The New Price of Paradise

THE NEW PRICE OF PARADISE

BY ROGER WILLIAMS www.floridaweekly.com

When New York Times reporters put Cape Coral Realtor Marc Joseph in the international spotlight recently, quoting him at length about his weekly rides with prospective buyers in a green bus known as ForeclosuresRUs, they pointed to a devastated housing market and a kingdom of good deals.

That’s not new news. While Mr. Joseph makes his way slowly from one foreclosed property to another, nobody else is shaking in surprise.

Like big speed bumps in the road, conditions for a classic buyer’s market have been evident for some time. After all, median home prices in Lee County fell from $278,000 in 2005 to $215,000 in 2007, to a low of about $80,000 nine months ago, before inching back up to roughly $90,000 in November, according to statistics provided by real estate professionals in the region.

What many might not know, however, is where the good deals are, or why better deals might exist at some price ranges than at others — with “good deal” being defined this way: real estate listings cut by the greatest percentage from their previously listed prices or sales prices.

Here, Florida Weekly plugs that information hole, exploring some of the best deals in Lee County listed from roughly $100,000 to more than $1 million. Coincidentally, we pick the brains of some of the most experienced veterans in the industry about the market and its opportunities as the New Year unfolds.

Consistent improvement “Even a hardened cynic like me sees optimism in the numbers,” says Jim Green, owner of Jim Green Realty.

 “The volume of sales was at a record high for the 2009 year (15,336 homes sold in Lee as of November, compared to 13,479 sold in 2007 and 2008 combined), and the median price of

 “While I would not anticipate a steep gradient to the price rise, I think it will remain consistent. Buyers were appropriately trepid in the past — they could see the falling prices. Many chose to abstain from purchasing a home that would be worth less the day after closing. With the median on the increase, one becomes more motivated to buy based on the future increase in value.”

Especially if one listens to Mr. Joseph. When he finished up with The

New York Times, he hustled over to a national FOX television broadcast, once again stepping out of his green bus for the cameras.

“I’ll tell you what you can get for $100,000 today,” he said to the world. “You can get almost a brand new home, four bedrooms, two bathrooms, about 1,900 square feet of living space that was (previously listed for) $280,000 to $290,000.

“And houses that were $600,000 to $800,000? Those houses are down to $200,000 or $225,000. And those are Gulf-access homes, straight out to the Gulf.”

But neither The New York Times

nor FOX-TV remembered to interview two other savvy commentators about this phenomenon, one of them still in business: Mark Twain and Southwest Florida Realtor Denny Grimes.

“No real estate is permanently valuable except the grave,” noted the late Mr. Twain, putting both boom and bust markets in perspective.

More to the point, Mr. Grimes, who owns Denny Grimes and Company, says, “The foreclosures are going so fast that Marc Joseph’s bus is too slow. You really need a NASCAR vehicle.”

Soon, perhaps, the interest in foreclosed and low-end homes will wane as the glut clears. And that interest should be replaced by more intense interest in homes of higher value.

Reducing the inventory

“We’re eating through that Lehigh- Cape cheap inventory stuff, the less expensive starter homes,” explains Toni Shoemaker, a Denny Grimes Realtor. “The investors are back, buying those as rental properties to hold on to themselves for some time (and not to flip).

“Those homes are a wonderful thing for young couples and first-time home buyers who can now afford a brand new home. People who are at lower income levels have to live somewhere, and it’s been wonderful for them.

“But we’re working through that inventory pretty quickly. We’ve just about eaten up the lower priced stuff. Next, we’ll see homes in the $150,000 to $250,000 range as sellers get more realistic about pricing them. Some people are still in denial. So I think the $180,000 to $300,000 range is where people will be looking next for the great deal.”

Before that could happen smoothly, however, the market here has to get past a potential land mine, Realtors say. That’s the glut of homes now owned by banks, and not even listed yet — the so-called ghost inventory.

“Now, about 85 percent of our business is under $500,000, and 63 percent is under $250,000,” says Michael Burke, a Luxury Home Expert with Keller Williams who sells homes in higher price ranges, but is forced to watch the rest of the market.

“We pay close attention to all the numbers because we have to know where the trigger points are,” he explains. “And those (lower) numbers might not accurately describe the markets in Bonita Springs, Estero and Naples. There are a lot of distressed properties in Lehigh Acres and Cape Coral, and they pull the numbers down. But most of the gated communities stand on their own.”

Although the housing market has stabilized, Mr. Burke adds, “We do see the condo market still adjusting. And we believe lenders are holding on to foreclosed properties (the ghost inventory). If that proves to be true, it’s going to knock us down a notch.”

In Mr. Burke’s estimation, banks do not have a strategy in holding on to those homes, so much as the inability to process them properly.

“I think that’s the problem,” he says. “With the banks, it’s just a manpower issue.”

And in the market as a whole, success is a matter of sober good judgment and a realistic attitude.

“Just because the median price of homes happens to have started up does not mean the market has corrected itself,” Mr. Grimes says. “That the median price of homes went up recently only means that at least one more home sold above the previous period at that price.

“If you’re a buyer, yes, you’d expect a Realtor to say, ‘It’s a good time to buy.’ There were a lot of people waiting for the ‘bottom of the market,’ and if you measure the market by the bottom of the median sales price, they’ve already missed that.

“But in this market, almost everything that sells is a good deal, or it wouldn’t sell. When you buy something below the cost of replacement, that beats wholesale, and it’s a good time to buy. Right now in most price ranges, you can buy something cheaper than you can build it.”

And when you do, when you get that good deal that will pay off in spades, someday, you can remember the words of that other great Realtor, Donald Trump: “It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my viewpoint. I just love real estate.” 