The first wave of foreclosures to impact Lee County were dominated by investor-owned single-family homes in Lehigh Acres and Cape Coral.  Many of these were the speculative products constructed by the likes of First Homes and sold to under-qualified and inexperienced investors.  These investors were the first to fall and many just walked away from their under-water investment.  Many of these homes have now been resold to new investors at 25% – 50% of he original price tag.

As reported by the Tallahassee Democrat, the next category of foreclosures impacting our market are more upscale owner-occupied homes.  These are homes are owned by middle-class Southwest Floridians suffering from the economic downturn.  As reported by USA Today, many have lost their jobs and are not having much success finding a new one.

These economic challenges have created a buying opportunity for anyone considering an upscale retirement home in Southwest Florida.  We are currently seeing foreclosures in upscale communities come on the market at significantly reduced prices.  Upscale communities like Gulf Harbour, Miromar Lakes and West Bay Club have been impacted by recent foreclosures.  Banks do not want to carry these homes and are doing whatever is necessary to quickly sell these properties.

Bonita foreclosures,  Estero foreclosures and Fort Myers foreclosures in upscale communities are hitting the market daily.   If you have considered an investment in Southwest Florida, now is definitely a good time to take a look.

Bye Bye First Homes

An ugly era in the annuls of Southwest Florida real estate history came to an end yesterday when Hovnanian sold the last 1,409 lots it owns in Southwest Florida. Hovnanian sold these remaining lots to a Czech investment group for about $3,000 each, a far cry from the peak value about 15X greater during the boom.

You may recall that Hovnanian was the NJ based firm that acquired local power-house builder First Homes back at the height of the market boom in 2005.  Many attribute much of the blame of the current SW Florida market woes to First Homes and others who built sub-par starter homes in remote sections of Lehigh and Cape Coral and agressively marketed them to unqualified investors. The acquisition proved to be a disaster for Hovnanian, as they missed their earnings projection the first quarter after the deal closed and have had financial difficulties since the acquistion.

Superstar Southwest Florida broker Frank D’Alessandro and his connected sidekick Samir Cabrera were shilling for First Homes with a very shady lease-to-own deal.  With superstar broker Frank D’Alessandro dead, his sidekick Samir Cabera heading to jail, Samir’s wife and TV Anchor Jessica Stillwell disgraced and off the air and Samir’s father-in-law former Lee County Manager Don Stillwell booted from office things have not gone well for this crew of First Homes pitchmen.

See you later First Homes, while you certainly were interesting to blog about, your legacy in Southwest Florida is not a good one.

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]

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]

Local builder fastest growing in country

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

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

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

First Home nets magazine award [News-Press]