McIntosh offers bleak news on Naples real estate market

NAPLES — There was no sugarcoating it.
Naples broker Ross McIntosh had very little good to say in his annual snapshot of the local housing market Wednesday night.
His speech — given at the Quail West Golf & Country Club off Bonita Grande Drive in North Naples — drew a crowd of more than 150. Those hoping for some good news didn’t hear much of it as McIntosh focused on the facts, including statistics about building permits that he described as shocking.
It was his 21st annual presentation. His title, “Whodathunkit,” fit the tone of his straight-talking speech as he touched on foreclosures, falling home and land prices, shrinking new home permits and cancelled projects.
He described the situation for home builders as “dismal,” mentioning only a few bright spots in the market where new homes continue to be built.
After doing the research for his snapshot, McIntosh, founder of REO Accelerated Disposition Associates in Naples, said he was surprised to learn just how many builders have been idle this year.
In 2008, 83 builders pulled at least one single-family or multi-family permit in Collier County. So far this year, 44 builders have been active, McIntosh said.
In Lee County, 175 builders pulled residential permits in 2008. That compares with 68 so far this year, McIntosh said.
Through September, 737 building permits had been pulled in Collier County. That compares with 934 in 2008.
In Lee County, 696 building permits were issued through the first nine months of this year. In 2008, there were 1,547.
In Collier, Marbella Lakes by G.L. Homes, located off Livingston Road between Pine Ridge Road and Golden Gate Parkway, has been the “single-family hot spot,” McIntosh said. The builder has pulled 119 permits so far this year, he said.
Two other communities — Lely Resort by Stock Development and VeronaWalk by Pulte Homes — each had 44 permits issued. They were the most active communities after Marbella Lakes.
Next in line was Heritage Bay by Lennar Homes with 39 permits pulled.
In Lee County, the top builder this year is Centex Homes, which has pulled 87 single-family permits — most of them at The Plantation. That compares with 131 in 2008.
Coming in behind Centex is D.R. Horton, which has pulled 69 single-family permits so far this year in Lee.
He described Lee as “ground zero for the foreclosure industry,” saying a bottom has finally been found in Lehigh Acres at about $50,000. The same home in the Naples area would go for twice that, McIntosh said.
He said multi-family projects are almost non-existent in Lee County this year
“There are two builders of multi-family,” McIntosh. “It’s a short subject.”
Centex Homes and Taylor Morrison are the two builders. They pulled permits for 42 units at four projects: The Plantation, Lucaya, Verandah and Tortuga.
He touched on the new town of Ave Maria in eastern Collier County, saying only 10 permits have been pulled this year. Other “new towns” have been postponed.
One investor, who hoped to build a new town in the city of North Port in Sarasota County, is now involved in foreclosure, McIntosh said. “Another new town dream dashed,” he said.
When builders do pull permits they are often dragging along a “ball and chain” from the boom, when they paid inflated prices for land and invested millions to start up new communities that have since been devalued by a housing slump.
Some builders invested millions in land they had hoped to put homes on that now has “no prospective use,” McIntosh said.
“Clearly this was a bubble market,” he said. “Southwest Florida is the poster child for a bubble market.”
He described the “living language” of today including such words as blanket receivership, capitulation, Chinese drywall, jobless recovery, strategic default and W-shape recession.
Two years ago, no one knew what Chinese drywall was and now it’s proving to be a costly problem for builders. Homeowners have complained the material — also known as sheetrock — has led to health problems and metal corrosion.
Here and around the county, many have filed lawsuits over Chinese drywall seeking damages. McIntosh expects many more suits will come.
McIntosh talked about several senior housing projects that have fallen through in Southwest Florida. Potential buyers are having trouble selling their other homes so demand has softened, he explained.
He was stunned a few months ago when Bonita Bay Group announced that it would not build the North River Village project in eastern Lee County after it fell behind on payments for the land.
For him, he said, it was a real “whodathunkit moment.”
He listed some of the local banks that have failed and said he expects there to be more locally and across Florida.
He didn’t offer any optimism in closing his speech. “This is it,” he said. Get used to it. Get to work.”
After his speech, one listener said she hoped for some sugar at the end. Others said they aren’t as pessimistic about the local market.
“There are definitely bright spots and I don’t think that he got that across,” said Patty Campbell, president of G.L. Homes’ Southwest Florida division.
She said he didn’t touch on all the homes that builders have sold this year that were in inventory, which is key to the market turnaround.
“The big dogs that built Naples, which are Centex and WCI, are in limbo right now,” Campbell said. “Eventually, they are going to get it back together again.”
Claudine Leger-Wetzel, director of marketing and sales for Stock Development, said her company is optimistic about 2010.
So far this year, there have been 131 new home sales in Lely Resort. Last week more than 70 registered visitors to the community’s sales center.
“Those are pretty strong numbers for the fall,” she said. “Prospects are coming into our center with optimism and interest in new home purchases.”

By By LAURA LAYDEN - Posted November 12, 2009 - NaplesNews.com

Beth Brown, P.A., GRI, ABR
Coldwell Banker
550 Fifth Ave S.
Naples, FL 34102
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Fax 1-866-814-2967
BethBrownRealtor@comcast.net
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