Why an Orlando Vacation Home?
Orlando housing values are safe
The risk of a
drop in local home prices is far less than the U.S. average, data show.
Jerry W. Jackson
Sentinel Staff Writer
Posted April 14 2006
Don't worry about that real-estate bubble bursting just yet --
at least not in Metro Orlando. But homeowners in Tampa, Fort Lauderdale and
Miami might be in for a rough time.
The latest national rankings show that nearly all of the country's 50 biggest
metro areas face a greater risk of declining values than they did three months
According to the PMI Mortgage Insurance Co.'s most recent market-risk index, the
four-county metro area -- Orange, Seminole, Osceola and Lake -- has a 16 percent
chance of a decline in home prices during the next two years -- well below the
28.7 percent U.S. average.
"We're still very healthy, in this market," said Sue Trover, broker for All Star
Vacation Homes in Kissimmee. Trover, a 21-year veteran of residential
real-estate sales, said the Orlando area has advantages over many other parts of
the country -- from steady tourism to ongoing population growth.
The news wasn't as good for Tampa, Miami and Fort Lauderdale, which are among
the 25 riskiest metro areas, according to PMI's second-quarter rankings.
Fort Lauderdale's metro area is the 17th-riskiest area in the nation, with a
42.3 percent chance of a price decline in the next two years.
When Walt Disney opened the Disney World Resort in 1971, he
created a unique market that has thrived for over 30 years. With an estimated 55
million visitors expected in the next year, renting property has become a
mainstay industry in central Florida. Couple that with a booming property
market, and the opportunities are many and varied.
Good appreciation potential in Orlando Florida homes is confirmed by
the statistics from OFHEO The majority of the twenty cities that
experienced the highest appreciation in property values during the first quarter
in 2004 are in Florida and California.
There are 55 million visitors per year to the Disney World area.
Therefore vacation rental homes within 30 min driving distance from Disney World
are in demand + high rent (rents for vacation homes are rising). In fact,
Kissimmee and Orlando are called the vacation capital of the world since besides Disney World, this
area has many other attractions, e.g. Universal Studios, Sea World, Splendid
Tourists start to find out vacation homes offer better deal than
hotels. This is especially true when families (60% families) bring children
and/or elders. Besides saving money, vacation homes offers amenities that hotels
do not offer, e.g. private pool, kitchen, large living area, etc.
There are many well-established management companies in
Kissimmee / Orlando area
that can provide worry-free property management for out-of-state clients. Many
of these companies provide online status update of your rental property.
Alternatively, if you do not want to manage your homes, you can pay the deposit
for a new home and then earn the appreciation by selling it when it is completed
a year to a-year-and-a-half later.
Orlando area is not near coastal areas and therefore tropical storms usually do
not cause serious impacts in this area.
Many of the vacation homeowners in this area are Europeans. This reduces the
investment risk since Euro is rising against the US dollar and the European
interest rates do not move in synchrony with the US rates.
Many people buy Orlando vacation home real estate for its appreciation
potential. Orlando vacation homes have rose in price between 20%-30% last year.
With home building costs increasing and 55 million people expected to visit
Orlando for vacation this year, and interest rates at a low, many
analysts are predicting a continuing surge in new home sale and prices.
Some people buy their Orlando vacation home at pre-construction
pricing, watch as the builder increases the prices each quarter, and when the
house is built, sells the property for a healthy profit, without even setting
foot inside. This built in equity is proving a boon to those with the timing to
get the early pricing.
e.g. A four bedroom
purchased in a resort community May, 2004 at $207,900 was being sold in October
of 2005 by the same builder in the same resort at $359,900! This represents an
overall increase of 37% in just over a year. Assuming the purchaser put 20% down
on the property (approx. $42,000), his net profit ($152,000 - $42,000) of
$110,00 was a 261% return on his down payment.
Others purchase vacation homes for the lifestyle they and their family
can enjoy. With an average temperature of 72°F in December,
many people enjoy getting away from the snow to their personal paradise. When
they are not staying in their Kissimmee vacation home, they rent it using a reputable
property management company. These rentals usually pay your running costs, and allow you
gain equity in your property while someone else pays the mortgage. If you are a
US resident the tax advantages can be another source of "hidden" income. The IRS
allows two "inspection" visits as write offs to your property, which to most
correlates to two vacations. Couple this with the allowed deduction of all taxes
and interest paid on a second home, and the benefits are great.
please click on the links below to some
articles in The Orlando Sentinel
- Homeowners cash in big.
- See the press release for more
- Rental homes can offer
great profit potential.
- See the press
Study: Most Florida real estate not overvalued
CLEVELAND -- Feb. 10, 2005 -- Is Florida real estate overvalued? A study by
National City Corp., one of the nation's largest financial institutions
according to Hoovers, finds some slight evidence of overpricing in South Florida
markets. However, in other areas such as Tampa and Daytona Beach, real estate
"The housing market has shouldered much of the economic recovery," says Richard
DeKaser, chief economist of National City Corp. and author of the study. "Many
are concerned that housing represents an overvalued sector of the economy that
will be corrected with future price declines." DeKaser found a home value
concern in about one-fifth of the markets studied, but he also found a large
number of U.S. cities where real estate is either fairly valued or undervalued.
DeKaser's study examines what home prices should be in each city, controlling
for differences in population density, relative income levels, interest rates
and historically observed market premiums or discounts. The study focused on the
top 99 U.S. real estate markets, and any rating over 20 percent was considered a
red flag for over-valued housing. Chico, Calif., the city determined to have the
greatest risk of overpricing, had a premium of 43 percent. In Florida, West Palm
Beach had the highest premium at 26 percent. Salt Lake City, the most
undervalued U.S. market according to the study, had a discount (negative
evaluation) of 23 percent.
But four Florida cities had very low premiums or discounts, with two cities --
Daytona Beach and Tampa -- tied for most affordable based on the market with a 1
percent discount each.
"While overvaluation in home prices presents a risk of future declines, these
risks may well go unfulfilled," DeKaser adds, "The true test of today's premiums
in these markets will be the economic environment, especially incomes and
interest rates, in the years ahead."
The Florida cities ranked in the study, followed by their premium or discount,
W. Palm, 26 percent
Miami, 23 percent
Sarasota, 22 percent
Jacksonville, 3 percent
Orlando, 2 percent
Tampa, -1 percent
Daytona Beach, -1 percent
For more info on National City, visit their Web site at
© 2005 FLORIDA ASSOCIATION OF REALTORS