Monopoly money

Asset rental service.....unbelievable

Can you actually qualify for a mortgage that requires money in the bank if you don't really have any money in the bank? Well, if you utilize the services of an asset rental service you can.

Morgan Sheridan, located in Mesquite, Nevada, will rent assets for an upfront fee of 5 percent. The rented funds will appear in an account with your name during the approval process. If you need to "rent" the account for longer than a month, it will cost you three-quarters of 1 percent of the asset amount, payable in advance each succeeding month.

Hard to see how this service is anything but outright fraud, hopefully the strong arm of the mortgage industry will put an end to this type of activity.

Funny money for the housing boom [Herald-Tribune]

Permitting delays plague region

Pace of growth swamping permitting officials

As the availability of quality buildable land in Collier County grows scarce, builders are turning to parcels which require greater scrutiny and review.

Delays in permitting these parcels are drastically restricting the pace of homes and condominiums coming onto the real estate market. Federal, state, and local permitting delays are holding up the development of at least 8,100 new homes and condominiums in large-scale developments in Collier County, a number that's more than all the new homes and condos built in Collier last year.

With growth from 102,000 to 144,000 residents in just five years, Cape Coral is also bracing for new construction delays if the city doesn't apply soon for permits to expand its wastewater treatment plants. The city is growing so fast that the demand for services in areas where there are sewer lines could outstrip the city's ability to treat sewage before the expansions are completed.

These permitting delays throughout the region are certainly not going to help keep prices in check. While painful for those with a financial stake in these new developments, on a macro level it is probably healthy for the region to slow growth of some of these large-scale developments.

Permitting delays contributing to area's surging home prices [Naples Daily News]
Lack of permits could delay new homes [News-Press]

Realtor ranks rising rapidly

Many see gold in SW Florida real estate

These days it seems like almost everyone in SW Florida is a Realtor, married to a Realtor, has a sister who is a Realtor or is studying to become a Realtor. The amount of wealth being created through real estate transactions in our region is almost staggering. Drive by any local real estate office and check out the parking lot, bling bling rides are lined up from one end of the parking lot to the other.

Florida real estate schools are bursting at the seams with new students looking to join the party. Enrollment at the Ed Klopfer Schools of Real Estate has grown from from 120,000 students in 2003 to 145,000 in 2004.

One of the major turning points in the dotcom boom was the mass migration of MBA students into the space. Companies with virtually no revenue were falling over themselves to hire the best and brightest from Stamford, Harvard and Yale. The same phenomena is happening today in the commercial real estate sector. Especially attractive are jobs in the private equity firms that invest in business parks, condominium complexes, and multiuse developments around the world. Also in demand are the financial firms where such properties are parceled into financial instruments -- such as mortgage-backed securities and real estate investment trusts.

So far I have not met many MBA types in the residential sector here in SW Florida. Probably won't see too many of these types at least until Starbucks finishes their invasion of the region.

Head of the class [Naples Daily News]
Business students flock to real estate [Boston Globe]

Price gains top charts

Cape Coral-Fort Myers market ranks second in price gains

Statistics released by the NAR for the second quarter of 2005 reveal that the Cape Coral-Fort Myers market ranked second nationally for home price gains over the past year. The average price in this market rose 45.2 percent to a median price of $266,800, trailing only the Phoenix-Mesa-Scottsdale which registered gains of 47 percent.

Clearly these record gains cannot continue indefinitely. The smart investor will need to pick their spots more carefully on a going forward basis to continue reaping gains in the market. It is our goal at Gulf Returns to help educate investors so that your decisions will be informed ones.

Home prices post record gains [CNN Money]

Oversupply...time to fly?

Growing inventory bears watching

Could the growing quantity of listings be the pin that pricks the real estate bubble?

A recent MarketWatch article cites the Naples market as having a very high ratio of listed properties to the total supply of housing. Currently, the number of existing home listings on Realtor.com for Naples stands at roughly 3,300 single-family homes and condominiums. With only 21,000 total housing units, approximately 15% of the total Naples housing market is for sale. For comparison sake, Phoenix has approximately the same number of listings on Realtor.com but has a total housing market approximately 25 times larger.

In Lee County the market is slowing for luxury homes priced over $1M. Typically, these homes are purchased by trade-up buyers or retirees looking to invest a large gain from a home sale up north. It will be interesting to see if this market picks up with the winter season fast approaching.

The new kids in the real-estate craze [MarketWatch] registration required

Investor or parasite?

Industry taking steps to curb quick flips

Are real estate investors really bad guys?

One school of thought says that investors are pushing up prices too quickly without adding any value in the process. Flippers are to the real estate market what day traders were to the dot.com boom.

The differing opinion is that investors are providing capital and resources to a highly inefficient market. This reasoning continues that investors are early adopters that validate developments before the general public is willing to buy.

The answer probably lies somewhere in the middle. The deed restrictions that developers are utilizing are designed to limit profits for investors and protect developer interests. I do know that developers will welcome back investors when fewer end-user buyers flock to their projects the way they do today like hyenas to a fresh kill.

Enter the Flipbusters [Time]

Bubble Metrics

National studies vary widely on market frothiness

The concept of applying economic and demographic data to a given market and determining whether or not it is an overpriced real estate market fascinates me. These market predictions are even more interesting when three respected economic number crunchers arrive at very different conclusions about given markets as outlined by a recent Wall Street Journal article.

PMI Mortgage Insurance picks: Boston; Nassau-Suffolk, NY; San Diego; San Jose and Santa Ana-Anaheim-Irvine, CA for its top five. National City's top five are: Santa Barbara; Salinas, CA; Naples, FL; Riverside-San Bernardino, CA and Merced, CA. Credit Suisse First Boston tabs Fresno; Las Vegas; Los Angeles; Riverside-Bernardino, CA and Phoenix as its top five. The only market to appear on both lists is Riverside-San Bernardino, CA.

I think that the moral of the story is that picking heated real estate markets is an inexact science and differing methodologies can produce dramatically different results. Although it has not happened yet, I wonder if some of the real estate industry economists like Robert Schiller and David Lereah will reach the near rock star status that Morgan Stanley analyst Mary Meeker or Solomon Smith Barney analyst Jack Grubman reached at the height of the Internet craziness.

Bubble-Metrics: Economists Handicap Housing Markets [Wall Street Journal]

Lee housing prices up

Record gains across Southwest Florida market

The median selling price of existing single family homes in Lee County for July was $287,000, up 44 percent from July 2004. This price gain was the second largest in Florida, trailing only Orlando County.

Collier County stayed the most expensive market in the state, up 31 percent to $490,400. Charlotte County was up 34 percent to $236,600.

While these price increases are unlikely to continue at this pace, SW Florida does remain an attractive investment option particularly for northern retirees coming from the sky-high priced Mid-Atlantic and New England regions. The challenge for the area remains the creation of quality jobs so that income levels can keep pace with this escalating real estate market.

Lee housing sales buck U.S. trend [News-Press]

Charlotte development kicks-off

New development along Notre Dame Boulevard

A new deed restricted community called the Enclaves at Notre Dame has been launched in Southern Charlotte County near the existing Burnt Store Lakes and Burnt Store Village developments.

Initially, 20 oversized lots are being developed by three builders. The homes, to be priced from $300,000 to $430,000, will be built to current hurricane safety standards, and future buyers will be able to choose from additions like safe rooms and removable storm shutters.

The area along Notre Dame Boulevard has about 1000 vacant lots that someday might be part of this community. Currently, vacant lots within the enclave are available for between $60,000-$80,000.

Developer looks south [Herald Tribune]

Hedge this

Online betting site for home prices

If John W. Henry can make enough of a fortune predicting future prices to buy the Boston Red Sox for $700M, maybe we all should jump on the hedge fund bandwagon. Online betting site HedgeStreet allows gamblers to place bets on whether house prices will rise or fall in several major metropolitan markets including Miami.

While I am fascinated with this concept, I much prefer owning the real thing rather than trying to predict the future.

[HedgeStreet]

Charlotte storms ahead

Real estate market recovers from hurricane setbacks

A year after Hurricane Charley wreaked havoc on Charlotte County, the real estate market has moved steadily forward with significant price escalations.

The shortage in available properties following the hurricane contributed to the steady property price increases. The storms created a certain level of activity as property owners searched for available property to replace homes that were destroyed.

Here's hoping we do not have another storm like this in our lifetime.

Charley didn't dampen interest in area real estate [Sun-Herald]

Lehigh auction sizzles

Over 100 lots sold over market prices

128 Lehigh Acres lots were auctioned off on Friday at Germain Arena in Estero. The auction company reports the lots sold 10 to 15 percent above market price, on average going for about $50,000 each.

Tough to understand why someone would pay over market for a vacant lot in Lehigh. Maybe they haven't found my little piece of the world wide web dedicated to finding vacant lots priced lower than market.

Lehigh lots burning up auction block [NBC 2]

Willkommen Deutschlanders

German vacationers flock to SW Florida

In 2004, nearly 230,000 Western Europeans visited Lee and Collier Counties in Southwest Florida. A majority of these visitors are from Germany and many choose to come in the summer months when the snowbirds from the north are nowhere to be found.

The favorable Euro to Dollar exchange rate makes vacations in the U.S. very attractive to Europeans. Travel is easy and convenient with direct flights to Fort Myers from Dusseldorf, Frankfurt and Munich.

The local real estate market has long been influenced by Germans that have elected to invest. To all who are currently here on holiday, we hope you find your own piece of Florida paradise.

European Invasion [Gulfshore Business]

Another day....another list

Cape Coral weighs in as 42nd on "extremely over-valued" list

A study of the top 299 U.S. real estate markets released today by the economics department of National City Corporation concludes that 53 metro areas representing 31 percent of the total U.S. housing market are "extremely overvalued" and confront a high risk of future price correction.

The study determines a market extremely overvalued if prices are 30% above where the study estimates they should be based on historic price data, area income, mortgage rates and population density.

Southwest Florida is well represented on the list with Naples at number three with prices 62% higher than where they are projected to be and Cape Coral at number 42 with prices 35% higher than expectations.

These have been a mighty exciting times for those of us with a stakehold in the Cape Coral market. The price appreciation which has seen the Cape transform from a solid middle class town to one approaching luxury status is both exhilarating and cause for concern. With gulf access lots now starting at over $300K, are buyers in this wealth category going to be accepting of the Cape's limitations in the areas of shopping, fine dining and culture.

High-priced housing faces risks [USA Today]

Mr. hou$ing bubble

Creative Mr. Housing Bubble line

The zany folks at T-shirt Humor have come up with a really cool Mr. Housing Bubble T-shirt. Yes, it does come in really large sizes for those super successful investor types.

I probably wouldn't win any popularity awards if I decide to wear one to the next board of realtors schmoozing shindig.

Mr. Housing Bubble Shirt [T-Shirt Humor]

Big leagues....bad list

Local real estate market has crossed the chasm

If there was any doubt about our market being in the big-time, it is now erased in my mind. We have just made the economy.com most overpriced homes list. Yes, along with places like Boston, Washington, DC, San Diego and Las Vegas, the Cape Coral - Fort Myers, FL market weighs in at number 40.

The factors used in compiling this list include employment forecasts, population forecasts, and income level and growth compared with housing prices. Clearly we do not have population and growth shortages, the big challenge facing this region is in the area of job creation and job growth. Where is the job growth outside of the real estate and tourism industries? I have been looking under many rocks for answers to this question and just cannot seem to find many.

With a large under-employed workforce, favorable tax rates, relatively inexpensive infrastructure and great weather, I am amazed that more companies have not set up shop here in Southwest Florida.

There seems to be this underlying optimism in the region associated with the opening of the new airport.....that companies will come flocking to the area. Probably not the case, but some of the other developments including the expanded presence of Florida Gulf Coast University are creating a positive environment for business growth. Additionally, the development of more class A office space, particularly concentrated around I-75 exits is a very positive step in attracting first class businesses.

Does my concern about job growth mean that you should pull capital out of SW Florida, no it does not. What you should be thinking about is investing in the right type of property that will continue to experience price appreciation. Certainly the best locations with access to favorable amenities and infrastructure will continue to be winners for the long haul.

Most overpriced home markets [CNN Money]

Sun, sand & surf

Interview with local banker Steve Jonsson

Interesting comments from on the Southwest Florida economy from Flagship National Bank President Steve Jonsson.

Particularly noteworthy are Jonsson's comments about the squeeze being experienced by the smaller local builders due to their land acquisition cost versus the larger national builders that are buying bulk parcels.

Banker: Real estate boom will peter out, not bust [Sun-Herald]

Waistline demographics

Cape Coral is growing even faster than my waistline

Happy 35th birthday to Cape Coral, whose population has recently surpassed 143,000 up from 100,000 in 2000. Cape Coral is proud of its growth as evidenced by the population meter prominently displayed above the fold on the city home page.

The Cape, which was founded and originally developed by a pair of slick brothers from Baltimore, has come a long way in its 35 years. It is truly extraordinary that in the last 5 years almost half as many people have moved to the Cape as did in the first 30 years of incorporation.

While both residents and investors alike have created significant amounts of wealth investing in Cape real estate, many believe prices are reaching a ceiling. According to the Cape Coral Economic Development Office, the median price of a home is now $190,267, up from $105,140 in 2000. While this may seem astronomical to many, spend some time on the East Coast of Florida or even in Naples and the Cape seems to be very affordable.

City riding wave of migration [News-Press]

Knockwurst, bubbles & experts

Getting a handle on your area's bubble

Pretty cool when an article in the esteemed NY Times suggests that it might be best to start discounting what the experts are saying about the real estate market. The article recommends that a better way to assess the market would be to have a neighborhood block party, grill some knockwurst and poll the neighbors.

It is hard to argue with the fact that real estate markets are local in nature and that local data points are significantly more relevant than massaged national data.

From my own personal experience, I get excited every time that I hear from someone that is planning on relocating to SW Florida. As I talk with SW Floridians, there continues to be a sense of optimism about the market, it seems that everyone has a friend or relative that is in some stage of planning for a move to our region.

Do Try This at Home: Assess Your Area's Real Estate Bubble [NY Times]

Back to the future

"The only man that doesn't make money in Florida real estate is the man that doesn't own any"

A look back at the investor madness that created a real estate boom in Florida in the 1920's.

There appear to be some similarities from the 1920s with today's investor craziness: W is nearly as conservative as Cal Coolidge; the cheap Jet Blue and Song flights are bringing the masses to Florida like the new railroads did in the '20s; and WCI Communities CEO & President Jerry Starkey is a modern day D.P. Davis.

When Underwater Lots Sold in Florida Boom [Wall Street Journal]

Lehigh tees up

Investor group snaps up local golf courses

Lehigh as a golf destination vacation location.........if Greentree Investments has their way, it just might happen. This investor group has acquired the Admiral Lehigh Golf Resort and Mirror Lakes Golf Club.

The group plans to improve the courses and promote golf tourism. The Admiral course includes a 131-unit resort with motel accommodations. It is currently the only hotel in Lehigh.A partner in the investment group plans to break ground on a Microtel Discount Hotel near Homestead Road in February or March.

Wow, this acquisition is an exciting development for Lehigh, can the Starbucks that I am pining for in Cape Coral be far behind in Lehigh?

Golf courses partnering up [News-Press]

Preserving paradise

Luxury project planned near Four Mile Cove Ecological Preserve

A residential project that could have a similar impact as Tarpon Point or Cape Harbor is underway in an area of Cape Coral and N. Fort Myers just north of the Four Mile Ecological Preserve.

The project coined Paradise Preserve is targeted to have over 1600 residential units spread across two properties, including the former Lochmoor Country Club. The project will include both high-rise buildings along the river as well as single family homes. Amenities for the project include both gulf access boating as well as a golf course.

This is an exciting project for that end of Coral and will certainly pull up the surrounding home prices as Tarpon Point and Cape Harbor did in the southern end of Cape Coral. Here's a request Mr. Developer, how about some fine dining open to the general public at Paradise Preserve.

Stay far away

Lehigh homeowner sued by county to clean yard

If you are investing in Lehigh, stay away from the 600 block of Michael Ave. This block of highly desirable half-acre parcels, located just east of Joel Blvd., is home to Frances Caronna. Mr. Caronna has so much junk in his yard that the Lee County Commissioners have sued him to clean up his yard.

Progress has been made as Mr. Caronna has mowed the grass and the old toilet seat that sat on the lawn is waiting to be hauled away. Caronna is facing $90,000 in unpaid fines and a court injunction to clean up.

County decides to sue over junk-filled yard [NBC2]

First Homes scooped up

Acquired by Hovnanian Enterprises

Local powerhouse builder, First Homes Builders, was acquired by Hovnanian Enterprises,Inc. (NYSE - HOV) the nation's eighth largest builder. The acquisition was all cash and the purchase price was undisclosed. Hovnanian is publicly traded and currently has backlogged orders for over 11,000 homes.

Hovnanian expects the acquisition to add about 5 cents to earnings in fiscal 2006. Fred Hermann, president, and Bruce Robb, chief operating officer of First Home Builders, will remain with Hovnanian following the acquisition.

It is tough to predict the effect that this transaction will have on the local home building market. You do have to wonder if a highly scrutinized public company will remain interested in building low-margin entry-level housing. Over time I expect to see the Hovnanian product to move up market, particularly in Cape Coral where almost all lots are pushing six figures.

Hovnanian Buys Florida Homebuilder [Forbes]

Newbie investor mistakes

Top 10 novice real estate investor mistakes

Here at Gulf Returns our goal is to provide information that can help you to maximize your investment returns. It seems that the biggest need for most investors is more time in the day to spend investing.

Most of real estate investing is just making plain common sense decisions. While many of the individuals that an investor interacts with can be very frustrating, it is critical to keep emotion and feelings out of the transaction. Truly this is an industry where the bottom line is what's important and the daily bumps in the road are just minor distractions.

Here is a quick list of common mistakes that are often made by novice investors.

10 biggest mistakes of novice investors [Bankrate.com]

An island of your own

Why buy canal front when you can own a whole island?

You heard it here first......Dubai Dubai Dubai.

Gulf Returns is high on Dubai. The beauty of Dubai is that our name works really well in that part of the world. I am hoping that the Crown Prince of Dubai, Sheikh Mohammed bin Rashid Al Maktoum decides that our name is a must have and offers one of his islands for the domain. I promise to invite all my loyal readers over for a visit if this fantasy does come true.

One of the truly remarkable development projects in the entire world is underway in Dubai. The Dubai government is building between 250 and 300 islands, each in the shape of a different country, two miles off the coast of Dubai. The project is the largest of its kind anywhere in the world and, along with the port of Jebel Ali & the Great Wall of China, will be a landmark visible to the naked eye as far away as the Moon. When completed, the islands will add 120 km of sandy beaches to the Dubai coastline.

If any out there knows the Crown Prince, please let him know that I am always open to offers.

Dubai's palms across the sea [The Business Online]

One big party

23 percent of real estate transactions investor related

If you are reading Gulf Returns you are probably either a real estate investor, want to be a real estate investor or lead a very mundane existence. It seems that everyone is investing in real estate these days.

From my personal experience, I continue to be amazed at the opportunities to create value that I see every day in this hot market. A little capital, some brains and the willingness to hustle can go along way in real estate investing. Many real estate professionals are just doing the minimum and making significant amounts of money in spite of themselves. Of course this will change when things tighten up in the market.

For me, I like the freedom of operating in this industry. It is very different from corporate America or even the start-up entrepreneurial space that I used to play in. I like the ability to make rapid decisions without the painful process of reaching consensus that is so popular in the corporate world.

Speculators cash in [Palm Beach Post]

Lee permits off

July new building permits drop after record spring

In Lee County, 729 permits were issued in July compared to June's 1,025. In Cape Coral, 481 permits were issued compared to 711 in June. Fort Myers issued 74 permits compared to 119 in June.

By comparison, July permits were still up in the county by 14 percent over July 2004's 638 permits. Cape Coral saw a decrease over a year ago when 577 permits were issued, and Fort Myers' permits declined from 190 in July 2004.

I don't think that these drops are anything for investors to be overly concerned about. The vacant lot activity level remains high particularly in Lehigh. Most of the offers that we are seeing for Lehigh lots are from buyers with plans to construct a house. Typically, the investor activity heats up in the fall and winter months when the snowbirds invade SW Florida.

Pace slows for home permits [News-Press]

Meet Syd Kitson

Introducing the new Babcock Ranch Owner

Former NFL Lineman Syd Kitson, the new owner of Babcock Ranch, has a major challenge ahead in gaining consensus for the development of this key SW Florida parcel.

Kitson has previous experience with high-end environmental challenging projects in the West Palm area and believes in bring all interested parties to the table to arrive at an agreement. Backed by the resources of Morgan Stanley Real Estate Fund, Kitson has proven a success with other projects.

Babcock's new owner balances construction and conservation [Sun-Herald]