It appears that the worst is behind us and the future is paved in (developing) dirt. All across Southwest Florida the business of building is once again booming. It's not just a single-family home here and there in The Moorings or small multi family developments in Old Naples but the larger developers like D.R. Horton and GL Homes are making land purchases on a large scale. In Lee and Collier county 2700 single and multi-family permits have been pulled. In the City of Naples single-family permits are up more than 50% over last year according to the Naples Daily News. If you through the streets of the downtown neighborhoods whether it be Port Royal, Aqualane Shores, or The Moorings there is new construction everywhere you look.
With the price of a lot rebounding from the bottom, builders are seeing good opportunities to make good profits in speculative homes. If the lot was purchased between 1-3 years ago there are certainly opportunities to flip the dirt and in some cases this is realizing a 30% return. For example, in Old Naples lot value at the lowest point during the past few years was in the low $400k's, now there are only 4 opportunities to buy below $1m and those are hovering close to the high $800k to the high $900k range. With limited supply on hand prices of new construction are within 15% to 20% of the 2005-2006 highs. Premium lots in these neighborhoods are seeing the same jump in the market.
This is all happening without a lot of help from the banks. The market is starting to see more of a willingness to lend but it is still perceived as a problem. Banks should start to get a more realistic idea when it comes to appraising now that transactions are happening on a more regular basis.
One of the primary reasons for the new construction boom in the higher end markets is simply attributed to fact that many of our wealthy buyers are at a point in there life that they will pay a large premium for NEW. These are usually savy buisiness men and women who can do the simple math and see it would make sence to buy a lot and and have a builder/architect get them exactly what they want. In a majority of the cases this is never a consideration, they want it done and are willing to concede certain items on thier wish list to do this.
This kind of market is good for everyone from the developer to the contractors moving back to southwest Florida where the job market surrounding real estate development is once again in full swing.