Lee County is going to grow.

No one disputes that assumption.

How fast is it going to grow?

That, no one’s quite sure about.

How much taxpayer money needs to be spent to get ready for that growth? Now you’re really stretching for answers. Figuring that out is less than an exact science. Schools, for example, have to be planned, but by the time they’re built, they’re likely to cost more than anybody estimated.
Other possibilities? They may be outdated even before they’re finished. Or there may not be enough people to use the new buildings.

“We’ve had to find more money to keep paying for projects,” said Pete Winton, Lee County assistant manager. “We’ve had to get creative.”

Projects are prioritized and built as funding becomes available. Winton said the county uses a five-year plan, a complex estimate process and available revenue to set priorities. Often, those plans change.

Local home builder construction costs skyrocketed in the wake of Hurricane Charley in 2004 and again after a dearth of storms in 2005.

Combined with the then-sizzling Southwest Florida housing market, a high level of competition persisted for building materials and labor costs.

“That wasn’t poor planning on our part. Nobody anticipated the drastic increase in construction costs over such a short period of time,” Winton said.

The region must deal with growth properly, because there will likely be no repreive. Stanley Smith, director of the Bureau of Economic and Business Research at the University of Florida, said he has seen no economic or population indicators that suggest a long-term slowdown in growth.

“I don’t really see anything on the horizon that would imply very large changes from what we have seen in the past. Our projections continue to show strong growth in Florida, and certainly Southwest Florida has been growing rapidly,” Smith said.

Florida mortgage loan applications are expected to bounce back in this climate of low rates and declining home prices. Also, affordable housing measures are being pursued and implemented across the region, albeit more slowly than some would hope for.

Lee County Smart Growth Director Wayne Daltry is confident that the county will be able to handle an influx of new students and prosper to boot.

“The impact fees and increased home values enable us to create school space for people who don’t live here,” he said. “That little bubble is temporary and a first for us in a long time.”

In Southwest Florida, impact fees are common, one-time charges billed to new construction to help pay for the county’s growth. Still, planners say more alternatives to construction are needed to meet tomorrow’s needs.

State economists cautioned lawmakers in Tallahassee on Tuesday that the real estate tax revenues of recent years are drying up because of a slowdown in the housing boom. Still, opinions are mixed on whether a cooling housing market could provide an opportunity for projects to get cheaper labor and materials.

Lee County Public Works Director James Lavender has seen more interest from contractors and a slowdown in the rising cost of raw materials. But with commercial real estate construction going strong, the outcome is uncertain.

That’s the opinion of Rick Diamond, a retired newspaper publisher and community activist who lives in Fort Myers, on what the housing market’s return will depend on.

According to Diamond’s editorial in the News-Press, commercial real estate broker Frank D’Alessandro sent a shock wave throughout the residential real estate community by predicting that the Southwest Florida housing market would not recover until the third quarter of 2008.

Yet in a July 2005 column, in which Diamond predicted the bubble was about to burst, D’Alessandro disagreed, stating, “While housing prices would be leveling off, the 5 percent annual population growth would be the key factor in maintaining current housing prices.”

D’Alessandro, who heads the largest commercial real estate brokerage in Lee County and often writes about real estate trends, admits that he was caught off base last year.

“With homes being grabbed up as soon as they came on the market, I assumed that future snowbirds, buying a second home, were major contributors to the boom. Instead it was speculators and, once the market showed signs of softening, they started to bail out, further depressing the market.”

This time D’Alessandro has more hard evidence to back up his prediction, pointing out that the local multiple listing service has a huge overload of 12,654 single-family homes and 7,819 condos on the market at median sale prices far in excess of the current median sales price of $264,100 for homes and $237,500 for condominiums.

This inventory does not include thousands of houses and condominiums for sale from a score of developers, including a number of national firms that were attracted to the area when Lee County was one of the hottest housing markets on the planet.

LEERY BUYERS

While most Realtors contend that a two-year recovery period is too long in view of our continuing population growth, many are hopeful that the outlook posed above will make sellers take a more realistic approach today when it comes to pricing their homes.

However, sales figures throughout Lee County do not bear that optimism.

While there are buyers waiting on the sidelines, many are waiting for prices to drop even further. A lack of affordable housing is the No. 1 problem facing potential buyers because, with house values more than doubling in the past five years, many buyers are priced out.

Nor has the big jump in homeowners insurance premiums or the increase in Florida mortgage rates made it any easier to buy a home.

Last year, the monthly payment on a $200,000 Florida mortgage at 5.25 percent was $1,100; today at a 6.25 percent rate the monthly payment is $125 higher — no small sum for people scraping by.

Buyers are now, understandably, much more leery about reducing monthly payments by taking out interest-only or adjustable-rate mortgages that, during the boom period, accounted for nearly 30 percent of the Florida home mortgage business.

Many families who purchased homes last year at peak prices, with small or no down payment and without fixed-rate mortgages are now facing foreclosures.

PORTABILITY IS THE KEY

Q: When will the market pick up? A: When prices begin to drop even more.

And there is movement in that direction already from new-home builders who, feeling the pressure from heavy investments in land and infrastructure, still need revenues even if their profit margins have to be cut.

Despite the glut on the market, they continue to build, but only at about half of last year’s record pace of 29,000 new homes and condominiums. Most builders are either cutting prices on existing models, whatever they can do to cover the closing costs or offer free upgrades.

However, most existing home sellers are reluctant to reduce their asking price significantly even though they should realize that few people are ever fortunate enough to sell at the peak of the market whether it is a house or a publicly listed stock.

More buyers will be making offers on the low end and sellers will have to have to decide whether to negotiate or to take their houses off the market for a year or two in the hope that prices will rebound.

Sellers have one important comfort zone, the Save Our Home Amendment that keeps their property taxes low. Selling at a reduced price, and purchasing another home or condo in Lee County, or in Florida, will mean that their property tax bill may be greater — even if they downsize.

Portability, the ability to carry your tax savings to a new property, will be the one measure that will jump-start the real estate market.

It’s been 16 years since Susan Bellina - a Bonita Beach Realtor - didn’t have a closing in sight. And she isn’t alone, as the two-mile stretch down Hickory Boulevard has at least 26 homes for sale at the moment.

“I’ve been with Susie for six years and this is the most I’ve seen in any area,” said Christi Bacon, a licensed real estate assistant to Resort Quest Real Estate’s Bellina.

Bacon said that properties remained on the market for less than a week, and that was just two years ago. A house would go up for sale and be grabbed up the following day. As Florida housing markets weaken, however, Lee County is experiencing similar slow downs at the rest of the state.

For the first time in seven years, the median price of an existing home sold with the help of a Realtor was lower in June than it was a year earlier — $268,000 compared to $281,000 in June 2005, according to data released last week by the Florida Association of Realtors.

Meanwhile, the number of homes for sale in the county has risen dramatically over the past year to more than 12,000 — about three times what it was a year ago. The demand for Florida home loans simply isn’t there, as buyers continue to wait and hope prices drop even further.

According to Wes Brodersen, president of the Bonita Springs Board of Realtors, there is a variety of reasons why so many homes in the Bonita housing market are for sale.

“We were invaded by investors who raised the prices and then left,” he said. The result? A significant buyer’s market.

Bacon believes the main reason people on Bonita Beach are trying to sell their homes is because of property taxes. “There’s a lot of people who have lived there for a long time and they can no longer afford the taxes,” she said.

Other reasons for some of the listings include the recent onslaught of hurricanes, children who have inherited the properties from their parents and now want to sell and rising insurance rates, Bacon said.

Brodersen, however, isn’t so sure.

“I don’t think they are selling them over hurricanes and insurance,” he said. “[Florida home loan rates] are going up and the first of the baby boomers just turned 60. Real estate is always a good investment in the long-term. I don’t think there’s anything wrong with the market. It should be more stable in the next six months.”

This is a common view - and it’s one anyone searching for a Florida home loan should find comfort in. No matter how the market appears at the moment, this is one state where purchasing a home is almost always worth the investment.

There’s a large gap between the cost of what’s on the Southwest Florida housing market and what many residents can afford.

That’s hardly new. The question is how to fix it. Officials believe it’s going to take effort by both government and the private sector to narrow the gap.

That was the theme of a wide range of panelists talking about affordable housing Thursday at the Lee County Horizon Council Affordable Housing Symposium, in the region’s latest attempt to find a solution to what is widely being termed an affordable housing crisis.

“Let’s define the problem. Very often I hear people say they don’t exactly understand affordable housing,” said moderator Don Upton. “People don’t know if it’s a long-term problem, a short-term problem, how does is affect the county’s competitiveness in the market, what are the best practices sustainable over time.”

James Nicholas, Professor of Urban and Regional Planning at the University of Florida, pointed to the forces that are causing the market shift. High external demand, much of it from real estate speculators, has created an imbalance between supply and demand and skewed prices upward, putting most homes beyond the reach of local residents.

• Incomes in Lee County grew at an average of 31 percent from 2000 to 2005.
• Housing prices, by comparison, surged upward by a staggering 158 percent.

Another telling stat is that about 113,000 Lee households earn an average of $36,368 annually. Housing is considered affordable if it doesn’t account for more than 30 percent of a family’s income, meaning households with that income could afford to pay a maximum of $122,225 for a home. The median price of a home in Lee County is more than $289,000.

With these prices, buying a house at that price would require a household income of about $89,489, and close to 90 percent of the local households do not earn that much. The recent increase in Florida home loan costs hasn’t helped borrowers on the brink, either.

“The problem here is where is the future labor force going to come from for hospitality, tourism, education and essential services?. If we try to raise wages you are going to need very high wages,” Nicholas said.

The solution could come, in large part, from employers, said consultant Beth Marcus, a former Fannie Mae employee. Helping employees buy houses not only helps the workers, it is also good for their businesses.

“If you are an area hospital, you are going to be interested in employee housing if it helps you retain nurses because you need nurses to continue providing the service you do,” Marcus said.

Employer assistance for housing comes in a variety of forms and can involve buying or renting a home. Options include discounts negotiated between the employer and an outside entity, or outright / matching grants.

Marcus has worked with some companies who have offered employees interest-free loans or matching funds if the person agrees to stay on longer than three years.

“If they leave before that time, they have to pay the loan back. Or the employer can offer to match to a certain level what the employee has saved in three years. But for an employer trying to recruit, those strategies wouldn’t work. They would have to offer something up front,” she said.

Marcus’ presentation ties in with recently passed state legislation, said Jamie Ross, affordable housing director for 1000 Friends of Florida.

“Part of what did pass [in the legislative session] was a measure encouraging employers to have a housing-assistance program as part of a strategy of recruitment and retention,” Ross said.

Southwest Florida isn’t alone. Just look to the eastern coast.

“If you think you have a problem here, I have bad news for you from the other coast,” said James Carras, president of the Broward Housing Partnership, in presenting a case study of his county.
The Broward County housing market lost 22,000 rental units in the last two years to condominium conversions and Hurricane Wilma, giving it the lowest rental vacancy rates in the country. For Broward and other high-growth counties such as Palm Beach and Miami-Dade, the state created a Community Workforce Housing Innovation Program.

The pilot program will provide $50 million to develop housing for essential personnel in communities, which, in theory, will encourage counties to come up with innovative solutions for affordable housing. The program requires long-term affordability of units, both rental and owner-occupied, in return for funding.

“This is the opportunity to bring folks together and get funding to assist in keeping essential personnel here, to encourage local governments to work on regulators barriers that affect affordable housing and to create a non-traditional public-private partnership,” said Nancy Muller, policy director for the Florida Housing Finance Corporation.