Orlando's housing market has now surpassed the biggest high before the bust in recent memory
I'll just come out and say it, the housing market has been acting bizarre ever since the coronavirus pandemic began in early 2020, with some confusing trends happening. First off, while everything else in the economy was on the decline, the housing market steadily gained steam throughout 2020 and 2021.
This might be due to the interest rates that were slashed to free up borrowers during the pandemic. While the interest rates were low, the theory goes, homebuyers wanted to capitalize on the low rates and secure a home for a lower price. On March 16th of 2020, the Fed cut the rates to zero, a rare move that was brought on by the crisis at hand.
But now, some are worried that Orlando may be in the midst of another housing bubble, much like the last one in 2006 that happened right before a big crash. Home price values jumped over $10,000 last month, in April of 2021 alone. Orlando's inventory of available homes is at the lowest it's been since 1995. And prices are skyrocketing accordingly.
We all remember the sub-prime mortgage crisis, the crisis that led up to the 2008 financial crisis that required bank bailouts and massive government spending to get us out of it.
Fortunately, it doesn't appear that there's a big crash looming. For starters, the last crash in the housing market Orlando experienced came on suddenly, with an extreme rise in housing prices that came out of nowhere, as mortgages that shouldn't have been given were handed out like candy to buyers who couldn't afford them. These mortgages were also toxic assets, time bombs designed to eventually go off and harm homeowners at some point in the future.
Second, these high prices have come about slowly over a period of years, unlike the last crisis. It seems that there's just a lot of interest in the Orlando housing market, which is good news for homeowners who are seeing their property values going up and up and up.
It's a seller's market out there as homebuyers seem perfectly content with paying the higher prices, especially, for some, if it means they can capitalize on the low interest rates available to them right now. These interest rates might not be seen again for a long time.
And then there's also the fact that a lot of people are fleeing northern states like New York and New Jersey for Florida. Just how many people? 900 per day. Some people say they're fleeing high taxes, others have noted that the pandemic restrictions were just a bit too much for them, and others are fearful about the safety of the big northern cities.
Florida also enjoys no state income tax, sunny (and rainy) weather, and no snow, something a lot of people are ready for and are willing to buy a new house to get it. Florida's population growth has remained steady over the past decade and it's believed that this growth will continue after the pandemic.
An influx of people means a lot of houses are being bought and sold. If this is the case, there isn't some crisis going on beneath the surface that could lead to the same kind of catastrophe we all experienced nationwide and globally in the late 2000s.