Experts Disagree On How Long Lee County Housing Slump Will Last

Surprise, surprise.

Experts expect the housing slump in Lee County to continue this year - the only disagreement is over how drastically, and for how long.

The housing prices are believed to be soft, and should remain that way for another 12-15 months before the market turns around, consultant Michael Timmerman told the Real Estate Investment Society at its annual luncheon Tuesday.

“We will have more sales in 2007, I will guarantee you that. But it will come at the sacrifice of price,” said Timmerman, the Naples-based managing director for Florida at Hanley Wood, a company that collects and analyzes data for home builders.

A lot of investors who own houses and are trying to get rid of them will likely decide to cut prices deeply after the winter season if they still haven’t been able to sell.

“They can’t afford to hold it,” he said.

Prices have fallen steeply.

According to the Florida Association of Realtors, the median price of an existing home sale was $258,600, down 12 percent from a year earlier.

The pace of construction also has slowed drastically, with only 7,449 building permits for houses issued compared to 10,471 in 2005.

Some think the end of the skid is nowhere in sight. In a recently released report, Orlando economist Hank Fishkind predicts an even longer Southwest Florida housing market slump that won’t end until 2009.

“After 2009 we’ll see some movement back toward normalcy,” Fishkind said.

Both Fishkind and Timmerman agree that the market will be toughest for the mid-range homes that were heavily speculated by investors as prices rose sharply in 2004 and 2005, taking advantage of low Florida mortgage costs and generally favorable market dynamics.

“It’s the standard homes in Cape Coral and Fort Myers that have seen rapid escalation that are the most likely. I think that is the place where we’ll see the most falloff in price,” Fishkind said.

Timmerman said the markets for high-end and low-end homes are relatively strong but that sales are weak in the middle — which makes up most of the unsold inventory of 14,000 houses.

As for Collier County, both said the market there will have a soft landing compared to areas of Lee, because there wasn’t the massive overbuilding of mid-level houses that the Naples housing market saw in the first half of the decade.

Timmerman and Fishkind said 2007 will see a weaker market for commercial real estate development, which took off in 2006 thanks to a pair of projects including two major shopping malls in south Lee County.

Robert Fowler Jr., president of Fowler Construction and Development, said he thought Timmerman might be a little pessimistic in his forecast for commercial projects.

“We have more under contract, more under construction, than in the 36-year history of our company.”

Scott Robertson, a real estate agent with Cushman & Wakefield, said that despite low rates on Florida mortgage loans, the glut of residential inventory absolutely has to be absorbed before the housing market recovers - which could take a long time.

But, he said, “It’s a great time to be a buyer.”