Homeownership revives in Orlando
Metro area sees rise after era of increasing rentals
An accountant’s nudge first prompted Maureen McCann to consider trading in her rental lifestyle to become a homeowner last year. Then she found out her rent was about to jump again.
“The tipping point for me was that I had been living in Baldwin Park four years and my rent had gone up every year,” said the 37-year-old, who recently bought a Lake Nona town home. “And then there was another $10 charge for trash pick-up and things like that.”
Rent increases, higher mortgage limits and new home-buying programs are beginning to reverse what has been a decade-long slide in Metro Orlando’s homeownership rate. Homeownership in Orange, Seminole, Osceola and Lake counties has reached its highest level in four years. Last quarter’s Census figures measured Orlando’s ownership rate at 63 percent. That’s up from 57 percent last year, which marked one of the largest drops in the nation from 74 percent at the housing market’s peak in 2006.
The region’s share of homeowners is important because it contributes to neighborhood stability and helps build greater wealth for residents instead of landlords.
The four-county Orlando metro area entered the year with wages up slightly and FHA mortgage limits up 6 percent to $277,500 from last year. Orlando-area residents now have access to about 60 down payment assistance programs, according to the group Down Payment Resource. New programs have emerged including Home Partners of America’s lease-to-own option, which finances the purchase of homes selected by renters and caps annual rent increases at 3.8 percent for five years. A new pilot of the program limits down payment costs on those purchases.
“Consumers are perhaps a little more uncertain about the economics of purchasing a home so they want flexibility,” said Ayoub Rabah, a marketing executive with Home Partners.
Trulia Chief Economist Ralph McLaughlin said new tax laws could further drive Orlando’s ownership momentum because so few Central Florida buyers will be affected by mortgage-interest deductions now capped at $750,000, down from $1 million.
“On the upside, it is likely that most households in Orlando will have more money in their pocket at the end of this year than the beginning and they might put that into a down payment,” he said. “Their paychecks will be larger with less withholdings.”
Orlando resident Tom Wilson, 36, traded his landlord for a mortgage payment two years ago when he and his wife had a baby. He said the new tax rules gave him pause — the larger standard deduction now outweighs the benefits of itemizing mortgage interest and other deductions for many homeowners. But he said payments on their three-bedroom Waterford Lakes house are similar to their rent payments. And the house they purchased for $180,000 is worth $230,000, according to a recent appraisal.
“Buying was almost a realization that if you're crawling, why not get up and start walking,” he said.
Overall, though, rebooting homeownership in a region known for service-level wages has its challenges.
Wages for Orange, Seminole, Lake and Osceola counties increased 1 percent last year while home prices went up about 10 percent, according to real estate reports. In addition, home listings are near record lows. And the metro area must also accommodate a growing population of Puerto Ricans who were uprooted from their homes.
Orlando housing counselor Michele Alamo, of the Central Florida HANDS down payment assistance nonprofit, said she is seeing newly relocated Puerto Ricans seek down payment help only to learn that they are ineligible because they still own houses — even if their residences were severely damaged by Hurricane Maria last year. Newcomers from countries including Venezuela and Columbia find they have no credit history in the U.S. and a longer road to establish a year-long record with no late payments.
“People are more challenged than five years ago because of the house prices and credit,” she said, adding that about a tenth of the prospective buyers attending home-purchase classes are in good enough financial shape to swing a purchase.
Minorities face particular challenges. In Orlando, fewer than half of minorities own their own homes largely because of income inequities, said Sam Radbil, communications manager for apartment analytics group Abodo. That group found minorities earn $11,200 less than other workers within the city, but the wage disparity lessens the farther one gets from Orlando. Prices also drop sharply in the outlying areas. Metro Orlando’s median home value is $203,000 while Brevard and Volusia counties’ median prices are about $175,000.
“With cheaper housing and more equal incomes, the metros outside of Orlando are more hospitable toward minority homebuyers,” he said.
For McCann, the News 13 meteorologist said one disadvantage of buying a house is that it makes relocating to other markets more challenging — but she added that is not a compelling enough reason to continue renting.