Orlando apartments aren’t the only real estate sector with soaring rents, as local single-family home rent growth is among the strongest in the nation.
Metro Orlando’s median August single-family home rent rate was up 10% from August 2020, according to an Oct. 19 report by property data firm CoreLogic Inc.
The Irvine, California-based company analyzed rent growth in 20 key U.S. markets, and Orlando’s year-over-year rent increase ranked 10th, ahead of much bigger metros such as Boston, Chicago, Seattle and Los Angeles. The median Orlando single-family rent in July was $1,696, according to CoreLogic’s most recent data.
High demand for rental homes caused single-family home rents to increase in every major U.S. market in August, including Orlando.
These properties are a hot commodity as consumers seek more space and privacy than apartments typically provide but face a limited inventory of for-sale homes, CoreLogic Principal Economist Molly Boesel said in the report.
That’s true in Orlando, where the population is growing but home supply hit historic lows this year. Metro Orlando added nearly 61,000 new residents in 2020, according to Redfin Corp. Meanwhile, there was less than a month’s inventory of homes on the market in Central Florida in September, the Orlando Regional Realtor Association reported.
This generates demand for single-family rental homes. In fact, real estate consulting firm RCLCO projects 13,000 single-family built-to-rent homes may rise in the region by 2030.
Meanwhile, investors are scooping up existing homes in Central Florida’s hot housing market to turn into rentals. Deanna Armel, owner, and broker of Kissimmee-based Armel Real Estate Inc., told Orlando Business Journal she estimates out-of-town investors make up between 10-20% of her clientele. “They’re wanting anything $400,000 or less. They’re all going to be rental income for them.”
The explosive growth in the industry signals a clear business opportunity. Plus, it creates an option for residents who want to live in a single-family home but cannot buy one at a time when home prices are near a record high.
“That’s why the built-to-rent business is expanding so rapidly,” Todd Mansfield, chairman of Charlotte-based investor and developer Crescent Communities, said Oct. 12 at the Urban Land Institute’s 2021 fall meeting. “It’s a perfect alternative for families who choose not to own a home either because they don’t think they’ll stay in the same place for a period of time or because they don’t have the financial capacity to have a home. It fills a real need.”
However, rental housing does little to improve the economic trajectory of the region’s residents, City of Leesburg Housing and Redevelopment Director Ken Thomas said during OBJ’s Sept. 30 Affordable Housing Roundtable. “That’s a whole population of people who probably will never be able to own a home. So what do we do? We just continue to allow them to live and pay rent forever and never build generational wealth in their families? ”
Trends in the residential real estate market are important, as every home sale in the state has an estimated local economic impact of $90,300, according to the National Association of Realtors. In addition, the housing market often is considered a reflection of the local economy’s overall health.