Strong growth of jobs and population is bringing tailwinds to the real estate market in Greater Orlando. This metro, which melds the economic reach of the cities Orlando, Kissimmee, and Sanford, notably exhibited these robust gains on a sustained streak and at rates outpacing its large U.S. counterparts.
In 2018, job growth again delivered rosy opportunities for the Orlando metro which bundles up the combined output of four counties: Lake, Osceola, Seminole, and Orlando’s home—Orange County. Data from the U.S. Bureau of Labor Statistics showed that the Greater Orlando region last year maintained its position as the country’s No. 1 in employment gains. The metro has notably kept this record as the fastest growing U.S. job market for the fourth consecutive year.
Government statistics from December 2017 to December 2018 show that the Orlando region created additional 41,800 jobs at a growth rate of 3.3 percent. At this pace, Greater Orlando exceeded other high-growth U.S. metros with 1 million jobs and over. The other U.S. economic powerhouses it outpaced included Phoenix, Houston, Austin, and Las Vegas. Orlando has held this distinction of being the fastest growing U.S. metro since 2015.
Significantly, the robust job creation in Greater Orlando appears a weighty factor too for the entire state of Florida. Since May 2012, the state’s year-over-year job growth rate has surpassed that of the nation’s pace. In the same time span, the Sunshine State produced a total of 213,600 new jobs for a 2.5 percent increase. This compares with the 2 percent increase in jobs for the whole of the U.S.
Economic Diversity Brings Strength in Orlando Region
Significantly, job growth in Orlando last year was well-pronounced outside of its bread-and-butter tourism sector. Indicative of a more diversified economy, the metro’s leisure and hospitality sector, its No. 1 employer, took a backseat last year in terms of job creation.
Most of the Orlando jobs created in December 2017 to December 2018 came from the professional and business services which combined for a 39 percent gain for a total of 16,400 new positions added.
Reflecting the vibrant homebuilding activity in Orlando last year, construction jobs in the metro rose 18 percent, adding 7,400 jobs during the 2017‒2018 period. For the record, housing starts in Greater Orlando ranked in the top 10 among U.S. metros, with its total of 28,900 for single-family homes last year and for condominium and apartment of between 12,000 and 14,000 units.
The tourism sector, for its part, generated 5,700 new jobs for a 14 percent slice of the total employment gain in Orlando. Though it came just in third as a job creator, tourism remains the region’s main source of economic strength, as Orlando has solidified its claim as America’s most visited destination, with its record 72 million visitors in 2017.
Future Drivers: Healthcare and STEM
In the next 10 years, we may be seeing a further diversification in the sources of economic strength for Greater Orlando. A research of the Foundation for Orlando’s Future predicts that healthcare will be the metro’s fastest growing industry in the next decade. This foreseen regional trend jibes with the track for the entire state of Florida which as a whole has recently added 40,100 healthcare jobs, representing a 3.1 percent gain.
Moving forward, employment generation from science, technology, engineering and mathematics (STEM) is a promising area for the Orlando Metro. Forbes magazine, which ranked the Orlando region sixth among the 15 Best Big Cities for Jobs, noted that Orlando currently produces STEM jobs more rapidly than the metros in the Bay area.
Another Forbes study indicated that STEM jobs’ growth in Orlando is the highest nationally. Labor data provider Emsi has come out with a similar finding, as it rated Orlando as third among large metros in terms of STEM job growth in the last five years.
Orlando Tops in Population Growth
Greater Orlando flexing its muscles on job generation extends to its being top-ranked for population growth among all U.S. metros. The population of Orlando metro’s four-county region rose 2.3 percent to more than 2.5 million residents from 2016 to 2017. At this pace, Greater Orlando’s population is growing twice as fast as the national pace and ranks as the fastest of all the 30 largest metros in America.
For comparison, below are the top five fast-growing major U.S. metros percentage-wise.
|Las Vegas-Henderson-Paradise, NV
|Dallas-Fort Worth-Arlington, TX
|Atlanta-Sandy Springs-Roswell, GA
Source: U.S. Census Bureau
Conducive too for growing further Orlando’s economy, the metro is host to a growing, productive demographics. This being that the region ranks as the No. 1 large U.S. metro for the growth of a working-age population at ages of between 18 and 64.
Orlando Region Struts International Appeal
Wealth and resources from foreign home buyers is yet another factor propelling the real estate market in the Greater Orlando area. In the one-year period from August 2017 to July 2018, a Florida Realtors study showed that foreign buyers consist 11 percent of Orlando Metro’s total sales of 44,000 residences.
The international market for residential properties is important not only in growing the region’s real estate industry but also in advancing the Orlando metro’s overall economy. This is considering that homes in the Orlando region are among the top three choices for foreign buyers. In 2018, the four-county area bagged 9.4 percent of Florida’s total foreign home buyers, a slice next only to Miami-Fort Lauderdale-Miami Beach area which accounted for the bulk at 53.4 percent. Rounding out the top five of foreign home buyers’ Florida destinations are Tampa-St. Petersburg-Clearwater (9 percent), North Point-Sarasota-Bradenton (5 percent), and Cape Coral-Fort Myers (5 percent).
Wide-ranging Market in Housing
The aforementioned steady gains on job opportunities across diverse fields of endeavors have resulted in a wide-ranging base of home buyers in the Orlando Metro. Coupled with its strong population growth in the region resulted in its real estate market to become a magnet for the following types of buyers:
- Wage-earners and young professionals
- Growing families and first-time home buyers
- Property investors
Seasonal residents and vacation-home buyers too are major players in the Orlando region’s real estate market, drawn by the iconic theme parks and resorts in this metro, such as Walt Disney World, Sea World, and the Magic Kingdom.
The main challenge for prospective home buyers in the Orlando Metro is the sustained gains in residential prices in the region. For the whole of 2018, the annual median price for all housing types (single-family and multifamily homes) in the metro rose 5.7 percent to $232,500. This gain notably capped a 12-month string of price increases. Moving on to 2019, the uptick was carried over to the first two months of this year, as indicated in the table below.
Source: Orlando Regional Realtor Association
Tamer Spike in Price
Prospective buyers of homes in the Orlando Metro would be encouraged to note though that the pace of price gains during the first two months of 2019 appears to be proceeding at a more moderate pace from last year. This slowdown could be partly traced to the strong growth of inventory in recent months. The overall inventory of homes available in the metro rose 6.3 percent, broken down into a 4.6 percent gain for single family homes and 29 percent for condos.
Even more encouraging, homes for sale in Greater Orlando are relatively now more affordable for its residents. The affordability index of the region’s housing market stood at 131.64 percent in February and at 136.05 percent in January. These levels are positive indications, as an affordability index over 100 percent suggests that median-income households earn more than the amount needed to buy a median-priced residence.
The current home price spikes though remain challenging for first-time home buyers. The affordability index for February for this type of buyers stood at 93.61 percent, a further drop from the 96.74 percent posted in January.
More Affordable Builds
But significantly, the homebuilders in the Orlando region are seeking to beat this affordability hurdle, especially for first-time home buyers. Increasingly, these builders are panning out of the metro’s core areas to bring more affordable homes on the market.
More importantly, the Orlando region’s homebuilders, which include the nation’s big guns Lennar and D.R. Horton, have stepped up their housing projects. In 2018, it’s noteworthy that home construction in Greater Orlando rose to its highest level in over a decade. Last year, U.S. Census Bureau statistics indicate that construction work started on close 29,000 single family homes, apartments, and townhouses in Metro Orlando. The 2018 uptick appears continuing this year, with the region’s January-February building permits ahead by as much as 25 percent year over year.
As home building accelerates and spreads even wider across Metro Orlando, there are definitely many downstream business and career opportunities to look out for. Increased surveying services and sinkhole related services are two possible opportunity areas. Clearly, the vigorous growth of employment and population in Metro Orlando are the economic multipliers that is now fast reshaping and invigorating the region.