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Foreclosed Houses Ironically Helping Builders in Lee County

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By : John Cutts    99 or more times read
Foreclosed houses caused huge losses in the home building industry across the country, but ironically in Lee County, Florida, these same houses have been helping home builders survive the downturn.

In Lehigh Acres, where foreclosures pulled down the median home sales price to only $55,500 in 2009 from the $237,965 median peak in 2006, home builders have been fixing foreclosures and reselling them to continue giving work to their employees while waiting for the time when they can build new homes again.

Advantage Builders and American Dream Builders have been fixing foreclosure properties for owners or have been selling bargain properties in the area. Once in a while, they get calls for the new homes they constructed before the housing meltdown. They have not been staffing their model homes because fulltime work for selling the new homes has been a losing proposition.

Executives from ten firms which have built houses in Lehigh Acres hope that in the next few years, the number of foreclosure properties drop and resale home prices increase so that they can begin building again.

Fort Myers builder Ray Scalero said that his firm was selling about 40 new houses per year in Lehigh from 2004 to 2006. Now, all home builders in the area cannot compete with bargain-priced foreclosed houses. He said that the cost of permit fees, impact fees and builder insurance already equal about 25 percent of the price of a pre-owned house, excluding the cost of the land and construction.

According to real estate executive Bob Oxnard, of the more than 4,600 single-family houses sold in 2009 in Lehigh Acres, almost 76 percent were foreclosures, the price median of which was $54,000.

During the boom in 2006, the median price for single-family houses in Lehigh was $237,965. It dropped in 2007 to $200,000 and plunged steeply in 2008 to $94,000. Last year, the median was only $55,500, just $1,500 above the foreclosure median sales price.

KenMark Construction, meanwhile, has been doing remodeling, extensions and steel buildings while waiting for better times. Cypress Homes, which sold about 75 new houses in 2006, has accepted nonresidential projects such as constructing the $7.5-million church building of the New Life Assembly of God over 15 months.

According to Jim Boggs, owner of Cypress Homes, it is not practical to build homes at a cost of about $130,000 per unit when existing homes and foreclosed houses can be purchased at half the price.

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