Lee County housing market clogged

Lee County's inventory of unsold homes has swollen to record levels, depressing prices and discouraging the construction of new homes - and the glut may be even worse than it appears.
As real estate sales in Lee County dwindled over the past two years, the inventory of unsold homes swelled to almost 16,000 _ seven times what it was in 2005 at the height of the market when buyers outnumbered sellers. Nearly 5 percent of the total housing units in the county are for sale.
Because of the glut, contractors find it impossible to compete in price against existing homes - and any dwelling in less than perfect condition has little chance of being sold.
The News-Press recently took a look at a one-day snapshot of the homes in Lee County for sale on the Multiple Listing Service, the system by which Realtors announce their listings to each other.
Some statistics:
• 5,189 single-family houses were listed for less than $200,000 countywide;
• 1,325 were going for $700,000 or more;
• Cape Coral had the most houses for sale: 5,011. That's followed by the Fort Myers/south Fort Myers area at 3,173 and Lehigh Acres at 2,547
Experts say the blame can be spread among the greedy seller and lagging economy. But high as they are, the MLS numbers may not tell the full story.
There's a "shadow market" of houses not officially for sale even though they're owned or soon will be owned by lenders who took them back in foreclosure, said Jack McCabe, a Deerfield Beach-based real estate consultant who tracks the area's home market.
"It'll probably take federal regulators to tell them to get this stuff off the books," he said. "The lenders are the most unrealistic of the bunch right now" - many banks still aren't putting their repossessed houses back on the market priced to sell.
As a result, said Michael Timmerman, a Naples-based senior associate with Fishkind & Associates, an Orlando-based economic consulting firm, it's hard to gauge the true number of houses on the market.
"The MLS doesn't really give us a full picture of the supply," he said. "It's very difficult because there's no one good source that allows us to get a handle on the total supply."
For example, Timmerman said, a builder generally doesn't put all the houses available in a new community on the MLS.
"But he may have three or four sales from a development on MLS just to entice people,' Timmerman said. "The MLS can be used as a system to generate leads for that particular builder."
But there's no way to know exactly how much of that is going on, or how many houses are being held by a lender who ultimately will have to put them back on the market.
When a homeowner does manage to sell, it's a happy event.
"That's the fun part," Esther Bird said as she closed on the sale of the Fort Myers house she and her husband sold in order to buy a bigger one for $370,000. "It's a good feeling."
It's also somewhat rare these days, said her real estate agent, Patti Pietroniro of Cypress Realty/GMAC in Fort Myers, even though Bird's house sold for $225,000 after only four days on the market.
The median MLS sales price has fallen 34 percent from its peak of $322,300 in December 2005 to $211,900 in February 2008, the last month for which statistics are available, according to the Florida Association of Realtors. Permits for new houses have slowed to a trickle: only 74 in March compared to 1,558 two years earlier.
The pace of sales is picking up, but it's short sales and foreclosure sales that make up the bulk of what's selling now because they're generally priced below other comparable listings, she said. "Buyers are making offers on short sales."
In a short sale, the lender agrees to reduce the mortgage so the seller can afford to make the deal.
Less desperate sellers often are not realistic about what a house will bring when they try to put it up for sale, Pietroniro said. "Unfortunately I have to tell people sometimes, 'I'm sorry I can't do anything for you'" at the price they want to ask.
Steve Koffman of Cape Coral-based Century 21 Sunbelt Realty, said about 40 percent of homes sold in the city are foreclosures or short sales.
The enormous inventory means that only the ones priced the lowest and in the best condition will sell, he said. Otherwise, an agent won't bother to show them to a client.
"There could be 500 like it on the market," Koffman said. "How do I pick the eight I'm going to show today? They have to stand out."
That's bad news for the houses that are half-finished or in bad shape, of which there are large numbers in areas where a lot of inexpensive homes were being built in Lehigh and the Cape during the boom, he said.
Many have been vandalized by thieves or even by subcontractors who weren't paid and illegally came back to take back items such as bathtubs, Koffman said.
He thinks the overall inventory of houses may start to fall now because sales are up. It's only in the under-$200,000 category that the number of houses for sale is likely to keep rising because so many are being taken back in foreclosure by lenders that will eventually put them back on the market.
With prices at rock bottom for existing homes, builders are offering great deals on the houses they've already finished - but don't expect it to last forever, said Kevin Clark, Southwest Florida division president of national developer Beazer Homes.
Builders are throwing in amenities such as granite counter tops and high-end flooring to lure buyers without cutting prices further, he said. That way they won't have to raise prices when demand picks up.
When the new construction that exists today is gone, he said, prices may not go up but "the next round of houses you get coming out from builders will be less amenitized - still a good price, but we can't afford to continue building $200,000-300,000 homes with that."
Fort Myers-based real estate broker Denny Grimes said builders are selling their completed houses successfully but that doesn't directly affect the MLS.
That will change when the builders' inventory is all gone, said Grimes, who also writes a column on real estate for The News-Press. "I think this year will mark the end of existing builder inventory."
At that point, Grimes said, there should be a surge in the number of MLS sales, he said, because "psychologically they (buyers) will realize you can't wait forever for everything." Article Courtesy Fort Myers News Press
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