From Fort Myers Newspress For sale’ glut slowed home building in ’06 But year still second-busiest on record

Real Estate Agent with Keller Williams World Class, Realtors
By Dick Hogan
January 05, 2007 in the Newspress

Lee County's pace of construction slowed last year as a huge inventory of unsold houses piled up - but it still was the strongest on record except 2005.

"If you look at previous years, 2005 was such an anomaly," said Mary Gibbs, head of the county's Department of Community Development.

The value of building permits issued in 2006 was $3.9 billion, down from $4.7 billion the previous year but still more than 2004's $3 billion.

Commercial construction, driven in part by two new malls in south Lee County, increased in 2006 - $432 billion, up 40 percent from $309 billion the year before.
But home building fell 28 percent.

Only 7,449 permits worth $2 billion were issued compared to 2005's record 10,471 permits worth $2.3 billion.

December's numbers were even worse - 402 permits issued countywide by Lee, Fort Myers and Cape Coral building departments.

That was off 25 percent from November's 541 and less than a third of December 2005's 1,451.

The falloff was the result of massive speculative building in 2005 that led to the present stock of 14,000 single-family homes listed for sale by Realtors plus thousands more for sale by owners and builders, said Brett Ellis of RE/MAX Realty Group in Fort Myers.

That inventory has also led to a substantial drop in the median price of an existing home. November's price was $258,600, down 12 percent from a year earlier.

"I think building permits are down for a good reason right now," Ellis said. "Builders are canceling projects. They're reluctant to build speculative homes because they don't want to build spec homes into existing inventory."

Lennar Corp., for example, halted plans for an 1,800-unit golf-course community on about 1,500 acres east of Fort Myers after the real estate market softened.

Besides, Ellis said, there's little incentive for buyers to build their own houses.

"They were willing to wait a long time for a home to be built because there was no inventory," he said, "but now, why wait six months, nine months for a new home to be built when you can get a new one already existing?"

Jim York of York Pre-Engineered Residences, who has been building houses in Lee County for 11 years, said business was good in the first part of 2006 but that "to be honest it's pretty much dried up since then. There just hasn't been a lot of activity."

Still, some people are continuing to buy new houses, said Gene Suggs, division president of America's First Home.

His company builds homes for entry-level buyers, mainly people moving to Lee County to avoid the crime and congestion of Fort Lauderdale and Miami, Suggs said.

An existing home may be available faster, he said, but "a lot of people are selling distressed inventory they're trying to get rid of. We caution people that they should pick someone who's going to be there six months from now."

Kim Wallace, 49, is an Ontario businessman who bought two condominium units at The Resort at Marina Village in Tarpon Point Marina in Cape Coral in January.
Wallace said he's not sorry he made the decision to buy.

He owns a house in Cape Coral but bought the units as part-time residences for himself and his parents.

"There's no question about it," he said. "When you're in real estate, it can flow as it has, but the market has stabilized. My investments were long term, and I think it's a very safe place to be long term."

What happens next?

Michael Reitmann, who heads the Lee Building Industry Association, said he thinks "that we have truly bottomed out. And as we've increased sales, people are actually deciding to purchase. I think you'll see, slowly, an increase in permit activity."

January's numbers, in fact, could be dramatically higher because builders will be trying to avoid a tripling of the county's roads impact fee to $8,976. The increase goes into effect Feb. 1, he said.

York said he expects the market will turn around by the summer as existing homes are sold.

Not everyone is so optimistic.

An economic forecast released Thursday by Attorneys' Title Insurance Fund and Orlando-based economist Hank Fishkind predicts "housing starts will continue to fall. The downward trend is expected to be continuing until 2008."

Comments (2)

Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Bueno!  The same thing is going on in the Las Vegas valley.  I am sure the media will spin "housing starts down" like it is a bad thing.  :eyeroll:

Jan 05, 2007 10:18 AM
Ryan Monroe
Keller Williams World Class, Realtors - Fort Myers Beach, FL
E-Pro Fort Myers to Estero Homes
It is good to hear.  How do you think this can be combatted? Iam starting to see a little more positive press.
Jan 05, 2007 01:37 PM