The expensive advertising campaign put out by the Sarasota Association of Realtors to lure buyers in a slumping market has raised a question: The market is showing signs of awakening, but is it due to the ads themselves or the themes within those ads that would likely be occurring regardless of the ads?The campaign's slogan is Time 2 Buy. It promotes the idea that the slump has created a buying opportunity, as interest rates have dropped, prices have stabilized and the glut of available homes in several price ranges means buyers can be picky. Bob Graham, a former Florida governor and U.S. senator, joined the board of directors at Tampa-based WellCare Health Plans Inc., replacing another ex-politician.Clyde Nixon carried lots of titles in his business career. President and chief executive of several companies, chairman of the board, community fundraiser and regional economic cheerleader, to name just a few.But Nixon, who died April 29 at 72 years old after a yearlong bout with cancer, will also be remembered by legions of friends, colleagues and employees for carrying a bucket of water. Bond-fund managers tend to be a gloomy lot. But real estate and finance companies oon the Gulf Coast might want to heed what Bill Gross has to say about the relationship between home prices and interest rates.
Imitation is the sincerest judge of success
The expensive advertising campaign put out by the Sarasota Association of Realtors to lure buyers in a slumping market has raised a question: The market is showing signs of awakening, but is it due to the ads themselves or the themes within those ads that would likely be occurring regardless of the ads?
The campaign's slogan is Time 2 Buy. It promotes the idea that the slump has created a buying opportunity, as interest rates have dropped, prices have stabilized and the glut of available homes in several price ranges means buyers can be picky.
But Sarasota Association of Realtors president Joe Hembree has a entirely different barometer for judging the success of the campaign as it heads into its fifth month in May: Imitation.
The Sarasota association presented its campaign at a statewide Realtors conference a few months ago, and since then several markets across Florida have picked up pieces of it, including Manatee County, Orlando and Jacksonville and Key West. Hembree also spoke about the ads to a group of other statewide Realtors association presidents in February.
And what of that proof that the market slump is showing signs of ending? Like many advertising campaigns, that is hard to judge with any certainty. Even Hembree recognizes that numbers can be spun nearly any which way the spinner would like. That's certainly true in monthly real estate sales figures released last week by countless local agencies throughout the Gulf Coast.
But when Hembree tells Coffee Talk the residential market is looking better, in Sarasota at least, he seems to be on to something. For example, while overall sales in the county for the first quarter of 2007 are 12.6% off from the first quarter last year, them beaten down condo market actually saw a slight sales increase, from 569 in 2006 to 587 sold so far this year.
Median sale prices on a quarter-to-quarter basis follow the same pattern: Up in condos, down in single-family homes.
And the month-to-month comparisons show even more improvement. In total, there were 653 condos and single-family homes sold in March, the first 650-plus month since last May.
"I don't know if it's the bottom," says Hembree, whose day job is in commercial real estate, "but it's close."
Famous new director, record Wellcare earnings
Bob Graham, a former Florida governor and U.S. senator, joined the board of directors at Tampa-based WellCare Health Plans Inc., replacing another ex-politician.
Graham, whose political supporters were once called Graham Crackers, replaces Jane Swift, a former Massachusetts governor, onWellCare's board.
The managed care company has experienced phenomenal growth since it went public in 2004 at $17 per share, with the stock reaching a 12-month high of $94.25.
On April 30, WellCare reported first-quarter net income of $25 million, up 49% from $16.8 million a year earlier.
In 2006, WellCare had revenue of $3.8 billion, more than double the previous year. And last week, CEO/Chairman Todd Farha said the company expected 2007 profits to exceed its previously issued guidance of $4.10 to $4.20 per share on revenue of $4.95 billion.
The company planned to report revised guidance for 2007 and more details on the recent first quarter on May 7.
Other WellCare directors are Regina Herzlinger, a Harvard business professor since 1971; Kevin Hickey, president of D2Hawkeye; Alif Hourani, a cousin to WellCare CEO Farha and executive chair of Pulse Systems Inc.; Ruben King-Shaw Jr., former president of UBC Solutions Corp.; Christian Michalik, managing director of Kinderhook Industries; and Neal Moszkowski, co-CEO of TowerBrook Capital Partners LP.
Business leader championed modest management style
Clyde Nixon carried lots of titles in his business career. President and chief executive of several companies, chairman of the board, community fundraiser and regional economic cheerleader, to name just a few.
But Nixon, who died April 29 at 72 years old after a yearlong bout with cancer, will also be remembered by legions of friends, colleagues and employees for carrying a bucket of water. It was the proverbial bucket of water that held Nixon's management and worldview: Picture a team - or a company or a family - of people each holding one hand in a bucket of water, Nixon would say, and then watch when one person pulls his hand out. The water might ripple around, but after a while, no matter whose hand is left, it's still the same water.
That's true with a business, too, Nixon believed. And he lived just that sort of company-first, self-effacing existence right through the last title he held, that of chairman of Sarasota-based Sun Hydraulics Corp., a publicly traded hydraulic cartridge valve and manifold manufacturer. Nixon also served as president and CEO of Sun from 1988 to 2000. In 1997 he led the company's move to become a publicly traded company as well as its international expansion into Europe and Asia.
Nixon graduated from Cornell University and the Harvard Business School. In addition to Sun, Nixon served on several Sarasota-area boards that promoted education, tourism and the region's continuing economic vitality.
Current Sun president and CEO Allen Carlson knew Nixon for 31 years - the pair first met in 1976, when Carlson was hired at a Michigan manufacturing firm where Nixon was president. "He was the senior executive and I was the young kid," Carlson says. "But he was an easy guy to have a conversation with."
Nixon's three-year term as chairman of Sun's board was set to expire in June and a succession plan had already been in place, Carlson says. Board vice chair Ferdinand Megerlin, 68, will be up for the chairman position at the company's June board meeting. Megerlin, who has been a Sun board member since 1998, has more than 35 years of executive experience in the fluid power industry, mostly working for Germany-based companies with a large U.S. presence.
A memorial service for Clyde Nixon is scheduled for June 16 at The First Presbyterian Church, 2050 Oak St., Sarasota. In lieu of flowers, memorial contributions could be made to the University of South Florida Foundation to the attention of Michael Ayers, 8350 N. Tamiami Trail, Sarasota, FL 34243; TideWell Hospice and Palliative Care,5 955 Rand Boulevard Sarasota, FL 34238; or a charity of choice.
Credit a threat to housing in Southwest Florida
Bond-fund managers tend to be a gloomy lot. But real estate and finance companies oon the Gulf Coast might want to heed what Bill Gross has to say about the relationship between home prices and interest rates.
Gross is one of the best-known bond investors, overseeing $668 billion in assets at PIMCO, the bond-fund manager in Newport Beach, Calif.
In a recent note to investors and of interest to real estate investors in particular, he says tightening credit is a greater threat to the housing market than foreclosures. He concludes that the Federal Reserve will be forced to lower short-term interest rates to reinvigorate the economy. (You can read the analysis at www.pimco.com).
Gross says either interest rates must come down or prices must decline as much as another 20% for the housing market to recover.
Here is the idea behind the amount that home prices or mortgage rates need to decline in order to revert back to affordability levels in 2003.
If home prices decline 20%, mortgage rates do not need to change; if prices decline 15%, rates need to fall 30 basis points; if prices fall 10%, rates need to drop 60 points and if prices fall 5%, rates need to decline 120 points. One basis point is 0.01%
BY THE NUMBER
Change in jobs
While all the regions on Florida's West Coast saw a decline in construction jobs over the past 12 months, the coastal cities gained jobs in other sectors, including professional and financial services.
The most recent statistics released by the U.S. Department of Labor, Bureau of Labor Statistics, show the Sarasota-Bradenton-Venice area had the lowest Gulf Coast unemployment rate in February at 3%. The unemployment rate also remained relatively low in other cities: Cape Coral, 3.2%; Tampa-St.Petersburg-Clearwater, 3.3%; and Punta Gorda, 3.8%.
Employment on the Gulf Coast (thousands)
Region Nonfarm Change* Financial Change
Cape Coral-Fort Myers 241 2.4% 14.3 .7%
Sarasota-Bradenton-Venice 312.5 1.3% 16.6 1.8%
Tampa-St. Petersburg-Clearwater 1,327.3 1.1% 103.1 .7%
Punta Gorda45.8 1.1% 2.7 n/a 3.5
Region Professional Change Const. Change
Cape Coral-Fort Myers 30.3 6.3% 36.9** -2.6%
Sarasota-Bradenton-Venice 74.8 1.4% 29.6** -.7%
Tampa-St. Petersburg-Clearwater 307.4 1.6% 88 -1%
Punta Gorda45.8 3.5 -2.8 6.2** -3.1
Source: U.S. Department of Labor, Bureau of Labor Statistics. Data extracted April 27 and is for the month of March. *12-month change. **Figures in those regions combine construction and mining.
Fort Myers River District goes shopping
Downtown Fort Myers, which was recently renamed the River District, is shopping around for retailers.
In particular, developers are eyeing the prime waterfront along the Caloosahatchee River. "The waterfront is where you can have a strong retail center," says Don Paight, executive director of the Fort Myers Redevelopment Agency.
Currently, there are only 17 retail establishments in a nine-block area of downtown and Paight says more may come as newly constructed condo towers fill up. Paight says his agency is working to attract retail establishments that don't have a presence in regional malls so that shoppers have a reason to visit downtown. He's been courting developers, though he declines to name names.
WCI Communities chief Carl Icahn takes pay cut
With all the news surrounding billionaire Carl Icahn's hostile takeover attempt of Bonita Springs-based WCI Communities, few people noticed that the company's president and CEO got no bonus in 2006.
In a recent securities filing, WCI Communities President and CEO Jerry Starkey's compensation in 2006 totaled $2.5 million. That contrasts to the $8.1 million he earned in 2005, which included a $5.8 million bonus.
Despite the lack of a bonus in 2006, Starkey received option awards valued at $1.3 million in addition to a $1.2 million salary. He also received $24,239 for the use of a company car, insurance premiums and 401(k) contributions.
Meanwhile, the board of directors changed the goalposts for executive incentive payouts in 2007. Now, half of the performance measure will be based on net operating cash flow and the other half on net-income targets. Previously, performance was based solely on net income.
"We chose to introduce the cash flow measure in recognition that paying down our debt during the current market downturn is critical to our longer-term growth expectations when the housing market begins to improve," according to the board's compensation committee. Kathleen Shanahan, the CEO of Tampa-based environmental-services firm WRS Infrastructure and Environment, is the chair of WCI's compensation committee.
Meanwhile, securities filings show if Carl Icahn is successful in wresting control of WCI, Starkey is potentially eligible for $11.2 million in termination benefits.
Gulf Coast real estate philosophy works way up north
The formula SKY Sotheby's International Realty used in Sarasota apparently works in locales far north of the Gulf Coast. The luxury realty firm opened an office in Minneapolis about six months ago and it's already listing $160 million in homes to go with its 19 full-time sales agents, exceeding early goals on both fronts.
"The market has been responding well to what we stand for," SKY Sotheby's co-founder and president Chad Roffers tells Coffee Talk.
Much like the Sarasota-based headquarters, the homes the agency is selling in Greater Minneapolis are strictly top-shelf. The list includes a four-bedroom, 10-bathroom, European style home on Lake Minnetonka's Maxwell Bay selling for $16.9 million; a four-bedroom lakeshore home in the same area going for $8 million; and a five-bedroom converted condo on the banks of the Mississippi River in St. Paul with a $1.69 million price tag.
The market surrounding Minneapolis is significantly larger than Sarasota, Roffers says, so the firm plans on hiring more agents. It's seeking to have 50 by the summertime and as many as 200 agents by the end of 2008.