Residential Property Developments

Orlando neighborhoods in danger of withering due to inventory shortage

Hampton Park is an example of a community with plenty of homes, but the challenge of seeing them sell at a decent pace.

The shortage of housing around Orlando could hasten the area's inevitable economic slowdown as neighborhoods stagnate and become unappealing, industry experts say.

Fewer residences sold mean fewer fix-ups and improvements, which can impact the allure of even some of Greater Orlando's most expensive communities, potentially leaving them lackluster, or even unappealing.


"The lack of sales acts in a negative way," that is not always front of mind, said Michael Gerdes, managing director of structured finance at Moody's Investors Service.

Gerdes spoke Tuesday at the Mortgage Banker's Association's CREF/Multifamily Housing Convention & Expo at the Hyatt Regency Orlando.


The issue can affect entire neighborhoods, not just the would-be seller. And the concern comes as some financial executives are predicting a slowdown to Orlando's torrid growth.

As a result, even if homes are available, people may not want to move into particular neighborhoods because they are not seen as vibrant.

Orange County has 277,598 single family residences, 52,774 condos, 17,473 town homes and 3,981 multi-family residences, according to the county property appraiser's office.

The dynamic of existing homes losing some appeal could play into all the communities that are being built around Orlando -- those new, full of amenities and architecturally appealing.

The lack of residential inventory has been driven home in the last several months, as home sales, after bursting out of the gate at the beginning of 2015, trickled out, of even fell on a monthly basis as the fall months arrived.

Certainly, "There is not enough being built for housing needs," said Michael Fratantoni, chief economist with the Mortgage Bankers Association. Fratantoni said this is the case in many areas, including Orlando.

The problem is some homeowners -- feeling they are the only game in town — are jacking up their asking prices and pricing themselves out of the market.

The next indication for home sales in the Orlando area will come Feb. 15, when the Orlando Regional Realtor Association releases residential sales for January. Last year, the year-over-year gain from January 2014 to January 2015 was 12.23 percent.


Home sales in Orange, Seminole and to a much lesser degree Osceola and Lake counties rose 15.46 percent in 2015, on the back of strong sales through three quarters of the year. But 2016 is projected to be a much softer year.

In fact, December saw saw a 9 percent decline on a year-over-year basis, and October was down slightly. This came after eight months of double digit percentage gains, and the slowdown has the ORRA projecting more tepid growth in the coming year.

Still, while not offering a growth figure, the group does feel it will beat the Florida Realtors' prediction of 8 percent to 10 percent growth for the state this year.

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