Central Florida's growing economy will continue to pump up housing prices

October 6, 2005

A solid, growing economy will keep Orlando-area home prices rising at above-normal rates, the Orlando Regional Realtor Association said Wednesday, citing a study by its national organization.

The local housing market is in "very little danger" of a price bubble, the local group said, citing a study of fast-growth U.S. markets by the National Association of Realtors.

Historically, home prices have tended to rise about 4 percent to 6 percent annually. In Metro Orlando, prices have risen 73 percent in just the past three years.

"The local market is likely to appreciate at an above-normal rate because of the strong job growth and the steadily rising number of retirees and foreign home buyers expected to purchase homes in Orlando in the coming years," said Lydia Pisano, president of the Orlando association and an agent with Keller Williams Homestead Realty.

"And the good news for buyers is that Orlando's impossibly hot market is actually slowing down a bit to a palatable level," she said, "with an increase in inventory and a median price that has remained stable for the past few months."

The median existing-home price was $245,000 in July and remained there in August. And the inventory of existing homes on the market in August was at its highest level in more than a year.

While population and job growth have been strong, mortgage rates have remained at near historic low levels, Pisano noted.

The national Realtors' analysis of the Orlando home market concluded that a price decline of 5 percent would occur only if mortgage rates shot up 10.5 percent and the area sustained the loss of 64,000 jobs.

The average national rate for 30-year home loans continues to hover at just below 6 percent. And the Orlando area is projected to gain at least 60,000 jobs over the next 24 months.

Pisano said the bottom line is that healthy gains in local home prices will continue.

Jack Snyder can be reached at 407-420-5094