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The price of renting single-family homes in the Orlando area is rising more than most American cities. The region ranked fifth nationally with a nearly 16% year-over-year increase, according to data released by CoreLogic Inc.
The average price calculated for the Orlando region in November was $ 1,788 per month, which corresponds to a higher figure than those found in large centers such as Atlanta (US$ 1,772) and Houston ($ 1,589). The rise in the average rental price follows the average house prices in the same region. In Orlando, the year 2021 closed with an increase of more than 20% in the average price of properties.
It is not surprising that Florida cities occupy the top positions in the ranking. While Orlando ranked fifth, the city of Miami took the top spot on the list. Miami rents are up more than 30% year-over-year, with an average monthly rent of $ 2,345.
The table below shows the 20 cities with the most variation in rent in the US. Most of them continue to experience growth as unemployment falls and tourism resumes.
Rising property and rent prices directly impact US inflation, which is already high. The real estate and construction sector exerts considerable weight in the price component, as it directly and indirectly affects other sectors of the economy.
High demand for Florida real estate
The data show the expressive demand for residential homes in Florida due to several factors such as population growth and a large influx of new residents from other states. Supply-side factors also put pressure on prices, such as the very low inventory of homes available for sale on the market.
More expensive properties inhibit new buyers and first-time home buyers. In some situations, the value of the property can be prohibitive. Within this context, the number of people who prefer to rent rather than pay large sums to have their own home is increasing.
Builders race against time
Faced with the super heated scenario in Florida and low inventory, developers are racing against time to launch new ventures. The “Builders Confidence” indicator, which measures the feeling of confidence of builders in the economy, is at an all-time high. However, there are several obstacles.
Florida, like the entire American territory, is experiencing a period of labor shortage. It is difficult to gather qualified labor for new projects. Likewise, there is not enough material for constructions. The pandemic, in this sense, disorganized the production chain in various sectors of the economy. The construction sector is one of the most affected.
Would rising prices indicate a new Subprime bubble? No!
An economic bubble suggests inflated prices by rotten or empty fundamentals. That was the case in the subprime crisis, where the market was inflated by bad credits, backed by bad insurance policies, which in turn created more bad credits. Until the bubble burst. The value of real estate, at the time, was not supported by any solid factor that justified the price of real estate, other than the heating itself caused by bad credits. It was, therefore, a crisis in the structure of the process.
What happens in Florida today is completely different. There is, in fact, a huge demand for homes in the region. Florida received in 2021 almost 1000 new residents a day. According to Florida’s Office of Economic and Demographic Research, nearly 330,000 new residents took up residence in Florida between April 2020 and April 2021. And in 2022, the movement continues.
There is therefore a strong demand for real estate in the region. In addition, as already mentioned, Florida’s population growth is one of the highest in the US, which will sustain this demand over the next few years.
At the same time, the inventory is low and there are no signs that it will grow anytime soon, as the new developments launched would need at least 3 years to be delivered in normal market situations. As already explained, the market is not in a normal situation, as there is a shortage of labor and materials.
Therefore, the economic fundamentals for real estate that we are witnessing today are solid and real, very different from those seen in 2006 that led to the subprime bubble.
Opportunity for investors
In a heated market, with prices on the rise and with indicators that suggest that the price will not decline in the near future, there is no better strategy than buying real estate as an investment.
Both Miami and Orlando are today the most recommended markets to invest in real estate.
The uptrend continues, due to the factors mentioned above. Take advantage of the trend and make a solid dollar investment today. Unlink part of your assets from Brazil’s political and economic risks.
About AMG International Realty
AMG International Realty is a global real estate company specializing in Orlando. If you want to know more about investment opportunities in Florida, give us a call today or chat with me now via WhatsApp: +1 55 318 6968 (Heloisa Arazi).