What the housing turnaround will look like
Cape Coral, Fla., not long ago one of the foreclosure capitals of America, is now seeing a rebound as home prices hit once-in-a-generation lows.
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As a result, home sales have been increasing, in some months dramatically. Houses “are coming on the market and going into multiple-bid situations,” says Suzanne Sherer, president of the Realtor Association of Greater Fort Myers and the Beach, Inc. “So we’re almost seeing the situation where investors are pushing out the first-time home buyer. That could be a clear indication we are out of the bottom.”Skip to next paragraph
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With the rise in sales, inventories are declining as well. Across the country, the National Association of Realtors estimates there is now a nine-month supply of homes on the market – down 15.8 percent from a year ago. In nearby Fort Myers, the supply is 3.8 months. Professional investors and even average homeowners are actually clamoring for more foreclosed real estate to be sold by banks.
Woody and Gloria Turner, for instance, are searching for a warmer place to live after several decades in Dayton, Ohio. He’s a boat broker, she’s retiring. They’ve just driven 17 hours to attend an auction, but, in the end, didn’t bid because the minimum price was too high. The foreclosed property had a $651,000 mortgage. They hoped to pay no more than $250,000. They haven’t given up, though: They’re searching for a broker to negotiate with the bank.
“In the past, we weren’t able to do this,” says Mr. Turner. “It would have been just out of reach.”
The single-story ranch house at 711 S.W. 27th Street also illustrates how much the real estate market in Lee County has vacillated. In 2003, the lot itself was listed for $28,500. It was on the market for 276 days and sold for $26,000 at the end of March 2004. The buyer, First Home
Builders of Florida, resold the lot for $35,900 three months later. Within a year, the new owners put up a house and listed it for $344,900.
The home carried a total of $359,600 in mortgages. Within six months, it was in foreclosure.
When Michael Polly, who works for Grimes, initially listed the house this spring at $65,000, it represented a potential loss of 82 percent. “To determine the value, we look at the last six months of sales and the competition in the area,” says Mr. Polly.
In the cold-numbers world of real estate, however, one person’s loss can be another’s gain. Take Robert Bernard, an information systems specialist for a cable company. He was looking for a house not unlike the one at 711 to buy for his family. He wanted to spend under $80,000.
He’s found it in the form of a duplex in Lehigh Acres, a suburb of Fort Myers.
“Previously, when I looked at houses, they were over $250,000, which is completely out of my budget,” he says.
Now his father talks about planting lemon trees around the property. His entire family, originally from the Dominican Republic, will squeeze into the duplex. He has only one frustration: He has made offers on a number of properties, only to lose out to investors loaded with cash. “It’s traumatic because of the investors,” he says.