If a collection of new reports are any indication of the activity ahead in 2017, then Orlando's single-family rental market is going to be hot, hot, hot.
HomeUnion ranked 31 metro areas based on factors including investment opportunities for 2017, yields, rental demand, investment home prices and capital markets conditions. Atlanta topped the opportunity rankings list as the metro area offering the best real estate investment opportunities in 2017, followed closely by Orlando and Seattle.
Here are the top 10 best opportunities markets, their employment growth, vacancy decline and rent growth percentage:
- Atlanta: 2.8%; 120 basis points; 3.5%
- Orlando: 3.2%; 300 basis points; 3.5%
- Seattle: 3.3%; 380 basis points; 3.5%
- Las Vegas: 2.7%; 150 basis points; 3.1%
- Chicago: 1.2%; 190 basis points; 1.9%
- San Diego: 2.5%; 90 basis points; 3.5%
- Oakland, Calif.: 2.9%; 30 basis points; 4.4%
- Detroit: 2.1%; 150 basis points; 2.7%
- Dallas: 2.9%; 30 basis points; 3.5%
- Memphis: 1.3%; 300 basis points; 1.8%
The Orlando market has the second-highest projected employment growth of all the Florida metros. With a forecast 39,000 jobs to be added to the metro, local payrolls will expand 3.2 percent this year.
Technology and tourism will fuel growth as the leisure and hospitality and professional and business services sectors add thousands of new positions. Deloitte, for example, is adding 800 IT positions with an average salary of $70,000 to its Lake Mary center expansion. Additionally, the company plans to invest $246 million in Orlando for the development of an upgraded technology development center.
Another major project taking place beginning this year Is the $1.8 billion expansion of the Orlando International Airport. Expected to take at least three years to develop, this project will create many temporary construction jobs, as well as hundreds of permanent positions upon completion of the terminal in 2020.
Orlando’s robust economy has created demand for housing, which has placed upward pressure on median sales prices for both investment homes and owner-occupied properties. As a result, cash sales are down as investors use leverage to acquire assets at higher price points. However, while prices increase across the board, both classes of buyers are moving down the quality scale into older neighborhoods.
Overall sales for both investment and traditional purchases are down from 2015 levels, largely due to price gains. Institutional activity has also declined as foreclosure inventory dries up. Cap rates fell 20 basis points between in 2016, though they remain very
attractive. At the end of last year, first-year returns were north of 6 percent. Strong rent growth should offset rising prices, keeping average cap rates near their current range this year.
• Employment: The pace of employment growth in Orlando is forecast at 3.2 percent as employers add 39,000 positions.
• Vacancy: Vacancy at SFRs will continue its strong downward trend, dropping nearly 300 basis points to 2.8 percent. Last year, vacancy plunged 320 basis points.
• Rent: Rents in Orlando grew to $1,469 per month, up 3.5 percent from 2016 when single-family rentals closed the year at $1,419 per month.
• Investment: Orlando SFRs continue to draw investors to the market. Tourism, which supports thousands of jobs in the metro, often precludes homeownership for local residents. As a result, investors can capitalize on this high-demand market in 2017.
Orlando 9th best market for buyers
Orlando is the ninth-best market for buyers, according to a new report from Zillow. To determine which markets favor buyers, Zillow looked at the length of time a home stays on the market. In buyers’ markets, homes are on the market longer and price cuts occur more frequently. In Orlando, homes typically stay on the market for 89 days. The top five local buyers' markets include Maitland, 114 days; Leesburg, 119 days; Windermere, 132 days; Celebration, 152 days; and Lake Mary 103 days.
Orlando among healthiest cities in the U.S.
A new study by WalletHub ranks Orlando the 20th healthiest city in the U.S. To rank the cities, WalletHub compared 150 of the largest U.S. cities across 34 key metrics ranging from cost of a doctor visit to fruit and vegetable consumption and fitness clubs per capita. San Francisco was named the healthiest city, followed by Salt Lake City and Scottsdale, Ariz. See the rankings here.
Source: Orlando Sentinel