Central Florida’s boom shows true picture of U.S. real estate trends

Last week, the U.S. Census Bureau released its 2018 local population estimates, temporary snapshots ahead of the formal census in 2020, and the cities posting the fastest growth rates came as no surprise: oil towns in Texas, cities and suburbs in tech-forward Utah, and Boise, Idaho, where an influx of cost-crunched Californians has strained the city’s affordability, all ranked high.

But among the list of 10 fastest-growing metros, two central Florida cities’ citations underscored that this booming part of the country has become a snapshot of U.S. demographic and development trends. The first, Lakeland-Winter Haven, a more remote, exurban, and rural area of former citrus groves between Tampa and Orlando, represents a geographic shift. Despite urban growth, especially in mid-tier cities, suburban and even exurban growth has bounced back since the Great Recession.

As the Brookings Institution noted, the south and western sections of the U.S. have ballooned with Snow Belt-to-Sun Belt population shifts, reflecting more suburbanization and expansion into rural areas. Lakeland-Winter Haven, a metro area that overlaps with the boundaries of Polk County, benefits from being an exceptionally affordable waystation in a growing megaregion, and the area saw its population grow 3.2 percent last year.

“It is only a matter of time before the area between Tampa and Orlando becomes, in essence, a conurbation,” Garrett Kenny, a local real estate developer, wrote in Forbes. “Getting in early while growth potential is particularly high is how developers can realize massive success.”

The other big performer in the local population estimates is The Villages, which registered a 3.1 percent population increase last year. Arguably the country’s most successful and influential planned community, The Villages is a rapidly expanding senior living center that is already as large geographically as the island of Manhattan, with plans to expand after buying 8,300 more acres earlier this month. It’s indicative of the “silver tsunami” soon to sweep the country, and its housing market.

“Between 2010 and 2040, we predict the nation’s 65-plus population will grow by roughly 90 percent,” Hamilton Lombard, a demographics researcher for the University of Virginia, told Curbed. “In some areas of the country, most of the population growth will come from retirees.”

Sprawl, supercommuters, and seniors

Buoyed by big growth in the Orlando region, there’s no question that central Florida has economic momentum. The Orlando region alone, the ninth-fastest-growing in the country, has seen its population increase by 20 percent since 2010, part of the reason central Florida has been top for job growth for the fourth consecutive year, according to the Bureau of Labor Statistics. That’s spurred a real estate building frenzy, with $10 billion-plus in infrastructure projects underway and nearly a billion in development in downtown Orlando alone.

Combine Greater Orlando with the Tampa region and everything in between, and you get an already-large area of 4.3 million people that will soon top 5.2 million. The Orlando Economic Partnership’s 2030 report forecasts that the larger region will add 1,500 people per week within the large block of cities and towns including Polk Counties. As the region continues to become more racially diverse, including seeing a significant number of Puerto Ricans relocate due to the economic devastation of Hurricane Maria, central Florida is looking increasingly like the nation when it comes to its demographics.

This influx of new Floridians will put strain on the environment, infrastructure, and roadways—Interstate 4, the main road connecting the two cities, is a common traffic choke point—while potentially turning the region into a political battlefield come the 2020 election. Tens of thousands of new arrivals will only reinforce its reputation as the “swingiest part of the nation’s biggest swing state.”

Exurban areas on the rise

The recent burst of exurban housing development nationally is more a resurgence of pre-Recession trends than it is a shift in the real estate industry. Exurbs, defined as areas on the edges of major metro areas, have boomed; The National Association of Home Builders says that single-family construction rose nearly 7 percent in exurban areas in 2018 compared with the previous year, according to a recent Wall Street Journal report.

Polk County contains fertile soil for such development. The region offers a huge cost-of-living advantage, with a median home price of roughly $177,000, per Zillow. And the area’s housing price-to-income ratio, a measure of housing costs versus average incomes, sits at 2.79, far below the national average of 3.61. Add that to its location, about an hour to Tampa or Orlando, and local homebuilders can offer affordable homes that, while not close, justify the long commute.

That tradeoff has helped supercharge growth. Polk’s population increased 10.6 percent since the last census, beating growth rates statewide (9.6 percent) and nationally (4.7). Per Metrostudy, housing starts in the greater central Florida region grew 27.5 percent year over year in 2018. All of this snagged Lakeland the top spot in Realtor.com’s Hot Housing Market of 2019 list, which painted a picture of houses doubling in value and spending less time on the market.

“There’s very little inventory,” Jason Brown, a real estate agent at S&D Real Estate Service based in Lakeland, told Realtor.com. “And there are still buyers out there chomping at the bit.”

Polk County has traditionally had massive growth, with lots of incoming retirees. But now, as housing activity rebounds to pre-recession levels, the county seems poised to be a pivotal part of the region’s growth.

“Last year’s data show that the domestic migration is not driven by retirees,” says Jed Kolko, chief economist for Indeed. “The metro’s population is younger, on average, than many other parts of Florida.”

The graying of the real estate market

Master-planned communities like the Villages are an extreme example of what the aging baby boomer population is doing to the country as a whole. According to Projections and Implications for Housing a Growing Population: Older Households 2015-2035 by the Harvard Joint Center for Housing Studies, the number of Americans over 80 will double, from 6 million to 12 million, in the next two decades. And by 2035, one out of three U.S. households will be headed by someone over 65.

“The Villages has completely transformed that area,” Rich Doty, a research demographer at the University of Florida’s Bureau of Economic and Business Research, told the Orlando Sentinel. “In 1970, the median age of that area was about 30. By 2020, it’s projected to be about 67.”

The Villages gives this growing population of potential customers a socially active option. Boasting more than 50 recreation centers and roughly 2,500-plus clubs and groups, the community also offers more than 40 golf courses, a polo arena, and numerous special events. A majority of the 123,000 residents get around on customized golf carts.

Shutterstock

Outsized development in Orlando’s orbit

Both Lakeland and the Villages sit within a region being shaped by the growth of Tampa and Orlando. The latter city, especially, has seen rapid expansion. The Associated Press used stadiums to contextualize the growth of these central Florida cities: Last year, Orlando welcomed 60,000 residents, enough to fit inside the city’s Camping World Stadium. The city’s population has grown 51 percent since 2000, per the Bureau of Economic Analysis, almost three times the rate of the nation at large. Tampa, at 51,000 new arrivals last year, isn’t far behind. The I-4 corridor, named after the interstate that connects to two cities, has been growing rapidly, Doty tells Curbed, with lots of new businesses and new hiring.

At the same time, the region’s economy is shifting. Tourism represents an outsized piece of the economic pie: Disney’s forthcoming Star Wars: Galaxy’s Edge park, and the introduction of Legoland, which brought in a billion dollars in its first four years nearly guarantees that won’t change soon. But both cities are building up and densifying—“The skyline has more than doubled in the last 10 years,” according to Thomas Chatmon Jr., executive director of Orlando’s Downtown Development Board—as well as diversifying.

Orlando’s forthcoming Creative Village, a 68-acre combination of creative offices, mixed-use commercial and residential units, as well as campuses from the University of Central Florida and Valencia College, should open the first section of the development this fall. Meanwhile, Tampa’s ongoing, multibillion-dollar Water Street project seeks to rebrand and rebuild the city’s waterfront. There’s even talk of the Brightline, the private higher-speed rail line recently introduced in Miami, introducing an Orlando-to-Tampa route in the next few years.

While the future does look bright for this part of Florida, the narrative is pretty consistent with what we’ve seen in the past: a housing boom built on cheap land and car-centric planning—and an influx of retirees. The region’s transportation infrastructure will groan under the weight of tens of thousands of new drivers entering the workforce each year, and the dearth of dense, transit-friendly, affordable apartments will strain the regional housing market with new demand (per the National Low Income Housing Coalition, the Orlando metro area currently has only 13 affordable and available rental homes for every 100 extremely low-income renter households).

The central Florida boom has been predicted before (thankfully, the attempt to coin “Tamplando” and “Orlampa” didn’t take hold). The new jobs and affordable homes offer a welcome antidote to the nation’s concentration of opportunity—and rising housing costs. But the story of growth, though with different characters in a different setting, tends to be the same as it ever was. And that’s cause for concern.