SW FL Real Estate

July 19, 2007  Well, here we go again and again and again.....  We have been struggling - cussing and discussing these issues (in this and every other forum) for at least 2 years.  Good ol' "Saint Farm" announced they were canceling another 50,000 policies in Florida!

How does this impact the real estate market?  We all know how and that doesn't need belabored.  What we need to discuss is.... what do we do?

IF people are willing to work at it, coverage can be found from reputable insurers and at rates usually less than what these "major captives" are offering.  The state has published a list of home insurers by county and compared their rates.  That's a good idea but, as usual, poor execution.  Don't pay any attention to that report.  In most cases it isn't accurate at all.

This is a perfect example of why I am spending so much money, energy and time establishing an independent agency in SW FL. 

Check it out: www.leecollierinsurance.com  

Is this a merciless and shameless attempt to announce my ownership of an independent insurance agency?  Sure, why not.....  What has to happen though is;

• Tremendous effort to keep stable insurers in this state...  there are many.
• Keep encouraging the companies that are currently in the process of obtaining state filing approval to enter this market as a property insurer....and there are actually quite a few....
• Keep the storms away fromt the FL. coast....yeah, I know....

I have railed on this before but you can search out and find the insurance industry earnings reports and they do not coincide with the company claims of losses incurred in '04-'05. For example: Click here for the Allstate annual report.  See what you think of the charts.  And, click here for a list of the approved rate increases since Aug. '06.  Or, click here for the State Farm financials.  Those are not "disasterous financials". As I have said before, this crisis is much like the gasoline lines in the Carter administration.  If you rmember, that ended when the oil companies no longer had a place to store their "shortaged" gas......

What do you think?

Here are a series of headlines as published Thurs., June 27.  I don't think I need to do all the "detail", I think the whole thought is self explanatory in the headline.

1. Meritage Homes Corp. is reporting a net loss of $57 million after real estate and goodwill-related impairments reduced net earnings by $70 million after tax for the second quarter ending June 30.
2. WCI Communities Inc., a big player in SW FL real estate has come up empty trying to sell to other than Icahn potential buyers. Their stock fell into a tailspin Thursday (7/27) after the luxury homebuilder conceded it has failed to attract a committed buyer.
3. Sales of existing single-family homes in Lee County are down 37 percent for the first six months of 2007 compared to the same period a year ago.

That fairly summarizes the overall thought of the market, the trends, the attitudes and perspectives.  Honestly, we all thought we see the bottom of the cycle by now.  Obviously, that was wrong. 

A year from now, this residential cycle will be turned and we will be saying the same thing about the commercial market.  We are getting so overbuilt, it's incredible.  For example, the small Estero area has 2.2 million sq. ft. of office space submitted for approval.

What are your thoughts?

If you ferret thru all the numbers published recently - by FAR - you will find out the slump isn't over - the we have not found the bottom - sellers can't drop prices far enough or fast enough...... here in paradise......

Lee county numbers are shown below and, of course, Collier county won't dignify the state or the industry by reporting theirs.  I can and will report them in about 10 days.....

1. For the 1st 6 months of '07 sales are down 37% from one year ago (which was off at least that amount from the prior year).
2. The month of June was even w/ the 6 month avg. as it was down the same 37% from June '06.
3. The median price was down another 5% for the month of June compared to the month of May.

We continue to see steady declines in both activity and pricing.  Some areas are hit harder than others but no area in the state is hit harder than this one.

The entire mls July #'s will be available in about 10 days.  I will publish that for us too.  As I look at it now, it would appear the July numbers are close to a match with 2002.

What do you think

You have gotta see this for yourself.

Go to my insurance web site - news section for the latest intentions and news regarding property insurers in Florida.....

What do you think?

Some things really get to me. I can’t help it. I have tried and tried but, the title says it all. Here is today’s example…..

An article in the paper says Bonita Springs will consider making an additional access to the “to be built” Imperial Parkway (N.-S. corridor) by connecting Strike Lane. Not a big deal, right? Then they go on to say, “the road between pt. a and pt. b is a problem because it isn’t owned by the … residents and it isn’t maintained by the city”. WHAT? This means applications for improvement must be run thru the county (Enter another layer). The city says if they consider this it would force closure of blah blah intersect. at old 41 as it was never meant to be a thru street and couldn’t handle the traffic. WHAT? Of course, at the beginning we mentioned the Imperial Parkway, right. Humor me. That road has been at least 5 years in the planning. It is the last piece (@ 4 mi.) to connect a N-S road parallel to 75 from Alico Road in Estero-S. Ft. Myers to Pine Ridge in Naples. No big deal, just a totally new 4 lane road running parallel to 75 giving relief to congestion from mile 101 to 128 (I digress). They think they might get that built by ’09, sometime. WHAT? It took 4 years to widen 5 mi. of 41 from Corkscrew to Bonita Beach Rd. That’s right, widen it. Hell, it was already there. They just widened it and built turn lanes (so you have to do a MI. left turn). Understand that Collier County built their section of that connector road in about a year and completed it back in either ‘05 or ‘06. I really think this section was 9 miles in length and I know it was built by a developer to access a high end gated community. WHAT? Yes, on Mars the residents of the communities along that stretch of road will pay for that road over the next 20 years as an add-on to their property taxes. That’s another little quirk here on Mars. Counties collect taxes but don’t always build or maintain roads. The residents that pay taxes to the counties and also pay added taxes (CDD’s) to pay for roads that are open to the public do all that. WHAT? Yeah, I know. Mars is funny like that.

It is easy to see why Lee County and Bonita Springs just started building their “connector” section of this road and hope to complete it in another 2-3 yrs. (ha). And another thing, this little stretch includes building a brand new bridge over the Imperial River. WHAT? Again, it took 4 years to widen an existing bridge over the Imperial on 41. Construction was stopped for 9 months once because someone found turtle tracks or what they thought might have been turtle tracks near construction digging along the river bank. What?

And another thing. Let’s talk about the name(s) of this road. Here on Mars it is hard to tell what road you might be on based on how far or in what direction you might want to travel. For example: The new road I have been ranting about is named Three Oaks Parkway on the N. end as it begins (currently). This magic road runs straight S for a few miles thru the intersection of Corkscrew Road, Williams Road and then comes to a dead end at Coconut Road which is the end of the name Three Oaks Parkway. This is also the magic intersection “that should be but isn’t” an exit off I-75 that made national news for the fleecing of America. That is where my original road construction topic begins (4-5 mi.) as a construction project that runs from this point straight S to Bonita Beach Road. If it were ever to be built, it would be named Imperial Parkway between these 2 points. At Bonita Beach Road it becomes Collier county and that completed road from there to Pine Ridge (off exit 107 from I-75) is named Livingston Road. I just don’t get that, do you?

The following are the latest news "blurbs" from the major home builders....

• D.R. Horton fell 39 cents, or 2 percent, to $19.40, the lowest since July 2004. They've dropped 27 percent this year.
• The Horton cancellation rate was 38 percent.
• The value of houses ordered thru Horton plunged 47 percent.
• Ryland Group Inc., will report a second-quarter loss of as much as $1.35 a share for their 2nd quarter. Their share price dropped $1.45. Preliminary figures show it sold 2,521 homes, 16.6 percent fewer than last year. 
• Ryland will record pretax charges of up to $155 million, the company said in a statement. ``We believe housing operating fundamentals are likely to get worse before they get better given still-significant levels of oversupply, coupled with first full-quarter impact from the subprime debacle and the corresponding tightening in underwriting standards,'' Robert Stevenson, an analyst at Morgan Stanley. D.R. Horton's impairment charges will be at least $250 million to $300 million after tax for the quarter
• Lennar Corp., the biggest homebuilder by revenue, last month reported a loss along with falling revenue.  

1. U.S. home sales in 2007 will decline to their lowest since the start of the five-year housing boom in 2001.
2. Short sales and foreclosures will continue to suppress the market throughout the remainder of 2007.

That's just the facts - what do you think the facts might be?  Let's start a dialogue here w/ comments.......

Let’s survey the recently published information on our local SW FL real estate market.

1. Fortune magazine – July ’07 issue – article says, “Buy in Collier County – Naples”. The article says that prices have been suppressed and dropping for 2 years and there are great buys in this market now.
2. Meritage homes announces that it is pulling out of the SW FL home building market – dropping $28M in land/lot options – and not coming back. They bought Colonial Homes 2-3 yrs. ago. Their statement was something close to: “that market isn’t coming back in the foreseeable future”. Their statement indicated that developer/builder sales have fallen by 70%.
3. Back in mid June, Collier County Commissioners ask for a report on how they could impose a complete building moratorium.
4. On July 8, 2007, the Naples News reports that Collier County impact fees will go up on Jan. 1, ’08. The impact fees will be equal to about $36,000. for a 2,000 sq. ft. single family home.
5. The average days on the market for a single family home have gone to 110 days with the average days on the market for a condo unit now at 128. That’s actually a misnomer. If a property is listed for 180 days – expires - and a week later is put back on the market – it is likely put back on as a new listing with a new realtor. If and when it sells - say 100 days later, it has actually been on the market 280 days - but it would show as sold in 100 days on the mls.
6. The News-Press says the median single-family home price has dropped from 2005 highs of $322k to $281k. in May ’07.
7. Lee County foreclosures push 1,000 for the month of May.

What is the consensus of this? Yeah, I agree – “survey says”….. party’s still over and goin’ south for a while longer……

The numbers shown below are for Bonita Springs - Estero only.  They are actually a somewhat encouraging compared to what we have been seeing and reading.  When I say that, I say it because they have kept pace with June '06 numbers.  Yes, that was also a very down market but to say it is not worse than a year ago is a bit surprising.  Everything else has indicated that it would be.

Naples did virtually the same thing.  Without item by item break downs, Naples (W. of I-75) had sales equal to June '06 and only about 50% of June '05.

Bonita Springs - Estero

Pending - June         Sold - June           (Estero) pending

'07 -  118                   '07 -  111                (34)

'06 – 99                     '06 – 119                (33)

'05 – 242                   '05 – 262                (76)

'04 – 216                   '04 – 208                (44)

What does this tell you?