My Experience with the Southwest Florida Real Estate Bubble

Lehigh Acres In 1975 my grandmother paid $1,500 for a quarter-acre lot in Lehigh Acres, a former cattle ranch sold off in little pieces to people all over the country starting in the 1950s. Think Glengarry Glen Ross.

A 1998 paper, Planning in the Wake of Florida Land Scams, described the development this way:

The original developer, the Lehigh Acres Development Corporation, was skilled at marketing but had never before developed land (Faulkner 1994). They emphasized the volume sales of unimproved homesites to out-of-town buyers, virtually ignoring community planning and even the basics of drainage. The demand for installment purchases of the early Lehigh Acres lots was phenomenal. Even though typically 40% of the purchasers defaulted on their payments, the lots were simply sold again, since no complicated foreclosure proceedings were required (Gould 1995). The development expanded in every direction. The result today is an unending landscape of quarter-acre and half-acre residential lots with a confusing grid system of over a thousand miles of discontinuous local roads.

This development approach created numerous problems including a rigid pattern of nearly identical lots and streets superimposed over the entire site (see configuration in Figure 6); a failure to provide even the most basic services such as water and sewer to most lots; an inadequately designed road network with few continuous arterial streets (despite the apparent grid); no reservation of land for schools, fire stations, and parks; an absence of employment opportunities, since sales techniques emphasized retirement living; little vacant commercial land remaining to serve future residents; and the destruction of most of the original wetlands by an elaborate network of canals. As Lehigh Acres has grown, the population mix has become younger, and more residents must traverse narrow and poorly constructed roads in their daily commute to jobs in the Fort Myers area. The number of commuters from Lehigh Acres is particularly high since there are so few jobs nearby.

As recently as 2003, the lot was assessed at $1,300. Then in 2004 it jumped to $3,400. And this year it rocketed to $19,500.

In 2004 I started getting weekly solicitations from brokers to list the property, from developers to buy it, and from “average people” with long stories about how they “longed to live in the country” or “struggled with the decision and have decided to relocate to Florida.” Those last were always offering about half of what the realtors were saying they could sell it for. The prices went from $7,000 in May 2004 to $22,000 in September to $35,000 in February 2005 to $40,000 in June.

When the lot across from mine sold for $55,000 in June, I called the buyer and asked him if he wanted to buy mine as well. He did and I sold it this week.

Lehigh lots burning up auction block
Jorma Duran
Posted on: Friday, August 19, 2005

ESTERO
— Investors claim empty lots in Lehigh Acres are the hottest pieces of property in Florida right now. More than 100 lots were auctioned off
today at Germain Arena in Estero. Some bidders say the prices they paid are outrageous, while others believe their investment will pay off in
the end.

No matter how fast the Lehigh property prices jumped, the numbers made sense for some. “The worst that can happen is that I sell them for a profit,” said investor Jay Suarez. Suarez, from Miami-Dade County, buys, sells and develops land all across Florida. He says two years ago the same lots sold for only a few thousand dollars each. “When you take a look at the growth between two years ago when you were buying something for $1,000, and now being able to sell it for $75,000– it’s amazing,” Suarez said.

In all, 128 pieces of Lehigh Acres land went up for auction, and all of them sold in mere minutes to the highest bidder. But the prices scared many locals away. Real estate agent Perta Niedermair says the lots were selling for outrageous prices – and she was quickly priced out.

With figures soaring to 10 times the price five years ago, Niedermair says people living in Southwest Florida wouldn’t think these lots are worth it. But those who normally buy and sell property on the east coast of Florida say it would be outrageous to not buy the plots of land. “Prices over there for something you pick up for maybe $40,000 here, over there go for $200,000,” Suarez said.

The land sold today ranged in size from a quarter to one-half acre. The auction company reports the lots sold 10 to 15 percent above market price, on average going for about $50,000 each.

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