The median price of an existing single-family home in Lee County fell 5 percent to $268,000 in March from $281,300 a year ago, according to a report released today by the Florida Association of Realtors.
A Bonita Bay Group program that provides Lee County’s work force with affordable housing is expanding to include Collier County workers and offering more economic subsidies to entice applicants.
A Michigan mortgage company has collapsed after making several hundred questionable loans to buyers of First Home Builder houses in Lee County.
Builders in unincorporated Lee County, Bonita Springs and Fort Myers Beach pulled 318 permits for single-family houses in March, about 6 percent more than in February and 62 percent less than in March 2006, the county Department of Community Development reported Monday.
The NBC2 Investigators have discovered that developers are paying off the county so they don’t have to build affordable housing.
And it’s all legal.
The Lee County housing market has a program in place that allows developers to put money in the Affordable Housing Authority Trust Fund instead of actually building affordable housing. The money helps the overall problem eventually, but it slows the process of putting cheaper homes on the market.
The Florida condos above Coconut Point are the perfect example. The developer was supposed to make 150 of the units available as affordable housing, but it never happened.
“Coconut Point chose to contribute to the affordable housing problem in Lee County by contributing $600,000 to the Lee County Affordable Housing Authority Trust Fund,” said Gloria Saigo, Lee County Community Development.
That breaks down to just $4,000 a unit. The Investigators asked the county if that is a fair trade.
“At that time it was used as a fair and reasonable solution to the problem,” said Saigo.
But this isn’t the only deal the county made.
The Gulf Coast Town Center paid $350,000 to the fund several years ago. In the end, it helped put 40 affordable units on the market for teachers that needed a Florida home mortgage loan.
“We layered that money with other funds so we could participate with Bonita Bay in the Homes for Teachers Program,” said Saigo.
Despite the successes, the county admits affordable housing isn’t coming online fast enough for the people who need it. With Florida mortgage rates on the rise, steps must be taken to ensure that individuals can qualify for various loans.
Officials are working with a consultant to change the system so they have a better way to handle affordable housing agreements. Right now, each major development negotiates with the county to determine the amount of its contribution to the fund.
The consultant is supposed to present a new way to handle affordable housing to the county on March 28th.
Tuesday was a bad day for the Lee County real estate market from top to bottom.
Sales of existing single-family homes dropped 17.7 percent to 492 in January, even as the median home price crept up 1.7 percent to $266,900.
That was the opposite of the national trend, where purchases increased 3 percent over December as the price dropped 3.1 percent from a year ago to $210,600.
Meanwhile, Red Bank, N.J.-based Hovnanian Enterprises on Tuesday blamed an oversupply of houses in the Fort Myers-Cape Coral area for weaker-than-anticipated earnings. They need to clear these out to Florida mortgage applicants ASAP.
Hovnanian is the parent company of the county’s biggest residential builder, low-end house builder First Home Builders.
Bonita Springs-based WCI Communities Inc., which specializes in the high end, reported it lost $64.6 million in the last quarter of 2006 as Florida home mortgage customers backed out of 276 contracts and placed just 262 new orders.
One hopeful seller, Cindy Infiesto, is trying to sell her 6,300-square-foot, all-concrete Alva house on 7.5 acres with a seven-stall horse barn and a putting green.
Infiesto, a Florida real estate broker with the Florida Real Estate Store, is motivated to sell, with a property tax bill of more than $13,000 this year and skyrocketing insurance rates.
But at $1.4 million, no dice.
“I’m desperate to sell my house,” she said. “I haven’t found the right person for it.”
But she hasn’t given up hope yet.
“I’ll even throw in the horses,” she said with a chuckle.
A massive inventory of unsold homes in the Lee County housing market could bring bad times to both the residential and commercial industries.
However, real estate agents could help soften the blow by telling sellers to ask more realistic prices for their houses.
That’s what two experts told a sold-out audience Tuesday night at The News-Press Market Watch at the Harborside Event Center in downtown Fort Myers.
In 32 years in the real estate business, “I’ve never seen the impact of residential on commercial like this. There’s a lot of fear,” said commercial broker Frank D’Alessandro of Gates D’Alessandro Woodyard, Commercial Realtors.
With 23,000 houses and condos on the market in the county and the number rising, he said, the residential construction market is likely to slow dramatically this year as builders work through a backlog of homes ordered when Florida mortgage demand was strong.
With 65 percent of industrial space occupied by people such as developers, subcontractors and suppliers for the residential market, D’Alessandro said, the commercial market could be hurt.
“The bottom line is fewer tenants,” he said.
Other factors could exacerbate the situation, such as:
• With 3 million square feet of commercial space being built in south Lee, there will soon be higher vacancy rates and fewer dollars spent per store.
• Road impact fees are rising from $101,260 to in 2006 to $316,740 this year for a 20,000-square-foot retail building, making it questionable whether some new projects are viable with the added costs.
• Florida insurance premiums are up 200 to 300 percent.
• The price of building materials such as steel, concrete and fill dirt remain high, as does the price of fuel.
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.”
With property taxes in the state a major hold-up for many thinking about a Florida home mortgage, the following is sobering news:
A tax break for seniors that was passed by voters in November really won’t have much of an impact in the Lee County housing market.
County commissioners say the requirements for the property tax break - that the homeowner is older than 65 and makes less than $20,000 per year - hit a relatively small segment of the population.
The senior tax exemption is a owners and any future Florida home loan applications that do actually qualify, taking another $20,000 off the assessed value of the property on top of the $25,000 exemption for full-time Florida residents.
Commissioner Bob Janes estimates the total amount the county to lose in taxes is $800,000 - a drop in the bucket compared to the millions of tax dollars the county brings in each year.
“It helps a minor segment but it does not by any means get to the overall inequities with the property tax,” Janes said.
Janes says the county should adopt the new exemption - the only problem is that the deadline to do so was December 1st. This doesn’t bode for for fixing issues such as mortgage defaults in the region.
“We need to find out if we still can do it or if it’s too late,” Janes said.
The Southwest Florida housing market probably won’t fall too much in the next few years in terms of property values, but they won’t increase much either, the Naples Daily News reported Friday.
Henry Fishkind, a local economist with Fishkind & Associates, delivered that message at The Chamber of Southwest Florida’s Regional Economic Outlook Conference in Fort Myers.
Fishkind has forecast the economy in Southwest Florida for the past 30 years, and believes that home prices in the Lee County will remain flat for at least three years. People won’t lose money on their homes, he said -they just won’t make as much as they had hoped.
The local population will continue to grow at a rapid rate, but it will take time for demand to catch up with the inventory.
“We’ll only have inventory because we don’t have the right price,” Fishkind said. “Everything will sell at a price.”
People are focusing on the current downturn, but the amazing thing was the housing peak. At the peak of the real estate boom in Lee County, Florida mortgage rates were so opportune that there were 20,000 residential units were under construction when there was demand for only 10,000.
“It only seems like a big downturn now because of the extraordinary nature of the peak,” Fishkind said.
Collier County is better off than most of the Naples housing market. The supply in Collier didn’t peak as high so the market didn’t have as far to drop before demand was met. The correction has caused prices in Collier County to return to normal. It will take more time before demand in Lee County catches back up with supply.
“In Lee, because the peak was so much higher, the valley will be lower,” Fishkind said.
While the housing market in Collier has already started to rebound, showing a 3 percent increase in prices over the past few months, Lee County prices fell by a modest 0.1 percent. Pricing in Lee County has flattened out as the volume of sales came down.
“I don’t see a price collapse,” Fishkind said. “What I see is a flattening of prices.”
Sales of existing homes in Lee County peaked around 4,500 homes per month in August 2005. During August 2006, 1,500 existing homes were sold in Lee.
“There was a huge speculative mountain of inventory generated. It will take until 2009 to work that inventory off,” Fishkind said.
Florida condo prices, however, are in for a decline, he said.
“Resale on condos is going down, down, down,” Fishkind said.
People will still want to move to Florida but they may not come in droves as they have over the past few years. Typical growth in Florida has been between 300,000 and 350,000 per year. Over the past few years, Florida saw about 450,000 people move to the state per year, powered in large part by low Florida mortgage loan borrowing costs.
That growth rate could reduce as retirees begin to look at other areas of the South, and a slowdown will have an effect on the local and state economy, which is closely tied to the residential housing market.
However, the tourism market is still strong and should show increases, especially with the opening of the new terminal at Southwest Florida International Airport.
“The opening of that airport was a tremendous economic stimulus to this area,” Fishkind said.
The health-care industry is another important factor that will continue to grow in Southwest Florida, he said. There will be an unprecedented demand for health care in the region because of the aging population. A lack of coverage for thousands of employees who work in the service industry will also create challenges for the system - to say nothing of the affordable housing challenge the area is facing.
