Home Values set for big drop

Lee County property values appear headed for a record drop of 20 percent on average - including up to 40 percent in Cape Coral and Lehigh Acres - after falling 12 percent last year.
"We're still in the process of evaluating that, so I can't say exactly what's going to happen," Property Appraiser Ken Wilkinson said. "But I can tell you, I think values will be a minimum in the 20s down."
There are two main reasons: a record number of houses in foreclosure or headed to foreclosure being sold at discounted rates and the plummeting revenue of new construction.
There were 74 discount sales in 2007. In 2008, there were more than that a month. Wilkinson has yet to get a final number because his office is still counting them. There were none in 2006.
As for new construction, that generated $4.3 billion in 2007, he said. Then last year that dropped to $770 million.
Wilkinson's office is not required to release estimates on values until June 1, after studying market activity from the previous year, and then final values on July 1. But as the economy worsens the topic continues to come up.
Lee property values rose as recently as 2007, by 6 percent. And in 2006, values soared 40 percent - 88 percent in Lehigh Acres and 43.3 percent in Cape Coral, where investors were selling properties they had just purchased and inflating values.
But by 2007, values started dropping in Cape Coral and Lehigh Acres.
In the Cape, the drop was 3.1 percent, and last year the Cape had the biggest loss of value in the county, at 26 percent. Lehigh values dropped 8 percent in 2007 and 17 percent last year.
"It was outrageous a couple of years ago when the
values went so high," said Bonnie Timberlake, executive director of the non-profit Cape Coral Housing Development Corp.
Her agency has been so busy not only handling affordable housing planning, but tending to foreclosure prevention she had to change the greeting on the office voicemail, asking callers to be patient as she and staff try to respond.
They could be getting busier.
"It's still a little early to make a prognosis, but it wouldn't surprise me" if values dropped 40 percent in Cape Coral and Lehigh, Wilkinson said.
When properties drop in value like that, governments lose millions of dollars in tax revenue. Lee is facing a $160 million shortfall next year.
And the situation is really tough for people who bought homes at the peak of the boom, in 2005 and 2006, like Cape resident Jeff Ziomek, 45, a professor at Edison State College.
"It's disappointing. You put so much hard work and energy into purchasing a home, to have the American dream," said Ziomek, whose house is worth less than half what he bought it for in 2006. "But what can you do?
Michael Reitmann, executive vice president of the Lee Building Industry Association, said the huge price increases in the Cape and Lehigh, followed by the sudden decreases, are affecting the rest of the county.
"We've been actually anticipating the decrease in value," said Reitmann, who believes the drop countywide could average 25 percent. "It's the reality we're dealing with."
Last week, Lee laid off 19 people from its building department. They are employees who make their money off building permit fees. Only nine permits were pulled last month.
The only way to get through this housing slump is to get rid of the inventory - 24,000 active condo and home listings and another 20,000 to 30,000 in the foreclosure pipeline, according to Denny Grimes and Company.
Reitmann believes the county is moving in that direction.
"I can see it getting better already," he said. Courtesy Fort Myers News-Press
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