Inventory woes

Rising inventories are national phenomena

The ever increasing number of homes for sale is not an issue isolated to SW Florida. The inventory growth is occurring in many markets across the country.

This trend appears to be impacting the confidence level of visitors to our area. In the past years, boomers seemed eager to make commitments down here for a second property with the belief that the primary residence up north will sell quickly.

This change in buyer confidence could be a factor in the pre-construction sector. A CNN/Money article suggests that that new home order cancellations are a growing concern for builders.

Home builders have reported an increased number of orders for new homes being cancelled in recent months, raising concerns that buyers who were looking to real estate for an investment rather than their own housing needs are pulling out of the market. Such cancellations could put downward pressure on prices in some formerly hot markets.

A correction which reduces the level of investor owned property is certainly good for the long term health of our market. Yes there will be some bumps in the road, but in the long run the growth demographics associated with SW Florida make it a great place to own property.

Home sales: Is the market glutted? [CNN/Money]

Virtual investing

Hone your investing skills

Attention....attention calling all SW Florida real estate investors. Is the lions share of your dough tied up in some lots that are not selling right now, or maybe a few rental properties with cap rates that look like your high school GPA.

Tycoon City: New York, a new video game from Atari provides the opportunity to rub elbows with the Donald and other Gotham City wheelers and dealers.

Maybe you can hone your development skills enough to come back to Fort Myers and tackle some major challenges like filling the downtown luxury towers or commercial land acquisition and assemblage in Lehigh Acres.

Sanibel starter homes

The bar is high and the ammenities are sparse

The phrase Sanibel starter home is truly an oxymoron, but for the ambitious dreamers there are some options. For starters, the bar is pretty high on Sanibel.......it takes a cool half a million to get into the game.

The average asking price for a single family home on Sanibel is currently $1.6M. The average selling price over the last 90 days is $1.075M and the selling price per sq. ft. was a lofty $504 sq ft.

For the purpose of this posting we are looking at single-family homes with a minumum of three bedrooms. There are a few two bedroom homes at lower price points, but are probably not realistic options for a number of buyers.

The lowest priced three bedroom single-family home on Sanibel is located at 848 Rabbit Road and is listed at $499,999. It has 1596 sq ft and was constructed in 1957.


A 3 BR, 2.5 BA home located at 986 Greenwood Court N in the Dunes Subdivision is available for $530,000. It has 1287 sq ft and was constructed in 1981.


Another option is 1932 Roseate Lane, a 3 BR 2 BA home located in Sanibel Lake Estates that is listed for $599,000. The home has 1741 sq ft and was built in 1970.

These 3 homes are a small sampling of the property available on Sanibel. Please drop me a note if you have any interest in finding your piece of this great island.

Finding a good real estate agent

5 tips to success a successful relationship

With the sheer number of real estate professionals operating in the area, selecting one is like a box of chocolates, You never know what you're gonna get. It is important to honestly evaluate the merits of utilizing the convenient neighbor, relative or fellow church member to represent you in this important transaction.

CNN/Money has an informative article that provides five tips for picking the right real estate agent. The five tips covered are:

1. Gauge your need
2. Where to find 'em
3. What you deserve
4. Be wooed
5. Watch for red flags

Finding a good real estate broker [CNN/Money]

Fort Myers vacant lots

Super-sized lots for the estate home

Ok, you have hit a couple of home runs in the real estate market and the time is right to build the dream house. With this success, you are drawn to the epicenter of success in Lee County, South Fort Myers

No dream house belongs on a postage stamp sized lot so typical at many of our gated communities. A trophy house needs a BIG LOT. For the purpose of this discussion, we are defining big lots as an acre or larger.

A hidden gem just a short distance from the Sanibel Causeway is Shenandoah, a secluded private gated community of 21 homes. The lots are a spacious acre and two horses are allowed on each lot. 16311 Shenandoah Circle is listed at $350,000.

Another option in South Fort Myers is the gated community of Belle Meade. A dream house would fit in just fine in this upscale community. A 1.45 acre parcel at 8500 Belle Meade Drive is available for $425,000.


Rainbow Farms is another South Fort Myers community with upscale homes. A 1.66 acre parcel at 9034 Ligon Court is available for $545,000.

For the super successful player, this 1.1 acre riverfront parcel at 14040 Schultz Road is one of the best vacant lots in South Fort Myers. This outstanding parcel has 250 ft of frontage on the intra-coastal waterway and a 125 ft concrete dock in a private protected basin. This beauty is listed for $5.590M

First Street Village Ft Myers

Keystone project for downtown renewal

First Street Village brings a fresh exciting approach to development in Downtown Fort Myers. The mixed-use project will include 356 luxury residential units, 38,000 square feet of office space, and 98,000 square feet of retail space to be anchored by a Publix supermarket.

Located on 12.5 acres between McGregor Blvd. and West First Street, I expect this project to have a similar impact on Downtown Fort Myers that notable projects like The Inner Harbor in Baltimore, Faneuil Hall in Boston and South Street Seaport in Manhattan have played in revitalizing downtown neighborhoods.

The developer of First Street Village is Ohio-based Cameratta Properties, who is also developing the Highpoint Place riverfront tower.

Please drop me a note if you would like to be added to the First Street Village registration list to receive ongoing updates about this exciting project.

Market Watch 2006

Local real estate experts gather to opine

The local real estate community gathered last night at the Harborside Event Center in Fort Myers to discuss the state of the market. The market slow down in the residential sector was the primary topic of discussion.

Presenter Denny Grimes stole the show with the following line:

"If you want to sell before the market changes, you must have your home sold before September — last September."

Downturn won't last, experts say [News-Press]

Duplex lots in Lehigh Acres

Double up on rental income

Pop quiz: What do taxes, traffic, 200+ days of sunshine and duplex rental income have in common?

Answer: Sure things in SW Florida.

A duplex is a two unit home that can be used in a split manner with one of the units serving as the primary residence and other as a rental property or as an investment property with two rental units.

While the CAP rates may not be reach lofty levels that we experienced prior to the last couple of years of land pricing increases, duplex properties are still paying off for many investors. Resale activity is stronger in this sector than single family construction with a pending to active ratio just under 20 percent.

The typical configuration here in SW Florida is a single-story side-by-side layout with each unit containing two or three bedrooms, two baths and approximately 1200 sq. ft. of living space. These structures are constructed on over-sized lots usually 100 ft by 125 ft and zoned RM-2. Currently gross monthly rents for duplex buildings are ranging from $1600 to $2000.

There are many lot options available today for a perspective investor. Three Lehigh Acres duplex lot options options currently on the market are: 920/22 Homestead Rd S for $53,000; 4633/35 24th St SW for $57,000 and 4728/30 27th St SW for $57,000. Please contact me if you are interested in exploring duplex options in SW Florida.

Red Sox invade Ft. Myers

The eyes of Red Sox Nation are on the City of Palms

Like the Roman Army invading Gaul in 55 BC, Red Sox Nation has descended upon Ft. Myers for spring training. We are also fortunate to be the spring training home of the Minnesota Twins, although their presence is dwarfed by that of the red hose.

With the entire spring training sold out and scalpers charging hefty premiums, some of Red Sox Nation might be shut out of the games and have some spare time. Might it be worthwhile for you to invest some of this time looking for your own place in the Florida sun?

Maybe it is also time for some of the Red Sox family to put down roots here in SW Florida. Based on our knowledge of the team and of the local real estate market, the following are some property recommendations.

For Manny Ramirez, a 20th floor penthouse condo at Mastique where the views are priceless and privacy is at premium. With private secure elevators, it is unlikely that anyone will be bothering Manny at Mastique. On the market for $2.295M

Principal team owner John Henry would be a good fit for Casa Yucca, the former Sanibel home of CIA Director Porter Goss, is listed for $18.9M. The gulf frontage is amazing is amazing, the only worry would be where he would dock his yacht.

For Big Papi David Ortiz, a penthouse condo at Beau Rivage along the River in Downtown Fort Myers seems like a natural. How cool would it be for Big Papi to take an evening stroll on his namesake Ortiz Avenue. Listed at $898,000.

Ace outspoken pitcher Curt Schilling and his lovely wife Shonda would be a good fit for a home on exclusive Waite Island in St. Charles Harbour. With six bedrooms and a guest house, the Schillings will have plenty of room. Listed at $3.8M.

General Manager Theo Epstein is a bottom line kind of guy. We think he would definitely factor in resale potential before making a decision. With strong resale results, an 11th floor condo at Riva del Lago would fit the bill for Theo. A four bedrooms unit would provide space for Theo sidekicks Ben Cherrington and Jed Hoyer to crash.

Bullpen stalwart Mike Timlin is an outdoorsman and country boy. For him a home with acreage in Alva seems like a natural. This riverfront home on 1.8 acres in Alva is listed at 1.95M.

Knuckleball pitcher Tim Wakefield is one of the teams best golfers and is destined for a home in Renaissance. On those off days between starts, Tim can enjoy playing 18 on the wonderful Arthur Hills designed course. Listed at $1.895M.

Chairman Tom Werner and girlfriend Katie Couric like to entertain and this Gulf Harbor Mansion, owned by former WCI CEO and current Ambassador to Portugal Al Hoffman should fit the bill. A few years back this home was visited by "W" for a political fundraiser. The asking price a cool $17M.

First baseman Kevin Youkilis is still working on his initial contract and is not yet cashing the big checks. For Youk, a townhouse in the Stoneybrook neighborhood of Gateway listed at $259,000 seems like a good fit.

Team architect Janet Marie Smith is famous for her renovations at Fenway including the beloved Monster Seats. This Ft. Myers riverfront home in Palmetto Pointe listed at $2.5M could blossom with her golden touch.

If any members of Red Sox Nation are looking for a place down here to call home, please drop me a note and we can try to find it for you. If during our home search, you want to talk about Coco's OBP or Paplebon's K/9 that will not be a problem on this end.

Cape Coral builder woes

Hansen Homes faces funding crunch

The City of Cape Coral has stopped issuing permits for local builder Hansen Homes, one of the areas largest builders.

Hansen attributes the permit backlog to the rescinding of financing by First Community Bank. The FDIC ordered First Community Bank to stop issuing construction loans in 2005 after its portfolio had become too overloaded with risky construction loans. In 2004, First Community Bank funded 12 percent of all new single-family construction loans in Lee County.

Hansen Homes may be ripe for acquisition by a better capitalized national buyer.

Cape targets builder for delays in building homes [News-Press]

Buying foreclosures

Everybody is talkin' foreclosures these days

At lunch, in the office and on the phone......everybody seems to be obsessed with FORECLOSURES.

Foreclosure monitor RealtyTrac said the number of foreclosures nationwide was up 24.5 percent from the first quarter of 2005 to the fourth quarter.

Courtesy of Money Magazine, here are three forclosure myths:

Myth no. 1: A big spike in foreclosures is right around the corner.

Myth no. 2: Foreclosed houses sell for far less than their market value.

Myth no. 3: Anyone can make money in foreclosures.

Foreclosures: Bargain hunters beware! [Money Magazine]

Lee County market slowdown

Investors exiting and inventory growing

Yes it is true, our market is slowing. Growing inventories and price reductions are the words de jour. The positives are that the market is still moving particularly at the lower end and the in-migration of baby boomers to the region will provide a mechanism for absorbing inventory.

A News-Press story provides a good overview of market conditions in Lehigh Acres and Gateway. There are some deals to be had if you are buyer looking to enter the market. Please drop me an e-mail if you have any questions about current market conditions.

Real estate slowdown seen in Lee County [News-Press]

Tax time tips

Tools to help investors during tax season

It is that dreaded time of year for real estate investors, when the tax return needs to be filed. Hopefully, you aren't piecing together history from a shoebox. A Real Estate Journal article highlights some tools that will make preparation easier.

For me, one of the big improvements that I have made is to utilize one credit card for all my investment expenses. I really like being able to hand my accountant the a years worth of expenses from a single source.

Tools That May Make Tax Time Easier for Property Owners [Real Estate Journal]

Government homes for sale

HUD consolidated site

A common question that I get asked is where can I find out about government owned property? The US Department of Housing and Urban Development (HUD) runs a consolidated site of homes for sale by many different government agencies.

I would enjoy hearing from anyone that has success buying property through this site.

Historic Fort Myers

Downtown makeover underway

The Downtown Fort Myers Historic District is home to many of the oldest buildings in Lee County. This is an area that I remain bullish on for real estate investments. Just like waterfront property, they are not making any more historic downtown buildings.

With several renovations complete it is exciting to see national companies announce plans to open franchises in this area. The Starbucks opening later this year in the Kress Building will serve as a natural drawing card for other establishments. Quiznos is also opening a restaurant in the Kress Building.

Old city, new face [News-Press]

Captiva and Sanibel tourism

Normalcy returns to barrier islands

Sanibel and Captiva are the bellwether for tourism here in Lee County. The success of our real estate market is interwoven with the ability of these resort communities to draw visitors to the region.

The continued health and growth of our market is dependent on the absorption of inventory by in-migration. Many of these newcomers will be baby-boomer aged northerners who were initially attracted to the area through a vacation on Sanibel or Captiva.

On a day when the northeast is getting hammered by a major blizzard, it is great to see that the lead travel story in the Boston Globe is about visiting Captiva and Sanibel. For those of you up north planning a trip down, please drop me an e-mail if you are interested in looking at investment opportunities on Sanibel or Captiva.

Captiva comes back [Boston Globe]

Fewer condo buyers

WCI reports drop in customer traffic in '06

Interesting comments about customer traffic at sales centers from WCI president & CEO Jerry Starkey during WCI's 2005 earnings call.

"In January, traffic was down 49 percent from a year ago and down 44 percent for the first eight days of February"

WCI released 2006 revenue and gross margin guidance on Friday and is scaling back tower revenue to 35 percent and upping traditional home building to 53 percent of 2006 revenue. This revenue mix shift represents a significant change from 2004 when towers represented 45 percent and traditional home building 43 percent of WCI revenues.

This shift in focus by a respected developer like WCI is something that all real estate investors should factor into their investment decisions. It is particularly important throughout Florida as the overbuilding in the Miami area is bound to impact the entire state.

Luxury condos' allure wanes [News-Press]

Realtor blogs

Gulf Returns featured in Florida Realtor Magazine

Florida Realtor Magazine has a cover story this month about Realtor blogs and prominently mentions this site in the article [blatant self-plug].

Gulf Returns has a significant amount of information about the SW Florida real estate market and real estate investing in general. If you are here for the first time check out the archives, which contain nearly 500 real estate related postings.

If you are curious about me, my post titled The Four Ws, provides some background on me and why I started this site. The parcel outlined in the title bar at the top of Gulf Returns was the first property that I purchased in SW Florida. My First Deal chronicles the life-cycle of this investment.

Here is an excerpt from the Florida Realtor Magazine story:

As a first-year real estate associate, Mark Washburn knew he had to build redibility, and quickly, if he wanted to succeed in an increasingly competitive business. So Washburn, an associate with the Cape Coral office of Island Coast Realty, turned to his blog: Gulf Returns

Washburn has been running this real estate investment Web log for about 13 months - longer than he's been working as a real estate associate. He spends about 30 minutes a day updating the online journal, writing about the price gains in his market, the struggles developers face when angling for building permits, the steps that members of the real estate community are taking to slow the pace of real estate flipping and other topics that investors in residential real estate would find intriguing.

By doing so, Washburn shows buyers and sellers not only that he understands the real estate market in Southwest Florida, but that he knows enough about it to run a busy online diary outlining the market highs and lows.

What The Heck is a blog? [Florida Realtor Magazine]

Seven buyer tips

Real estate pendulum shifting to buyer

With the tables turned to favor the buyer, how about some tips to gain further leverage in a buying scenario. Scripps Howard News Service offers up seven buyer tips to help buyers gain an advantage in a transaction.

First tip: Buy in the offseason. The best time to buy a house is the week between Christmas and New Year's Day, says Robert Irwin, a real estate author and investor. Why? No one is looking.

"The only ones out there are people who desperately need a home or investors looking for a bargain," says Irwin.

As real estate market cools, 'buys' return [Scripps Howard News Service]

Fort Myers waterfront condos

Can luxury condos revitalize downtown?

It is big news in SW Florida when our problems are aired as a prominent story in the NY Times. Many will most likely find it painful to stomach Ft. Myers being described in the article as "the stepchild to its more beautiful sisters in southwest Florida, Naples and Sarasota."

While the high-rise development in Downtown Ft. Myers will certainly bring more full-time residents to the area, the lack of public access to the waterfront is troubling. Think of the possibilities if the city leadership had required a retail level and riverside promenade on the first floor of each of these high-rise developments.

As previously discussed here at Gulf Returns, the first new high-rise, Beau Rivage, is experiencing sluggish resale results. Currently, 27 units (22%) are listed for re-sale in the MLS system. The prices range from a low of $439,900 for unit 1405 to a high of $898,000 for unit 2203. The average asking price at Beau Rivage is currently $338 per sq. ft. and the average sales price for three resales in the last 90 days was $291 per sq. ft.

A Florida City Awaits the Payoff From Its Bet on Condos [NY Times]

Zillow debuts

Real-time home valuation tool launched

Real-time self-service property valuations just got a little easier for web-savvy home owners. Zillow, a web-based property valuation tool, launched today.

The service, described as a Kelly Blue Book for homes, provides an estimated value of a home utilizing information culled from county tax records. An especially useful feature allows the homeowner to adjust the value based upon the amenities of a particular home.

Zillow is well positioned with $32M in venture funding and is led by the founder of travel site Expedia. Zillow is free for the user and expects to generate revenue from location specific advertising sales.

While I am excited about any tool that empowers the real estate consumer, I do believe that a service wholly dependent on county tax records will have a time lag associated with the information. Here in SW Florida, I have seen delays ranging from one to three months between the time when a transaction closes and when the county database is updated to reflect the transaction. I find MLS databases to be a better source for current sales information.

2 Web Sites Push Further Into Services Real Estate Agents Offer [NY Times]

Condo conversions cooling

Sales of converted apartments slowing

A sector of the real estate market that has stalled is that of converted apartment buildings. Often hitting the market with attractive price points, these conversions were the darlings of the investor sector over the past couple of years. It was often possible for the average investor to eke out a positive cash flow from a converted unit.

With many investors sitting and watching, the conversion market is now significantly more dependent on end-user buyers for absorption. Attracting end-users is proving to be a challenge for conversions throughout SW Florida.

Jack McCabe, Deerfield Beach-based real estate analyst, agrees with the basic logic that investing in affordable housing is less risky than investing in more expensive property. But McCabe believes it may take longer for the market to turn around than many in the real estate industry may think.

"Speculators are leaving the market, not just in Florida but all across the country," McCabe said. "What we're left with is end users. Complexes that were selling 25 units a month are now selling two or three.

"This is not just an anomaly. It's an absolute trend. January and February sales will be up over November and December, but they will be half as much as last year."

McCabe believes that rather than rebounding by summer, it will take at least two years for real estate market to burn off the inventory that's building up.

Converted condos taking longer to sell [Herald-Tribune]

Lee building permits stalled

New construction permits below last year

Another sign that the market in SW Florida is cooling are the drops in new single-family construction permits from the same period last year.

In January, Cape Coral issued 423 permits, down 29 percent from December 2004, but up five percent from December 2005. In January, Lee County issued 632 single-family home permits, down 18 percent from January 2005, but up one percent from December 2005.

I think that a significant factor contributing to these permitting fall-offs is the significant number of investors dropping out of the spec home market. At this time last year, many local builders were heavily promoting $1,000 down new single family home programs. For the most part, these programs have disappeared from the market. This is a good thing for the long-term health of the market as the end-user absorption rate of these properties is lagging behind the number coming on the market.

Lee's January home permits fall [News-Press]

Inflated home sales numbers

Are Ft. Myers and Cape Coral MLS boards double reporting?

One of the things that truly befuddles me is why both Ft. Myers and Cape Coral both need their own real estate boards. As the two organizations use different information systems and do not currently share data, a significant number of local Realtors belong to both organizations.

Many homes for sale in the area are entered into both systems. When the double entered homes are sold, both boards are most likely reporting the sale. This double reporting inflates the home sales that are reported each month by the Florida Association of Realtors. Heads up to astute RE/MAX Realtor Brett Ellis for uncovering this oversight.

Real estate numbers may be inflated by duplication [NBC-2]

South Seas sold

Famed Captiva resort to have new owners

In an apparent below market valued transaction, South Seas Resort was acquired by Blackstone Group LP for $367 million in cash. In addition to the Captiva and Sanibel assets, the transaction included hotel properties owned by MeriStar Hospitality in Key Largo and Clearwater.

This transaction is certainly a positive for the SW Florida market as the famed resort has been closed since damaged by Hurricane Charley in August 2005. The 3,500 guests that visited the resort on a weekly basis have over the years ignited the SW Florida real estate market.

South Seas resort sold [News-Press]

High Point Place Ft Myers

Riverfront 32-story highrises taking shape

High Point Place, the "Uptown Waterfront Tower" is rising in Ft. Myers on the banks of the Caloosahatchee River. The project developer is Cameratta Properties of Broadview Heights, Ohio. The Carlyle Group, a highly respected private equity firm with more than $17.5 billion under management, has provided funding for the project. I have had previous experience with the Carlyle Group and their involvement in this project is a big plus for me.

At 32 stories, High Point Place will be the tallest residential building in Ft. Myers and will contain a total of 273 units. Condo units are two and three bedrooms ranging from 1760 sq. ft. to 2230 sq. ft. The project is 100% pre-sold and pricing is estimated in the $850,000 to $1.5 million range.

High Point moving quickly [News-Press]