The News-Press Market Watch: Real estate tide turning, experts say
The News-Press, February 23, 2012
We’ve all got the bruises and the scars,” commercial real estate broker Randy Thibaut told the audience Thursday night at The News-Press Market Watch real estate symposium. “But I’m here to tell you, it’s time to start smiling again.”
That was the theme of the night at the annual event at Harborside Event Center in downtown Fort Myers, where real estate authorities take a look at the previous year’s trends and make predictions for the year ahead.
Thibaut — owner and founder of Land Solutions, which handles the sales and development of large parcels of land — was talking about a steady recovery in the new-home construction industry over the past year and a half.
“The gap between new home construction and resales is shrinking,” he said: $100-130 per square foot for a new home vs. $80-90 for an existing home.
It was the cheeriest Market Watch since the real estate market imploded at the beginning of 2006 at the height of a wave of speculation that drove the median price of a single-family resale to a record $322,300 in December 2005.
The median was $115,000 in January, according to Florida Realtors statistics — although the group debuted a new industry data.
“Greed, that was what drove our market” at the height of the boom, said Denny Grimes of Denny Grimes & Company at Royal Shell Real Estate.
Now, he said, the market is driven by confidence: prices are rising and 20,175 residences were sold in 2011: third best of all time next to 2009 and 2010.
The supply of unsold homes on the market shrank sharply, especially for the low end, Grimes said, noting that there are now only 683 single-family listings on the market compared to 4,220 two years ago.
Six years ago, as the boom was cresting, there were only 12.
Grimes drew applause when he said a tight market for homes would reignite the home-building industry.
“That’s good news, that’s going to put builders back to work again,” he said. “Our inventory is what it was a month before the peak.”
The only fly in the ointment is the difficulty buyers have getting financing, Grimes said. “If the appraisers don’t get you, the underwriter will.”’
Contract failures, caused largely by declined mortgage applications or by appraised values coming in below the negotiated price, were at 33 percent in November 2012, he said, compared to 9 percent in August 2010.
The third speaker of the night, commercial real estate broker Stan Stouder of CRE Consultants LLC, said thke past year was characterized by the strong influence of major events on the world scene.
“It was the year of the big,” he said, citing the S&P cut in the credit rating for U.S. national debt and the economic troubles in Europe.
But that was not all bad news, Stouder said: a $1 billion Chinese drywall settlement means $500 million in remediation efforts will be spent in Florida. It costs about $30,000 to clean the drywall out of a typical house, he said.
Going forward, Thibaut said, expect to see growth move north along Interstate 75 but probably not any farther to the east.
He also advised builders to look to the south, where rhe burgeoning economies of Latin America have produced a lot of people looking to invest or even relocate to Florida.
Those buyers have already transformed the Miami condo market, Thibaut said, and they’ll be looking to Southwest Florida as well.
“If I were a builder, I’d be learning to speak their language,” he said.
Fort Myers home prices rise
Gulfcoast Business Review, March 7, 2012
GULF COAST — According to data by national researcher CoreLogic, year-over-year January housing prices increased in the southern portion of the Gulf Coast while they continued to decline further north.
In its January Home Price Index report, the Cape Coral-Fort Myers area was the only market to increase prices on the Gulf Coast from last year. January home prices in that market, including distressed sales, increased by 7% from January 2011, and December prices increased by 2.4% compared with the same month in 2010. Excluding distressed sales, prices grew 4.4% in January and declined by .5% in December compared with a year ago.
CoreLogic reports that housing prices in Tampa-St. Petersburg-Clearwater, including distressed sales, declined by 1.4% in January and 7% in December compared with the same months a year ago. Excluding distressed sales, those numbers decrease, to a price decline of .1% in January and 1.1% in December compared with the previous year.
For the North Port-Sarasota-Bradenton area, home prices decreased by 1.6% in January and 6.4% in December compared with those months a year ago when distressed sales are included. When distressed sales are excluded, January sales show an increase of .9% over 2011 and December sales show a decline of 1.3% from December 2010.
Additionally, Florida is third out of the top five states with the largest declines of peak-to-current prices when including distressed transactions, behind Nevada and Arizona. California and Michigan are fourth and fifth, respectively.
CoreLogic, based in Santa Ana, Calif., has one of the largest databases for U.S. real estate in the country, and is a leading provider of consumer, financial and property information
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Five Best US Housing Markets for 2011
Nu Wire Investor, January 3, 2012
Most of the U.S. housing market suffered painful losses throughout 2011, and failed to make a significant recovery in an ongoing recession that has eroded buyer confidence and driven down real estate prices. There are five cities, however, that experienced comparative booms in prices and sales. Cities that saw the biggest increases in the media price of homes, from greatest to least, include Fort Myers/Cape Coral, Fla., Shreveport/Bossier City, La., Washington, D.C., Ft. Wayne, Ind. and San Antonio, Texas. For more on this continue reading the following article from TheStreet.
The U.S. real estate market continues to struggle, but some cities actually saw housing booms of sorts over the past year.
Consider Fort Myers/Cape Coral, Fla.
Long the poster child for Florida’s housing bust, the Gulf Coast community’s median list prices soared more than 20% during 2011’s first 11 months as investors grabbed low-cost homes, according to Realtor.com.
“Like many Florida markets, Fort Myers has experienced a large increase in investor activity, which has driven down inventories and put a floor under prices,” says Paul Bishop of the National Association of Realtors, which operates Realtor.com. “As the rest of the national economy stabilizes and picks up, vacation buyers will also look to snap up bargains.”
Here’s a look at 2011’s five best U.S. housing markets, based on increases in Realtor.com’s median list prices for each community between January to November of 2010 and January to November of this past year:
Fifth-best market: San Antonio, Texas
Median 2011 price gain: 4.05%
San Antonio’s housing benefited from strong population growth, a below-average foreclosure rate and some of the nation’s best job gains in 2011.
Manpower Group recently predicted the city will have the best employment increases of any major U.S. metropolitan area during the fourth quarter, with health care and bioscience jobs leading the way.
“More than half of the recent job growth has been in health care — a stable sector that attracts professionals and skilled workers from all areas of the country,” Bishop says. “With strong population growth and gains in employment, household formation in San Antonio has continued at a solid pace.”
That helped push the city’s median list price up to $169,500 during 2011’s first 11 months — a 4.05% gain from the same 2010 period.
Fourth-best market: Fort Wayne, Ind.
Median 2011 price gain: 5.11%
Fort Wayne’s median list price rose more than 5% during 2011’s first 11 months, hitting $105,000. Bishop attributes the gains to a combination of affordable home prices and an improving employment picture.
“Fort Wayne is recovering from a significant recession, but has managed to see tally job growth in the past few months,” he says. “The unemployment rate is on par with the national average, but the metro area has performed better than the state overall in generating new jobs.”
The community, which ranked ninth on Realtor.com’s third-quarter list of “Top 10 Turnaround Cities,” has also seen an improving foreclosure picture.
The number of foreclosed Fort Wayne homes listed for sale on Realtor.com dropped 19% over the past year, with asking prices on bank-owned homes rising 6.5% due to strong demand and falling supply.
Third-best market: Washington, D.C.
Median 2011 price gain: 5.16% (city), 5.11% (Virginia suburbs)
Median list prices rose more than 5% during 2011’s first 11 months in the District of Columbia and Washington’s Virginia suburbs.
Median asking prices increased to $369,900 in the District, while Virginia suburbs saw the typical list price rise to $332,970.
Bishop attributes the gains to Washington’s large base of federal government jobs.
“The federal government and contractors provide a stable, well-paying block of jobs that has allowed D.C. to weather the recession better than most areas,” he says. “Rents have [also] risen strongly, pushing some households to purchase their first home either in the District or in one of the nearby suburbs. ”
Second-best market: Shreveport/Bossier City, La.
Median 2011 price gain: 7.01%
This northwest Louisiana community’s median list price increased to $168,000 during 2011’s first 11 months.
Bishop cites “better-than-average job growth, especially in higher-wage sectors such as manufacturing, mining/energy and construction. Homes remain affordable and with an unemployment rate of just over 6%, the areas has attracted job seekers from other areas of the country.”
Historically an oil-and-gas powerhouse, Shreveport /Bossier City has become a tourism and gambling mecca in recent years, with five riverboat casinos and one racetrack. The local economy also benefits from the presence of nearby Barksdale Air Force Base, which has some 9,000 employees.
Best market: Fort Myers/Cape Coral, Fla.
Median 2011 price gain: 20.7%
Fort Myers/Cape Coral saw prices drop more than 60% during the housing bust, but has since begun a rebound.
Foreclosure filings are down, median list prices hit $174,900 in 2011’s first 11 months and real estate investors are pouring in.
“Underlying all of this is a modest increase in employment and a decline in the unemployment level — although it’s still above 10%,” Bishop says.
Fewer foreclosed homes returned for resale
The News-Press, Dick Hogan on January 3, 2012
Combine the sharp drop in homes coming back on the market with higher housing prices at the end of 2011 and builders in Lee County get some good news for a change.
The number of foreclosed homes coming back on the market for resale by lenders in Lee County was down sharply as 2011 closed while housing prices rose — good news for builders hoping to be competitive in price with existing homes.
A glut of foreclosed homes following the implosion of the real estate market in 2006 pushed prices down sharply for existing homes. Builders found themselves unable to compete with the low prices and the number of houses being built went from more than a thousand in 2005 to about 100 at present.
In December, 23 permits were issued in Cape Coral, six in the unincorporated county, three in Sanibel and 10 in Bonita Springs. Numbers weren’t available Tuesday from Fort Myers and Fort Myers Beach.
Meanwhile, the median price of an existing home in the county with the assistance of a Realtor was up as the year ended: $106,300 in November, up 20 percent from $88,500 a year earlier.
From modest homes to mansions, prices inched up enough to make the price of new construction roughly equal to that of an existing home, said Jeff Tumbarello, director of the Southwest Florida Real Estate Investment Association, which issued a report Tuesday on the 2011 foreclosure and real estate market.
“Go try to buy a million-dollar house and see what it costs to buy a lot and put the same house on it,” he said. “It’s almost the same.”
The number of foreclosure lawsuits filed actually bumped up in 2011: there were 586 filed in December compared to 423 a year earlier.
But fewer foreclosures were resulting in actual judgments followed by public auction sales: there were only 293 in December compared to 582 a year earlier.
That was a result of a slowdown in the judicial system’s handling of foreclosures as the so-called “Rocket Docket” — a speeded-up procedure for pushing those cases through the courts — came to an end mid-year, Tumbarello said.
William Noah of Re/Max Hometown Properties, which is representing developer Pasquale Franchi’s Casa di Fiori condominium project in Cape Coral, said both investors and prospective homeowners are interested in the project, which has 52 units already built and ready for sale plus land for another 152 yet to be built.
By next week he hopes to have permission from the state Department of Condominiums to start marketing the condos, which will go for $115,000 to $125,000 — about half the price in 2005 when the project was started as Island Pines of Cape Coral.
One big advantage Franchi has is that he’s offering seller financing to buyers with 10 percent down: banks typically won’t look at a condo mortgage for less than 20 percent down, Noah said.
Dennis Cantwell, president of Sand Springs Development in Estero and also president of the Lee Building Industry Association, said the difficulty in getting bank financing is a major problem in the home-building industry these days but that he’s seeing signs of a recovery. He’s been relying on remodeling for work but now has a house under construction for the first time in two years.
Caitlin Hustrulid, director of members services and events for the association, said the group’s Parade of Homes will have at least 41 homes as it showcases the area’s new home construction the first three weekends in February.
That’s up from 32 last year and a far cry from the event’s low point of 12 houses in 2010, she said. “A lot of people who have participated in the past are jumping in and doing it again, a lot of smaller custom home builders.”
Clubs taken over from Bonita Bay Group by members now finding success
Naples Daily News, December 30, 2011
A little over two years ago, members took over their beach and golf clubs at Mediterra.
A cloud of uncertainty lifted, as club ownership shifted from the financially strapped developer, Bonita Bay Group. It came at a price: Mediterra’s members paid $6.8 million in cash for their clubs and assumed $15 million in debt for a Community Development District, created to help develop roads and provide other basic services for residents.
Members also agreed to put up money for future improvements as part of the sale.
Since the transfer, the golf club in North Naples off Livingston Road has been spiffed up and has attracted new members.
“It’s going spectacularly well. I would say we have exceeded our wildest expectations in terms of membership growth, just growth and development of the club,” said Richard Schmidt, who served as the first president of the member-owned club.
Bonita Bay Group, a Bonita Springs-based developer, sold off a handful of its clubs to its members in 2009 and 2010 as it fought off bankruptcy. Other clubs have seen renewed interest with the change in ownership that put their members in control.
With 441 members, the golf club at Mediterra is expected to reach its cap of 450 by the end of the winter season, said Schmidt, who helped negotiate its sale to members.
On top of the hundreds of golf members, there now are about 100 sports members and more than 200 social members using the club for other activities, such as tennis. When members took over the club, there wasn’t a social-only membership.
Many of the club’s new members are new residents of Mediterra. With an improving housing market, sales have picked up in the luxury gated community, generating new prospects for club membership.
“The worst years were 2008 and 2009. Sales increased in 2010, over 2009 … 2011 is going to be a much better year than 2010. We’re hopeful that trend is going to continue, but who knows what is going to happen with the real estate market,” Schmidt said.
At the time of the sale, golf members at Mediterra contributed $19,000 each and sports members paid $6,000 each to purchase their clubs, to recapitalize them and to pay for immediate improvements.
More than $2.5 million has been spent on improvements since members purchased their golf and beach clubs. About $750,000 was spent on a new outdoor dining area with a bar at the golf club. Other additions include bocce courts and there are new tennis courts under construction, which will include a stadium court where exhibition games can be played.
The beach club at Mediterra also has undergone renovations, including freshening up the inside. The beach club membership is part of the golf and sports memberships.
“We’ve brought our golf courses, conditioning wise, back to what they were before the developer ran into financial problems,” Schmidt said. “They were neglected.”
When members first took over the club, the new board borrowed money, but “we immediately paid it back,” Schmidt said.
“We have been able to make all of the capital improvements and still have a very healthy balance in the bank,” he said. “So we’ve had no assessments, and we have been able to make the improvements with the regular cash flow.”
New members pay about half of what the original members did to get into the club. The fee for new members is now $85,000, which is non-refundable.
For years, Bonita Bay Group touted its unique club membership fee refund policy – money back within 30 days of resignation. But in fall 2008, the company suspended refunds after seeing a surge of resignations and a “run on the bank” by members seeking refunds at its golf clubs, including Mediterra.
The roughly 25 members who wanted to resign from the old club at Mediterra and didn’t want to join the new member-owned club have all gotten their deposits back from Bonita Bay Group, Schmidt said.
The new club at Mediterra offered 20 memberships to outsiders who don’t live in the community and most are sold, Schmidt said.
He said members who joined the club when it was owned by Bonita Bay Group and then joined the new club are eligible for a partial refund of their original deposit “if the club can afford it.” They’ll also get back their initial capital assessment, Schmidt said.
Like the club at Mediterra, the Bonita Bay Club off U.S. 41 in Bonita Springs has grown and gotten a new look since being taken over by its members.
The club at Bonita Bay has added nearly 100 members since it was purchased in March 2010.
The club has 2,002 members total, including 1,232 golf members, said Stephanie Glasco, an assistant to the Bonita Bay Club’s manager. There are several types of memberships, including tennis and social. The initiation fee for a golf member is now $50,000. Golf members pay $850 a month in dues.
Members purchased the Bonita Bay Club for $11.5 million in cash. When members bought the club, they agreed to pay capital assessments for sorely needed improvements on top of the transfer fees. One-time assessments ranged from $1,200 for golf members to $360 for social members.
A few months after the sale, the Bonita Bay Club’s new board approved $3.5 million in capital improvements, which included sprucing up the entrance to the club, redoing the tennis center, giving the fitness center a facelift and updating the Creekside golf course. Later, the board approved another $3 million in improvements for 2011, including adding 250 new GPS-equipped golf carts and nearly $1 million in new golf course maintenance equipment.
Here’s a look at other Bonita Bay Group clubs and properties, past and present:
■ Shadow Wood Country Club at The Brooks in Estero has done “exceedingly well” since it was sold to its members, said Bill Wagner, general manager and chief operating officer.
It has been nearly two years since members bought their club at Shadow Wood and it’s debt-free. Members purchased the Shadow Wood and Commons clubs in The Brooks for $8.25 million. The board will vote soon on some improvement projects for the club, which was built about a dozen years ago.
■ At TwinEagles off Immokalee Road in North Naples, The Ronto Group and Angelo, Gordon & Co. purchased TwinEagles from Bonita Bay Group for $11 million in September 2010. Improvements are ongoing.
■ Bonita Bay Group still operates the marina club and the restaurant, Backwater Jack’s, at its flagship community, Bonita Bay. Members got their deposits back after they rejected a final sales pitch from the developer following months of negotiations.
■ At Verandah in Fort Myers, Bonita Bay Group still operates the club and controls the community. Memberships are growing with the community, one of the developer’s newest on the banks of the Orange River. As of November, new home sales at Verandah had doubled over last year.
“Certainly, many of those sales translated into memberships,” said Tina Matte, a spokeswoman for Bonita Bay Group. “However, we have introduced a nonresident membership, which has also been received very well in the marketplace because of its value, compared to other clubs.”
■ Earlier this month, Bonita Bay Group announced that homebuilder Taylor Morrison had purchased the remaining home sites in the Sandoval community in Cape Coral, which the developer launched in 2005. It was the developer’s first community that didn’t include a golf course. There’s a clubhouse and other amenities, including a two-mile linear park and a resort-style lagoon pool, but no membership is required.
Sandoval remains a top-selling community in Southwest Florida, with 120 new home sales in 2011 alone.
Downtown Fort Myers thrives
The News Press, December 14, 2011
For the first time since the recession, downtown Fort Myers has almost no vacant store or restaurant fronts. Two new businesses have sprung up in the past few months – with more coming soon.
Things are looking up in downtown Fort Myers.
After years of business slowed by a poor economy and ongoing construction, downtown is finally seeing more crowds, more new businesses and fewer vacant storefronts.
“Most of the storefronts that are in a rent-able condition have been rented,” said Don Paight, executive director of the city’s Downtown Redevelopment Agency.
All retail fronts on First Street have been spoken for, said Nils Richter, a Realtor with Market America Realty. He’s seen more potential renters interested in downtown properties now than in the past 12 years, he said.
Bob Pekol, a real estate adviser with LandQwest, said he expects rent prices to go up soon as space is running out downtown.
Paight said he credits the increased business to the completion of the city’s $60 million street renovation project, which replaced underground utilities downtown and added brick roads, new streetlights and new street signs. Street closures throughout the four-year construction project caused many businesses to suffer, though few moved out during that time, Paight said.
Since the project was finished in January 2010, Paight estimated about 20 new businesses have moved in.
Nancy Maloney, 58 of Fort Myers, said she sees vacant storefronts downtown fill up much more quickly now than they did six months ago. With all the new businesses springing up, she now has a wider variety of options for her lunch hour, she said.
“This is a destination place now. Even if I didn’t work downtown, I’d come just to walk around and do the shops,” Maloney said.
One such new addition is Lush Bakery, which opened on the corner of First Street and Broadway just over two months ago.
Originally from Paris, owner Eric Truglas attempts to give the new bakery an authentic Parisian feel. He sells pastries, sandwiches, coffee, tapas, wine and beer — which customers can enjoy inside or at his sidewalk tables. One of his French specialties is the Croque Monsieur — a panini with melted cheese on top.
It’s too early to tell if Lush will be a success, but things are going well so far, Truglas said.
“It’s been well received. It’s been steady — and people like our product,” he said.
A few blocks away, a new organic gelato shop is looking for more customers. Adelheidi’s Organics on Hendry Street offers creative flavors such as beer, black pepper and strawberry rose — two scoops for $3.95.
“It’s slower than we’d like,” said Peter Hogan, who manages the shop owned by his stepson and daughter-in-law.
They haven’t done much promoting yet and are still lacking some basic items such as a dishwasher, a working credit card machine and decorations, he said.
Trends
One encouraging trend is that as several businesses have moved into larger spaces this year, the newly vacant spots have been snapped up immediately, Paight said.
One such example is Charme, a women’s boutique that doubled its size two weeks ago by moving into a new location on First Street. The store’s old location a few doors down is now rented to The Nest Home and Garden, Paight said.
Charme owner Kathy Bogaert said she decided to move after watching 20 people cram into her store for Art Walk and Music Walk. The expansion has been a success so far, she added.
Offices spaces are not renting as fast this year — there are about 12 still up for rent, Richter said. That’s because while a retail business benefits from a busy downtown location, an office has no reason to pay the extra rent being downtown entails, he said.
Even so, downtown is renting out more office space than the rest of Lee County because the government and court presence provides a high demand for attorneys, Paight said.
Downtown’s future
As new tenants come in, sections of downtown Fort Myers are also getting a facelift. The building at 1601 Lee St. had a bold, tangerine paint job in recent weeks and other buildings are on a waiting list for work. Richter said a client recently bought the building at 2208 First St. and will renovate once a tenant is found. He’s also listing 1414/1416 Dean St., a vacant shell, which has a potential tenant who will do the improvements in the next few months.
A new burger and beer joint called Ford’s Garage is in the process of renovating 2201 First St., the former Morgan House location. It should be open for business by mid- to late January.
Mike McGuigan, one of Ford’s managers, said downtown has a lot of potential that needs to be taken advantage of. The area needs new restaurants and bars that can draw a crowd and make downtown a fun place to hang out.
“Our intent is to literally jump start downtown,” McGuigan said.
Ford’s Garage will pay homage to local legend Henry Ford, and the decor will be modeled after a 1920s service station. The restaurant will offer gourmet burgers and 100 varieties of craft beer. A typical burger-and-beer combo will cost about $15.
Ford’s is just the first of three new restaurants McGuigan and partner Zak Kearns plan to open downtown within the next year.
Downtown development seems poised to continue in the right direction, especially once the waterfront project is completed this summer, Paight said. The city is planning a water quality project that would create ponds off the Caloosahatchee River and bring the waterfront in to Bay Street, providing more waterfront property for businesses, customers and tourists. Restaurant owners and hotel developers have already expressed interest in the location, Paight said.
“I think we’re over that hump, and we’re going to continue to see the growth and prosperity down here as the economy picks up and we’re able to get a few more of these projects going,” he said.
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