Treviso Bay Continues to Fight Foreclosure Naples

"It's over!" (Federal government spokesman, 2009.)

"It's over." (Various university economists, 2010.)

"It's over." (Various media outlets, 2010-2011.)

Make note: As of July, 2012 along the southwest coast, the real estate crisis really is over, judging by the numbers — at least in sizeable pockets and prominent towns, especially in Collier and Lee counties.

That welcome news comes almost six years after the recession started like a smoldering coal in a tinder box of inflated prices, weak loans, cheap refinancing, and greedy ambition. The numbers of new home-building permits issued by many local governments are up.

Mark Price, Bob Gleason, Randy Thibaut, Michael C. Price and Douglas Meschko inspect a property on Matlacha.

Almost perversely, however, the number of new single-family home permits issued in the last year in Charlotte County declined 7.1 percent.

The newest numbers lend a cautious but unmistakable optimism to the carefully weighed, educated opinions of builders, researchers and real-estate professionals here who earned degrees from the school of hard knocks. They've survived an extraordinarily persistent downtime to see a steady and strongly promising rise in new single-family and multi-family home building in the past year.

Land value recoveries usually begin with waterfront properties, like these on Matlacha.

"What's happened is that opportunistic buyers of all kinds have come out of the woodwork to stake their claims on discounted land in Southwest Florida," explains Randy Thibaut, owner of Land Solutions Inc. The company tracks and analyzes opportunities to buy and develop land for builders and developers from Naples to Sarasota.

"The pioneers — like Lennar Homes, D.R. Horton or Stock Development — have been very, very aggressive. It's a new mentality. Most of these are national home-building companies and they had stockpiled some cash as a result of tax refunds from the government from the previous years' losses — and they also had new equity partners eager to fund deals. So they started aggressively."

Not only that, but the new-economy pioneers kicked off their game as decent foreclosure opportunities finally began to dry up, says Bob Knight, co-owner and vice president of Paul Homes, where both he and Gary Paul survived the recession by cutting the company to barebones and taking no salaries.

"There's still a tremendous amount of cash on the sidelines, and Southwest Florida has been the poster child in how to properly absorb foreclosed properties," he notes. "There are still a lot out there, but the absorption rate is more than the new construction rate, and new construction is starting to pick up. The only reason that happens is because decent foreclosed properties are not as common. That is a very good sign."

And that sign is now showing in the numbers and the deals, as new developments and renewed developments — both — open their sales doors, especially in Collier and south Lee Counties. People are buying homes again.

"The interest rates are down, so it's still a buyer's market but we're seeing a slight shift — in certain areas and at certain price points, instead of 50 choices a buyer might have 20, now," observes Sally Masters, a property appraiser and broker's associate at Coldwell-Banker in Naples.

If the choices include foreclosed properties no longer considered the cream of the crop, buyers are likely to consider entirely new creations.

Consequently, for example, new single-family home permits issued to builders in Collier and Lee counties have jumped back to levels unseen since 2008.

In June and July of that year, Collier officials issued 58 — significantly more than in the months before or the years afterward. In contrast, by the end of June, 2012, they had already issued 114.

Lee officials, meanwhile, issued 56 new single-family home permits in unincorporated parts of the county last month, as opposed to less than 40 in the same summer period four years ago. And the numbers in Lee's urban communities ranged from astoundingly high in Fort Myers (83, versus only 12 in June four years ago), to dismal but showing some signs of life.

In unincorporated Lehigh Acres — once declared by The New Yorker Magazine and The New York Times as one of the most-damaged if not the worst-hit community in the United States by foreclosures and unemployment together — the recovery is still comatose.

But not dead. Lee County officials issued 13 permits for new single-family homes in the first two quarters of the year in Lehigh, after issuing only eight in the previous three years together.

Inflating another bubble?

All those figures were taken from the community development offices of each county and analyzed by Land Solutions Inc.

Mr. Thibaut has become so excited that he wondered if another "bubble" of sorts was in the works. A little bubble, perhaps, that harkens back to the sober but steady and healthy pre-9/11 economy.

"In 2000 in Lee, Collier and Charlotte counties, we were pulling about 10,000 building permits. In those days if you owned a home and sold it you might make your 10 percent a year — you could pay your Realtor commission and put a little in your pocket.

"Then we went to the greed cycle and 45,000 permits in 2006. In 2008 in Lee, Collier and Charlotte, we pulled 1,000 permits — at the most. People looked at their appraisals and freaked out."

And now?

"And now we're expecting that Lee, Collier and Charlotte will end up (the year) with somewhere around 4,000 to 4,500 permits. And by 2014 we might be back at 10,000, barring some catastrophe."

Waving the caution flag

Mr. Thibaut's optimism may have seemed more palatable as he sat overlooking the big water recently in a second-story model on stilts. There, hardwood floors gleamed with the reflected light of a bay burred with mangrove keys and stretching from the base of the building in Matlacha, south and west over Pine Island Sound and out to sea.

But that could have been any waterfront, from Marco to Venice Beach, where recoveries always come first.

Mr. Thibaut was lending the considerable research skills of his team to an Estero-based company, Coastal Land and Homes, for development of a waterfront property whose accordion history of values and sales suggests a microcosm of the coastal economy.

It sold for $570,000 in 2003, then $2.7 million in 2005 (but with additional parcels), received permits in 2008- 2009 for a boathouse, dock, pool and spa, and now comes with an appraised value of $687,887, according to the Lee property appraiser's website — possibly far below its real value.

That a smaller developer is making such a move now is very promising, suggests Ms. Masters and others — but banks remain the key to a more vigorous recovery. Currently, activity is fueled significantly by private money.

"It's a banking issue," she says. "The builders are ready to build and have everybody lined up — but if they can't get a loan, they can't move forward.

If we could get the banking industry to loosen their strings and take a chance on smaller builders — not just the GL Homes or Pulte who have cash on hand and can borrow — we'd grow stronger, faster. It's the smaller builders who employ the local architects and infrastructure people: They need help to get off the ground again."

She is not alone in that opinion.

Joe Cameratta, whose son, Nick Cameratta, now heads Cameratta Companies, concurs. (Ohiobased Cameratta now has sizeable high-rise and mixed-use projects in downtown Fort Myers, and a significant residential development at the Preserve at Corkscrew in Estero, among others.)

"The banks still aren't lending," the elder Mr. Cameratta, now a consultant, notes.

"Everything we're doing these days is with private entities. Until the banks make a collective decision to move forward, I don't think this recession is entirely over. There are pockets, yes, but the banks are still so risk-averse after what just happened that I don't see them anytime soon making loans in any number.

"To me, that's the number-one holdback in this economy. Any medium sized builder developer not publicly traded does not have access to capital. If you're a billionaire, you'll get a loan. If not, you ain't getting no loan.

"So I think the market is doing very well, but the caution light is still flashing. The publicly traded builders are the ones who need inventory and it's not available. Labor costs are going up as well, and there's a shortage of trades. Until the banks start lending, it'll be tough."

For many of these analysts, the caution comes with personal experience.

Mr. Knight and his partner Gary Paul kept the company, Paul Homes, afloat with caution, cash-hoarding and suffering, for example.

"From the 1990s to 2003, we would average 35 homes a year," he recalls. "During the peak of exuberance, we were up to 65. It was out of control."

Then the recession hit.

"We kept sliding back down, we were conservative, we maintained our cash position, we did not leverage heavily — we were pretty close to debt free. We had enough cash to survive it. Cash is like air: 'Do I have enough to get back to surface?' But nobody knew where the surface was."

They found out where the pit was, however.

"At the pit," he says, "we got down to six houses. Then we picked up remodel jobs to keep people busy. And as owners, we stopped paying ourselves. We made it work, but we had to take the company down to bare bones."

But bare bones no more. Paul Homes has built or contracted to build 15 new homes in the last year, double what the company did the year before.

"I don't think we're going to double again next year," Mr. Knight predicts, "but we're doing a lot better. To use another analogy, we're walking up the steps one at a time, we're not leaping up them."

And his clients are taking advantage of the government-induced continuing low interest rates, he concludes.

"The rates are so low — 3.5 to 4 percent. In the past, it's all been cash, nobody got loans. But about 12 to 18 months ago, loans starting to come to the surface. Some of my clients — their financial advisors are recommending, get the mortgage because you'll earn a better amount."

Freeing up money

Doug Meschko, the primary researcher for Land Solutions, points to low interest rates as a prominent engine of this recovery — but he worries about sources of wealth, too, and long-term stability.

Starting with his own. When he and his wife became one of the promising statistics recently, buying a new home, he found the experience less than simple, which may suggest how far the market has to go.

"Even though we had immaculate credit and we could have bought a $600,000 house but we only bought a $200,000 house, it was still a nightmare to get a loan. Documentation was two to three times what it was back during the peak. It had to do with getting appraisals, and the approval time. I don't know if that was a lack of bodies underwriting loans – banks are skinny on staff — or if it's pushing two or three times more work through the pipeline and there's just more bureaucracy to go through. Probably a little of both."

What should have taken Mr. Meschko 30 days — learning the status of his mortgage — took 50 days, he recalls.

Still, the interest rates were worth the wait, which maybe how others see it.

"The Federal Reserve said, 'We're going to keep interest rates low until the end of 2014, to put some certainty in the market at least through the election.' And it's working."

But is it working because of new banking and lending rules, or a new job market creating new wealth?

Those answers are more obscure, and Mr. Meschko is seeing primary new-home development, but not yet robust retiree and second-home development.

"A lot of this ties in with the job market," he points out. "Construction will create those jobs. But how much comes from imported wealth, and how much comes from creating jobs here that are more stable and long-lasting rather than cyclical? I don't know.

"Initiatives by the counties are starting to bring jobs here — jobs that can support home buying — and that's important. But I'm still a little wary that not enough is being done to encourage that."

Time will tell. And it's beginning to tell a promising story. ¦

Note: This approximate list of new home communities now planned or under construction reveals how much activity is taking place along the southwest coast. The list was compiled in part by Land Solutions Inc., which brokered some sales.

>> Lantana at Olde Cypress – Stock Development Naples: 64 acres, 122 planned
one- and two-story single-family homes
>> Bonita Lakes – Toll Brothers – Bonita
Springs: 120 acres, 268 planned homes
>> Preserve at Corkscrew – Lennar &
Pulte – Estero: 441 single-family homes on
510 acres
>> Riverstone – GL Homes – Naples: 286
acres, home from about 2,000 to about
5,000 square feet
>> Sabal Bay – Minto Communities – Naples:
2,300 acres, 1,600 planned homes
>> Treviso Bay – Lennar – Naples: 1,050
acres, roughly 1,000 planned homes
>> Bonita Isles – Minto Communities – Bonita Springs: 85 acres, 220 homes
>> Sandoval (Phase 3) – Taylor Morrison –
Cape Coral: 577 lots
>> Bella Vida – Lennar – Cape Coral (no
other information available.)
>> Orange Blossom Ranch – Naples – (no
other information available.)
>> Bent Creek Preserve – Centerline
Homes – Naples: 138 acres, 450 planned
dwelling units.
>> Forum West – Lennar – Fort Myers: 706
acres
>> Banyan Bay – DR Horton – Fort Myers:
(No other information available.) ¦

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Source: https://naples.floridaweekly.com/articles/whats-up/

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