Occupancy Rates Up and Rents are Dropping

The latest report on the Lee County rental market released by RealFacts of Novato, CA detailed shifts in our rental market for 2Q10.  Lee County apartment occupancy rates in 2Q10 climbed 4% to 90.8%, the fourth highest in the 12 major Florida markets.  Lee County rents for the same period dropped 9.1% to an average of $762/month.  This decline in rental rates was the highest in Florida during 2Q10.  The Fort Myers-Cape Coral market now ranks 9/12 in average rental rates in the 12 major Florida metro markets.

The biggest challenge for landlords in this market is the quality of tenants.  Many who have lost jobs and homes are seeking rental arrangements.  Also with our rock-bottom prices, the best qualified renters are purchasing in this environment, further skewing tenant quality.  We are seeing a significant demand for lease-to-own arrangements in this market for those who have wrecked their credit via short sale or foreclosure.  These types of arrangements may prove very attractive for investors with skinny or negative cash flow assets.

Here is a resource to view investment properties in the Fort Myers-Cape Coral market

The minnpost.com has a story about a recent speech given by housing researcher John Mcllwain titled, “The Suburban Century is Over.”  Mcllwain predicts a shift in American housing and lifestyle preference away from the white picket fence suburbia towards a more urban lifestyle.

In TV terms the wonderful suburban neighborhoods of Leave It To Beaver, The Brady Bunch and Bewitched are fading and the urban lifestyles of the Odd Couple, Mary Tyler Moore and Frazier are coming of age.

What does this mean for the Southwest Florida and the greater Fort Myers area?  While no one is ever going to confuse Southwest Florida with the Upper West Side, we do have some really dynamic urban areas like 5th Avenue in Naples.  In recent years, a handful of urban-oriented projects have been developed or renovated that address this shifting lifestyle demographic.

Developments in the Fort Myers area offering an urban lifestyle experience include:

High Point Place – Riverfront high-rise in downtown Fort Myers walk to restaurants, Publix, Starbucks, offices, parks, theatres and museums.

Residences at Coconut Point – Condos located on the upper-levels of the Coconut Point Mall which has emerged as the destination in South Lee County.

Rapallo – Gated condos and villas adjacent and very walkable to the dynamic Coconut Point Mall

Cape Harbour – Waterfront boating community with vibrant boardwalk featuring restaurants, retail and community events.

Patio De Leon – Downtown Fort Myers renovated historic condos located above commercial space.

Earnhardt Condominiums – Downtown Fort Myers renovated historic condos located above commercial space

When the market turns and development starts up again, it would sure be wonderful to see more project like these completed rather than starter homes on random 1/4 acre plated lots in the hinterlands.

The appetite for homes in Cape Coral gated communities remains strong as evidenced by ongoing sales activity at Sandoval.  Developed by Bonita Bay Group, Sandoval recently announced that it has sold its 803 home, pushing the popular community past the 50% of buildout.

Sandoval continues to defy the stalled Cape Coral new construction market.  Year-to-date, 64% of the new home permits pulled in cape Coral were for homes in the Sandoval master-planned community.  Buyers are attracted to the long roster of resort-quality amenities that are available in the Sandoval community.

Currently there are both new construction and resale opportunities in the various neighborhoods of Sandoval.  Here is a resource to view active Sandoval real estate listings.

The Naples Daily News reports that Sutherland at Sandoval, a neighborhood of 45 single-family homes has sold out 93% of its homes.  Sutherland at Sandoval, which was built out by Pulte Homes, only has three remaining home sites available.  Four floor plans are available in the Sutherland at Sandoval neighborhood ranging in size from 1,834 SF to 2,650 SF and are priced in the mid $100,000s.

Sandoval is a master-planned community gated in Cape Coral developed by Bonita Bay Group.  The tropical  feel of the community as you enter the gates of Sandoval is a big draw.  Resort-style amenities, coupled with moderately priced new and resale homes have proven a winner at Sandoval.

If you are interested in Sandoval real estate, both new construction and resale opportunities are currently available.

One of the most succinct ways to summarize our real estate market in Southwest Florida is that right now it is a good time to be a buyer and a challenging time to be a seller.

A Forbes study ranks the Cape Coral-Fort Myers market at -8% for home-equity-to-home-value, the second worst in the nation.  This current underwater position is a dramatic a shift from the 68% home-equity-to-home-value that Southwest Floridians enjoyed in 2006.

The loss in value has pushed Southwest Florida home prices down to levels of about 8 years ago, well before the bubble run-up.  These significant price drops have made it most challenging for any homeowner who purchased after about 2003 to break even when selling a home.

For buyers, the equation is very different.  Many properties here in Southwest Florida are selling well below the actual cost to build a similar home.  Some of the best deals can be found with bank-owned foreclosures.  Here is a resource to view active Southwest Florida foreclosure listings.  The best priced bank-owned properties are currently in many cases attracting multiple offers and selling at or above asking price.

Robust inventory of waterfront and off-water homes

The opportunity to purchase a significantly discounted bank-owned property in Cape Coral is still available for those seeking a primary residence or second home.  The majority of the Cape Coral foreclosure inventory consists of single-family homes.  Both waterfront and off-water options are currently available.

To expedite your search, here are four pre-defined searches of Cape Coral foreclosure listings.  These are strictly active listings currently available for sale in the Fort Myers MLS.

• Cape Coral foreclosed condos
• Cape Coral foreclosed homes
• Cape Coral gulf access foreclosed homes
• Cape Coral freshwater foreclosed homes

Good luck with your search for a deal on a foreclosed property in Cape Coral.

The City of Cape Coral has implemented a program requiring a mortgagee undertaking a foreclosure action to register with the city and maintain the property.  The fee to register a property with the city is $150.  Properties in non-compliance are subject to fines of up to $1000 a day.  This program has proven effective at forcing mortgagee’s to make improvements to foreclosed properties and keep them moving towards a sale.

Here is a resource to view active Cape Coral foreclosure listings.

NBC-2 reports on the foreclosure registration program:

Eco-friendly Renovation of ’60s Gulf Access Ranch

Photo courtesy of Florida High Performance Green House

A renovation is underway in Southeast Cape Coral to transform a typical 1960s era ranch home into an eco-friendly home.  The project is the being led by Paul Shahriari, an eco-entrepreneur and president of GreenMind, an environmental consulting company.

The home, which is located on SE 37th Terrace in Cape Coral, is expected to reduce utility bills to just 25% of the average utility bill.  Design characteristics include thicker walls, illuminating skylights, dual flush toilets and power monitoring systems.

A website, Florida High Performance Green House, has been created to chronicle this project.  Hopefully this project will spur other homeowners to utilize eco-friendly techniques in their renovations.

1. Boating – 400+ miles of navigable canals
2. Weather – average annual temperature of 75 degrees
3. Affordable homes – median sales price of $94,000 in 2009
4. Good schools – part of the respected Lee County System
5. Friendly residents – most people are just really nice
6. Short Commutes  – easy access to commercial and government hubs in Fort Myers
7. Beaches – close to outstanding SW Florida beaches
8. Family and Friends – lots of out of town visitors during winter
9. Diversity – everyone is welcome in Cape Coral
10. Sunsets – my favorite is looking over the Spreader Canal

There haven’t been many blog posts from me or anyone else in the last couple of years about Cape Coral vacant lots.  If you bought land in Cape Coral during the boom years, you have watched its value shrivel by somewhere in the neighborhood of  75-90%.  If your lot is in the current path of Cape Coral utilities expansion, then every tax bill brings a painful reminder of the assessments that you also owe on this asset.

An article on Inman News titled, Residential Lots: The Next Big Boom caught my eye today.  The article begins:

Over the past two years, in a number of markets stretching across the West, from Phoenix through Las Vegas to Sacramento and Riverside, investor groups have been maneuvering to acquire finished residential lots that due to the recession ended up stranded without hope like lost pilgrims in a vast desert.

For all my glass-half-full readers, unfortunately there was no mention of Cape Coral or Florida vacant land in the article.

One of the questions that I frequently get asked is when will Cape lots start appreciating again? The simplistic answer is that we need to work through the backlog of existing REO inventory before it will be economically feasible to build again in Lee County.  With over 20,000 properties in the foreclosure pipeline, this process is sure to last at least a couple of more years.  The other key issue, particularly in Cape Coral, is whether or not the community leaders have the where-with-all to attract new businesses and jobs to the community.  It is truly a shame that very little activity and intellectual capitol is expended on job creation by our community leaders.

WGCU hosted a panel of Southwest Florida real estate experts including Dick Hogan from the Fort Myer News-Press.  The panel discussed the state of the market and expectations for 2010.

Distressed real estate and foreclosures dominated the discussion.  The panel fielded calls from local homeowners facing foreclosure and having great difficulty trying to renegotiate with their lenders.

The panel discussion was recorded and is available for replay.

One of the buyer misconceptions about our current Fort Myers area real estate market is that banks will approve ultra-aggressive, low-ball offers on short sales and foreclosures.  Approving low-ball offers in Lee County has absolutely not been the operating model for lending institutions during 2009.   Particularly for foreclosures, much of the discount on these properties is reflected in the aggressive selling price.

The numbers speak for themselves regarding the ratio of selling price to listing price.  In 2009, 20,480 residential properties were sold in Lee County for a total of $2.7B.  The average listing price was $140,706 and the average selling price was $132,068.  This represents an average selling price to listing price ratio of 94%.  Anyone who tells you that banks are accepting offers at 50% of asking price is just not dealing with reality.

Complete inventories of Estero foreclosure listings, Fort Myers foreclosure listings and Cape Coral foreclosure listings are available on our site.

The Miami Press reports on new guidelines coming out from the U.S. Treasury  that will place a 10 day limit on bank approval for a short sale.  These guidelines cover mortgages for institutions participating in the Home Affordable Modification Program including JP Morgan Chase and Bank of America.   Fannie Mae and Freddie Mac backed loans are not part of this program, but these two organizations are working on their own short sale standards.

If enforced, these guidelines should dramatically alter the dynamics of a short sale transaction.  The current modus operandi on a short sale transaction involves bank approval delays that can stretch on for many, many months.  Pending, but unapproved or denied short sale listings are clogging our MLS, and setting unrealistic pricing standards in some communities.

I applaud the Administration and Treasury Department efforts to introduce standards to the short sale process.  Our extensive inventory of Cape Coral short sale listings and Fort Myers short sale listings could sure use some trimming through expediting the decision making process.

Time Magazine covers the re-emergence of flippers to the Florida real estate market.  We have certainly seen this in the Fort Myers area, particularly in the entry-level single-family home foreclosure market.  Cash paying investors have bought up significant quantities of the inventory below $100,000, making it challenging for regular homes buyers with a mortgage to compete.

The Time article suggest that today’s investors are “good” flippers, as they are helping to clean up foreclosure messes and also are holding longer than bubble era flippers.  The article reports that during the bubble many “cocktail party” investors bought at any price irregardless of whether or not the deal made economic sense.

Peter Goodman, the author of Past Due, which prominently featured the boom and subsequent bust of the Cape Coral real estate market weighs in with an update in today’s NY Times. This article is a must read for anyone with a vested interest in Cape Coral real estate.

Despite the echos of “we’re back” from many of my peers……which ring hollow up and down the banks of the Caloosahatchee, there is still much heavy lifting to be done in Cape Coral.

We sure are selling lots of properties right now, mostly foreclosures to bottom-fishing, cash-laden investors as well as pre-retirement boomers.  This rush of recent investment is not going to solve the long-term problem here in Southwest Florida, that of economic diversity and the creation of quality new jobs.  I would much rather see some of the stimulus money coming to areas like Cape Coral to stimulate the creation of new companies and industries.  To me this would create sustainable recovery that cannot be realized with the highway projects that are being built all over the country.

If you have spent any time looking at Cape Coral foreclosures or Fort Myers foreclosures, chances are you have visited a home or condo that has been stripped of its appliances, cabinets, fixtures and sometimes even more.  The NY Times reports on the damage and destruction that owners and others are causing to foreclosed homes.

The Times reports that law enforcement authorities in Arizona are actively pursuing foreclosure strippers that are posting the goods for sale on Craig’s List.  Stripping a home can be a difficult crime to prosecute as it is civil mater rather than criminal, and can often cost a bank more to pursue than the ultimate return they would realize in a civil proceeding.

Hopefully, authorities here locally will also pursue some of these foreclosure strippers to at least make others think twice before damaging the next home.

NBC-2 reports on unrecorded liens, a surprise post-closing challenge many buyers of foreclosed properties have faced in Cape Coral.

The current policy in Cape Coral is to not file liens for things like overdue water bills if the amount is less than $500.  In the scenario presented in the story, the buyer of a foreclosed building in Cape Coral received two water bills for over $800 that had not been recorded as a lien against the property.  Cape Coral’s Mayor John Sullivan vows to fix this issue so that buyers of Cape Coral foreclosures will not be surprised after closing.

A good Realtor representing the buyer would know to call the City of Cape Coral to check on any unrecorded liens.

Remember the AC/DC song Big Balls………well I have to say that Roger Schutt, CEO of Premier Properties of Cape Coral may have the biggest of all!

Premier Properties has purchased the Cape Coral subdivsion formerly known as Pinewood Lakes from Reliance Bank, who took it back from the previous developer. The project has been re-branded as Celebration Cape and features 58 lots on a 20-acre parcel.  At a purchase price of just under $1m, Premier is into this investment at under $18K per lot.  Taking a long-term view, I really like the upside of this investment for Premier.

Celebration Cape has unique zoning which allows for over-sized backyard garages that can accommodate an RV or a boat.  The project features a concrete wall around the perimiter and water and sewer utilities are already in place and paid for.

Celebration Cape is located off SE 8th Street, east of Santa Barbara Boulevard, between Nicholas Parkway and Hancock Bridge Parkway.  New home prices including the lot start at $129,000.

Wink News reports that the foreclosure auction held last night at the Harborside Event Center netted sales of 75 homes.  Our market is still heavily weighted towards foreclosures with approximately two-thirds off all homes being sold falling into the distressed category.

We continue to see significant activity mostly from second-home buyers looking to take advantage of aggressively priced foreclosure listings.  Here are free web resources that are updated daily with the latest foreclosure listings:

• Fort Myers foreclosures
• Fort Myers beach foreclosures
• Cape Coral foreclosures
• Estero foreclosures
• Bonita Springs foreclosures