Tuesday, July 26, 2005

Flipping Over Naples

The following is a partial reprint of a recent Naples Daily News editorial:

"Flipping may be risky, but so are many things

The Naples Daily News July 17, 2005


These days they're more than dolphins with a knack for showmanship.

They're real estate investors with a knack for sensing a niche in a blazing hot real estate market. Without any intention of living in them, flippers buy homes only to sell or flip them to someone else — sometimes buying and selling in the same day.

Their proliferation and impact on the marketplace were summarized in this newspaper last Sunday. It told of small and large investors alike in the midst of profit-taking that has helped pushed taxable property values upward by nearly 20 percent in Collier County and 26 percent in Lee County in a single year.

Some flippers buy and sell property they have never seen, let alone occupied. Some pocket a respectable year's salary in a single, quick deal. Payoffs seem proportionate to flippers' investment and patience.

There are down sides. There is fear of a bubble about to burst, though except for big condominium projects that bank on deposits turning into closures, a burst may mean a mere price plateau.

Further, under the surface, there is an unspoken impact on affordable or workforce housing. Prices of land are high enough without any "help" from flippers.

In most other contexts, this is the point in an editorial where we call for a halt to the forces exerting the destructive influence. Not this time — except to offer a reminder that the next time we witness flipping or absurd home prices or the heirs to a landmark home try to sell to pay the taxes, please remember how we got where we are. This is what drives our community and its economy."

Maybe the question to ask is: does the end justify the means? As housing prices skyrocket and moderate income residents can no longer afford to live here, what happens to the lifestyle for those that can afford it? It seems that at some point the service providers either accept a much lower lifestyle (boarding houses?), or those that demand the service pay much higher for the service. When the average home is $300,000, the average wage must be $100,000. What can the wage earner(s) get in a different part of the country. What keeps them here?

An example is a letter to the editor in a recent SHT. In part it says: I, for one, won't be here. I just got a better-paying job and bought a 10-year-old house with three bedrooms and two baths on two acres with spectacular mountain views for less than a "standard" lot sells for west of the Trail. Goodbye, Sarasota. I'm the one of many who are leaving this place behind.

And, by the way, we seem to be able to take care of price gouging when a hurricane approaches, why is price gouging with homes different?

No comments: