Even as the real estate market cools off a bit, Central Florida remains a lucrative investment opportunity amidst sunshine and growth.

Florida, affectionately known as the “Sunshine State,” not only attracts tourists with its theme parks, sandy beaches and vibrant lifestyle but also entices investors with a thriving real estate market. Boasting a combination of favorable factors, including a robust economy, population growth and diverse housing options, Florida offers a plethora of investment opportunities. Orlando Family Magazine spoke to several local experts in order to delve into the state’s real estate market, highlighting the current key factors driving its growth and potential benefits for investors. What should consumers, realtors and policymakers expect when it comes to Florida real estate over the next year?

Economists expect this year to look more like 2018-19, with supply and demand finding more of a balance and no major correction in pricing. The typical buyer in 2023 will be very well-qualified, as banks aren’t going to be taking on high risks and interest rates will continue to inch up as long as the Fed’s plan to curb inflation shows progress. However, affordability will continue to be a major issue for first-time homebuyers.

“We are seeing Orlando’s housing market continue to cool off, meaning there is no longer the buying frenzy that we saw a year or two ago,” says Lisa Hill, president of the Orlando Regional Realtor Association. “We’ve seen more price reductions in the MLS than we have in the last two years. While we have more buyers entering the market as inventory increases and prices level off, the high interest rates are still holding some people back.

“However, with that said, buyers should still take advantage of the market conditions. While a 6.6% interest rate may seem high, in retrospect, that isn’t a bad rate. Agents who have been in the business for more than 10 years know they can get much higher.”

Economic Resilience and Job Market

Florida’s economy has proven to be remarkably resilient over the years, making it an attractive destination for businesses and job seekers alike. This influx of residents has led to increased demand for housing, both in the rental and ownership sectors.

With pro-business policies, no state income tax and a favorable regulatory environment, Florida has fostered an environment conducive to economic growth. Major industries such as tourism, health care, aerospace, technology and agriculture contribute to a diverse economic landscape. The robust job market has been a driving force behind the state’s population growth, attracting individuals seeking employment opportunities and a high quality of life.

“Central Florida has experienced growth from all over the country and internationally, which could contribute to this increase,” Hill says. “Also, the lack of inventory in the past few years can be credited for that increase as well. Generally speaking, Florida’s average median home price has remained the same as this time last year, and it will be determined by supply and demand moving forward.”

Population Growth and Demographics

To corroborate the economic growth, and further Hill’s statement, Florida has consistently ranked among the top states in terms of population growth. According to the U.S. Census Bureau, Florida’s population surpassed 21.5 million in 2020, representing a growth rate of 14.6% over the previous decade. The state is projected to continue experiencing significant population growth, primarily fueled by migration from other states, international immigration and a steady birth rate.

Demographic trends also play a crucial role in shaping the real estate market. Florida’s appeal extends beyond retirees seeking a warm climate; it attracts young professionals, families and students, creating a diverse and dynamic population mix. This diversity fuels demand for various housing options, including single-family homes, condominiums, townhouses and apartment complexes.

Tourism and Short-Term Rental Opportunities

Florida’s tourism industry is renowned worldwide, attracting millions of visitors each year. This booming tourism sector creates a unique opportunity for real estate investors interested in short-term rentals. Popular destinations like Orlando offer a steady stream of tourists, providing investors with the potential for lucrative returns through vacation rental properties.

Realtor Dallas Ackley confirms the notion: “Here in Central Florida, we have Disney and all the theme parks, so our international buyer pool continues to be hot. Platforms such as Airbnb have made it easier for property owners to capitalize on the demand for short-term rentals, offering flexible investment options for individuals seeking to enter the market.”

However, it is important to be aware of local regulations and homeowner association rules to ensure compliance and maximize investment potential.

Buyers’ or Sellers’ Market?

Investing in a property here in Central Florida is undoubtedly a judicious decision, but some will still pose the common and recurring question when entering into the real estate arena: “Is it a more advantageous market for buyers or sellers?”

“Signs are pointing toward a buyer’s market as more inventory becomes available here in Orlando,” Hill says. “We saw a lot of buyers sitting on the sidelines over the past year or two as competition was fierce. Now, as the market continues to cool, buyers can be pickier when it comes to choosing a home. In fact, we are seeing buyers start to ask for concessions again—like having the sellers pay closing costs, pay for inspection repairs, etc.—after throwing some of these away altogether during the buying frenzy.”

Realtor Jose Fleming agrees that buyers are starting to get the upper hand in negotiations and points to other factors that are beneficial.

“Buyers are starting to dip their toe back in the market, and even though interest rates are still high there are great … programs that are being offered,” he says. “Right now, buyers in the state of Florida, if they are employed by a Florida company, can get up to $35,000 toward their purchase, and pretty much anyone in the state of Florida that is employed by a Florida company can qualify for this program.”

For sellers, while homes may not be getting offers above the asking price anymore, it is still a good time to sell. Hill adds, “Homes are not sitting on the market for long, especially as we enter a busy summer season here in Orlando. Sellers are still getting a great value for their home—they just need to be realistic when it comes to the listing price.”

Ackley agrees that the market seems to be readjusting to a more balanced arena. “We do have low inventory because people are hanging onto their homes to try to save the 2-3% rates they got over the past few years. So, when a beautiful home comes on the market in a hot location we are still seeing multiple offers. However, the amount above the asking price has changed to be more reasonable.”

Florida’s real estate market stands as a thriving and promising investment opportunity, driven by its strong economy, population growth, diverse demographics, affordability and unique tourism industry. The state’s ability to weather economic storms, coupled with its pro-business environment and tax advantages, positions it as a prime destination for homeowners and real estate investors alike, seeking long-term growth and income potential. As with any investment, it is essential to conduct thorough research, work with experienced professionals and understand local market dynamics to make informed decisions. With the right approach, investing in Florida real estate can be a profitable venture under the Florida sun.