Trulia.com real estate search

The future of real estate search


Check out Trulia.com, a site dedicated to real estate search. This site developed by some smart Stanford grads, represents the next generation real estate experience. Trulia appears to me to be what the off-spring of a marriage between Google and Realtor.com would look like.

The truly fascinating aspect of Trulia is that it uses data obtained from individual agent and broker sites, bypassing the strong arm of the multiple listing services. I believe that technology like spiders, RSS and GIS mapping utilized by Trulia will be more effective at creating MLS competition than any government lawsuit or legislation.

You heard it here, there is a whole wave of Trulia optimization coming to the real estate industry. Realtors will soon become very focused on optimizing their site and listings to be friendly to the Trulia web spider.

While operational now in California, Trulia plans a national launch. This one feels like a winner to me.

Toll Brothers acquires 2K acres

National builder pays $108M for parcel

More than 2,000 acres of land surrounding the Florida Sports Park has fallen into the hands of a nationally known luxury home builder at a price of nearly $108 million, making the sale the fourth most expensive land purchase in Collier County history.

According to official records, concept site plans include large commercial and residential developments, as well as 100 acres set aside for a college.

Land around Florida Sports Park sold for $108M [Naples Daily News]

Real estate competition

GAO study finds industry has competitive attributes


A study by the Government Accountability Office finds that the Internet has increased consumer access to information and fostered the creation of Internet-oriented real estate firms.

It also reveals that competition in the industry is heavily based on non-price factors such as quality, level of service, and reputation.

The study also says the effect of state-chartered banks that offer competitive brokerage services in the 30 states where they are allowed to do so by law is “minimal” due to the limited number of banks that have entered the business.

While I see significant in the trenches competition among Realtors, there is very tight control by the National Association of Realtors on MLS data, particularly at the macro level. Controlling the aggregation of this data is the means that the NAR uses to control competition.

Factors That May Affect Price Competition [United States Government Accountability Office]

"Miami Model" condo resales

Developers are bringing resales in-house


A strategy shift is underway for condo developers.....bringing resales in-house to participate in the profits. Until recently most developers shunned resales and looked to penalize investors with that flipped pre-construction units.

A different approach, coined the"Miami Model" is an approach where the developer handles the resale or flip and pockets the real estate commission and other fees associated with the transaction.

"You're inviting more people, including investors, to take on the risk until the end user gets to the building," Developer Christopher Mathieson said. "The end user wants a product they can look at. The investor is there to take the risk

Miami's Model for Condo Sales Spreads to Las Vegas and New York [NY Times]

South Seas rising

Famed Captiva resort opening in February 2006


The grand dame of Southwest Florida resorts, South Seas, is rising from the rubble of Hurricane Charlie and is accepting reservations for its re-opening in February, 2006.

Charley washed and blew much of the 600-unit resort down to the foundation, so owners MeriStar Hospitality Corp. and dozens of individual unit owners agreed to pour more than $140-million into a 17-month rebuilding. Most of the bill is supposed to be paid by insurance, but how much is being negotiated.

"The result is a brand new property," said Chris van der Baars, general manager of the resort once known as South Seas Plantation. "It's so different that sometimes I end up in a spot where I have to wonder for a second exactly where I am and what it used to be."

South Seas is a specialplace for me as it was during a vacation at this resort that I discovered the real estate investing opportunities that exist in SW Florida. I am amazed at just how many SW Floridians first exposure to the region was a vaction at South Seas.

Captiva resort reborn after Hurricane Charley damage [St. Petersburg Times]

Port Charlotte most affordable

Leads Coldwell Banker index for affordability in Florida

Port Charlotte ranked as the most affordable community in Florida in terms of home prices while the Sarasota-Bradenton market came in as one of the most expensive on a list compiled by Coldwell Banker.

Coldwell Banker's Home Price Comparison Index, or HPCI, uses an "apples-to-apples" comparison of four-bedroom homes sold in "middle-management" neighborhoods, defined as neighborhoods that are typical for middle-management transferees.

The twelve Florida markets covered by the Home Price Comparison Index were ranked as follows:

1. Miami-Dade $671,854
2. Boca Raton $512,412
3. Naples $436,666
4. West Palm Beach $429,250
5. Sarasota-Bradenton $387,375
6. Fort Lauderdale $387,141
7. Fort Myers $385,483
8. Panama City $360,333
9. St. Petersburg-Clearwater $323,833
10. Tampa Bay $320,781
11. Orlando $312,000
12. Port Charlotte $310,164

Port Charlotte ranks high for affordability [Sun-Herald]

Trump consigliere opines

Apprentice sidekick comments on Cape Coral & Lehigh


George Ross, who recently wrote a great book, Trump Strategies for Real Estate: Billionaire Lessons for the Small Investor, hosted an on-line chat on Boston.com. Here is bearish feedback from George to a question about the Cape Coral & Lehigh real estate market:

jc: Q: The Florida market, Cape Coral & Lehigh Acres, have been booming these past few years. Do you still see these regions steadily rising in the future?
George_Ross: No

You have to admire George's ability to answer in a succinct manner.

I wonder how George feels about Apprentice 3 winner Kendra Todd running around scoffing at the very thought of a real estate bubble in SW Florida. In a recent presentation to the Naples Area Board of Realtors Todd said,

"Folks, bubbles are for bathtubs, not real estate,"

My money is on George remaining in the gainful employment of The Donald longer than Kendra.

The Big Move: George Ross, Executive Vice President and Senior Counsel for the Trump Organization [Boston.com]

Apprentice scoffs at a Southwest Florida real estate bubble [Naples Daily News]

Portfolio diversity

Is too much wealth tied up in real estate?


At $18.4 trillion, residential real estate now commands a record 37 percent of overall household net worth. In the second quarter, real estate assets grew by nearly 4 percent, dwarfing the 2 percent growth in overall assets.

Good old cash amounted to $5.6 trillion, or 11 percent of net worth.

But that's still not the whole picture. At $11.1 trillion, household debt was twice that.

There does seem to be much new found wealth in the area associated with recent real estate gains. I hope that those who are heavily leveraged have the ability to step back and think about paying down the debt before buying more real estate or a depreciating asset like a new car. Having rode the Internet wave and the downturn that followed, I have seen paper fortunes vanish in the blink of an eye.

This little piggy bank stays home [Dallas Morning News]

Consumer confidence plummets

Katrina aftermath and rising fuel costs are key factors


Consumer confidence among Floridians fell in September to 78, down eleven points from August. This is the lowest level of consumer confidence in Florida since February, 2003.

"The effects of Hurricane Katrina combined with the already rising energy prices has taken its toll on consumers in Florida," said Chris McCarty, the Survey Director.

With the lack of viable public transportation alternatives state-wide, Florida is certainly impacted by rising energy costs. Hopefully, rising fuel prices won't deter the winter snowbirds from making their annual migration to the Sunshine State.

Florida Consumer Confidence Index [University of Florida]

Landlord challenges are many

Know your downside before investing


Second-home purchases, mostly for investment purposes, last year accounted for more than a third of all single-family home sales in the United States, according to the National Association of Realtors.

Throw in sales of duplexes, apartment houses, and condos for investment purposes and you get some idea how many people want to play landlord.

And why not? Not only do you rake in rent money every month, you can also reap profits from soaring housing prices.

As any landlord will tell you, however, it's not as easy as it looks.

Reality check: Before you play landlord [CNN Money]

Collier prices tops in state

Median Collier home price hits $500,000


Collier County median home prices hit $500,800 in August and continue to be the highest in Florida. This figure was up from $397,300 in August 2004 and up from $490,400 in July 2005.

My hunch is that these figures will continue to rise as long as prices continue to rise in the northern states where the inflow of Naples boomers originate. For many boomers, spending the extra money for a home in Naples is easily justified by the culture, dining and shopping that are all in close proximity. Other SW Florida communities lacking a real downtown experience like Ft. Myers, Cape Coral and Punta Gorda need to take action to create this type of environment.

The big challenge for Collier County will be for businesses to attract necessary workers that can no longer touch a home in close proximity to their job.

Collier homes costliest in Florida [News-Press]

Gulf access communities

SW Florida paradise or environmental disasters?


As recently posted, gulf access properties are rapidly appreciating and are in very high demand for residential development.

Have you ever wondered why so much of the SW Florida coastline was carved up into canal front communities?

In the 1950s and 1960s developers dredged massive swaths of coastal wetlands to create canal communities including present day Cape Coral and Marco Island. The canals were dug to provide enough fill to raise individual lots five feet above sea level.

The cost of this development was the loss forever of dense mangroves, palmettos and second-growth pines. Landmark legislation was passed in the 1970s rein in wide-scale destruction of future wetlands including the Environmental Protection Act, the Clean Water Act and the Endangered Species Act.

Today these man-made canals are the fuel driving historic price gains in SW Florida property. The National Sea Grant Library has three informative case studies detailing the origins of Rotunda West, Cape Coral and Marco Island.

Case Studies: Rotunda West, Cape Coral, Marco Island (part 1) [National Sea Grant Library]
Case Studies: Rotunda West, Cape Coral, Marco Island (part 2) [National Sea Grant Library]

Developments of Regional Impact

Developers sizing projects to avoid DRI review


The Florida Developments of Regional Impact (DRI) process was implemented to ensure that large-scale development projects account for their impacts. Too many developments lacking necessary amenities like Golden Gate, Lehigh Acres, Cape Coral and North Port were constructed throughout Florida prior to the DRI process.

Locally, the Southwest Florida Regional Planning Council manages the DRI process. This organization has been in place since 1973 and serves: Charlotte; Collier; Glades; Hendry; Lee and Sarasota Counties.

A growing trend is for developments to be built that are just under the size that would trigger a DRI review. The size of development that triggers a review uses a formula based on the population of the county where the project is being built. This also explains why large projects like the West Villages of Thomas Ranch in North Port have parceled out smaller adjacent communities to different builders.

Large-scale developments getting past state review [Sun-Herald]

Gulf access lots

Limited availability provides strong investor returns


The limited availability of gulf access lots in SW Florida has created significant price appreciation gains for the owners of these parcels.

Cape Coral is home to over 200 miles of gulf access canals and offers the best gulf access value in SW Florida. At the present time a few gulf access lots are available in Cape Coral for just under $300,000 and the median price is $430,000.

Not all gulf access lots are created equal. Factors to consider when investing in a gulf access property include whether it is a direct access lot which can accommodate a sailboat or access is under a bridge or through a lock or lift. Another important consideration is the distance to the gulf which can be very quick particularly in SW Cape Coral or much longer in more northern sections of the city. Also, many buyers prefer locations where both sides of the street have gulf access lots.

It is amazing how beautiful cape Coral is from a boat. If you have not had the opportunity to cruise along the canals of Cape Coral at sunset, it is time to make a friend with someone who owns gulf access property.

Taste for salt water grows [News-Press]

Florida homestead tax unfair?

Tax burden shifted to new buyers


A Herald-Tribune article reveals that many homeowners want to move but are staying put to avoid a major tax increase associated with a new home appraised at the current market value. In Florida, as a result of the Save Our Homes Amendment, tax increases for primary residences are limited to three percent a year.

While this tax limitation does protect low income individuals from losing their homes, it has created a serious tax inequality problem across the State of Florida. A major portion of the tax burden is falling on newcomers and first home buyers that are taxed at market rate.

In the long run, this inequality will hamper the real estate industry in Florida if the tax burden is not more equally distributed. Tough to imagine very many politicians would be willing to take on the burden of fixing this one.

Homeowners feel trapped by taxes [Herald -Tribune]

Region tops growth charts

Cape Coral/Ft. Myers is ninth fastest grow metro area in nation


The Fort Myers-Cape Coral area posted the ninth-largest population increase, growing 11.6 percent to 492,000 from 2000 through 2003. Coming in fourth was the Naples-Marco Island area, which expanded 14 percent to 287,000 in the same period.

It is important to note that these figures are through 2003, and do not reflect the explosive number of new housing starts that have broken new records each month for most of 2004 and 2005. With Cape Coral less than 40% built-put and Lehigh Acres under 20%, there is plenty of vacant land available for many years. The key question is who will be able to afford the area if property values continue to appreciate so drastically.

Census puts area growth in top 10 [News-Press]

Home builder optimism drops

Third consecutive month of declines


Home builder optimism in the market for new single-family homes remains in a positive zone this month, albeit with some further erosion from the cyclical high in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

“Many builders appear to be taking on a more cautious attitude because of uncertainties in the economy and this post-Katrina environment, particularly with regard to sales expectations in the near term,” observed Dave Wilson, NAHB president and a custom home builder from Ketchum, Idaho.

The overall HMI declined two points in September to a score of 65, which is the lowest it has been since July of 2003 when it also hit 65. This was the third consecutive month of declines since June’s 72 reading.

Home Builder Optimism Edges Down Further In September [National Association of Home Builders]

Lehigh land auctions

Lots of lots on the block


John Bickel has an alternative approach for buyers and sellers of Lehigh land. Every other month he holds a real estate auction featuring Lehigh Acres vacant land.

The upcoming auction this Saturday features 70 quarter and half acre parcels. Recent auctions held by other groups have seen property actually selling for prices higher than generally available through traditional MLS approach.

Auction 'fun way' to buy lots in Lehigh [News-Press]

Homestead tax cheaters

Scofflaws costing state millions in lost revenue


In 2001, a hitman gunned down Miami Subs founder Konstaantinos "Gus" Boulis in a gangland-style slaying on the streets of Fort Lauderdale. His murder made national news, was featured in a book and joined mafia lore as an unsolved murder mystery.

Away from the limelight, however, no one noticed that a waterfront home in the name of a dead man was still receiving a homestead break. The illegitimate homesteading tax benefit lived on until this year. It saved his estate -- and cost Broward County taxpayers -- thousands in taxes on the $1.25 million waterfront home.

The case is not unique.

Homestead cheaters rob millions in taxes [Herald-Tribune]

Real estate escrow evolves

Most escrow now held at title companies


A change that has occurred in Florida real estate practice is for title companies to hold escrow funds rather than a broker. The Florida Real Estate Commission (FREC), which governs the industry, and the Florida Association of Realtors both endorse this idea.

The FREC record keeping and reporting standards are very rigorous for broker escrow accounting, so most brokers would rather the funds be kept at the third-party neutral title company. This change in practice is very positive one for the Florida consumer.

Eye on escrow funds [Palm Beach Daily News]

Lee County demographic shift

Wealthier buyers flocking to region


In his Market Watch column, Frank D'Alessandro astutely describes the new breed of buyer that is purchasing a home in Lee County. Many of these new residents are baby boomers purchasing a second home in Lee County.

The findings presented in the recently released Wachovia Regional Economic Review titled How Sustainable Are The Forces Driving Florida's Latest Housing Boom? state that "spillover from buyers priced out of the Naples market has added fuel to an already red hot market in the Fort Myers areas."

Lee home buyer profile changing [News-Press]

Real estate blogging

New media gaining relevance?


The NY Times highlights the differing perspectives on the real estate market between the National Association of Realtors (NAR) and the ever growing band of bubble bloggers.

David Lereah, the NAR chief economist, suggests that prices will continue to rise as a result of the shortages caused by Hurricane Katrina. While I have not seen price erosion in the SW Florida market, the rapid appreciation we experienced last year and through the spring has slowed.

Real estate bubble blogging is growing on a near daily basis. The very best of the bubble blogs is The Housing Bubble authored by Ben Jones. The fact that the NY Times is now referencing these blogs as a source of information is a an important milestone for the blogging community.

Another sign that the traditional media is adopting the new media practices is the availability of RSS feeds from newspapers. An RSS feed allows a reader to aggregate many news sources in common location utilizing a reader like Newsgator, Bloglines, Yahoo or even in your Firefox browser. Here locally in SW Florida, the Herald-Tribune is the first paper in the area to offer an RSS feed. And of course, Gulf Returns has a feed that is available here.

Realtors Bubble. Skeptics Blog. [NY Times]

Lehigh Acres strap numbers

What exactly is a strap number?

Every parcel of property in Lee County has been assigned a unique identifier called a "STRAP" number. A strap number is a 17 digit identifier in the form of Section - Township - Range - Area - Block - Lot.

We use the strap number property identification system as a result of the government survey method (rectangular survey system) that was originally used to survey Florida and the plat method that was used to subdivide Lehigh Acres. The plat method divides property into lots and blocks.

A township is 36 miles and is divided into 36 square areas called sections. Each section contains 640 acres. The popular maps that are available from the Lehigh Acres Chamber of Commerce have the township and range identified in the blue border at the edge of the map. Lehigh is organized into four township - range quadrants:

1. northwest 44-26
2. northeast 44-27
3. southwest 45-26
4. southeast 45-27

19-44-26-03-00017.0040 is a strap number of a property that I own in Lehigh Acres. From the strap we know that the property is located in the northwest sector of Lehigh.

Here is a breakdown of strap number 19-44-26-03-0017.0040:

• 19 = section
• 44 = township
• 26 = range
• 03 = area(unit)
• 17 = block
• 04 =lot

It is important to note that the last zero on the lot number is dropped to arrive at the proper lot number.

Katrina impact on real estate

Building material shortages from Charlie still plague region

It is estimated that the over260,000 homes have been destroyed and over $100B in damages may have been caused by Hurricane Katrina. The question of the day is just what impact Katrina will have on our market?

"The high cost of construction materials is expected to add 2%-3% to new home costs in the coming months," says Frank Nothaft, vice president and chief economist at Freddie Mac.

A recent MAX funds article details the following six areas of the economy that could be most affected by Hurricane Katrina:

1. Interest rates could climb as the government borrows hundreds of billions to clean up after Katrina.
2. Energy price increases from the Katrina related supply shock may drag the economy into recession.
3. Mortgage defaults from homeowners with homes underwater (literally and figuratively) could spook the mortgage bond market, cutting off new capital to homebuyers.
4. Rising insurance premiums resulting from hurricane losses could increase the cost of owning a home thereby lowering the value of a home.
5. Fare increases from airline fuel costs could increase costs of visiting vacation property.
6. Excess demand from massive construction projects in Katrina ravaged areas could lead to building materials and other commodity price increases as well as labor shortages creating inflationary pressures on the economy.

Our market in SW Florida is certainly at risk particularly from rising fuel prices that limit travel to the region. The relatively inexpensive fares between RSW and the northeast and Midwest have driven much visitor activity. We truly depend on these visitors to drive the market.

We are also susceptible to rising costs due to shortages of building materials and labor that is redirected to rebuilding the areas impacted by Katrina. There are a significant number of out-of-towners working locally in the construction industry. Costs will rise if this labor pool leaves the area chasing Katrina dollars.

Will Katrina Sink The Housing Market? [MAX funds]

Huge Katrina Rebuilding Efforts Will Boost Costs, Create Delays [Investor's Business Daily]

New Fort Myers suburb

Babcock Ranch will be orientated towards Ft. Myers

While much of the Babcock Ranch is located in Charlotte County, owner Syd Kitson plans to develop the parcel as a Ft. Myers suburb.

According to Kitson, "It is four miles from I-75 and eight miles from downtown Fort Myers." Tentative plans call for 19,500 new homes, of which 17,800 will be built in Charlotte County.

This project sounds like a winner for Lee County, which will only have to provide services for 1,700 new homes, but will attract the wallets and spending power of the entire project. It will be interesting to see what concessions Charlotte County will require to balance this seemingly unfair economic equation.

Babcock to be Ft. Myers' suburb [Sun-Herald]

Financing contingency follies

Creative financing in vogue

Many buyers entering the housing market in Southwest Florida are resorting to non-traditional financing methods. Recently, I have seen many contracts with financing contingencies well outside the boundaries of the traditional 20% down, 30 year fixed-rate variety.

Many of these same offers also seek extended closing intervals, often referencing business days rather than calendar days. As the owner of a property that is for sale, it is important to understand the downside of accepting an offer with a creative financing contingency. Basically, the property is off the market for the financing commitment period and if the buyer is not successful in getting approval, they get their escrow back.

One of the questions that comes to mind is whether these creative mortgages are gaining in popularity as a result of prices that have increased so dramatically that many buyers have no other option or rather as a byproduct of aggressive marketing campaigns by mortgage industry lenders. My hunch is that both of these factors are major contributors to this trend.

The Wall Street Journal polled 2,300 homebuyers and found out that nearly one in five U.S. homeowners bought a home within the last three years that exceeded their suggested price range. The survey also revealed that one-third of Americans that purchased a home in the last three years used a creative mortgage including interest only, piggyback, payment option or miss-a-payment mortgage.

U.S. Homebuyers Using Creative Mortgages [Wall Street Journal]

Sideways condos

End of an era for many mobile home parks

Along both Florida coasts, luxury housing projects have been constructed on property that previously served as a mobile home park. It always seems strange to me to see a luxury condo rise from the ground surrounded by the remaining mobile home parks in a given area.

While these site redevelopment projects further squeeze those in need of affordable housing, municipalities generally are supportive due to the large tax gains that are realized.

With Naples spillover rapidly driving up property values, Bonita Springs has seen over 500 mobile home units disappear in the past 3 years. One has to wonder how long before developers pick off the remaining 38,000 mobile units here in Lee County.

Truly mobile: Making room for luxury real estate [Naples Daily News]

Hurdling investor landmines

Avoid common investor mistakes

While it seems everyone is making a killing investing in real estate right now in SW Florida, there are some ways to lose big in real estate investing. MSN Money weighs in with a column by Jeff Schnepper titled 3 ways you can go broke in real estate.

One surefire way to lose is to invest in a neighborhood where values are declining. Tough to identify many neighborhoods that fall into this category in our region right now.

Another investment pitfall is unstable tenants. This is absolutely an issue in a seasonal market like ours. Lose a couple of months of in-season rent and your investment could certainly be underwater.

A third investment pitfall is changing interest rates. With the surge in popularity of exotic mortgages, some investors are sure to get burned if interest rates go up. I received a letter from a lender this week notifying me of a $341 a month increase in a mortgage payment on an investment property due to an upward rate adjustment. While I was planning for this increase in my projections, sizeable payment increases can certainly squeeze investor cashflow.

3 ways you can go broke in real estate [MSN Money]

Flipping by the numbers

Flipper returns are ahead of the market

A study recently released by First American Real Estate Solutions titled Real Estate Flipping, Goldmine, Mistake or Fraud reveals that flippers are beating the overall market appreciation increases with their investments.

The study analyzes flipper activity since 1999 in three hot markets, Orange County, CA, Las Vegas and Miami. The study concluded that holding time sweet spot for maximizing returns was 3-6 months.

Another study conclusion was that flippers exercised a level of intelligence and savvy above that of the general market. Strategies utilized by flippers beat the market include: investing in the hottest areas; investing in distressed properties; identifying below market asking prices and capitalizing on hyped market psychology.

Real Estate Flipping, Goldmine, Mistake or Fraud [First American Real Estate Solutions]

Bullish on Florida

Wachovia supports sustainability of Florida real estate market

As summer fades to fall, the entire Florida real estate market is waiting for snowbirds to arrive....... their portfolios percolating with freshly minted equity. As these aging boomers descend on the Sunshine State, the million dollar question is, will they buy?

The latest Regional Economic Review from Wachovia titled How Sustainable Are The Forces Driving Florida's Latest Housing Boom? suggests that rising home prices in Florida can be explained by basic economic and demographic forces. Quite simply, prices are rising rapidly throughout most regions of Florida because the demand for single-family homes is vastly outpacing supply.

The five fundamental factors driving Florida's housing market are as follows:

1. Near record low mortgage rates
2. Strong job growth
3. A growing population
4. An increasing supply of aging baby boomers
5. Growing interest from overseas visitors, immigrants and investors

The report suggest that our market is and will continue to remain healthy for the foreseeable future. Anyone with a vested interest in Florida real estate should take the time to read this report, it presents a very detailed view of the economic and demographic data driving our market.

How Sustainable Are The Forces Driving Florida's Latest Housing Boom? [Wachovia]

Potty talk

18,000 loos invade Lee County

Pop quiz: What is the first thing that you teach a newbie investor when showing them around SW Florida?

Answer: Look for the streets and neighborhoods with the most porta-potties......more than likely these are prime areas to invest.

For those of you who haven't had the opportunity to visit the area, each residential single-family construction site has a porta-potty located at the front of the lot. In some of the grid neighborhoods particularly in Lehigh, you can look down a street and literally see them lined up all the way to the horizon.

And if you are wondering, yes I may have checked out one or two of these in my travels while hunting for the next great investment.

Portable toilets dot Lee lots [News-Press]

Foreclosure 101

Seems like everybody is riding this horse

Investors across the country are focusing on the foreclosure space, making money buying distressed properties. Hardly a day goes by when I don't hear another foreclosure investor success story.

I haven't participated in this sector yet, but would jump in if I had an edge in finding properties ahead of the pack. My friends that are successful with these distressed properties have made connections with the banks and get an early look at properties ahead of the pack.

There is intense competition for these assets in many parts of the country. The leading states for foreclosures are: Colorado; Georgia; Ohio; Michigan and Texas. Most investors prefer to purchase a distressed property from the owner rather than from an institutional owner.

Don't bet the house on foreclosures [Rocky Mountain News]

Bubble talk

Is there a bubble in SW Florida? The experts weigh in....

bub·ble n.

Bubbles occur when prices continue to rise simply because enough investors believe investments bought at the current price can subsequently be sold at even higher prices. They can occur in virtually any commodity including stocks, real estate, and even tulips.

The one sure thing about the market in SW Florida is that the experts cannot reach a consensus opinion about what the future looks like.

Michael Pollick's article from today's Herald-Tribune about the real estate market is a must read for any real estate investor.

Region's roaring real estate market carries reward and risk [Herald-Tribune]

Hovnanian swings and misses

Local giant misses Q3 earnings target

Hovnanian Enterprises, Inc., who recently acquired local power-house builder First Homes, missed third quarter earnings projections.

Hovnanian said earnings for its fiscal third quarter ended July 31 rose 34 percent to $116.1 million, or $1.76 per share, from $86.7 million, or $1.33 per share, in the year-ago period.

Analysts' average estimate was $1.77 per share, according to Reuters Estimates.

Red Bank, New Jersey-based Hovnanian maintained its outlook for fiscal 2005 earnings of more than $7 per share, versus analysts' average estimate of $7.24.

Commenting on the Hovnanian backlog, J. Larry Sorsby, Executive Vice President and Chief Financial Officer said "Our quarter-end backlog of more than 11,300 homes combined with the backlog of our two most recent acquisitions provides us with approximately 15,500 homes in contract backlog.

While the Q3 results were in not impacted by the First Homes acquisition which occurred after the quarter closed, saving Q4 could have been have a key driver in completing the deal. Public companies often make deals when organic results are not meeting expectations. It is interesting to note that the two acquisitions made by Hovnanian in the quarter added 4,200 contracted homes to the Hovnanian backlog.

Hovnanian Enterprises Reports 32% Increase in Fiscal 2005 Third Quarter EPS [Hovnanian Enterprises]

Services economy

Real estate driving jobs growth

Like bees swarming a hive, agents patrol the neighborhoods of SW Florida looking for the next listing. As discussed in a previous post titled Realtor Ranks Rising Rapidly, the quantity of new entrants into the field of real estate is staggering.

On a national basis, our economy is truly evolving from a producer of goods to one highly concentrated on providing services. This chart, courtesy of PIMCO Bonds, details the dramatic upswing in real estate job growth vs. the loss of manufacturing jobs.

As of December 2004, National Association of Realtors® membership grew to more than 0.6% of the U.S. labor force, an increase of 37% over the past decade. Mike Panzner, author of New Laws of the Stock Market Jungle, provides this interesting chart on NAR membership growth vs. U.S. labor force and total U.S. population:

The situation is even more dramatic here locally. According to the Lee County Economic Development Office, only three percent of the non-agricultural jobs in Lee County are in the traditional manufacturing sector.

Source: Lee County Economic Development Office

Investment Outlook "Lunch" Time [PIMCO Bonds]

Bright lights, big city

New SW Florida Airport dazzles

Wow, I am writing today from the new Southwest Florida International Airport. When I booked this flight last month, I had no idea that I was going to be one of the first passengers to use the new airport. I literally had to do a double take after so many flights through the dingy old terminal, this place is big-time. It reminds me of the new terminal at Ronald Reagan Washington National Airport........big, bright and airy.

The parking and rental car facilities are located in a huge garage connected to the terminals, a significant improvement over the previous arrangement. Like the old terminal, there is a Chili's outside of security. The big change here is many dining choices inside of security, no more stale sandwiches from the beer kiosk.

My Jetblue flight is departing from Terminal D, which has plenty of very comfortable leather chairs to accommodate every waiting passenger. The free WiFi that was so helpful at the old terminal is not presently operating, hopefully this will be turned on in the near future.

Can a new airport significantly impact the economy of an area like SW Florida? While I really don't know the answer to this question, I do know that significant growth has occurred in other cities around new airports. A couple examples that come to mind are the extensive development around Dulles Airport in Northern Virginia and DFW in Dallas, two airports that when they were built, were very remote.

I believe that commercial property in close proximity to the airport is about as sure a thing as any real estate in SW Florida. It just seems that an explosion of development is just around the corner for the entire corridor along I-75 in the vicinity of the airport. It is time to step up and find my piece of the action in this booming part of town.

Transition from old to new goes smoothly [News-Press]

Lee permits soar

New building permits up sharply in August

Lee county had a dramatic increase in building permits issued for the month of August reaching 1,309, nearly triple the number from a year ago. Previously the record had been June's 1,025 permits. Lee County's numbers include the unincorporated county plus Fort Myers Beach and Bonita Springs.

Cape Coral reported that 742 permits were pulled in August, also a record and almost twice the number from a year earlier. Previously, the Cape's record was June's 711. Fort Myers' numbers were down: 40 permits, compared to 208 in August 2004.

I don't know how to explain the July permitting dip that the region experienced, but continued builder confidence is certainly positive news for the area.

Permits hit record in Lee, Cape Coral [News-Press]

The lure of coastal life

Coastal development has its risks

In 1960, there were 180 people per square mile in the coastal United States; by 1994, there were 275 per square mile. A USA Today study in 2000 found 1,000 year-round settlers arriving in coastal counties each day.

In Florida, more than 13 million people live in coastal counties, up from 200,000 a century ago. As a result, all four of last year's Florida hurricanes made the list of America's 10 most damaging storms ever.

While there are still a few lingering reminders that Hurricane Charlie plowed into Punta Gorda last year, much of the area shows no sign of damage and significant new development is underway the area. It certainly appears that we have short memories when it comes to balancing the risks of living near the coast vs. living in the path of future storms.

The Lure of Coastal Life Outweighs The Risks [Washington Post] registration required

Shifting construction strategy

Movement to more affordable starter homes

Recent housing data shows an interesting twist. For the first time, the median price of new homes is below that of existing homes. In short, new homes are getting cheaper and more are being sold, while existing homes are getting more expensive and less are being sold vs. the recent past.

This data reflects a "big shift in the kind of homes being built," says Sam Lieber, portfolio manager with Alpine Funds, portfolio manager for the $900 million Alpine U.S. Real Estate fund, which is about 50% in homebuilder stocks. Homebuilders are now focusing more on affordable homes for first-time homebuyers rather than high-end properties, he says.

Lieber's assessment of the home building shift may not be as relevant in this market where so much of the single-family housing stock is focused on the starter home buyer. Our valuations are skewed by the land value particularly whether or not the property is located on or near water.

Real Estate Review: Subdivisions [The Street.com]

Condo crush

Condo developers most at risk

If the real estate market slows, who is the first to feel the heat?

Condo developers could get hit much harder than other types of developers because they face more construction-cost risk. Unlike single-family subdivisions where homes are sold from sales offices before construction, condo developers could get hit hard if the market changes quickly.

In past downturns, condo developers who were building during a market squeeze were forced to discount their units, shrinking or wiping out their margins. In some over-supplied markets, developers were forced to turn their projects back over to the banks that fina