Housing market recovery on track in Collier, slower in Lee

NAR: Worst is over – existing-home sales to trend up in 2008

WASHINGTON – Dec. 11, 2007 – Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors® (NAR). However, a recovery for new-home sales is unlikely before 2009.

Lawrence Yun, NAR chief economist, says the worst part of the credit crunch has already worked its way through the data. “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” he says. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September. It was the second consecutive monthly gain, but still 18.4 percent below the October 2006 index of 106.8. “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,” Yun says.

The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago. In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.

“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun says. “Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.”

Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006. Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.

“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008. I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,” Yun says.

“Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases,” he said. “The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price.”

Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash. “We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions.”

New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million in 2006; no sustained improvement is seen for new homes until 2009. Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year. The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.

The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates.

Growth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 2008.

The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008. Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.

© 2007 FLORIDA ASSOCIATION OF REALTORS®
 

Big Plans - 22,000 Acre Big Cypress

Wednesday, September 27, 2006

In the 1920s, New York advertising magnate Barron Gift Collier began carving civilization out of a wilderness that would become Collier County. Some 80 years later, the company that traces its roots to that pioneer is at it again, with plans to found a new town, dubbed Big Cypress, east of Golden Gate Estates.

Collier Enterprises wants to build some 25,000 homes in a new town and in a scattering of smaller villages and hamlets on 8,000 acres of farmland surrounded by 14,000 acres of preserve. The project would take 25 to 30 years to build. Work won’t get started until at least 2010, Collier Enterprises CEO Tom Flood said.

Big Cypress, along with its neighbor, Ave Maria University and its companion town, are products of a landmark 2002 growth plan that requires landowners to preserve and restore land to earn credits for development.

The 22,000-acre Big Cypress district is more than 34 square miles — about twice the size of the city of Naples — and represents an unprecedented blank slate to plan for growth in Collier County.

The company is planning public workshops to get community input on the Big Cypress plans after a kickoff event in late October. Details still are being planned.

The workshops would focus on land conservation, agriculture, parks, schools, economic development, roads and housing, according to the company.

Flood said the goal of the company’s planning is to make Big Cypress a self-sustaining town that fits with the rural character of eastern Collier County.

“We don’t see this as a bedroom community of Naples,” Flood said. “We see this as a place for people to live and work.”

The center of the town would be built in the middle of a loop created by a realignment of Oil Well Road and an extension of Randall Boulevard. Immokalee Road and Golden Gate Boulevard also would provide access to Big Cypress.

Plans don’t include hooking up the Vanderbilt Beach Road extension to Big Cypress. Some Golden Gate Estates residents had blamed the need for the controversial extension on the Collier company plans.

Flood said the extension is “not driving our thinking at all” and that it would be “fine with him” if the extension never hooks up to Big Cypress.

Plans propose a “conceptual alternative interchange” at Interstate 75 (Alligator Alley) with a new road that would meander north, through Big Cypress to Immokalee Road.

The conceptual alternate location is about two miles east of the spot of a proposed I-75 interchange at Everglades Boulevard, which would have to be widened to six lanes, putting it through residents’ yards and driveways, Flood said.

The conceptual road through Big Cypress would wind past six villages, each with up to 1,000 acres. Plans also show two hamlets, each with up to 100 acres.

Flood said the company wants to create a 23-mile walking trail that would connect the villages and lend a rural twist to the project.

Besides the 14,000 acres of preserve within the district boundaries, Collier Enterprises also will have to preserve 13,000 acres beyond the new town to earn enough development credits under the 2002 growth plan.

Collier County Audubon Society policy advocate Brad Cornell said the Big Cypress plans still must overcome questions about size and compatibility with surrounding land, including habitat for the endangered Florida habitat and woodstork.

“They (the Big Cypress plans) are big; they’re really big,” Cornell said. “In every respect it’s big, and there’s a lot of questions left unanswered in my mind.”

For example, Cornell said he wants to know more about how the company will mitigate the effects of its proposed interchange at I-75.

Cornell said the mitigation should involve buying up panther habitat in Golden Gate Estates between North Belle Meade and the Florida Panther National Wildlife Refuge.

Another question is where Collier Enterprises will set aside the additional 13,000 acres it needs to earn development credits under the 2002 plan.

“We’re still mulling the road and how to optimize (the mitigation) for environmental benefit,” Florida Wildlife Federation field representative Nancy Payton said.

Overall, though, the plans are within the scope of the 2002 growth plan and “that’s a good thing,” Payton said.

She said environmental groups who backed the 2002 plan didn’t anticipate that new towns would start popping up so quickly. That also means preserve land is getting set aside more quickly.

“It is seeing our county change quicker than we’d like to see it change, but we’re prepared — we have a plan,” she said.

The next step is to embark on what Flood says is a genuine effort to get input from the town’s neighbors. The biggest neighbor is Golden Gate Estates.

“I think residents of Golden Gate Estates will be interested in what we’re doing and I hope they’ll conclude that we’re going to be good neighbors,” Flood said.

Golden Gate Estates Area Civic Association President Mark Teaters said, from what he’s heard so far, the company is “making the right moves.”

Teaters acknowledges, though, that Collier Enterprises might face a skeptical crowd in Golden Gate Estates residents who fear their rural lifestyle is slipping away.

“It’s not ever going to be the same,” Teaters said. “Things are going to change.”

Some changes will be for the better, Teaters said.

He said Big Cypress plans will bring commercial services closer and help solve traffic problems in the Estates.

Immokalee community leader Fred Thomas said the plans “make all the sense in the world.”

“It will help focus everyone’s attention on making Immokalee the industrial hub of Collier County,” Thomas said.

At the same time the company is touting plans for Big Cypress, the company is unveiling plans for a 580-acre expansion of an industrial park and 470-acre moderately priced housing development southeast of the Immokalee Airport.

The company also is talking with Collier County officials about speeding up planning for a bypass road around Immokalee, Flood said. He said Collier Enterprises is willing to provide land it owns for a link in the bypass. The road also would pass through land owned by Barron Collier Cos. and Consolidated Citrus.

“It’s time to get a shovel in the ground,” Flood said.

Home buying will stay strong, real estate executive says

Analyze national and local real estate sales — and prices — from a 100-year perspective and recent trends are really very promising, Coldwell Banker leaders said Thursday at a two day company conference at the RitzCarlton Beach Resort, Coldwell Banker President and Chief Executive Officer Jim Gillespie said the real estate market may be a little “off” this year, but the numbers are still impressive.

“Some of the (newspaper) headlines don’t really tell the story,” Gillespie said. Real estate may be off 7.6 percent from the previous year, but it was coming off the industry’s best year in history, Gillespie said.

Founded just after the 1906 San Francisco earthquake, Coldwell Banker is celebrating its 100th anniversary in the real estate business Reacting to trends predicted this week by National Association of Realtors, a trade organization representing 1.3 million members, Gillespie said he is still bullish on the future of real estate.

Addressing U.S. Senate housing, transportation and economic policy subcommittees on Wednesday, NAR President Thomas M. Stevens said housing prices are expected to drop throughout the end of the year, and will become more of a buyer’s — than seller’s — market.

“After five years of outstanding growth, the housing market is undergoing a period of adjustment and becoming more and more of a balanced market between buyers and sellers,” said Stevens, according to a news release posted on the NAR Web site.

NAR forecasts a total 8 percent drop in home sales for 2006, followed by another 2 percent decline in 2007. Increases in sales prices will be minimal, according to NAR: less than 3 percent in 2006 and 2007. In 2005, national resales totaled 7.1 million, Gillespie said Thursday. That’s not new home sales — which were about 1.2 to 1.3 million — but resales, he stressed. In 1995, the U.S. hit 4 million resales. In 2000, the nation saw barely 5 million resales.

“Last year was the fifth year in a row for record resales,” Gillespie said. What real estate brokers will see this year is still the “third best year” in history, Gillespie said. The real estate market will continue to remain strong because of newly emerging markets, he said. There are some 78 million baby boomers around the country, and they’ve discovered real estate as an investment, Gillespie said.

Also, consider the 1.2 to 1.4 legal immigrants who want to buy homes, minorities and single women, and the fact that interest rates are near historic lows. The willing buyers are there, he said. Noting that housing markets vary from state to state, Stevens told senators that one-third of the nation’s population will actually face increasing home prices, including Alaska, New Mexico, Vermont and some Southern states.

However, the states that experienced the greatest increases in home prices in the recent past will see “significantly lower sales,” Stevens said. That includes Arizona, California, Florida, Nevada and Virginia. Asked to address Southwest Florida’s affordable housing concerns, Gillespie said he believes that if a Coldwell Banker real estate agent searched hard enough, he or she would probably be able to find a home for most.

But buyers may have to trade on some priorities, such as longer commutes to work, and might have to talk to family to get a loan, he said. He and Budge Huskey, president and chief operating officer for Coldwell Bank Florida residential real estate, also conceded that in every market there are going to be hopeful buyers who will be priced out. “I’m not going to suggest everyone is going to be able to own (but) prices are beginning to stabilize,” Huskey said.

Acknowledging that the local markets are “challenged” by affordable housing, there’s still a demand for the high-end products, said Charles Richardson, Coldwell’s senior vice president and regional manager for Southwest Florida. Local sales numbers and prices seem to buck the trend, Richardson pointed out.

“The average sales price in Naples has actually gone up,” he said. While in the past two months the median sales price in Collier County has decreased, year over year, real estate professionals in 2006 are still doing better than last year, Richardson said. Gillespie and Huskey stressed a point NARS officials emphasized this week.

The national apartment rental market — multifamily housing — is benefiting from weaker home sales as potential home buyers remain in rental housing. Vacancy rates in the fourth quarter are expected to average 5.2 percent, down from 6.2 percent during the fourth quarter of 2005. It was not immediately clear Thursday whether Southwest Floridians will be able to enjoy that trend. Average rent is projected to increase 4.8 percent in 2006, compared with 2.9 percent last year.