Florida homes are going back on the market, but at high prices.
The housing slump has cast a shadow over the wealthy retirement community of Naples on Florida's sunny Gulf Coast, once one of the hottest real estate markets in the country. But there is little sign the boom has turned to all-out bust.
Billed as a subtropical paradise, it has seemed almost immune to recent concerns about a slowing United States economy and fallout from a gathering wave of foreclosures on properties bought with subprime loans - mortgages for those with poor credit histories.
Naples real estate prices saw a wild run-up earlier this decade, with some studies showing an increase in home prices of as much as 140 per cent between 2001 and last summer.
Home prices are still stubbornly high.
Visitors to the art galleries, restaurants, top-notch hotels and palm-fringed boutiques of downtown Naples can't help coming away with the impression that it remains among the most attractive locations anywhere in the United States for wealthy retirees and second-home buyers with cash to burn.
Britons and Canadians have become a growing part of the mix here, say long-term residents, citing the lure of a warm climate and weakening U.S. dollar. That has helped support the market.
And while there is a whole catalogue of ready-and-willing home sellers in Naples, according to local real estate agents, few seem poised to cut prices dramatically and make a run for less impressive digs elsewhere anytime soon.
"A lot of the people that have their property up for sale right now may not even have to sell it," said one realtor.
The allure of Naples includes its white, sandy beaches, superb fishing on the azure waters of the Gulf of Mexico, and the fact that it touts more golf links per capita than anywhere else in the country.
MOST OVERVALUED
Naples has been the "most overvalued" housing market in the country since June 2005, according to economists at National City Corp and economic consulting firm Global Insight Inc.
But, when the market started to slow the impact was immediate - the number of houses and condominiums sold dropped about 47 per cent from the second quarter of 2005 to the same quarter a year ago.
Prices also fell, with the median price dropping to US$365,000 in the fourth quarter of 2006 from a market peak of US$437,500 in the first quarter.
That still was a significant gain since the beginning of 2004, when it was US$257,500.
Spencer Haynes, head of the Naples Area Board of Realtors, acknowledged that unsold properties had "flooded the marketplace," whereas agents once had to scramble after every new listing. But he said the high end was holding up nicely.
Pending sales of Naples homes priced at more than $1 million have totalled 243 so far this year, Haynes said, compared to 252 over the same two and a half months in 2006.
The ripple effect from problems caused by subprime mortgages involving borrowers with poor or less-than-perfect credit may yet pose a threat to Naples, since lenders have been battered by a recent surge in delinquencies and defaults.
After California, Florida has the most subprime mortgages of any state, according to First American Loan Performance, a data and analytics unit of First America Corp.
Investors and speculators who helped spur the Naples housing boom are thought by realtors to hold a fair share of them.
While acknowledging a risk to the Naples market, Haynes said it "typically had an almost non-existent foreclosure situation."
He ranked Florida's skyrocketing insurance rates, driven by the threat of hurricanes, and hefty property taxes, as greater threats to the Naples market overall.
"The rich and famous come to play here," said Haynes, citing one pundit as saying that Naples had become "one of the cheapest places for wealthy people to live."
"Whether it's slower than 2005 or not, this is probably a pretty healthy place to be," said Haynes.
