Unflinching Optimism, Practical Steps

Unflinching Optimism, Practical Steps

Even as they predict brighter days, Gulf Coast Realtors and those in related industries are taking protective measures now.

COVER STORY by The Review Staff

Realtors tend to be an optimistic bunch, as it takes a perpetually smiling approach to sell a product with an average price tag in our area of more than $300,000.

But the residential real estate market on the Gulf Coast in 2006 is giving even the most cheery agents fits. Take a look at some of these numbers:

• In Lee and Collier counties, business for residential real estate brokerages is down as much as 50% so far this year compared to last year.

• In Pinellas and Hillsborough counties, there were three times as many homes and condos for sales in July and June, respectively, as there were during those times last year.

• And in Sarasota and Manatee counties, total volume of sales at the region's largest brokerage, Michael Saunders & Co., were off about 30% from the first six months of 2006 compared to the first six months of 2005.

Not exactly the boom times of 2004.

Still, even faced with those gloomy statistics, not to mention several anecdotal stories of layoffs and expense-cutting, many in the residential real estate market are dipping into their deep bag of optimism as they look ahead. So, too, are a majority of those who work in connected industries, such as mortgage lending and title companies.

For examples, three industry executives interviewed by the Review in the Sarasota-Bradenton market catered their comments with disclaimers that any optimistic answers are reality-based and not just sales-speak good spin on a bad situation.

Bob DeCecco, a veteran in the Sarasota-area mortgage industry, is one of the many seeing the positive light; DeCecco sold his Aclarian Mortgage to New Jersey-based Opteum Financial Services earlier this year. "There's still a lot business out there," DeCecco says, "just not as much as there once was."

In speaking with DeCecco and more than a dozen other industry executives and Realtors who make their livings from the Gulf Coast residential real estate market, five themes emerged. Some trends show that even though not everything is as rosy as the optimists might say, there are ways to fight back in a down market. Here's a glance at what some are doing:

Consolidation: Some brokerages are buying smaller companies that don't have the wherewithal to last through a protracted downturn. Barbara Watt, owner of Century 21 Sunbelt Realty in Cape Coral, says over the next year she plans to add roughly 200 agents to the 800 she already has through acquisitions, mostly in the area stretching from Punta Gorda to southern Sarasota County.

ReMax Gulfstream in Sarasota is growing, too. It bought a smaller sister firm last month and hopes to have 280 agents by the end of the year, a 36% jump from its current number of 180 agents.

Fewer Realtors: As big companies get bigger, some agents are getting out of the business entirely. From Pasco County south to Lee County, the numbers of agents selling homes are decreasing. Through the end of July in Sarasota County, for example, there was a near 6% drop in people who re-upped for membership in the Sarasota Association of Realtors.

And Mike Mayo, director of public affairs for the Pinellas Realtor Association, says a recent orientation class for new Pinellas Realtors was the smallest he has seen in six years. Still, the association has an all-time high of 8,000 Realtors, up from 5,000 four years ago.

Statewide, the Florida Department of Business and Professional Regulation projects there will be a modest 1% drop in brokers and salespeople renewing their real estate licenses in the 2006-2007 fiscal year.

Few see the drop as a negative, though, as many non-experienced agents jumped into the business to get in on the good times over the last few years, watering down the field.

"I want to see more associates drop out of the business and the ones that are skilled and competent remain," says Steve Bailey, head of Naples-based Premier Properties soon-to-be-opened Sarasota office.

Insurance: Buyers are walking away from deals after they learn how much property insurance, combined with taxes, will raise their mortgage payment, Mayo says. Other Realtors throughout Southwest Florida echo that sentiment.

In addition, Florida's Save Our Homes tax cap is locking some people into homes when they'd like to downsize, but would face higher taxes on a less expensive home if they sold and moved. Some are looking for relief from the state legislature in this department.

Coldwell Banker Residential Real Estate in Sarasota is one firm trying to solve the insurance crisis on its own. The firm announced earlier this month that it will begin offering insurance, including homeowners' policies, through NRT Insurance Agency, part of the firm's parent company, as a package for home buyers.

Advertising: Many firms are continuing to advertise prosperities, as the need to connect with a limited pool of buyers takes on a greater sense of urgency in a slumping market. For example, Watt, with Century 21 in Cape Coral, says she plans to boost advertising by $500,000 this year.

Other firms, such as Premier Properties of Southwest Florida in Bonita Springs and Sarasota-based Bosshardt Realty Inc., are diverting funds from the traditional newspaper listings toward online ads.

Not all firms are expanding marketing budgets, however. At least one firm, John R. Wood Realtors in Naples, is making judicious cuts. The firm trimmed its advertising in the Sunday edition of the Naples Daily News from four to three pages and reduced the number of expensive color pages to one.

Cost cutting: Firms are taking various steps to rein in expenses. Some are putting off office renovations, while others have had to drop some employees. Milt Flinn, president of LWR Residential Realty in Lakewood Ranch, has put off hiring additional administrative support. And Dave Minton of Bosshardt Realty says his firm had to cut back on operating expenses by about 15% this year.

One of the areas he cut back on was contributing to charities.

Mark Gordon, Jean Gruss, Janet Leiser and Sean Roth contributed to this report.

At A Glance

Realtor Numbers drop

Statewide, the Florida Department of Business and Professional Regulation says 145,802 brokers and salespeople renewed their real estate licenses during fiscal-year 2005-2006, which runs from June 30 to July 1. In that same period, 14,692 corporations, partnerships and branch offices renewed their real estate licenses. In fiscal-year 2006-2007, the department projects 144,849 brokers and salespeople will renew their real estate licenses (a 1% decline) and 13,969 corporations, partnerships and branch offices will renew real estate licenses (a 5% drop).

Lenders feel the pinch, too

The slumping residential real estate market is impacting many of the businesses connected to the industry. The trends facing brokerages are being seen in the lending industry, too.

At Bonita Springs-based Homebanc Mortgage, for example, brokers are focusing on helping homeowners shift from rising adjustable-rate mortgages to fixed-rate loans. "It's a good time to lock down your housing payments," says Thomas Flood, senior vice president and regional sales manager with Homebanc in.

At Lutgert Mortgage in Naples, President John Irons says it's likely that many smaller mortgage companies will fold. In the long run, that will benefit well-established companies such as Lutgert Mortgage because it will reduce competition, Irons says. Irons says his company will benefit from the fact that parent company Lutgert Cos. will be selling new homes this year, generating business through the end of the year.

Longtime Tampa-area mortgage planner Scott Fitzgerald says there's still enough work, only now he doesn't have to stay up all night to get it done. "We got spoiled for two years; Business was so good," says Fitzgerald of Mortgage Corp. of America. "The phones aren't ringing off the hooks anymore."