Florida Projects Defy the Housing Decline

A low basis on the property enabled the development of a product that can compete with the foreclosures and short sales that have dominated the Florida landscape for the past several years.

Palm Coast, FL – May 16, 2011 – In this day and age of gloom and doom espoused by everyone from Ben Bernanke to your local postman, it’s time for some good news in the housing industry. And believe it or not, there is good news to be told.

From ad agencies to flooring companies and roofers to developers, a lot of people in this great state of ours made their fame and fortune riding the real estate wave in Florida. And when the wave crashed – and crash it did – many were forced to do things they had never contemplated before in order to survive: shrink down, pull back, wring their hands and wait for better days to come.

Better days are here.

Mike Castleman, founder and CEO of Metrostudy, recently noted in Fortune magazine that in the 41 cities Metrostudy covers, just 78,000 houses are currently vacant, for sale or under construction, representing a quarter of what was available in 2006 and well below the level of a decade ago. That, plus the steep decline in pricing, he says, will lure Americans to start buying homes again, which will result in prices rising.

While it might be a bit premature to herald the end of the national housing slump, in our little microcosm of the universe, things are picking up. Two new projects located in different markets of the state are defying the downward trend in new home construction and launched brand new communities in 2010, while others with existing projects are reporting impressive sales figures over that of last year.

So what’s their secret? Good business sense, good timing, and a lot of hard work.

Construction is booming in Monterra, located in Cooper City, with sales of over 250 homes since debuting in 2010.

Take for instance, Monterra, located in Cooper City, just east of Fort Lauderdale, Consisting of 500 acres of prime real estate, this property represents the largest undeveloped parcel in Broward County. Upon completion, the primarily single-family home community will welcome 1600 families through its gates.

Developers Jim Carr and Armando Codina purchased the property after Hollywood-based home builder Tousa went bankrupt. They did so through an acquisition that included the Community Development District (CDD) bonds, the land backing those bonds and the mortgage on the property. A low basis on the property enabled the 30-year veterans of the home building industry to develop a product that can compete with the foreclosures and short sales that have dominated the Florida landscape for the past several years.

Since launching the project in January of 2010, more than 250 homes have been sold with average weekly traffic of 300 people.

Central Park by Neal Communities has sold over 100 homes since its debut in July 2010.

On the opposite side of the state in Sarasota, Neal Communities’ new project – Central Park – took the area by storm in July of last year when it launched a single-family home community surrounding a large, family-oriented park setting. With initial pricing from just $120,000, it is of little wonder that opening weekend generated traffic heralding days of old with more than 4,000 people visiting the project in a single weekend.

Since that time, over 100 homes have been sold with average traffic of nearly 60 people per week.

Interesting enough, it’s not just entry-level buyers heating up the market. A number of national news articles – from the Wall St. Journal to the New York Times – report increased activity in the luxury market as well.

Dick Corace, CEO of Moraya Bay Development Co. and 30-year developer in the Naples market echoes this sentiment. “Even though the economy has extended market absorption, mid-term elections and the extension of the tax cuts have helped us here (at Moraya Bay).”

The project, comprised of 72 high-end residences overlooking the Gulf of Mexico, launched sales in 2006 selling out very quickly. However, most of those contracts fell through at closing and the developer was forced to go back to the market with lower prices and a new brand.

But it’s paid off in spades, with over $80 million in sales since January of 2010. “We’re seeing improvement across the state of Florida,” Corace said. “But it will be at a slower, more measured and sustainable growth rate.”

Sales in Vineyards this year are strong with much of the activity taking place in the estate home neighborhood of Venezia Grande.

Just down the road, Vineyards, a large master planned community which debuted in Naples in 1987, sold more product in the first 60 days of 2011 than they did during the entire year of 2010. Many of those sales were in higher end luxury estate homes.

With all the bargain shoppers out there, one might find the heightened interest in luxury homes rather amazing but  Michel Saadeh, Vineyards’ Development Corporation president and CEO, is somewhat more practical. “Look, the stock market has gone up, the economy is recovering and there’s not going to be a double-dip recession. This is a great to time to buy. Things are super cheap, interest rates are low and it’s not going to last forever.

“It’s often cheaper to pay a mortgage these days than rent,” he added. “That, plus fewer short sales and foreclosures mean good things for the housing industry.”

But as seasoned veterans of this industry, the lessons of the past four years have not been lost on them.

“I’ve been doing this for 30 years and no matter how good things may be going, you can never be complacent, never lose your edge and always be optimistic,” Corace said.

Truer words have never been spoken.

Robyn Bonaquist is president and CEO of B-Squared Advertising, a full-service, award-winning, advertising and marketing agency located in Naples, Florida serving builders and developers throughout the country for over 10 years.

Source: FHBA.com – reprinted with permission

2 replies
  1. Lindsay Dolamore
    Lindsay Dolamore says:

    Lot Home Packages

    It is true that even in our little hamlet our city leadership took it upon themselves to send out postcards to exsisting lot owners reminding them they have a lot in Palm Coast. Little did they fully understand the effect of this little out spoken action and the underlying result of said action. It is now time to start building new homes and these lot owners should be offering lot home packages. The next wave is building but this time the wave will be watched carefully or will it. Can we learn from our mistakes and grow at a steady controlled pace? Great article Toby.

  2. George Edward Chuddy
    George Edward Chuddy says:

    Largest New Town in the Nation –

    For the newer arrivals to see how Palm Coast, Inc., was promoted in 1971 :

    Monday, Jun. 28, 1971
    Environment: Development and Decay

    Depending on a man’s values, Florida is either one of the fastest-growing or one of the fastest-decaying states in America. Each week 2,750 new residents flock to its balmy climate; each year the crush fouls more of Florida’s once pristine air and water. In draining swampland for home sites, canal builders have ruined vital water supplies and endangered wildlife. Near Naples, one huge coastal development recently erased a lovely mangrove-lined shore in favor of concrete sea walls. Asked to set aside a refuge for the area’s few remaining eagles, a spokesman for the builders replied: "It’s all been sold. You can buy it back for $250,000."

    In the past, such a cavalier attitude would have been met with helpless resentment, since Florida officials lacked adequate means to control environmental abuses. Now, with tougher laws on the books, environmentalists are aiming their fire at reckless land developers.

    Florida officials are reviewing nearly 400 projects from industrial plants to marinas, some of which may be halted until the builders mend their ways. The state has filed suit against three developers who are draining pine and cypress swamps along the northern border of Everglades National Park. Such work, claims the suit, interrupts the natural flow of water through the wilderness area and upsets food chains. Furthermore, says the assistant attorney general, this kind of activity contributed to the twelve-month drought that recently turned much of southern Florida into a tinderbox swept by stubborn fires.

    Optical Pollution. Fortunately, a few developers have tried to minimize their projects’ ecological impact—a hard task. For one, ITT Levitt Development Corp., a subsidiary of the largest U.S. home-building company, is building "Palm Coast," the nation’s biggest "new town." A gargantuan project, it will in 20 years plunk 750,000 people onto 100,000 acres of now uninhabited coast land near St. Augustine. Levitt spent nearly $1,000,000 on environment planning to achieve a community whose residents will live in virtually pollution-free neighborhoods connected by canals. Housing density will be 2.5 homes per acre, less than that of Beverly Hills.

    Dr. Norman Young, a psychologist who heads the Palm Coast development, aims to eliminate the "optical pollution" caused by rows of identical houses. He is using many architectural styles and requiring others who build in Palm Coast to do likewise. Noise pollution will be eased by siting residential areas far away from major highways. To reduce auto-exhaust pollution, shopping and commercial centers will be placed within walking or biking distance of most residents. Industry will be mostly light; factory builders must submit strict pollution-abatement plans before starting construction.

    "It is difficult for conservation groups to argue with us," says Young proudly, "because in some cases our environmental standards are tougher than theirs." He may be right, but in one area he has run squarely into Florida’s newly awakened environmentalists.

    The resulting showdown could affect the entire course of Florida development.

    At issue is the 200 miles of "interior" canals designed to give Palm Coast a waterfront ambiance and link its various parts to three new, bigger canals, which in turn will be connected with the saltwater Intracoastal Waterway. The builders say that because tidal action will flush all canals, they expect no algae buildup—the process that destroys a waterway’s self-cleansing power by consuming oxygen and killing marine life. As a further safeguard against algae, Levitt Ecologist Stanley Dea has ordered landscapers to use fertilizers that act like time capsules, releasing their nutrients slowly in water rather than all at once.

    Environmentalists are not impressed. According to Joel Kuperberg, executive director of the Florida Internal Improvement Fund, "there is no reason to believe that this kind of system works ecologically." Kuperberg cites Fort Lauderdale as an example of what can happen when canals honeycomb densely populated areas. As he sees it, "There is no longer any body of water there fit for human contact."

    Salty Canals. State officials are also worried about the effects of saltwater intrusion into Palm Coast’s fresh-water environment. "As far as we are concerned," says Bernard Barnes, a senior engineer for the state’s department of air and water pollution control, "Levitt can complete their three main canals, but we will not issue additional construction permits until they come up with a changed plan." Arthur Marshall, chairman of the division of applied ecology at the University of Miami, goes further. Regardless of the precautions taken, he says, the very size of developments like Levitt’s is bound to upset natural habitats and ultimately destroy wildlife.

    Levitt men are understandably upset by the charges, particularly since the company has spent so much time and money trying to make Palm Coast the most environmentally compatible of all new towns. Levitt planners are negotiating hard with Florida officials and, promises Young, "If both parties decide something better can be done, then we will do it."

    In seeking to help developers plan communities, rather than just passing on applications as was done in the past, Florida’s environmental agencies have taken on a very difficult job.

    They nonetheless feel that brakes on development are essential if Florida is to survive in anything like the condition that has lured millions of newcomers.

    Says Kuperberg: "We trust engineers to tell us the weight that a bridge will carry. For the same reasons, we must trust ecologists when they tell us how much weight this state can stand."


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