Young families leaving Orlando for more affordable spot, economists say

ST. CLOUD, Fla. — The Saturday afternoon air along the lakefront was filled with smells of barbecue, puffs of wind and sounds of shrieking children.

Teams of toddlers built castles on the beach. Teenagers tossed a volleyball around. A small horde of elementary-age kids bounced on a squeaky playground spring – trying, seemingly, to knock each other off.

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It’s no wonder Zillow economists point to the out-of-the-way town of St. Cloud as the place young millennial families are increasingly choosing to call home.

“You can kind of walk freely, feel comfortable, feel safe,” Shanese Stewart said, with her husband and kids following closely behind her.

Data shows that between 2020 and 2021, home values around St. Cloud increased 27%, some of the highest in Central Florida. Around Lake Eola, the jump was just 16% – not as much, but far from falling too.

Notably, St. Cloud has one of the highest proportions of kids in the region, while Eola has one of the lowest. The trend was seen in cities across the country.

“There are just an unusually large number of people in their early 30s,” Zillow Senior Economist Jeff Tucker said. “People are looking for a bigger home, they don’t mind being a little further out from the center of town.”

Tucker said kid-friendliness was on top of people’s minds, along with affordability. St. Cloud checks all the boxes. The average home’s value was just north of $300,000, below the region’s median. The community has decent schools, plenty of parks and a quiet suburban feel.

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Compare that to Orlando’s center, which developed heavily in the 2010s and is still booming today. Younger people without high incomes are being forced out as investors swoop in to buy available properties. Space increasingly comes at a premium.

However, this is one of those cases where early birds like Stewart get the worm.

“They get more bang for their buck, but if everyone has that same idea at the same time, then those bargains start to start to disappear,” Tucker said.

The competitiveness of the housing market is exacerbating income and wealth inequality around Central Florida. Older millennials who bought in the wake of the Great Recession or just before the current boom are seeing their net worth surge. Younger millennials who are in the first four to eight years of their careers are caught in a spiral of rising rents, with the average one-bedroom apartment’s price jumping 30% in the last 12 months.

“The idea of homeownership and starting a family . . . all becomes a lot more difficult, when half your income is going to rent,” renter Lucas Ragsdale described.

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Along with millennials, investors and baby boomers are scooping up traditional “starter homes,” making the problem worse. However, Tucker said those planning to buy a home should not feel discouraged. Despite already high prices, communities like St. Cloud are still great investments, depending on your living situation.

“If it provides you a good place to live, and you’d be happy there for several years, then I think it makes sense,” he said. “Waiting on the sidelines hoping to time a dip is very dicey . . . there’s going to be continued increasing demand for places to live in Florida.”

He offered two ways for the Orlando region to crawl out of the current seller’s market: first, by building more homes to make housing a more abundant resource – easier said than done when dense development proposals run into opposition from existing property owners.

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The second, he said, is to wait 10 to 12 years, when the bulk of baby boomers are expected to begin moving to retirement communities, assisted living facilities and nursing homes. Then, housing will ease, allowing the smaller Gen Z to move in.

However, even that strategy comes with risks because of Florida’s reputation as the retirement state.

“That’s another sort of surge of demand,” he said.

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While some buying preferences are timeless – no one wants a small kitchen – Tucker said millennials and baby boomers that make up the majority of the current housing market are looking for specific things.

Boomers are preferential to single-story floor plans where they don’t have to bother with stairs. They’re also on the hunt for smaller homes that they can maintain longer into their lives, forestalling a move to an assisted or nursing environment.

Millennials come with high expectations for online listings. Bright, high-quality photos of every room are a must, along with the exterior spaces. Without those, a young family will move on to the next, better-looking listing.

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In addition to the items already discussed, like schools and quiet streets, Tucker said one trend surprised him: millennials love homes with extra living spaces like garages and additional units. Those, he said, could potentially be turned into short-term rentals for extra income.

“A lot of folks are thinking, ‘Well, if I’m going to get into homeownership, I’d like to be able to defray the cost of the mortgage by renting it out,” he explained. “Further down the road, I’d like a place where my parents could come and stay, and maybe help out with the grandkids.’”

The jury is still out on Gen Z, he said, most of which are too young to think about homeownership just yet. They are replacing millennials in downtown apartments, helping to keep the prices high.

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