Rent ratios

Applying stock market fundamentals to real estate

Here is a concept that could prove very useful to investors in evaluating whether or not a property is appropriately priced.

The concept of rent ratios is based on the most basic method of evaluating a stock, price-to-earnings ratio. This ratio measures a company’s share price with its annual profit and can be a good indicator of value with a stock.

This same concept can be applied to the housing market utilizing rent ratios which are created by dividing the price a house would sell for by the annual rent that the property would generate. For example, a house selling for $200,000 that rents for $1800/month would have a rent ratio of 9.3 ($200,000/($1800 x 12) ).

The rent ratio is just one of the factors that investors should consider when evaluating a property. Rents are a great reality check for housing prices but can be greatly affected by other issues including demographic make-up of a community such as a university town or a resort community with high seasonal rental rates. The aggressive rate of condo conversions in some markets can also have an impact of this ratio with rental stock shortages driving up rental rates in some markets.

Nation-wide the average rent ratio is approximately 17, which interestingly is below the current Standard and Poor’s 500 stock index price-to-earnings ratio of 20. During the dot-com boom in 1999, the S&P 500 PE ratios hit 35.

Is Your House Overvalued? [New York Times]

Glades restoration proceeding

Southern Golden Gates restoration moving forward

The last piece of property has been acquired by the state for the Southern Golden Gates restoration project.

This highly controversial project calls for the restoration of the failed Southern Golden Gate Estates to its natural state. The project will tear out roads and fill in canals to restore natural water flows across 55,000 acres where developers once dreamed of building the world's largest subdivision between U.S 41 East and Interstate 75.

Last month, long-time hold-out and local folk hero Jesse Hardy agreed to sell his 160 acre property to the state for $4.95M. Last week a Collier County Circuit Judge signed an order forcing the Miccosukee Tribe of Indians to give up more than 800 acres it owns in the restoration area in exchange for $2.2 million from the state.

Miccosukees forced to give up land to Glades restoration [Naples Daily News]

Alternative REI strategy

Invest in housing-focused company stocks

Investors eager to pile onto the real estate boom but not wanting to plunk down $200,000 to buy a house are finding an even better way to play: stocks.

Shares of everything from home builders to mortgage lenders and makers of building materials are surging, even faster than home prices, as the industry rocks.

Housing stocks go through the roof [USA Today]

Impact fees

A tale of two cities

Impact fees continue to be a hot topic around SW Florida and this month two communities have taken remarkably different positions regarding these fees.

In the Charlotte County community of Northport, the City Commission agreed to up the road-impact fee 27 percent to help fund new highway growth. In an interesting twist, even many local builders have spoken up in favor of increasing road-impact fees. Builder's motivation for supporting impact increases was to block an alternative approach which called for a building moratorium in certain parts of the city where basic services are not in place.

Meanwhile in Lee County, the Ft. Myers City Council voted to continue the in-place sewer and water impact fee waiver until 2011. This waiver was established 1992 as a way to encourage residential development in Ft. Myers. With the explosive growth now occurring throughout the Ft. Myers, one has to question whether this waiver is necessary. Fear of lawsuits from developers with projects on the drawing board was cited as a factor in continuing with the waiver.

North Port's first step [Sun-Herald]
Critics question impact fee waiver [News-Press]

A peek at investors

A birds-eye view of five hot markets

Curious about investing.....what are they buying......how are they doing it? Take a quick tour of five sizzling markets: Los Angeles; Las Vegas; Phoenix; Austin and Miami.

Optimism is rampant with this crew, the results to date speak for themselves.

Real Estate Frenzy [Fortune]

Lee County prices skyrocket

Up 43 percent from April 2004

The median resale price of a single-family home in Lee County was $262,900 in April, the second consecutive month in which prices have skyrocketed 43 percent over last year.

The prices didn't slow sales, as 1,266 homes sold, a 19 percent increase over April 2004, the Florida Association of Realtors reported.

Existing home sales up sharply [News-Press]

Clued in

What will trigger a crash?

Choose your poison:

1. spike in long-term interest rate

2. minor event that spooks investors

3. recession

4. ridiculously high prices

5. flattening yield curve between short-term and long-term rates

House of Cards? [Wall Street Journal]

Florida's housing bubble

Home appreciation off the charts -- now what?

Business columnist Robert Trigaux of the St. Petersburg Times weighs in on the booming Florida housing market.

Indicators of the existence of a Florida bubble include the fact that four of the top five and eight of the top ten appreciating metropolitan areas in the country for the first quarter of 2005 are in Florida. The other weighty statistic is the fact that Florida median single-family homes shot up 26 percent in the last year.

While Trigaux makes no predictions, he does reference Yale University economist Robert Shiller's new book about the today's real estate market titled Irrational Exuberance. Probably not a bad idea to pick up a copy of this book to understand Shiller's perspective, particularly his comparison between this market and the dot-com boom.

As an active participant in both of the dot-com and real estate booms, I can certainly see many similarities as well as some differences. Most troubling to me in the current real estate market is the risk that investors are currently taking with interest only financing and also current ratio of investor to end-user transactions. Of comfort to me, especially in the Florida market, are the very favorable migration demographics.

Florida's housing bubble, is it ready to burst? [St. Petersburg Times]

Take the money and run

Is it time to cash out on top?

This here's a story about Billy Joe and Bobbie Sue
Two young investors with nothin' better to do
Than sit around the house, get rich, no re-hab to do
And here is what happened when they decided to cut loose

A question for the ages, do I cash out of my boom inflated property and downsize or relocate to a less expensive area? The Christian Science Monitor profiles several families as they ponder this question.

Home economics: Do you cash out? [The Christian Science Monitor]

Gen-X and echo-boomers

Young buyers driving new-home market

Households headed by Generation Xers and members of the so-called echo-boom purchased 55 percent of all newly built homes sold in 2003 and are fast becoming the trendsetters in U.S. housing markets, according to reports from the U.S. Census and newly analyzed buyer preferences data from the National Association of Home Builders (NAHB).

“A new generation is viewing the housing market from an entirely different perspective than the baby boomers who’ve traditionally dominated industry trends,” said NAHB Executive Vice President and CEO Jerry Howard. “They’re techno-savvy and are more likely to be house-shopping on the Internet. They have a strong awareness of all their options.”

Young Buyers Are Setting Trends In The New-Home Marketplace [National Association of Home Builders]

Meet Bucky Buthman

Everybody's favorite agent

Move over Clark Kent, there is a new guy in town and his name is Bucky Buthman. Although I doubt that he is faster than a speeding bullet and probably can't leap buildings with a single bound, Bucky has a style all his own.

Of special note in Bucky's listings is the granny unit, I have often wondered what these green beauties are that I see dotting the landscape.

Real Estate from Bucky Buthman

Party on Mr. Realtor

Miami pre-construction parties spare no expense

The nutty Miami condo market is getting even crazier with the pre-construction parties that developers are throwing to create a buzz about new projects.

With 70,000 condos on the drawing board for the greater Miami market, attracting fresh faces to invest is a must. Some of these parties have cost over $250,000 and have featured salsa dancers, drag queen DJs and even Star Jones of "The View" fame.

Not everyone is sold on the long-term viability of Miami market, Jack McCabe, chief executive of McCabe Research and Consulting of Deerfield Beach, Florida, has formed an "opportunity fund" that is nearly "eight figures" to take advantage of a swoon he sees coming next year as a result of a bulge in the south Florida condo pipeline.

Salsa Dancers and Stunt Men? Must Be a Miami Condo Project [New York Times] registration required

Lowball litigation

Enforcing real estate contracts....even bad ones

Hopefully anyone who is considering accepting an offer that they received in the mail for a SW Florida vacant lot has the sense to do a Google search and if they are lucky find this site.

Many distant lot owners are receiving multiple letters, listing agreements and even firm offers every week. While most of the correspondence contain terms that are realistic, there are some that would fit in the category of a lowball offer.

If you accept an offer, even a bad one, it becomes an enforceable contract, regardless of whether or not it is a market offer.

Realtor sues to get lots [News-Press]

Affordable housing squeeze

Property increases creating affordable housing void

While investors are doing back-flips over property valuation increases along the canals in Cape Coral and the half-acres of Lehigh, many low and moderate income families are being left behind.

The Florida Association of Realtors recently announced that the average price of a home is over $450,000 in Collier County and approaching $250,00 in Lee County.

There are limited county resources available to bridge the gap to home ownership for needy families including the Collier County University Extension Housing Program and the Lee County Housing Development Corporation.

Housing market taking its toll on residents [Naples Daily News]

Abandoned lot auction

County to sell 2,220 lots in Northport

Plans by Charlotte County to sell all 2,200 abandoned lots in Northport between November and February will certainly impact the local market for vacant land. The County is currently evaluating what process will be most effective in selling these lots.

One of the challenges surrounding selling these lots is that only one third of Northport been surveyed for Florida scrub-jays which are common in the area. Lots with active scrub-jays have limited value as they require permitting approval by both state and federal agencies and often require a 2:1 property mitigation.

We will be monitoring this lot sale process and may jump in if it appears to be an economically effective means of acquiring lots.

Abandoned lot bid meeting [Sun-Herald]

Lehrer on the boom

Everybody's talking about real estate investing

News Hour with Jim Lehrer recently ran a fascinating segment about the real estate boom in Southern California and some of the problems facing the lower income segment of our society.

This segment highlights the concern that I have pontificated about many times on Gulf Returns about income gains not keeping pace with rising housing costs. At some point this has to matter, temporary fixes like interest-only mortgages do not resolve this growing disparity.

Real Estate Boom [ News Hour with Jim Lehrer]

Interest-only...investor heroin

Rapidly rising percentage of mortgages are interest only

According to mortgage risk analysis firm Loan Performance, a rapidly growing percentage of mortgages are interest only. Interest only mortgages allow a buyer to stretch their budget and afford more house than they could afford with a traditional mortgage.

In 2004, 31 percent of all mortgages were interest only, up dramatically from 13 percent in 2003 and 6 percent in 2002.

With an interest only 30 year mortgage, there is typically no amortization of the principal for the first 10 years -- but the entire principal has to be repaid in the last 20 years. This results in astronomically higher costs later in the life of the mortgage.

I was shocked to read that over 50 percent of new mortgages issued in Georgia in 2004 were of the interest only variety. With pensions being phased out, Social Security in doubt and now interest only mortgages becoming increasingly popular, one has to wonder what the future will be like for today's young families when they reach retirement age.

A Growing Tide of Risky Mortgages [Business Week]

Naples rental restrictions

Evaluating new laws to limit rental occupants

The City of Naples is exploring ways of regulating the number of occupants in a rental property. With an eye towards the restrictions in place in the university community of Gainesville, Naples is exploring various restrictions.

Multiple restriction alternatives under investigation include confining cars to paved or gravel driveways, setting yearly inspections for rental properties, requiring landlords to obtain rental permits or further restricting the number of unrelated people per household.

Regulating the use of private property is tricky and it would appear that the Naples City Council is walking a very fine line on this issue.

City Council takes aim to regulate number of people living in single household [Naples Daily News]

Condo fever

Margins decline as new developers compete for conversion properties

Fueled by low interest rates and a frothy market, $13.3 billion worth of apartment buildings that have been converted to condominiums were sold in 2004. This is record number of conversion sales up from $3 billion in 2003. According to market research firm Real Capital Analytics, 103,000 apartments have been converted to condos since January 2004.

One of the real challenges facing investors in this space is that the competition for properties is driving the cost of these assets in some cases far above the rental value of the building. In doing so, they are leaving little room for profit in the deal.

Several friends of mine have invested in conversion condos in the Miami area. Early returns on these investments appear real positive, I am most interested in how these assets fare over time as more properties flood the market.

Landlords Cashing Out as Condo Fever Spreads [NY Times] registration required

Collier most expensive in Florida

Median Collier County single-family home is $468,000

Move over West Palm County, Collier has taken the throne as the top priced county for single-family homes in the state of Florida during the first quarter of 2005.

The Naples area with it's fine beaches, shopping and dining has long been a favorite place for affluent retirees. The entire SW Florida region benefits from the attractiveness and beauty of Naples and rising prices throughout the region are a testament to this.

Collier home prices soar far beyond the rest of the state [Naples Daily News]

Lee prices....going up

Sky-high Naples driving the Bonita and Estero markets

Results of a study by the National Association of Realtors (NAR) provides further proof of the skyrocketing home prices in Lee County. What is even more astounding than the gain in single-family values since last year is that many think the NAR's estimates are low.

According to the NAR study, median single-family home prices grew to $215,700 in the first quarter of 2005 from $133,600 at the same time last year. The median price is defined as "a typical market price where half of the homes sold for more and half sold for less."

Lee home prices have no where to go ... but up [Naples Daily News]

Investing from afar

The lure of the snowbird.......

A quick perusal through the Lee County Property Line Website reveals that a majority of the property owners in the plated communities in SW Florida are located afar. This distant ownership came as a result of the way the original developers like Gulf American Corporation marketed these communities.

What I find interesting is that the lure of affordable property in SW Florida is still very attractive to investors in other areas of the country where even the most basic home commands a king's ransom. While a $50,000 vacant parcel in Lehigh blows the mind of long-time SW Floridians, an investor from San Francisco, New York or Boston most likely views it in a very different light.

The question that I get asked repeatedly is "when do the escalating property prices top out and no longer lure folks to SW Florida?" Tough question to answer, particularly in summer, but a whole lot easier when the region is crawling with snowbirds.

The way I see it is that SW Florida is certainly subject to national real estate downturns -- but the lows will never be as low and a downturn won't last as long as regions that don't have the lure of the snowbird.

In Wall Street speak, I rate our market a "buy" at the right price of course.

Priced-out investors seek distant properties [The Washington Times]

Pay more or else.....

Builders utilizing escalation clauses to recoup rising costs

An emerging trend in the new construction market is the use of escalation clauses by builders to recoup unexpected costs from home buyers.

As reported in the the Herald-Tribune, Maureen Trimble thought she had a deal: $192,000 for a new three-bedroom house in North Port.

But in January, with construction already under way, she found her contract might not be as ironclad as she thought. Her builder sent a letter saying that it was raising the price by $51,000 to cover increased costs.

Wow, what a whammy to be hit with a 26.5 percent increase in the cost of building a new home after the execution of a contract. It is tough to believe that the builder, in this case Gulfstream Development Group, could have been that far off the mark. An attorney representing Gulfstream Development Group cited last year's hurricanes as the reason for the cost increases.

'Escalation clause' becoming common in housing contracts [Herald-Tribune]

First Home fastest growing

Local builder fastest growing in country

First Home Builders, headquartered in Cape Coral, was named by Builder Magazine as the fastest growing private builder in the country for the second consecutive year.

Evidence of First Home's rapid ascent is evident in a drive around Gator Circle in Northeast Cape Coral or a cruise through many neighborhoods in Lehigh. In some areas it appears that the majority of the homes under construction in some areas are First Home projects.

First Home sold 5,038 houses in 2004 up 87 percent from 2700 in 2003.

First Home nets magazine award [News-Press]

Jammed flippers

Developers tactics to limit new construction flipping

A recent trend that is becoming popular with new home developers is this use of deed restrictions to limit investor flipping.

Tactics adopted by developers include restricting resales for a year or until the community is completed and also mandatory profit sharing with the developer if the property is flipped.

Here in SW Florida, I have seen several different deed restrictions to discourage investor flipping including a five percent penalty payable to the developer if the property is sold within a year.

Also popping up on many new construction contracts is a clause that prohibits the assignment of the contract. This type of clause forces the investor to close on the property and incur closing costs that previously could have been avoided by assigning the contract.

Housing.com recently issued a report on housing markets ripe for a price correction and named Ft. Myers; along with Colorado Springs; Denver; San Francisco and Sarasota as "worrisome" markets. Additionally, Boston; Las Vegas and Reno were cited as as the metro areas "most susceptible to a severe house price correction."

Developer tactics to avoid housing bust [The Christian Science Monitor]

shh....3 hot investment tips

So says Lawrence Yun, senior economist at the NATIONAL ASSOCIATION OF REALTORS®

Heavy in-migration regions—Places where a high number of residents move in from other parts of the country, including Nevada and Florida.

Future retirement destinations that are still currently affordable—Places where homebuyers plan to buy now and live once they retire, including Charleston and Myrtle Beach; Virginia Beach.; the panhandle of Florida; Alabama; and the North Carolina coast.

Tech-sector heavy markets—Markets where the technology industry is making a comeback, including Seattle; Denver; Austin, Texas; and Raleigh-Durham-Chapel Hill, North Carolina

I am in absolute agreement with Mr. Yun on the heavy in-migration regions and that is one of the key reasons why I chose to invest in Southwest Florida. I became a true beliver in the lure of Florida this fall and winter when the market didn't miss a beat even after the devastating hurricanes.

With regards to Yun's other two picks, I am much less bullish on the high-tech comeback markets, as I think the tech rebound will be sluggish at best. The future retirement destination markets hold much merit and one of my objectives over the next few months is to investigate investment opportunities along the Alabama coast.


The Next 3 Hot Real Estate Sectors [REALTOR® Magazine]

Charlotte County prices up 32%

Tight inventory fueling increases

Home prices in Charlotte County were up 32 percent in the first quarter of 2005. The average sale price in Charlotte County was $198,700, up from $149,600 in the first quarter of 2004.

Prices in Charlotte County were up dramatically despite a drop in sales volume from 990 home sales in the first quarter of 2004 to 927 in the first quarter of 2005. The current inventory of available homes is quite tight in this market.

Charlotte County, North Port see 32 percent rise in home prices [Herald Tribune]

Lee County home sales up 33%

Dramatic gains for the first quarter 2005

Home sales in the Ft.-Myers - Cape Coral metropolitan statistical area (MSA), increased a remarkable 33% for the first quarter of 2005. Homes sold increased to 3,024 up from 2,272 in the previous quarter. The median sales price increased to $236,000 up from $171,000 in the first quarter of 2004.

Scott Whitlock, president of the Cape Coral Association of Realtors and a Realtor sales associate with Premier Realty of Southwest Florida in Cape Coral, says buyers are realizing what the Cape Coral area has to offer. "We have great weather with milder winters than North and Central Florida, we're next to some of the most beautiful beaches in the state and the area offers less congestion and traffic than other places in South Florida," he says. "The bottom line is that we've been discovered -- baby boomers who are anticipating retirement are buying second homes here and people are moving here from other parts of the state, especially from the south."

Across Florida home sales were up seven percent in the first quarter of 2005. The state-wide median sales price was $207,000 for the quarter.

Florida home sales up 7 percent in first quarter 2005 [Planet Realtor]
Florida Home Sales Up 7 Percent in First Quarter 2005 [Yahoo]

Captain Crunch eats Marco

Home teardowns popular on Marco Island

A giant crane, coined Captain Crunch by its operator, has been kept busy on Marco Island by the latest real estate trend to hit the island -- home teardowns. This practice long popular in upscale resorts like the Hamptons, Nantucket and Malibu is now the rage locally on Marco Island.

In 2004, 112 homes were torn down and it is expected that 90 will be torn down this year. With the value of land worth significantly more than that of the home on the lot, teardowns can make economic sense in many cases.

For waterfront properties, improving or replacing a seawall after the teardown is a good idea as it can be accomplished from land without the use of expensive barge equipment that is necessary when a lot has an existing home on it.

I would expect for this trend to spread rather quickly to other parts of SW Florida where older homes are sited along water. Cape Coral and South Fort Myers are ripe for this type of re-development along gulf access canals.


The teardown trend [Naples Daily News]

15,000 new homes in North Port?

Project would include new I-75 Exit

Developer TLH Boss of West Palm Beach has filed a development of regional impact pre-application with the Southwest Florida Regional Planning Council for a 15,000 home development in Northern Charlotte County.

The project, called the Isles of Athena, is planned for a section of North Port near the DeSoto County line that was formerly the 5,800 acre Kelce Ranch. Isles of Athena would include 15,000 homes, a town center and a new exit off I-75 between Kings Highway and Toledo Blade Blvd.

It is too early to gauge what impact this development would have on land values in North Port and other Charlotte County plated communities. Certainly additional commercial infrastructure that surrounds projects such as this would be welcomed in this area that has long struggled to attract commercial interests.

15,000 homes for North Port? [Herald Tribune]
Developer wants to build 15,000 homes in North Port [Sun-Herald]

Burnt Store at crossroads

Developers seek to accelerate planned growth

The developer funded Burnt Store Area Plan recommends a comprehensive approach to the development in the Burnt Store Area

The plan includes input from over 400 Charlotte County residents who attended meetings regarding this initiative. One of the key issues is the $4oM widening of Burnt Store Road, which is not on Charlotte County's radar screen until 2015. This Burnt Store Area Plan recommends the acceleration of this infrastructure project by 5 years to accommodate the ever growing number of vehicles.

The plan also calls for the expanding of Charlotte County's Urban Service Area along Burnt Store Road from Rt 41 to the Lee County line. This expansion is key for developer interests as it changes the density use of property in the corridor.

When the posturing is over, I suspect this issue will ultimately be resolved by what else but money. When development interests agree to step up and fund the road widening, Charlotte County will agree to expand the Urban Service Area.

We have been bullish on the Burnt Store Lakes and Marina communities for quite some time particularly with the sewer and water utilities in place that are lacking just over the Lee County line in Northwest Cape Coral.

Money is key to growth of Burnt Store [Sun-Herald]

Coral Lakes clean-up

Developer to demo 40 new homes

A plan is now in place to save the Coral Lakes project in Northeast Cape Coral that was shutdown last month by the City of Cape Coral. Developer Transeastern Homes will demolish about 40 newly built homes to fix the soil problems at the 370 acre, 1000 home site.

Currently, Transeastern has contracts on about 550 of the homes to be built at the site. Although it has not been reported, I wonder how high the fallout rate will be on this project particularly with completion dates slipping. The exploding Gator Circle neighborhood directly north of this project presents an inviting alternative to potential homeowners.

Coral Lakes homes, soil to be replaced [News-Press]

Triple Play

Property values to sky-rocket if Bonita canals dredged

A Bonita Springs resident is trying to generate neighborhood interest in the funding of a canal dredging effort to enable access to the Gulf. If the canals are dredged, property values in this established Southwest Bonita neighborhood could triple.

This story brings to mind one of the most common questions that I get asked about Cape Coral, "why don't they connect the fresh water canals with the salt water canals creating a much larger gulf access system?" Seems logical enough when you look at a map of Cape Coral, but there a number of reasons why this isn't feasible.

The City of Cape Coral uses the freshwater canals to store water that is used in the city's reuse irrigation system. Other benefits of the storage of freshwater in the canal system include reducing harmful and excessive discharges of freshwater into the adjacent marine waters and reducing flooding problems throughout the region. The City of Cape Coral performs regular canal maintenance to insure that canals are functioning properly.

While we won't see the fresh and gulf access canals connected anytime soon, I view both as excellent investments for both the near-term and long-term hold strategies.

Big dig may triple land value [News-Press]

Read...learn...grow rich

First-hand view from the investor trenches

One of the best ways to learn more about real estate investing is to pick the brain of someone having some success. Here are some links to real estate investors who are documenting their trials and tribulations using a blog.

Shaun's Real Estate Adventures details the investing adventures of Chandler AZ, based database developer named Shaun. I found Shaun's post titled a step by step guide to buying preforeclosures to be most informative and a must read for any investor hunting for forclosures.

My Real Estate Investing Venture authored by Steve, a software engineer from Round Rock, Texas, provides significant step-by-step details about his investments. His posts titled Scrutinizing Profit Calculations and Overanalyzing and My RE Agent were both most interesting.

Building An Empire is a blog authored by 29 year-old Oklahoma based, IT analyst Trisha. She is currently in the process of acquiring her sixth investment property. Trisha's comments in a post titled Re-Thinking My Buying Strategy provide insight into using cash vs. OPM to finance an investment.

The life and times of an Arizona Investor chronicles the adventures of Brian, a Southern Arizona investor. There is a significant amount of "how-to information including a posting detailing the anticipated return on a submitted offer titled, Offer #6 The complete break down. Also check out the end of the month status post which reviews monthly goal achievement.

Joe Kelley's Real Estate Investment Weblog is a journal detailing the successes and failures of a North Texas real estate investor. His post titled Nearing a First Deal? chronicles his dealings with a despondent home seller who is just days away from filing paperwork for foreclosure.

Real Estate Investing, Buying and Selling Blog provides expert guidance and information from real estate Attorney and Investor David Whisnant. News, tactics, strategies and information for investors and consumers who want to buy below market value, sell for more, and profit from real estate. Check out David's post on Who do you contact on probate properties? and Why I Do Not Buy Foreclosures On The Courthouse Steps.

Rotten to the core

Ethics lacking in Big Apple real estate trenches

As crazy as the Southwest Florida real estate market has been of late with an ever growing number of challenges for buyers, we can't touch the Manhattan market for insanity.

Move over Samantha Jones, open houses on the Upper East side have more action in two hours than you have in an entire season. With prices only rivaled by George Steinbrenner's inflated payroll, the competition among Realtors for New York listings has become cutthroat trench warfare.

Illegal tactics which are clear violations of the National Association of Realtors Code of Ethics attempted in the New York market include advertising rival firms listings on your website as your own listing and poaching other firms active listings through the use of misinformation.

A serious challenge facing our industry is the rapid acceleration in the number of real estate professionals drawn to this hot industry. The National Association of Realtors says its membership has grown 46% since 2000 increasing from 766,560 to 1.1 million today. As the numbers increase, new agent training lags and many more agents are crossing the line to land a deal.

Realty Agents Add Elastic to Their Ethics [NY Times] registration required

Bi-county corridor

Study underway for Charlotte to Lee County Highway

Ft. Myers based consulting firm Cella & Associates is conducting a feasibility study of a highway connecting I-75 in Punta Gorda to I -75 in Ft. Myers. The proposed highway would follow the path of Burnt Store Road to Veterans Parkway to Colonial Boulevard.

From an investor standpoint, this highway would provide access now clearly lacking in the Burnt Store Marina and Burnt Store Lakes developments. Access to much of NW Cape Coral would also be dramatically improved. In the near term, I would advise caution when evaluating investment opportunities in close proximity to Burnt Store Road.

County Aims High to Relieve Drivers [WINK-7]

Vacation house hunting tips

Considerations for buying a second home while on vacation

Over one third of all homes sold in 2004 were vacation homes. If you are like my family, you probably spent some time while on vacation looking at real estate.

Here are eight tips courtesy of Bankrate.com for maximizing your productivity while looking for a second home while on vacation:

Before you go

1. Figure out your motivation

2. Find a real estate agent

3. Get mortgage pre-approval

4. Think about taxes

While you're there

5. Find the nearest Starbucks

6. Talk to locals

7. Check out the vacation rental market

8. Crunch the numbers again

Something to consider when shopping for a second home is that the best deals can often be had in the off-season when there are significantly fewer potential buyers and properties are not tied up with renters.

8 tips for house hunting on vacation [Bankrate.com]

April Housing Starts Down

Experts suggest that we are "returning to normalcy"

After breaking all previous records for new housing starts in March, April starts were still very high with 655 permits in Cape Coral and 790 in unincorporated Lee County.

These figure represent drop-offs of nearly 24 percent for Cape Coral and 9 percent for unicorporated Lee County. Despite the reductions, these figures are up dramatically from April 2004, when Cape Coral had 410 new starts and unincorporated Lee County had 632.

Industry experts are somewhat mixed on what these results mean, Commercial broker Frank D'Alessandro is seeing " a return to normalcy' while Mary Gibbs, the Director of the Lee County Department of Community Development, said "It looks like we're going to have another record or something a little bit bigger than April. It looks like this month is going to be pretty active."

I am expecting housing starts to continue to slow in Cape Coral as lot prices edge up into the $80,000 range. While some builders are still working through their Cape lot inventory, I expect that they are less likely acquire new lots in this price range to build spec homes.

April home permit growth slows [News-Press]

Housing taking bigger slice

Families spending over 50 percent on housing up significantly

A new study, The Housing Landscape for America's Working Families 2005, revealed that American families spending more than 50 percent of their income on housing rose 76 percent between 1997 and 2003.

In 2003, there were over 4.2 million families in this over 50 percent bracket. Additionally over 14.1 million families were in this 50 percent plus bracket and/or lived in dilapidated conditions.

One of the compelling findings of this study is that six out of 10 immigrant working families with critical housing needs are Hispanic, including one third are Hispanic families from Mexico.


Number of America's working families spending more than half their income on housing grows 76 percent [Freddie Mac]

More families are house-poor, research shows [Planet Realtor]

Venezuelans validating Florida

Confidence low in their own economy -- investing in South Florida

Rich Venezuelans are investing in South Florida real estate in ever increasing numbers. Many are concerned about the policies and direction of the populist government of President Hugo Chavez.

Miami real estate organizations are traveling to Venezuela and holding seminars about investing in South Florida. They offer a turnkey package including mortgages origination, financial planning and even real estate attorney services.

As crazy as our real estate market now feels it is comforting to me to think that much of the rest of the world views an investment in US property a safe bet.

Nervous Venezuelans seek safety in S. Florida real estate [Sun-Sentinel]

FDIC bubble prognosis

Boom markets increase by 72 percent

An FDIC study determined that the number of local markets with home prices up at least 30% over 3 years shot up 72% in '04 to 55 out of 362 U.S. metro areas. This figure is more than double the highest number of boom markets during the last housing boom in the late 1980s.

The study suggests that the broadening of the US housing boom may imply that national factors like availability of credit may be playing an increasingly important role in driving the housing market.

An important conclusion of the study for investors is that a housing boom does not necessarily lead to a hosing bust. In fact, boom was found to lead to bust in only 17 percent of all cases prior to 1988.

Locally, the challenge is the same one that we have discussed many times on this site, incomes are not rising in step with appreciating property values. At some point new home sales will need pause to allow incomes to catch up. This issue is some what offset in SW Florida with all the influx of retirement wealth that moves to the region.

FYI Revisited -- U.S. Home Prices: Does Bust Always Follow Boom? [FDIC]

If you have to ask....

Overview of Lee County property by price range

The News-Press has just completed an excellent series overviewing homes in Lee County sorted by price range. This is a must read for anyone contemplating a home purchase in SW Florida. Better hurry, the prices are only going one way......... up

What will $100,000 buy? [News-Press]

What will $200,000 buy? [News-Press]

What will $300,000 buy? [News-Press]

What will $500,000 buy? [News-Press]

What will $1,000,000 buy? [News-Press]

Is everyone an investor?

Many leaving corporate jobs to focus 100 percent on real estate investing

Figures recently release by the National Association of Realtors detail that 23 percent of all residential transactions in the US last year involved investors and not end-users. Obviously end-user affordability is a big concern as prices continue to rise significantly faster than wages needed to afford these escalations.

The Seattle Times profiles several investors including Paul Galasso, who quit his corporate job with Costco to focus full-time on real estate. I find it rare to attend a function, party or even a soccer game and not bump into someone else who is investing in real estate.

Locally a quick glance through the MLS properties on the market reveals that a rather significant number of property owners are licensed realtors. Hopefully, in couple of years some of the remote Lehigh lots in my portfolio won't look as ridiculous as some of the now bankrupt telecom and dotcom stocks now look.

Flipping real estate ... without getting burned [The Seattle Times]

Buyer frenzy

Hot markets require creative offers

The typical elements of an attractive offer like cash, 30 day closes and full price are often not enough to seal the deal in a hot real estate market. In the ultra-hot Los Angeles market, buyers are sending bios, flowers and even family pictures to better position their offer.

Locally, we have seen multiple full price, cash, 30 day close offers rejected in the screaming Lehigh market. Much to our dismay, it often takes a buyer willing to also pay the sellers closing costs to land a property in this market.

While these crazy dynamics are at work in the lower end of the price spectrum, we are not seeing nearly the level of activity at the very high end of the market, where properties are sitting for much longer periods of time.

Wanna buy this house? Send your résumé [The Christian Science Monitor]

Shame your neighbor

Port St. Lucie resident seeks stricter code enforcement

Long-time Port St. Lucie resident Joe Edge is sick and tired of living next door to neighbors who do not keep up their yard and park an abandoned RV on the lawn. He is so troubled by the lack of code violation enforcement that he started a website Port St Lucie Homes of Shame to try to elicit change.

Each week Edge highlights a home with code violations on his website. His first entry, that of Port St. Lucie Mayor Robert Minsky has created quite a stir in this Treasure Coast community. Seems the mayor dissed Joe Edge when he tried presented his concerns about code violations to the Port St. Lucie City Council.

While we all have challenges with our neighbors, here is one redneck neighbor that you would not want to live next door to. Here is another neighbor to avoid when you are out house shopping. If you plan on renting, it is a good idea to check out the neighbors in the complex or you could have jackass apartment mates. And don't forget about one of America's most loved eccentric neighbors.

Port St. Lucie Homes of Shame