CHMA: Orlando-Kissimmee-Sanford, Florida

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

Orlando-Kissimmee-Sanford, Florida

Sumter Brevard

U.S. Department of Housing and Urban Development Office of Policy Development and Research As of June 1, 2014

Marion

Volusia

Atlantic Ocean

Housing Market Area

Lake

Seminole Orange

Osceola Polk

The Orlando-Kissimmee-Sanford Housing Market Area (hereafter, the Orlando HMA) in central Florida is coterminous with the OrlandoKissimmee-Sanford, FL Metropolitan Statistical Area. 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.

Hardee

Highlands

Indian River

Okeechobee

Summary

Economy

Economic conditions in the Orlando HMA began to improve in 2011, after 3 years of job losses. During the 12 months ending May 2014, nonfarm payrolls increased by an average of 37,300 jobs, or 3.6 percent, from the previous 12 months, to 1.08 million jobs. The leisure and hospitality sec- tor is the largest employment sector in the HMA, accounting for approximately 21 percent of all jobs. During

Market Details

Economic Conditions.......................... 2 Population and Households................ 5 Housing Market Trends....................... 8 Data Profiles...................................... 20

the next 3 years, nonfarm payrolls are expected to increase by 32,800 jobs, or 3.0 percent, annually.

Sales Market

The overall sales housing market in the HMA is currently slightly soft, with an estimated vacancy rate of 2.6 percent, down from 4.1 percent in April 2010. During the next 3 years, demand is expected for approximately 35,450 new homes in the HMA (Table 1). The 4,870 homes currently under construction will meet a por- tion of this demand. In addition, a portion of the estimated 76,300 other vacant units likely will reenter the market and satisfy some of the demand.

Rental Market

Overall rental housing market condi- tions in the HMA are currently slightly soft, with an estimated vacancy rate of 9.4 percent, down from 13.3 per- cent in April 2010. The average apartment rent was $931 during the second quarter of 2014, up 3 percent from the second quarter of 2013 (MPF Research). During the 3-year forecast period, demand is expected for 11,400 additional rental units (Table 1). A portion of the 4,525 units currently under construction will satisfy some of this demand.

Summary Continued

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

Orlando HMA*

Sales Units

Rental Units

Orange County Submarket

Sales Units

Rental Units

Seminole County Submarket

Sales Units

Rental Units

Lake and Osceola Counties Submarket

Sales Units

Rental Units

Total demand 35,450

11,400

20,200

5,650

4,700

1,800

10,550

3,950

Under construction

4,870

4,525

2,200

2,750

470

650

2,200

1,125

*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 June 1, 2014. A portion of the estimated 76,300 other vacant units in the HMA will likely satisfy some of the forecast demand. The forecast period is June 1, 2014, to June 1, 2017.

Source: Estimates by analyst

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

Economic Conditions

The economy of the Orlando HMA, which is a leading tourist destination, relies heavily on the leisure and hospitality sector, which accounts for approximately 21 percent of all nonfarm payroll jobs (Figure 1). The weak economy and the decline in the preference for air travel after Septem ber 11, 2001, had a detrimental impact on tourism in the HMA, causing non- farm payrolls to decline from 2000 through 2002 by an average of 3,500 jobs, or 0.4 percent, annually. The lei- sure and hospitality sector lost 12,000 jobs during this period, more than any other sector. Economic conditions im- proved from 2003 through 2007 during

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

Government 10.9% Other services 3.3%

Mining, logging, & construction 4.9% Manufacturing 3.6%

Wholesale & retail trade 16.2%

Leisure & hospitality 20.7%

Transportation & utilities 2.9% Information 2.2%

Financial activities 6.5%

Education & health services 12.2%

Professional & business services 16.5%

*Orlando-Kissimmee-Sanford HMA. Note: Based on 12-month averages through May 2014. Source: U.S. Bureau of Labor Statistics

the housing boom, with payrolls in- creasing by an average of 37,100 jobs, or 3.8 percent, annually, led by job growth in the professional and business services sector, the leisure and hospi tality sector, and the construction sub- sector, which grew by an average of 7,200, 5,700, and 4,900 jobs, or 4.6, 3.3, and 7.2 percent, respectively. At the end of the housing boom, another economic downturn occurred from 2008 through 2010, with the construction subsector leading in job losses, declining by an average of 12,500 jobs, or 17.4 percent, annually. The economy began to improve in 2011, adding 12,900 jobs, a 1.3-percent increase from 2010, with the leisure and hospi- tality sector, which added 7,900 jobs, an increase of 4.0 percent, leading job gains. During the 12 months ending May 2014, nonfarm payrolls increased by an average of 37,300 jobs, or 3.6 percent, from the previous 12 months, to 1.08 million jobs. By comparison, during the 12 months ending May 2013, nonfarm payrolls increased by an average of 28,200 jobs, or 2.8 percent. The unemployment rate

Economic Conditions Continued

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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

Labor force and resident employment

Unemployment rate

averaged 6.3 percent during the past 12 months, the lowest rate since 2008, and was down from 8.0 percent dur- ing the previous 12-month period. Figure 2 shows trends in the labor force, resident employment, and the unemployment rate from 2000 through 2013.

After the economic recovery began in the HMA in 2011, the leisure and hospitality sector has contributed the most job gains to economic growth. During the 12 months ending May 2014, the leisure and hospitality sector led growth, adding 10,600 jobs, or 5.0 percent, from the previous 12 months

Figure 2. T rends in Labor Force, Resident Employment, and Unemployment Rate in the Orlando HMA,* 2000 Through 2013

13.0

11.0 1,165,000

9.0

1,065,000

7.0

965,000

5.0

3.0 865,000

1.0

765,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

? 1.0

Labor force

Resident employment

Unemployment rate

*Orlando-Kissimmee-Sanford HMA. Source: U.S. Bureau of Labor Statistics

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

12 Months Ending

Absolute Percent

May 2013 May 2014 Change Change

Total nonfarm payroll jobs

1,043,900 1,081,200 37,300

3.6

Goods-producing sectors

85,800

91,900

6,100

7.1

Mining, logging, & construction

48,000

53,100

5,100 10.6

Manufacturing

37,800

38,800

1,000

2.6

Service-providing sectors

958,200

989,300 31,100

3.2

Wholesale & retail trade

169,100

175,600

6,500

3.8

Transportation & utilities

30,900

31,600

700

2.3

Information

23,500

24,000

500

2.1

Financial activities

68,100

70,300

2,200

3.2

Professional & business services 171,400

178,800

7,400

4.3

Education & health services

130,100

131,900

1,800

1.4

Leisure & hospitality

213,300

223,900 10,600

5.0

Other services

35,200

35,900

700

2.0

Government

116,600

117,400

800

0.7

*Orlando-Kissimmee-Sanford HMA.

Notes: Numbers may not add to totals because of rounding. Based on 12-month averages through May 2013 and May 2014.

Source: U.S. Bureau of Labor Statistics

to total 223,900 jobs, exceeding prerecession peak levels (Table 2). Figure 3 shows the percentage change in sector growth from 2000 to the current date. Walt Disney World Resort (hereafter, Disney World) and Universal Orlando Resort (Comcast; hereafter, Universal) are the first and third largest employers in the HMA, with 69,900 and 17,300 employees, respectively (Table 3). These attractions have contributed to the HMA's being the leading domestic and international tourist destination in the world. More than 57 million people traveled to Orlando in 2012 (the most recent data available), con- tributing to an estimated economic impact of more than $50 billion on the local economy annually (Visit Orlando). Disney World had more than 48.5 million visitors in 2012 (the most recent data available), making it the most visited theme park worldwide during that year (Themed Entertainment Association and AECOM). In February 2014, Universal announced it expected to add 3,500 jobs for the new "Wizarding World of Harry Potter Diagon Alley" expansion that will open in July 2014, the new "Cabana Bay Beach Resort" that opened in June 2014, and the "City Walk" expansion that is expected to be complete by the end of 2014.

During the 12 months ending May 2014, the professional and business services sector, the second largest sec- tor in the Orlando HMA, added 7,400 jobs, an increase of 4.3 percent from the previous 12 months. B , an online hotel reservation company, announced in 2013 it would be adding 200 jobs to its call center in Orlando, which contributed to sector growth. The wholesale and retail trade sector, the third largest sector in the HMA, increased by 6,500 jobs, or 3.8 percent,

Economic Conditions Continued

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

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 Wholesale & retail trade Transportation & utilities Information Financial activities Professional & business services Education & health services Leisure & hospitality Other services Government

? 30 ? 20

? 10

0

10

20

30

40

50

60

*Orlando-Kissimmee-Sanford HMA. Note: Current is based on 12-month averages through May 2014. Source: U.S. Bureau of Labor Statistics

Table 3. Major Employers in the Orlando HMA*

Name of Employer

Nonfarm Payroll Sector

Number of Employees

Walt Disney World Resort Florida Hospital Universal Orlando Resort (Comcast) Orlando Health Darden Restaurants, Inc. Lockheed Martin Corporation SeaWorld Orlando Marriott International, Inc. Westgate Resorts Siemens Corporation

Leisure & hospitality Education & health services Leisure & hospitality Education & health services Leisure & hospitality Manufacturing Leisure & hospitality Leisure & hospitality Leisure & hospitality Manufacturing

*Orlando-Kissimmee-Sanford HMA. Note: Excludes local school districts and retail operations. Source: Metro Orlando Economic Development Commission

69,900 25,700 17,300 14,200

7,600 7,400 6,050 5,625 5,325 4,450

from the previous 12-month period. Wal-Mart Stores, Inc., opened three new stores in the HMA in June 2014, adding approximately 380 jobs. The mining, logging, and construction sector was the fastest growing sector during the past 12 months, adding 5,100 jobs, a 10.6-percent increase from the previous 12 months. The construc- tion subsector was responsible for nearly all this growth as a result of improving housing market conditions and increased residential building activity.

Nonfarm payrolls are expected to in- crease at a fairly constant rate during each year of the 3-year forecast period, averaging an increase of 32,800 jobs, or 3.0 percent, annually to reach 1.18 million jobs. The leisure and hospitality sector is expected to continue to lead job growth during this period. The Four Seasons Resort Orlando at Disney World will open in August 2014, adding 500 permanent jobs; an additional 500 jobs are expected at the resort within the next year to accommodate increasing tourism.

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Population and Households

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 Average annual change

As of June 1, 2014, the popula- tion in the Orlando HMA was estimated at 2.27 million, an average increase of 33,250, or 1.5 percent, an- nually since April 2010 compared with an average increase of 49,000, or 2.6 percent, annually from 2000 through 2010. Expansion of the housing mar- ket and strong economic conditions contributed to fairly rapid growth from 2000 through 2007, with net inmigration accounting for approximately 72 percent of population growth. After the housing boom, unstable economic conditions in the HMA led to a decline in net in-migration from an average of 47,250 people annually from 2000 through 2007 to an average of 6,875 people annually from 2008 through 2010, accounting for 33 percent of population growth. As the eco- nomic recovery began in 2011, net inmigration increased and averaged 19,950 people annually from 2011 through 2013. During the next 3 years, the HMA population is expected to increase at a moderate rate by an aver- age of 46,350, or 2.0 percent, annually. Figure 4 shows components of population change from 2000 to the forecast date.

Figure 4. Components of Population Change in the Orlando HMA,* 2000 to Forecast

40,000 35,000 30,000 25,000 20,000 15,000 10,000

5,000 0

2000 to 2010

2010 to current

Current to forecast

Net natural change

Net migration

*Orlando-Kissimmee-Sanford HMA.

Notes: The current date is June 1, 2014. The forecast date is June 1, 2017. Sources: 2000 and 2010--2000 Census and 2010 Census; current and forecast-- estimates by analyst

More than one-half of the population in the Orlando HMA resides in the Orange County submarket, which is the economic epicenter of the HMA and includes the city of Orlando. The population in the Orange County submarket is currently estimated at 1.23 million, an average increase of 21,150, or 1.8 percent, annually since April 2010. Population growth has declined from the average of 24,950 people, or 2.5 percent, annually from 2000 through 2010. Net in-migration was strong from 2000 through 2007, during the housing boom, averaging 21,250 people annually. The Orange County submarket accounted for nearly one-half of all housing units built in the HMA during that period. As the economic recession began and the housing boom ended, net in-migration decreased to an average of 1,750 people annually from 2008 through 2010, with net out-migration occurring in 2009 as people left to seek employment opportunities. Net inmigration has increased significantly in recent years, averaging 12,450 people annually since April 2010 accounting for nearly 60 percent of growth as jobs return to the HMA. During the next 3 years, population in the submarket is expected to have the fastest rate of growth of all the submarkets, increasing by an average of 30,350 people, or 2.4 percent, annually.

The population of the Seminole County submarket is currently estimated at 434,600, an average increase of 2,850, or 0.7 percent, annually since April 2010. Net natural change (resident births minus resident deaths) has ac- counted for 52 percent of population growth since 2010, the greatest rate in the HMA. The Seminole County

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