Comprehensive Housing Market Analysis for Orlando ...

C O M P R E H E N S I V E

H O U S I N G

M A R K E T

A N A L Y S I S

Orlando-Kissimmee-Sanford, Florida

U.S. Department of Housing and Urban Development

Office of Policy Development and Research

As of January 1, 2018

Atlantic

Ocean

Marion

Volusia

Sumter

Housing Market Area

Lake

Seminole

Brevard

Orange

Osceola

Polk

Indian

River

Hardee

Highlands

Okeechobee

The Orlando-Kissimmee-Sanford Housing Market Area (hereafter, Orlando

HMA) in central Florida is coterminous with the Orlando-KissimmeeSanford, FL Metropolitan Statistical Area. Orlando is a leading tourist

destination in the world and is home to Walt Disney World Resort, Universal Orlando Resort, and SeaWorld. Magic Kingdom at Walt Disney World

Resort had more than 20 million visitors in 2016, making it the most visited

theme park worldwide. For purposes of this analysis, the HMA is divided

into three submarkets: the Orange County submarket, which includes the

city of Orlando; the Seminole County submarket; and the Lake and Osceola

Counties submarket.

Summary

Economy

The Orlando HMA has had job

growth since 2011, and economic

conditions have strengthened since

2014 when the number of jobs

exceeded the prerecession high. Non??farm payrolls averaged 1.25 million

during 2017, an increase of 3.2 per??cent from 2016. The mining, logging,

and construction sector expanded at

the fastest percentage rate because of

a significant increase in construction

activity during the past year. Leisure

Market Details

Economic Conditions.......................... 2

Population and Households................ 6

Housing Market Trends..................... 10

Data Profiles...................................... 23

and hospitality is the largest employment sector, anchored by Walt Disney

World Resort and Universal Orlando

Resort, which are the two largest

employers in the HMA. Nonfarm

payrolls are expected to grow an

average of 3.7 percent a year during

the 3-year forecast period.

Sales Market

The current sales housing market in

the HMA is balanced, with an

estimated 2.4-percent vacancy rate

(Table DP-1). During 2017, the

number of new and existing homes

sold increased 3 percent, and the

average sales price increased more

than 7 percent relative to a year ago.

During the next 3 years, demand is

estimated for 41,850 new homes

(Table 1). The 5,225 homes currently

under construction will satisfy some

of the forecast demand.

Rental Market

Rental housing market conditions in

the HMA are currently balanced,

and the overall rental vacancy rate is

estimated at 6.9 percent, down from

13.3 percent in 2010. The market for

apartments is slightly tight, with an

apartment vacancy rate of 4.0 percent

during the fourth quarter of 2017.

During the forecast period, demand

is expected for 28,775 new marketrate rental units. The 6,100 units

currently under construction will

meet a portion of the demand during

the first year of the forecast period

(Table 1).

2

Summary Continued

Table 1. Housing Demand in the Orlando HMA* During the Forecast Period

Orlando

HMA*

Total demand

O r l a n d o - K i s s i m m e e - S a n f o r d , F L ? C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S

Under construction

Orange County

Submarket

Seminole County

Submarket

Lake and Osceola Counties

Submarket

Sales

Units

Rental

Units

Sales

Units

Rental

Units

Sales

Units

Rental

Units

Sales

Units

Rental

Units

41,850

28,775

18,600

15,300

6,150

4,275

17,100

9,200

5,225

6,100

2,225

3,600

400

1,600

2,600

900

* Orlando-Kissimmee-Sanford HMA.

Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast

period. Units under construction as of January 1, 2018. The forecast period is January 1, 2018, to January 1, 2021.

Source: Estimates by analyst

Economic Conditions

T

he Orlando HMA is a popular

tourist destination, and the

economy includes a large leisure and

hospitality sector, which accounted

for 20.6 percent of all nonfarm payroll

jobs during 2017 (Figure 1). Six of

the top 10 theme parks worldwide, by

attendance, are in the HMA: Magic

Kingdom, Epcot Center, Disney¡¯s

Animal Kingdom, Disney¡¯s Hollywood

Studios, Universal Studios Hollywood,

and Universal¡¯s Islands of Adventure.

The six parks had a combined attend?

ance of 77.5 million in 2016, making

the HMA the most attended amuse?

ment park location globally (Themed

Entertainment Association; AECOM).

The HMA is also home to 3 of the

Figure 1. Current Nonfarm Payroll Jobs in the Orlando HMA,*

by Sector

Government 10.0%

Other services 3.5%

Mining, logging, & construction 5.9%

Manufacturing 3.6%

Wholesale & retail trade 15.6%

Leisure & hospitality 20.6%

Transportation & utilities 3.2%

Information 1.9%

Financial activities 6.0%

Education & health services 12.2%

Professional & business services 17.6%

* Orlando-Kissimmee-Sanford HMA.

Note: Based on 12-month averages through December 2017.

Source: U.S. Bureau of Labor Statistics

top 10 global water parks: Typhoon

Lagoon at Disney World, Blizzard

Beach at Disney World, and Aquatica

at SeaWorld, with a combined attend?

ance of 6.4 million in 2016.

The HMA had strong economic

growth after the most recent economic

downturn that resulted from the

national recession from 2007 to 2009.

Total jobs declined by an average of

30,200 jobs, or 2.9 percent, annually

from 2008 through 2010, but the losses

were completely recovered by 2014.

During the recovery and subsequent

economic expansion from 2011 through

2016, nonfarm payrolls increased

by an average of 36,100 jobs, or 3.3

percent, annually. By comparison,

national nonfarm payrolls increased

an average of 1.7 percent annually

during the same period. During 2017,

nonfarm payrolls in the HMA rose

by 38,200 jobs, or 3.2 percent, from

a year earlier to average 1.25 million

jobs (Table 2) and exceeded the

pre?recessionary peak of 1.08 million

jobs in 2007 by more than 15 percent.

Growth in nearly every sector during

the past year contributed to overall

job gains that more than offset the

small loss of 300 jobs in the other

services sector. The unemployment

Economic Conditions Continued

3

Table 2. 12-Month Average Nonfarm Payroll Jobs in the Orlando HMA,*

by Sector

Total nonfarm payroll jobs

Goods-producing sectors

Mining, logging, & construction

Manufacturing

Service-providing sectors

Wholesale & retail trade

Transportation & utilities

Information

Financial activities

Professional & business services

Education & health services

Leisure & hospitality

Other services

Government

December

2017

1,208,900

110,800

68,300

42,500

1,098,100

190,200

37,800

24,100

73,300

207,500

148,300

249,600

44,100

123,300

1,247,100

118,300

73,800

44,500

1,128,800

194,100

39,300

24,100

74,700

219,600

151,900

256,500

43,800

124,700

Absolute

Change

Percent

Change

38,200

7,500

5,500

2,000

30,700

3,900

1,500

0

1,400

12,100

3,600

6,900

¨C 300

1,400

3.2

6.8

8.1

4.7

2.8

2.1

4.0

0.0

1.9

5.8

2.4

2.8

¨C 0.7

1.1

* Orlando-Kissimmee-Sanford HMA.

Notes: Numbers may not add to totals because of rounding. Based on 12-month

averages through December 2016 and December 2017.

Source: U.S. Bureau of Labor Statistics

rate averaged 3.8 percent during 2017,

down from 4.5 percent a year earlier,

as employment growth outpaced labor

force gains. Figure 2 shows trends in

the labor force, resident employment,

and the unemployment rate in the

HMA from 2000 through 2017.

The HMA economy contracted during the early 2000s before expanding

from 2003 through 2007. From 2001

through 2002, payrolls declined an

average of 3,500 jobs, or 0.4 percent,

annually. The leisure and hospitality

and the manufacturing sectors led job

losses, shedding a respective 6,000

and 3,400 jobs, or 3.4 and 6.6 percent,

2.0

760,000

0.0

20

20

20

20

0

20

0

20

0

20

0

Labor force

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

4.0

860,000

05

6.0

960,000

3

8.0

1,060,000

04

1,160,000

2

10.0

1

12.0

1,260,000

0

1,360,000

Resident employment

* Orlando-Kissimmee-Sanford HMA.

Source: U.S. Bureau of Labor Statistics

Unemployment rate

Unemployment rate

Figure 2. T

 rends in Labor Force, Resident Employment, and Unemployment Rate in the Orlando HMA,* 2000 Through 2017

Labor force and

resident employment

O r l a n d o - K i s s i m m e e - S a n f o r d , F L ? C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S

12 Months Ending

December

2016

annually. From 2003 through 2007,

payroll growth resumed and averaged

37,100 jobs, or 3.8 percent, annually.

The professional and business services

and the leisure and hospitality sectors

had the largest job growth, averaging

gains of 7,200 and 5,700 jobs, or 4.5

and 3.2 percent, respectively per year.

In addition to being the largest payroll

sector in the HMA, the leisure and

hospitality sector had the second

high?est number of jobs added during

the past year, rising by 6,900 jobs, or 2.8

percent, to 256,500 jobs. The sector has

recorded the third fastest percentage

growth since 2000 (Figure 3). Walt

Disney World Resort and Universal

Orlando Resort are the two largest

employers in the HMA, with 73,000

and 23,000 employees, respectively

(Table 3). Walt Disney World Resort

is the largest private employer at a single

site in the United States (economy.

com). Tourism has an estimated

economic impact of more than $50

billion on the local economy annually (Visit Orlando). As economic

conditions improved in the HMA

4

Economic Conditions Continued

Figure 3. Sector Growth in the Orlando HMA,* Percentage Change, 2000 to Current

Total nonfarm payroll jobs

Goods-producing sectors

Mining, logging, & construction

Manufacturing

Service-providing sectors

O r l a n d o - K i s s i m m e e - S a n f o r d , F L ? C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S

Wholesale & retail trade

Transportation & utilities

Information

Financial activities

Professional & business services

Education & health services

Leisure & hospitality

Other services

Government

¨C 20

¨C 10

0

10

20

30

40

50

60

70

80

* Orlando-Kissimmee-Sanford HMA.

Note: Current is based on 12-month averages through December 2017.

Source: U.S. Bureau of Labor Statistics

Table 3. Major Employers in the Orlando HMA*

Name of Employer

Walt Disney World Resort

Universal Orlando Resort

Florida Hospital

Publix Super Markets Inc.

Orlando Health

University of Central Florida

Lockheed Martin Corporation

SeaWorld

Darden Restaurants, Inc.

Valencia College

Nonfarm Payroll Sector

Leisure & hospitality

Leisure & hospitality

Education & health services

Wholesale & retail trade

Education & health services

Government

Manufacturing

Leisure & hospitality

Leisure & hospitality

Government

Number of

Employees

73,000

23,000

21,815

19,783

19,032

9,134

9,000

6,032

5,500

4,733

* Orlando-Kissimmee-Sanford HMA.

Note: Excludes local school districts.

Sources: Orlando Sentinel; Orlando Business Journal 2017

from 2011 through 2016, the leisure

and hospitality sector led job growth,

rising by an average of 9,000 jobs, or

4.1 percent, annually. Some of this

growth was attributable to the addition of the attractions The Wizarding

World of Harry Potter in 2010, Diagon

Alley and Hogwarts Express in 2014,

and the new Sapphire Falls hotel in

2016 that added about 1,000 rooms

to the resort. At the start of the 2017

season, the Volcano Bay water theme

park opened, supporting sector job

growth during the past year.

The mining, logging, and construction sector also benefits from the large

leisure and hospitality sector, as most

of the structures that house travel

and tourism businesses are continuously built or renovated. The mining,

logging, and construction sector had

the highest percentage growth of any

sector during 2017, rising 8.1 percent,

or 5,500 jobs, to 73,800 jobs. Part

of this growth occurred because the

HMA has more than $9 billion in

underway infrastructure construction,

including an expansion of Interstate 4,

O r l a n d o - K i s s i m m e e - S a n f o r d , F L ? C O M P R E H E N S I V E H O U S I N G M A R K E T A N A LY S I S

5

Economic Conditions Continued

the Orlando International Airport

and Orlando Sanford International

Airport expansions, and the commuter rail transit system expansion

called SunRail Phase II. From 2001

through 2006, the mining, logging,

and construction sector grew by an

average of 5,200 jobs, or 7.2 percent,

annually, partly because of increased

single-family home construction that

nearly doubled from 2000 through

2004 and remained elevated through

2006. Beginning in 2007, sector pay?

rolls declined, with an average annual

decrease of 9,200 jobs, or 13.1 percent,

through 2011. During the period, the

sector accounted for 89 percent of all

job losses in the HMA. Both residential and nonresidential construction

have increased in the HMA since

2012, contributing to sector growth.

From 2012 through 2016, the mining,

logging, and construction sector increased by 4,600 jobs, or 8.6 percent,

annually, as residential (single-family

plus multifamily) permitting rose from

6,725 units in 2011 to 23,250 units in

2016. Even with recent growth, the

number of jobs in the sector is still

nearly 20 percent lower than the peak

of 91,200 jobs in 2006.

The professional and business services

sector supported job gains during the

economic recovery from 2011 through

2016, increasing by 7,700 jobs, or

4.3 percent, annually, which was the

second fastest rate of growth in the

HMA during the period behind the

mining, logging, and construction

sector. Following job losses surrounding the national recession at the start

of the previous decade, the sector

added an average of 7,200 jobs, or 4.5

percent, annually from 2003 through

2007, before 3 years of losses from

2008 through 2010, when the sector

declined an average of 6,500 jobs,

or 3.7 percent, annually. Job growth

in the sector increased during 2017,

and the sector added the most jobs

of any sector in the HMA, rising by

12,100 jobs, or 5.8 percent, to 219,600

jobs. As the second largest sector in

the HMA with 17.6 percent of all

nonfarm payrolls, the professional

and business services sector has contributed to job growth during periods

of expansion and has been the second

fastest growing sector since 2000,

increasing 54 percent, behind the

education and health services sector,

which has grown 77 percent.

The government sector accounts for

only 10.0 percent of nonfarm payrolls

in the HMA but is a notable source

of economic stability. The HMA is

home to the University of Central

Florida (UCF), with 56,000 undergraduate students, the largest number

of undergraduates at a single campus

in the United States ().

UCF employs 9,134 full- and parttime staff and has an annual budget

of $1.5 billion (UCF Institutional

Research). Valencia College is also

one of the HMA¡¯s largest employers

and is one of the largest community

colleges in America, with nearly

61,000 students enrolled. Valencia

employs more than 4,733 staff and

had a budget of $194 million in 2017.

The government sector increased by

an average of 3,200 jobs annually, or

3.2 percent, from 2001 through 2008.

As economic conditions weakened

following the national recession, the

sector declined slightly by 600 jobs,

or 0.5 percent, annually from 2009

through 2011, even with increased

student enrollment during the period.

Improving economic conditions in

the HMA led to job growth in the

sector that averaged 1,600 jobs, or

1.4 percent, annually from 2012

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