Real estate experts say we may have hit bottom

BY NANCI THEORET  Florida Weekly

Realtors and industry experts in Southwest Florida say we may be finally looking in the rear-view mirror as sales numbers rise in Collier, Lee and Charlotte counties and prices continue to plummet to a 10-year low.

H. Shelton Weeks, the Lucas Professor of Real Estate in the Lutgert College of Business at Florida Gulf Coast University, believes the bottom is near — give or take a few thousand dollars.

“We’re getting very close to the bottom on residential real estate and sales volume is catching up to the number of foreclosures,” he said. “For a while foreclosures were dramatically outstripping sales volume. We’re getting closer to a one-to-one relationship.”

Once-hesitant buyers have been jumping back into the market this summer — a pleasant surprise for Collier County Realtors, who reported more buyers at the mid- and higher ends of the market as the inventory of homes priced under $300,000 shrunk.

Cape Coral and Lehigh, among the most affected markets in the country, are attracting bargain-hunter investors and multiple bids are beginning to push up sale prices for the most distressed homes.

Naples, in particular, had a good summer with more closed sales than summer 2008, according to data provided by the Naples Area Board of Realtors, which tracks home listings and sales in Collier County with the exception of Marco Island. The majority of those sales occurred in the under $300,000 market, the segment most impacted by foreclosures and a market that didn’t exist in January 2006 when the Naples median price hit $511,400.

“Foreclosures are proceeding at a pace that is record setting,” said Brett Brown, NABOR president and a Realtor with Downing-Frye Realty. “We’ve had 9,000 foreclosures compared to less than 500 in 2004. But the good news is we are selling those distressed properties. We have a 15 percent reduction in inventory compared to almost a year ago.”

Naples’ median price for existing homes dropped to $172,000 in July 2009. By contrast the median statewide price fell to $147,000.

Lee County continues to suffer although Realtors here think the end is also near. “We may be there and bumping along, give or take a $1,000 or two,” said Denny Grimes of the eponymous Fort Myers real estate company. “The market below $100,000 is showing great improvement, from $100,000 to $149,999 has had some improvement and $150,000 to $200,000 is

getting better.”

Lee County’s median sales price for existing homes was $89,000 in July, compared to $154,900 in July 2008 and a peak $322,300 in December 2005. The county recorded 1,570 homes sold in July — more than twice the 768 homes sold in July 2008.

Mr. Grimes estimated 85 percent of the county’s inventory is priced below $200,000 — with as much as 80 percent representing distressed homes. “But it was irrational the way the market was going [four years ago]. People were buying pre-construction, selling and using their proceeds to buy a Lear jet. The pendulum swung completely to the other side. You can now buy a home well below the cost of reproducing it.”

Buyers, he said, are a mix of investors, first-time and last-time buyers.

John McWilliams, of McWilliams Buckley & Associates in Fort Myers, said bidding wars and multiple offers are beginning to occur in the lowest segment of the Lee County market, helping to drive up prices in Lehigh and North Cape Coral, where banked-owned threebedroom, two-bath homes were selling from $40,000 to $80,000 — a fraction of their $250,000 boom pricing.

“There are more buyers in the entry market than there is supply,” he said. “People are looking for the best deal possible and they’re finding them.”

Collier County

Tom Bringardner, president and CEO of Naples-based Premier Properties of Southwest Florida, was encouraged by early September showings.

“September is usually our slowest month but we’ve had more showings than we’ve had in a significantly long time, even in the upper end of the market — the million dollar and up range,” he said. “A lot of people have been sitting on the sidelines waiting for the right price and the right property.”

The Naples Area Board of Realtors’ July data, the most recent available, showed an overall 121 percent jump in pending sales in July 2009 compared to July 2008 — 924 single-family homes and condos versus 419. Pending sales for properties under $300,000 showed the most significant spike.

The return of buyers to the Naples market “is exactly what we need,” said Jo Carter, president of Jo Carter & Associates. “Prices are starting to rise a bit.”

“People recognize the market has about hit bottom and if they want their little piece of paradise they have to get on the stick, said Michele Harrison, a Realtor with John R. Wood Realtors. “They’ve been sitting on the fence; now they’re making the leap,”

Ms. Harrison has worked with buyers “from $200,000 to $2 million. The higher price range is really just starting to take off,” she said. “People are still coming in looking for deals but right now those bargains are in the over $300,000 segment.”

Charlotte County

Competitively priced homes are also selling in Charlotte County, said Sharon Kerr, a Realtor with Coldwell Banker Sunstar.

“Year to date, we’ve had the largest amount of sales between $100,000 and $140,000, particularly short sales and foreclosures,” she said.

The adjusted prices are appealing to young retirees, second-home buyers and some first-time buyers, Ms. Kerr said. “I think you’re seeing prices start to level off. You’re also seeing educated buyers who are cognizant that values are very attractive and they’re willing to step up to the plate.”

ReMax Harbor Realty agent Mary Dick agreed.

“People are realizing now is the time to buy that vacation home,” she said. “Homes are so attractively priced right now, people are picking up property now as an investment in their future.”

Charlotte County posted 248 sales in July — up 24 percent from the 200 sales in July 2008. The county’s median existing home price was $105,000 in July, down from $141,800 a year ago. No homes priced above $1 million had sold in the county as of August, Ms. Dick said.

Ms. Kerr expects sales numbers to continue to climb in Charlotte County. Realtors elsewhere are expect summer’s momentum to influence Southwest Florida’s so-called “season,” the January-to- April period that attracts vacationers, snowbirds and part-time residents.

Optimism

“Almost all of my rentals are taken, and traditionally a good portion of my seasonal tenants become buyers,” said Ms. Carter. “But you’re talking to an eternal optimist. I’ve been in Naples 55 years and have been in business 36 years. I’ve seen the ups and downs before — and 18 percent interest rates — but I love Naples and see the value.”

Mr. Grimes predicts Lee County will post record sales numbers in 2009 especially as more sellers get realistic about pricing.

“Bargain hunters will be using their leverage this season,” he said. “Waterfront homes in Cape Coral are 50 to 75 percent off their peak prices. Condo deals are only going to get better because we have an oversupply.

“There are more eyeballs on us worldwide every day, thanks to the Internet,” continued Mr. Grimes. “I’m getting e-mails, inquiries and phone calls from people who are salivating. The Internet allows them to watch the crash in real time.”

Mr. McWilliams echoed Mr. Grimes.

“People are coming from all over the world,” he said. “They clearly know Lee County real estate is on sale.”

Shrinking inventory is also good for the local economy, once fueled by the building boom. Ms. Harrison sees signs that builders will soon be back to business, building new homes in now-stagnant developments throughout the region.

“The new home market was quiet for so long there were builders who couldn’t hang in there and didn’t. The entire industry has been decimated,” said Ms. Harrison, past president of the Collier Building Industry Association, the local trade organization for builders, contractors and related businesses. “I’m hearing glimmers of good tidings from builders. Their inventory has pretty much been snatched up in our area. Soon, builders will have to ramp up.”

The current wave of discount buyers is also good for the economy, said Professor Weeks.

“Investors will fix up these homes, pour money into them and bring dollars back into the economy,” he said.

But first the existing inventory of distressed homes must sell, said Mr. Grimes. “The local economy won’t pick up until construction workers go back to work. And they won’t go back to work until the inventory selling below the cost of reproduction is sold.”

Professor Weeks cautions that there’s no quick fix for the local economy or the real estate market.

“What we’re seeing is the market working through the process of clearing all this inventory that built up during the downturn,” he said. “It takes a while for the market to work through that.

“For us, looking forward, it would be unreasonable to think improvement in Florida in general and Southwest Florida in particular is going to happen before the remainder of country recovers economically,” he added. “Unfortunately for us, a lot of buyers have historically traveled down I-75 … and things are not healthy on the northern end [Michigan] that has traditionally fed into Southwest Florida. It’s going to take bigger things to happen. Recovery will happen and it will happen slowly. People will come back and want to live in Southwest Florida.”

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