House prices and values in Orlando: know before you buy

14th October, 2015
  • Almost a decade has passed since the first rumblings of the US housing market crash started making their way into the newswires. Yet, in many parts of the country house prices are only just starting to return to the levels seen in the mid 2000s, before the onset of the downturn. 

    Like other cities in Florida, the Orlando residential property market bore the brunt of the crash. Median home valuations in the city lost around 60% of their value during the five years from the peak of the market in Summer 2006 to its nadir in late 2011.

    While prices have since started climbing, the median list price of a home in Orlando remains some 40% below what it was in mid-2006. To put this in perspective, median house prices throughout the wider US market now stand at just over 90% of their pre-crash peak. In some cities, such as San Francisco, prices are around 50% higher than they were back in 2006. 

    Put simply, this means the Orlando property market still offers considerable opportunity for seeing appreciation on your investment. 

    Applying the price to income ratio

    The price to income ratio, a gauge of house prices relative to the earning power of the local population, illustrates just how affordable homes in Orlando have become.

    The current ratio for an Orlando property is 1:1.6; this means that – in theory – it would take the average Orlandian just 1.6 years to earn enough salary to afford to purchase his or her home. A San Francisco native, by comparison, would have to save for 16 years; a Londoner would need 30 years.

    Location, location, location

    As is the case in most major cities in America, the amount you pay for a property will vary significantly depending on the type of home and the neighbourhood where it's located. One of the first decisions facing property investors in Orlando is whether to buy a house within the traditional city limits or in one of the many outlying suburban areas. 

    There are pros and cons to both options. As a rule, the central neighbourhoods in Orlando tend to be more expensive when measured in terms of square footage. However, thanks to Orlando's large young professional demographic, rents are generally high and tenants usually in good supply. 

    Generally speaking, suburban areas in Orlando tend to be quieter and are likely to be home to older couples or families with children. However, residents living in these areas tend to be homeowners, meaning the tenant density will generally lower – something to consider as a buy-to-let investor. On the plus side, property taxes in suburban homes tend to be lower than those applied to downtown areas.

    Neighbourhood watch

    With Orlando home to more than 150 recognised neighbourhoods, there is significant price variation to be aware of in both the central and suburban areas of the city. The cost of a singe family home in the relatively upmarket suburban neighbourhood of Winter Park starts at around $250,000. Alternatively, look 10 miles to the east and a similar property in Pine Woods can be picked up for as little $40,000 or $50,000.

    As in any city, neighbourhoods will fall in and out of favour over time; however the more popular home buying spots in Orlando will be those offering good transport links and proximity to major centres of employment and other amenities.

    It's worth keeping your ear to the ground with regard to new employers moving to the area; the recent decision by Mitsubishi Hitachi Power Systems Americas to establish its US headquarters in Lake Mary, a community around 20 miles to the north of Orlando, is a case in point.

    To be sure, Orlando is potentially among the most profitable cities in America in which to buy a house at the present time. With the right type of investment, many parts of the city offer significant appreciation potential. However, with each neighbourhood distinctly different from the next, much will depend on where you decide to buy and the kind of property you choose to invest in. 

    by: Prime Asset Investments

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