Naples, Bonita Springs & Estero Real Estate Industry News & Updates

Southwest Florida’s new home glut shrinks

February 20th, 2011 by

Lee County’s subdivisions have fewer vacant new homes than they have had since 1993, according to a new study by housing market data company Metrostudy.

That’s likely to lead to increased sales soon as supplies dwindle, say builders and industry analysts.

In the fourth quarter of 2010 there were 553 new homes for sale in the county’s larger subdivisions, the report says.

That number has been decreasing as buyers slowly grind away at the glut of new homes built during the residential real estate boom that ended in early 2006, when prices started a sharp four-year decline.

Move-ins throughout 2010 stayed steady at about the level of the 269 recorded in the fourth quarter.

“An encouraging sign is the number of finished vacant units at 2.7 months of supply” in Lee County, said Brad Hunter, director of Metrostudy’s South Florida division.

Although that number was even lower during the second and third quarters of 2008, it’s down from a peak of 5.1 months in the fourth quarter of 2009, he said.

The falling inventory is a sign that new-home construction is getting close to a point at which a modest recovery will occur in the battered industry, said Michael Timmerman, a Naples senior associate with Fishkind & Associates, an Orlando-based economic consulting firm.

“The opportunity to build more units is on the horizon,” he said. “It’s not going to be a big number, but it’s something.”

Michael Reitmann, executive vice president of the Lee County Building Industry Association, said developers are already ramping up to meet the anticipated demand.

At the association’s annual Parade of Homes, which ends this weekend, there are 32 dwellings on display compared to 12 last year, he said.

A lot of the people touring the homes are serious buyers, Reitmann said. “We’re very optimistic about the clientele.”

Paul Erhardt, vice president of community operations for Bonita Springs-based WCI Communities, said he’s seeing the trend in the company’s Pelican Bay development in Fort Myers.

“The resale selection has declined, and I think a lot of what’s left is difficult to buy,” he said. “A foreclosed home or a short sale, it’s a difficult purchase.”

Projects such as Pelican Preserve benefit from that now because they face relatively little competition from pre-owned houses, Erhardt said.

Also, he said, “Through the downturn, buyers always had the desire for this lifestyle” but were unable to afford it, Erhardt said. “We worried about it, that maybe people no longer wanted to live in a country club community or one with a lot of amenities.”

Now economic conditions are easing, he said, and since WCI re-started construction at Pelican Preserve in July, 28 homes have been sold – most of them in recent months.

WCI recently started building another project, Manchester Square in Naples – putting in roads and utilities on raw land where 117 homes will be built, Erhardt said.

Timmerman said the first projects to benefit in a major way will be those close by existing population centers where jobs are available.

That will become more important as gasoline prices increase and commuting becomes more expensive, Timmerman said. “It makes sense for people to be a little bit closer.”

Erhardt said WCI is even building homes at Pelican and other developments “on spec” without a buyer already lined up – a practice that was common during the boom but largely vanished from the industry after falling prices left Southwest Florida with a glut of housing.

That helps overcome some buyers’ concerns about the possibility that construction in a subdivision may come to a screeching halt as happened in many projects after the boom, he said.

Nowadays, Erhardt said, “People are a little more skeptical. Seeing is believing: You can’t sell it off the rendering anymore.”

Allan Poeschl and his wife, Sandy, retired to Pelican Preserve from Milwaukee in 2008 and bought a 1,357-square-foot villa that had already been constructed.

But in a few weeks they’ll be moving into a new 1,743-square-foot single-family home in the community that they were able to design more to their specific tastes, he said.

“Construction prices are good,” said Poeschl, 65, who worked in Milwaukee as a consulting engineer. “Why would I buy a used one when for a few dollars more I could I could get a new one?”

Courtesy of News Press

About the Author:

Melinda Sullivan is Realtor specializing in luxury property in the Naples, Bonita Springs & Estero areas. She updates this blog on a weekly basis and writes about anything and everything to do with buying or selling property in Southwest Florida. You will find regular blog posts on her website at http://www.bonitanaplesrealestate.com/blog/

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