Southwest Florida Housing Market Forum: Positive Outlook Abounds

Local real estate experts shared a positive outlook about the Southwest Florida housing market at the Bonita/Estero Market Pulse ‘07 Thursday night.

How quickly it will turn around, they said, depends on sellers’ willingness to reduce home prices in Florida. A sold-out crowd of more than 250 came to Three Oaks Banquet and Conference Center in Estero.

The event was presented by the Bonita-Estero Association of Realtors and the Bonita Springs Area Chamber of Commerce.

Jim Scartz, managing broker of John R. Wood Realtors in Bonita Springs, said the market has begun to turn for single-family homes, but the over-saturated condo market will take a little longer to bounce back.

After the boom of 2004-05, he said, sales prices in 2006 reflected closings on newly constructed homes that were bought six to 18 months earlier.

The Office of Federal Housing Enterprise Oversight reports that Lee County’s median housing prices rose 120 percent over five years — an average of 24 percent per year from 2002 through 2006.

The prices were not reflective of the true market in 2006, and as many as 60 percent of the listings had unrealistic prices. Even now, Scartz said, about 35 percent of the inventory falls into that overpriced category, hence why Florida home loan demand has slowed.

But sales have increased over the past three months, and he expects the number of homes for sale to decrease throughout 2007 as Florida mortgage activity picks up.
“What we are seeing is the properties that offer a water front location, a golf course or other special amenities are generating the most interest,” Scartz said.

But many investors expecting a quick flip bought condos without many amenities and away from the Gulf. Scartz said they will face the most difficult time selling their properties. Still, Scartz said his company predicts 2007 will be the third best year on record for real estate sales, with 2008 comparable to the 2004-05 boom.

Mike Timmerman, of Hanley Wood Market Intelligence, expects a slower turnaround. He said the existing home sales pace will remain slow in 2007 but might pick up as prices are adjusted downward.

“There has been a decrease in sales over the 18 months since September of 2005,” Timmerman said. “… On the positive side, most cycles don’t last more than 18 to 24 months.”

He said pressure from the resale market is causing developers to offer price reductions to cut cancellations and spur sales. Because of the 2004-05 boom, Scartz said, builders stayed busy completing previously sold homes. Now that those homes are built, layoffs aren’t surprising.

However, he expects builders to begin looking for land for new projects by the end of 2007, which will bringing jobs back to the local construction industry.

Scartz said baby boomers will have a tremendous impact on the local Florida housing market. The volume and number of home sales is up slightly over 2006 in the under-$500,000 category, although the average list price of sold properties is 7 percent less than last year, he said.

Homes in the $500,000-plus category show 2007 already stronger than 2006 in units, volume and average list price.

“Prices always take off with a roar at some point after the plateau, achieving far higher levels than in the past,” Scartz said.

On the commercial front, Andrew DeSalvo of Premier Commercial Properties said the Bonita-Estero market is affected by increased impact fees and insurance rates.

However, he said, property taxes and material costs should be stabilizing and subcontractors are available for work.

He said retail in Bonita and Estero equals 41 percent of Collier County’s total retail market and 21 percent of Lee’s. The three regional malls in south Lee have reached virtually 100 percent occupancy.

SOURCE: The News-Press