ORLANDO, Fla. — Lucas Ragsdale sits on the couch, stroking his dog and occasionally glancing at his girlfriend beside him. The lights are turned low in their cozy, 700 square foot apartment as a program flashes on TV.
It’s the life many young adults dream about as they imagine their early careers, and one Ragsdale himself barely believed was possible at one point. It’s also one he increasingly stresses about, worried it might slip away from him.
“I’m just scared,” he said. “When the lease renews, I won’t be able to stay.”
Back in July, the 22-year-old started a new job in the construction industry and moved his young family to their new apartment. It was a considerable upgrade over their old place, which did not have AC, and afforded by the higher salary he made. It was also out in Longwood, away from the sky-high rents downtown.
Or so he thought.
Week after week, he watched neighboring apartments lease for higher and higher monthly amounts. Less than six months after he moved, the average apartment in his complex now rents for 50% more than he is paying.
“It gets really like daunting when every week the numbers for apartments just jump,” he said. “It goes up 5% per week.”
Agents say the price increases come from an influx of high-paid tech and finance workers moving to the area, either because their companies relocate, or they have a new ability to work from home. The steady migration and resulting demand allows landlords to push their offerings higher and higher.
In generations past, blue collar and middle-class workers forced away from the downtown toward cheaper options would’ve sought starter homes.
That road is being blocked, too.
Thanks to the pandemic and quest for sunshine and warmer temperatures, out-of-state residents are snapping up Orlando’s available single-family homes. Fewer than 2,000 were listed on the market as of mid-January, a historic low. At the same time, the price of available homes soared. Orlando’s median home sale topped $340,000 for the first time ever at the end of 2021, Orlando Regional REALTOR Association (ORRA) data showed.
“You have people selling,” ORRA President Tansey Soderstrom said. “It’s just -- you have a lot of people buying and a lot of people come in into the state.”
According to the National Association of Realtors, more than 20% of home purchases in the Orlando metro area come from an out-of-state resident.
There’s also a new class of competition for young workers: investors, who swarm lower-priced investments in desirable areas, including starter homes and condominiums. The Orlando Business Journal calculated 11% of home purchases were by investors in the third quarter of 2021, a number that’s expected to grow. Investment firm Marcus & Millichap named Orlando America’s top investment market of 2022.
Meanwhile, so-called starter homes are a hot commodity of older couples looking to downsize. Their life-long investments are tough to overcome by renters like Ragsdale, who sometimes pay up to 50% of their income on apartments.
“It all becomes a lot more difficult when half your income is going to rent,” he said. “It makes us worse consumers too, because we’re just living to survive.”
Soderstrom disagreed with the assessment in part, saying that first-time buyers have an emotional advantage for sellers who want to see their homes go to good families.
The caveat: those first-time buyers needed to come in with competitive offers, often skipping over steps once seen as common to protect buyers like waiving a home inspection. In a strong seller’s market, she said, buyers need to be prepared to make quick, decisive decisions.
Ragsdale, calling housing Central Florida’s most important issue, said he was disappointed that elected leaders weren’t talking about it more. He suggested there was a disconnect between people in power, often older and in established homes, and the city’s young workforce that constantly compares rent increases on sites like Reddit.
His feelings might offer those leaders a foreshadowing of economic strains to come -- unless something is done to increase the region’s supply of housing that workers outside of the tech and finance sectors can afford.
“It gets hard to even imagine yourself here in five years with the rate that rent is going up,” he said. “I’ve lived here my whole life, but if it gets to a point where I can only survive, it would make me want to look elsewhere.”
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