Estero homes in boom modePrices growing with population

Estero homes in boom modePrices growing with population.
Brightly colored homes still under construction in the second phase of Villagio, a residential community in Estero.
RISING HOME PRICES• The Reserve at Estero: From the $200,000s in 2004; from the mid-$300,000s today.• Belle Lago: From the low $300,000s in 2003; from the high $400,000s today.• Grandezza: From the $140,000s in 2001; From $500,000s today.• The Meadows: From the $300,000s in 2004; From the $500,000s today.• Villagio: From the mid-$100,000s in 2003; From the $400,000s today.

Gas station signs aren't the only ones with prices that increase in the blink of an eye.Just look at the "starting from" prices on signs for residential development in Estero.Less than 10 years ago, new homes in gated projects such as The Brooks, Stoneybrook, Pelican Sound, Grandezza and Villagio started from the low- to mid-$100,000s.
• Juan Diego, left, and Modesto Agnel of Sunnygrove Landscaping and Nursery in Estero sweat it out in the noon sun planting palm trees in the Estero residential community Villagio on Thursday.In six years, starting prices for Grandezza on Ben Hill Griffin Parkway increased to the $500,000s.In three years, Villagio on Three Oaks Parkway is now at the $400,000s.
And in two years, The Meadows — still under construction on U.S. 41 — jumped from the $300,000s to the $500,000s.Joe Pavich, Sr., broker and owner of Realty World of Florida in Estero, said nobody knew about the rural community 15 years ago. Prices in the $100,000s were meant to lure people into Estero."People would come to Estero and like the home, but they didn't know where they were at," he said. "The closest grocery store and gas station was six or seven miles away."
Over the past few years, Estero has come into its own, earning a reputation for high-end communities and regional commercial projects."Now, everything is from the $400s," Pavich said about Estero's residential market.
Steven Goldfarb is president of Royal Palm Communities West Coast Division, which is building Villagio's second phase.He said the company contracted the land in 1998 with plans to build apartments.
"By 2002, we changed the concept to coach homes," he said, noting Villagio opened in 2003 with prices from $139,000 to $189,000."We figured when we went into it, we could raise the prices once a month," Goldfarb said. "We ended up being able to raise prices 23 times in 16 months.
"Don't think it's all profit. The costs of construction for phase two were incredibly high."Despite the higher prices, phase two's 248 units sold out in five months — half the time it took to sell phase one's 266 units.Villagio sold out last year, so the "starting from" sign now refers to resales, which have already increased in value by more than $200,000.
Debbie Hanson, 33, bought a two-bedroom, two-bath unit in Villagio for the pre-construction price of $168,900 in late 2003. Similar units are now reselling for $414,000."I think it's going to be a very upscale area to live in," she said. "I think the prices will probably keep increasing. It makes me feel good about the decision I made."
Hanson said she chose Villagio for its close proximity to Interstate 75, Estero's location between Fort Myers and Naples, and developers' plans to build upscale shopping nearby.She said she couldn't afford to buy a comparable home in the area today."The challenge in Southwest Florida is the fact that affordable housing is becoming very difficult to find," Hanson said.
"Myself, being a young professional, would have a hard time finding a place to live commensurate with my salary."Goldfarb said a lot of ingredients combined to create the local real estate boom.
"Estero is an emerging place within Southwest Florida," he said.Other factors were a good economy, relatively good weather, low interest rates and a lackluster stock market."More and more people looked to real estate as an investment. Now, the tide has turned a little bit," he said.
"We've had two seasons of tremendous hurricanes, the investment climate has changed and interest rates went up. The market is catching its breath."Pavich agreed and said the rapid increase in the $200,000 to $600,000 range won't be duplicated in the $600,000 to $900,000 range.
"It has to level out somewhere," he said.However, Pavich and Goldfarb agree prices won't fall."The cost of land dictates what they're going to be able to start with," Pavich said.
So does the cost of construction materials, Goldfarb said."Sometimes, we would raise the price by $10,000 to slow demand, and it would have absolutely no effect," he said. "I will not be surprised if Villagio units routinely resell in the $500,000s within three years."
Pavich said much of the price increases throughout Estero now come in resales. He said the new Rapallo development on U.S. 41 near Coconut Point Town Center had pre-construction prices in the $200,000 to $300,000 range. They're already reselling for $450,000 to $700,000.And, Pavich said, investors complicate things by buying at pre-construction prices and reselling, or flipping, the property for a quick profit.All of a sudden, developers who created lottery systems to handle demand now need help to sell new construction, Pavich said.
"They're now reaching out to the real estate community to bring buyers to them," he said. "They're offering incentives to agents and buyers to buy new construction versus inventory that's already out there."If an investor's property takes a little longer to sell, he will likely reduce his price to avoid the burden of mortgage payments or association fees.
"Things like that will start leveling prices out," Pavich said. "They're in direct competition with the developers."So much so that many developers add investor policies to their purchase agreements."They make the prospective buyer sign off that they'll not sell in the first two years or rent," Pavich said. "If they sell within that time, the developer is entitled to a percentage of the appreciation."
Some even go so far as to cut commissions for real estate agents who bring investment buyers."What they're selling today will be their competition tomorrow," Pavich said.