Sunday, March 26, 2006

Great Expectations - The American Dream

For some inexplicable reason, I have always wanted to own my own home and my own business. For me, this is the quintessential American Dream. Many Americans have the dream of home ownership. You own; you are a winner, you rent; you are a loser. It is a stigma that plaques us. These expectations and the rapid rise in housing costs has led us to The Affordable Housing Problem.

Homes are not affordable to those that work here. There is a disconnect between wages and housing costs. I read about it almost every day in the paper. Our expectations are that we should be able to own a home. When we find out we can't, we are disappointed. This is a Bad Thing. It gets negative press. It makes us angry and stressed.

Renting is one solution to the affordable housing problem. Change expectations and the stigma that renting is bad and show your workforce that indeed in today's real estate market renting is in fact financially wise, and part of the problem is solved. Changing expectations takes time however, and Lord knows we want to solve the problem immediately, heck, we live in America, the land of quick fixes.

The high number of apartment complexes converting to condos is decreasing the inventory of rental apartments. Correct? I am not so sure about that. It is certainly changing who OWNS those apartments, but my observation is that there will be many more rental condos on the rental market next year than there were total rental apartments on the market last year. All these investor units will enter the rental pool. The prices will be higher that the current aprtment complexes, but still substantially lower than the cost of home ownership.

The developers of new condos are accused of catering to the rich. To punish them and to put a band aide on their conscience, the politicians make them donate a chunk of money for each unaffordable home that they build to go to an "affordable housing pool". This money then gets, well, lost in the system and doesn't help the problem. So far all I see it accomplishing is raising the cost of the already unaffordable home.

Do we have an affordable housing problem? Most would agree that we do. Most employers are concerned about where their employees will live. How to attract them. How to keep them. We are in the apex of the problem now and it is hard to see the big picture.

The market will solve the problem.

What should NOT happen is artificial government imposed fixes. What we need is to allow the market to adjust and:

Wages will need to go up. Employers will have to pay more to attract employees. This is already happening. It is just not quick enough to please everyone. But these wage adjustments must seek their own level naturally. But the way, it does not all need to be wage related. Some of the benefits will be increased child care, transportation, health benefits, education, etc.
Housing and rental prices need to stabilize. The market will also take care of this. I have a great deal of confidence in the free market system. We just need to allow it time to work.
We need to allow an increase in density permitted on land. The more housing units allowed per acre, the less impact on all services and therefore the lower the cost of the living unit. More density means less roads and infrastructure and less costs overall.


We also need to encourage renting in our society. Let me talk a little about that. I know a gentleman that is renting a condo on the water for $1600 per month. In fact, he could afford to buy where ever he wants. But why should he when he is renting an $800,000 condo for so little? The market here is in a stage of flux and certainly not stable when it comes to renting. But I know there are many wonderful opportunities to rent in today's investor driven market.

There have been a few studies done by The Organization for Economic Cooperation and Development (OECD) that tend to indicate that the percentage of home ownership in a country is directly related to the unemployment rate; the higher the percentage of home ownership, the higher the unemployment rate; more renters, more jobs.

The American Dream has been achieved by 68% of Americans, but in Spain the number is 83%, Germany 42%, Japan 60%, and in Switzerland only 31% of the population owns their own home. Greece has 83% home ownership. Based on this and other studies, the OECD has data that shows a correlation between home ownership percentages and unemployment over the years. The reason? A renter is more mobile and can respond quickly to changing job opportunities. So as far as the work force is concerned - renting is good.

In summary, my conclusion is that we have a short term problem that will be solved by natural market forces. Employees will rent, employers will pay higher wages, density will increase, and the Spanish, I mean American Dream will survive.

Let me bring this home to my readers who really are second home buyers, retirees, and real estate investors in general. What does all this mean to you? It means there will an adjustment in the market in terms of wages. If you are investing in Florida you need to understand the trends and make your buying decisions accordingly. There will be a demand for rental housing. There will be increased density. There will be fewer employers here that hire low wage workers because wages must and will go up. My building call CYPERLIN CENTER, for example, is not trageting the employer that needs low cost employees. It is targeting the luxury home buyer who wants a luxury place to work as well.

I will repeat the mantra I have repeated so many times, however. The Baby Boomers are still coming. They want homes, they want places to shop and eat and play. Our prices, while high, are lower than other areas of Florida. South West Florida is still paradise. The time to buy is now.

The Lee County Economic Development Office has a fantastic website you must visit if you are interested in Commercial Properties here, www.leecountybusiness.com. Take a tour.

Speaking of Commerical Properties. We sold four Brantley Commons building this past week to investors. Email Tatiana if you want more info on these opportunities.

We are still about the weather and the water here and we have some wonderful opportunities. Check out Gregg's pick of the week here.

Speaking of the Paradise, here are two new listings that you need to see:
http://www.investinwaterfront.com/bellaterraresales.shtml - great location off Corkscrew Road in Estero, near FGCU and Miromar Outlets - Bella Terra - $289,000 - 2 bed/2 bath condo with carport on a lake.
http://www.investinwaterfront.com/garnickpropertyhighlight.pdf - only 4 miles to Ft. Myers Beach - 3 bed/2 bath condo with resort-style pool and amenities - $289,000

Now some bragging. My son Christopher and his partner Leon started their own advertising agency third quarter last year. Gail and I attending the ADDY awards ceremony two weeks ago with Christopher and Leon. After less than a year in business Devious Design Studios took home more awards that any other ad agency in Lee and Collier Counties. You can see their work at www.DeviouslyCreative.com.

© Copyright 2006 Gregg A. Fous All Right Reserved
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Saturday, March 18, 2006

A Single Log makes a Poor Fire

A Single Log makes a Poor Fire
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I like the energy that exists in my office. So does everybody that visits us. It is an exciting place to do business. I believe the reason for this is simple. We hire energetic people that have a common purpose; We love our profession and we believe in what we are doing. But the energy comes from working together, a single log will soon peter out if ignited, but many logs burning together will make up a wonderful fire.
When I first started my own business in a suburb of Cincinnati I worked out of my own home office. I would get dressed for work, go into the office and shut the door and work on the phone and my PC all day. (Keep in mind this was 1986).
At the end of the day I would emerge and my two children, Nicole and Christopher, would both chime up, "Did you make any money today Dad?" I remember the question very clearly, because it cut to the chase. I don't remember the answers as easily.(Someone said we soon forget pain). Those were very formative times for me. Fortunately I soon realized that as energetic and confident as I was; I was not going to do as well by myself as I would with other energetic people around me. I would peter out.
Today no one would deny that my energy level is very high. But it stays high because of the company I keep. Unlike large nationals, Market America Realty and Investments is not in the business of real estate agents. We are in the customer service business. The national real estate companies make more money by having more agents. We make more money by serving more customers.
In order to be successful in the real estate customer service business we have to know many facets of the business and know them well; from property values to community locations, from finance to insurance, and from construction methods to appraisal techniques. In the investment areas we need to know how to look at a profit and loss statement, the difference between a cap rate and a debt service ratio, and we have to be able to teach this to our clients.
During all this we are constantly looking for people to serve. (Lead Generation) Those of us that are experienced get most of our business from referrals. High energy is essential as this is a very fast paced business. The phone does not stop ringing (thank goodness) and each client wants immediate and thorough attention.
When choosing a Realtor to work with, don't choose a "single log", though superstar they may be. Today's clients have needs that are complex - they need an entire company working for them and they need a company to work for them that has the team leaving work whistling - not grumbling and glad to get out.
Try us, we think you will be pleased. (www.investinwaterfront.com)_______________________________________________________________
Christopher and I went to Realmark's gala affair earlier this week. My guess is that there were over 2000 people there. Will Stout and his team did a superb job. He had multiple movie screens showcasing his communities. I was most impressed with his plans for Burnt Store Marina. If you have not seen the link please visit. We have some furnished models at Grand Isle ready to go.
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I am very pleased to announce that we now are handling the presales of 18 stand alone office and medical buildings for Brantley Commons. (http://www.investinwaterfront.com/brantley%20commons.htm) These office buildings are available at pre-construction prices from $600,000 and above. They are located right by our office building off Summerlin Road. These will make excellent investments for some of you and will be ready as early as late 2006. Email Tatiana@ma-realty.com

Other Commerical Opportunities can be visited here.
______________________________________________________________We have more condos at the Citadel (www.citadel-bonita.com) but many opportunities remain. Renovations are underway. Please revisit the website for new pictures, current information and pricing. These condominiums, prices from $225,000 are just off Bonita Beach Road three to four miles from the beach. Email Holly@ma-realty.com
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Other Links: Paramount. Gasaprilla; Featured Property Page; Archived Newsletters

Lessons from A Dinosaur Egg

Lessons from a Dinosaur Egg

Lessons come from many places and at any time. I would like to share with a few that I relearned yesterday. Yesterday the weather was fit for a post card. I left the office at lunch time to go to The Bell Tower to pick up some tailoring I was having done on a new suit I recently purchased as Jos. Banks. First I walked through Saks Fifth Avenue to see if I could bump into my daughter Nicole and invite her to lunch. She runs the visual department there. We had a tardily served but delicious lunch at what used to be called Dragonfly (Maybe the new owners need to work on their branding. I have no idea what the new name is, or even if there is one). I asked Nicole if it was OK to pick up her son Adi from preschool and take him home for the evening so he could spend the night with Gail and I and his cousin Jacob.
After parting with her I ran into John and Joe Armenia and sat down with them for about a half hour at Bistro 41. The amenity center John built at Riva Del Lago, by the way, was the inspiration for the amenities center I am installing on the penthouse level at Cyperlin Center; total class and no short cuts, just like all that John does.
I told John that Cyperlin Center, being built on the corner of Cypress Lake Drive and Summerlin Drive will be unlike anything here in town. My feeling is that if you live in luxury, you should work in it too. This office building is designed for the business that not only has substance, but knows who they are and is not afraid to show it. John loved the concept and shared with me his dream for a Fort Myers restaurant that will cater to the same clientele. We had talked about his before; with all the restaurants we have in Fort Myers, there are no truly full service top level restaurants that cater to the business and Beemer crowd, full service banquet facilities, top notch kitchen and bar, meeting rooms, A restaurant that will not allow shorts and baseball caps. John and Joe want to build one for Fort Myers. My bet is that they will.
I finally got home with Adi about an hour later. (Now we get back to the dinosaur eggs). When we were last in Chicago, Gail purchased two gifts for Adi and Jacob at the Field Museum; essentially an egg the size of a large mango. If you know anything about preschool boys, you know that they know more about dinosaurs than Fred Flintstone ever did. They are absolutely fascinated by them. When Gail came home after picking up Jacob at his preschool she presented both boys with these eggs. These are cleverly designed. They come in a box with two very simple tools; a digging stick about three inches long and a similarly sized brush. The idea is the child becomes a Paleontologist. He must excavate a dinosaur from this brown Plaster of Paris egg. They do this with this large toothpick and brush.
Our two budding paleontologists spent one and one half hour excavating while I watched and listened. The only other thing I have EVER seen them do for that long a period of time is sleep. They picked, they brushed. They compared progress. They very slowly saw a small dinosaur emerge. The suspense and the promise of success kept them glued to their tasks.
Once they finally got them out and washed them in the pool water, you would think they found the Hope Diamond. This is lesson number ONE. When you have to work very hard to achieve something, it is worth more. If Gail had simply handed the boys two baby plastic dinosaurs, there would be no other value associated with the toys; no interest, no personal investment, no long term bond and no memories.
This leads us to lesson TWO. People pay for added value and are happy to do it. I know Gail paid almost ten dollars a piece for these dinosaur eggs. This was essentially a two cent plastic dinosaur, wrapped in five cents of plaster in a ten cent box.
THREE. The marketers of this wonderful toy knew that it isn't about the dinosaur. It is about the whole experience. In fact, I know that as anxious as the boys were to finish the task and see the results, they were disappointed when the experience came to an end.
FOUR. This is one you know that I live by and is how I opened this column: Lessons come from many places and at any time.


I didn't write my column last week. (Thanks for noticing). This doesn’t mean I have not been busy, quite the contrary, my head was exploding with so much I couldn't seem to get it on paper.
This past week I made the deal with Endeavor on Windsor Lake Estates on Burnt Store Road and we are about ready to start taking reservations. Cape Coral is in need of a gated community with deed restrictions and with large lots and preferred builders. Windsor Lake is just that; large one half acre lots with new homes from $800,000.
I met with Bob Knight earlier this week, President of Paul Homes. I believe Paul Homes may be one of the preferred builders at Windsor. Bob had great insight into who his customer is and what is happening in this market.
Bob’s customer is a successful employee that has saved well, perhaps just inherited money from his parents, comes from the Midwest, doesn't want to pay to be on the water, but wants to be near it and he wants to live in Lee County weather not Cook County. He wants granite counter tops but not an extravagant overly expensive kitchen. He knows who he is and wants to show it with his house. He is not super rich, but comfortable.
Bob believes, and I agree with him, that the price range of Windsor Lake Estates is in the "sweet spot" of the market. With builders like Paul homes, developers like Endeavor, and marketers like us, this project will set a new standard for the North Cape. Bob also understand that he is not selling just houses. He is selling the whole experience.

We are in a cycle. Unless you have been in a coma the last six months you know that the media has been hyping the slow down in the real estate market. Indeed we are in a flat period and this is good. Every once in a while the overgrown forest needs a little forest fire to weed out the weak and undernourished. We will now get back to our normal 15 to 20 percent growth rate. We will get rid of inexperienced and overzealous investors, developers, builders, and sellers. This is a great time to buy. Remember those boys and those eggs. It was too easy a year ago. No matter what you bought went up. Now you have to work at buying the right thing in the right location.


Condos are more over heated than single family homes. The inventory of single family home will sell out quicker than the condo market. If you are going to buy condos, buy existing or buy way down the pike. For existing try www.citadel-bonita.com or The Paramount For down the pike try Palmetto Cove. My best bet for waterfront is still Grand Isle or Paramount. Grande Isle because of price point and Real Mark’s involvement. Paramount because of luxury and location.
Commercial opportunities are scarce but we have them. For office condos try Brantley Commons. We sold two preconstruction buildings there this past week. I expect to sell at least two more on Monday. They will not last long. Cyperlin Center is an excellent long term play. Until the fourth floor sells out the developer is making some excellent deals. (Remember, buy location, buy unique)
I am pleased to welcome Ron Campbell to our commercial team headed by Cliff Wiersma. Ron and I have been friends for years. Ron’s wife Nancy ran our research department years ago. Ron has an appraisal back ground and lots of experience in office and retail space. Kathy Brewer joined us from Keller Williams and is handling resales in Gulf Harbour and South Fort Myers along with Tom Leach (also a former Keller Williams agent and an superb buyers rep) Holly Sugrue is now working as my assistant with Tatiana Cuevas.
Holly works on projects like The Citadel and our residential projects, while Tatiana handles our development marketing and commercial support. These two woman make thing happen in our office amd we would be lost with out them. My cousin Deb Krikorian is our shining preconstruction star. There is not an agent in town that knows the condo market here better than Deb. Maggie Morrisse lives and works in Bonita. She is a gated community specialist in Bonita and Estero and has the knowledge that Deb has, but further south.

Hey folks, it's confusing out there. There are many properties to choose from and for a buyer it can be impossible to pick the right property to buy in the right location. Choose your professional carefully. Let us help you. Remember, we are in the real estate customer business, not the real estate agent business