he said.
That said, Divounguy believes housing affordability will remain a challenge. Land, materials, and labor all cost more now than ever before.
Zillow predicts that Americans will embrace small-home living — partly because of affordability, partly as a reflection of post-pandemic design trends.
“We've seen builders really respond to affordability challenges by building smaller and taller. Especially in southern markets, you see more and more homes built on smaller lots to help meet buyers where they're at, where they need help in their finances, to get them on the market, get them on the housing ladder,” the economist said.
Some markets, such as manufactured homes, tiny homes, and studio-style units, even garage-turned-studios in private homes are all expected to become more commonplace. Another rising trend in 2024 expected to continue or increase in 2025 is co-buying homes.
But, what about the rental market?
As far as the rental market in the Orlando area, Divounguy said he expects it to “tighten a little bit.”
“Rental vacancy rates have been on the rise, but with the number of apartment buildings under construction dropping so much this year, that means the number of vacant rentals could actually peak, and we'll probably see more competition among renters in the year ahead,” he said.
RentCafé, a popular apartment search website that gathers data and serves as a central hub of information for tenants, landlords, and property managers, published their most recent Year-End Report, ranking Orlando as the 13th most competitive rental market in the nation, second hottest in the state.
According to the report, this year in Orlando, an average of 10 people competed for the same vacant rental unit. This high demand does not bode well for people needing to relocate or struggling with tight budgets.
“In fact, it was one of the hardest places to secure a lease,” the report stated. “It was even harder this year to call an Orlando apartment ‘home’ compared to 2023.”
Despite a strong influx of new apartments, the report showed that 66% of renters stayed put, choosing to renew their leases and secure themselves a living unit rather than step out and try their luck.
This fueled demand and kept the occupancy rate at a high at 94.7%, which is down from 95% in 2023. Yet, there were slightly more new apartments on the market this year — Orlando’s so far had a 4.22% increase in new units for 2024, which is an increase from last year’s 3.8%.
RentCafé spokesperson Esther Urmosi said in an email that, although they can’t be sure if this is the end of Orlando’s fierce rental market, the numbers suggest a promising 2025.
Like in the housing market, RentCafé reported that Florida’s appeal is also waning among renters, due to prolonged competition and a high cost of living.
Lillian Hernández Caraballo is a Report for America corps member.
