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Reflecting on the Unpredictable Real Estate Trends of 2023

The year 2023 brought about an unexpected twist in the real estate landscape, largely shaped by the rollercoaster ride of rapidly fluctuating interest rates. Initially climbing from 5.5% to 8%, these rates eventually settled back down to 6.7% by year-end. This dramatic shift significantly impacted sales activity, rendering it cost-prohibitive for many potential buyers. Furthermore, individuals who had previously secured financing at rates below 4.5% were inclined to retain their current properties, thereby keeping inventory levels relatively low. Despite fewer buyers in the market, there were correspondingly fewer sellers, explaining the relatively stable home values experienced in 2023. Notably, many Central Florida areas saw stagnation in value, with some even witnessing an uptick.

Insights from Specific Real Estate Segments

Orlando Luxury Market Report

In the expansive Orlando Metro or Central Florida region, there was a noteworthy 9.5% surge in sales of luxury homes valued at or above $2,000,000 from 2022 to 2023.

Lakefront Homes in Central Florida

Sales of single-family lakefront homes in Central Florida decreased by 9% year-over-year. However, the average sale price exhibited an upward trajectory, increasing by 10.6% with an average sale price of $1.17 million for the year. The average sale price per square foot stood at $331 in 2023.

Lake Front homes in Winter Park and Windermere

Winter Park witnessed a 43% surge in lakefront home sales, albeit with a slight context—16 sales in 2022 compared to 23 in 2023. The average sale price jumped by 34% to $3.07 million, with an average price per square foot of $654. Windermere also experienced a 29% increase in lakefront sales, rising from 47 to 61, along with a 23% growth in average sale price to $3.45 million, at an average of $567 per square foot.

Real Estate Trends in Specific Areas

  • City of Orlando: Down 18% in total home sales year-over-year.
  • City of Winter Park: Down 15% in total home sales.
  • City of Windermere: Down13% in total home sales.

Home Value Trends in Orlando's Real Estate Market

  • City of Orlando average sale price for a single-family home was $516,305 in December 2023, an increase of 7.5% from December 2022. The average $255 per square foot in December 2023
  • The highest average sales price was in June 2023 at $561,000. However, it's essential to note that the average sale price in Orlando currently reflects an 8% decrease from the high recorded in June 2023. The decline is largely attributable to seasonal influences, mirroring a trend seen across the United States.

Percentage of Cash Buyers in Orlando

One might easily assume there would be more cash buyers this past year with the higher interest rates, but you might be surprised to see the percentage of cash buyers decreased:

The percentage of cash buyers decreased from 37% in 2022 to 32% in 2023 in the city of Orlando. This means that a larger percentage of buyers financed in 2023 compared to 2022. The percentage of cash buyers in Winter Park also decreased, but only by 1% YoY. The percentage of cash buyers in Windermere increased by 2% YoY.

Forecast for 2024

Anticipating the real estate landscape in 2024 hinges largely on interest rates. With the Federal Reserve signaling three anticipated rate drops, the trend is toward increased affordability and potentially higher inventory as more people might consider selling their homes. The pent-up demand is expected to lead to a surge in home sales and, consequently, a rise in home values within the primary home markets of the Orlando Metro area. Forecasts suggest a possible 6% to 8% increase in home values by the end of 2024.

Kris Kennedy