Upscale foreclosures rise in Lee County
Expensive homes become affordable
DICK HOGAN • firstname.lastname@example.org • November 3, 2009
That expensive house you covet might not be quite so expensive in a few months.
Experts say more high-end foreclosures are being filed, more houses are under construction and fewer people are moving in - all adding up to pull down prices in Lee County.
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"The cream is coming," predicted Jeff Tumbarello, director of the Southwest Florida Real Estate Investment Association, which compiles monthly statistics on foreclosures.
In October, there were 1,628 foreclosures filed, down 40 percent from October 2008's all-time high of 2,665.
But the foreclosures in recent months, though fewer in overall numbers, are showing signs that the middle class is starting to lose its houses. Tumbarello said, for example, a third of the houses that went into foreclosures over the past six months were pool homes.
That's because the houses going into foreclosure now are increasingly in the higher range, said Brett Ellis, a real estate agent with Re/Max Realty Group in Fort Myers.
Less expensive homes are already at a rough balance of supply and demand, he said, but what constitutes a high-end house depends on the area: more than $100,000 in Lehigh Acres but closer to $200,000 in Fort Myers.
Kerry Collier, a real estate investor and broker, said she and two business partners bought a house in Estero that had been foreclosed on and will close on it this week for close to their $285,000 asking price.
But she said she expects houses even a little more expensive - about $300,000 or more in Estero - will be coming down in price soon.
"If you look at the MLS (multiple listing service), there's a lot out there," said Collier, the owner of Collier & Associates Real Estate and HomesByOwner.com.
Even as a wave of foreclosures approaches the market, new construction is actually increasing in Lee County, said Brad Hunter, who directs Metrostudy's market research operations in Southwest Florida.
In the third quarter, starts for detached single-family homes in subdivisions rose to 194 from 91 starts in the previous quarter, according to a Metrostudy report that came out last week. At the same time, vacant inventory rose from 703 houses to 728.
Builders have made reducing their inventories a priority over the past year, Hunter said, but "now it's at a point where when a builder sells a house, they have to build a house just to have enough houses to sell."
But those houses being built now will face a lot of competition from the foreclosures coming back onto the market, Hunter said. Up to now it's been mainly subprime mortgages for inexpensive houses, but now prime loans are starting to show up.
"There's still another wave of foreclosures coming and that will bring another round of price declines." Hunter said. "Those homes will be a greater competitive threat to the homebuilders than the first wave."