- April 15, 2024
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Cover Update: Finding Greener Pastures in 2010
It's safe to say Kitty Green drew the short straw.
Green took over as president and chief executive officer of The Bonita Bay Group early this spring just as the residential real estate market was heading into a steep decline.
When the Lucas family named her to the top post of the privately held Bonita Springs-based development they control in early 2007, Green expected the residential real estate market to rebound in 2008.
But reticent homebuyers and a nearly three-year supply of existing homes on the market undermines that. "I think like everyone else in the industry I have become more pessimistic," Green says.
Green's forecast: scratch 2008 and 2009. "Neither one are going to be great for us," she says. Sales won't rebound until 2010.
The biggest hurdle is that prospective homebuyers are reluctant to buy homes they still think will decline in value. "The consumer psyche has stayed negative much longer than I had anticipated," she says. That will change when people admit to friends that they've bought a home without getting odd stares.
The good news is that the supply of new homes in Lee and Collier counties has gradually returned to a six-month balance with demand because builders have stopped pulling new permits. But there is a 30-month supply of existing homes for sale in those two counties, a huge overhang that could grow further as foreclosures rise. For any recovery "we've got to get the resale inventory down to a more realistic level," she says.
Certainly, sales haven't come to a complete halt. Sales at the lowest and highest end of the market are relatively healthy. For example, sales at the company's Sandoval in Cape Coral and Mediterra in Naples are ahead of last year. The communities are at the company's lowest and highest price ranges, respectively.
But in the middle market, the steady drumbeat of bad news is hurting consumer confidence and the effect likely will linger for some time to come. "When they do start buying, they'll buy less of a house than they did," Green says.
Homebuyers' reluctance to buy a home today is extreme. "It's just as silly now as it was at the peak," Green says.
For now, Green has ordered a complete review of the company's operations, including its large land holdings in Hendry County. "Clearly the absorption assumptions were more optimistic" when that land was acquired during the boom, she says. Sales of land may be in the cards. "That's going to be an evolving decision," she says.
Despite the downturn, the Bonita Bay Group is still considering diversifying outside the state. Its executives have scouted sites in neighboring states such as Georgia and the Carolinas. "We still want to develop out of state," Green says.
But the company's ambitions have clearly been curtailed by the downturn. It has laid off 75 people this year, though its year-round staff still numbers 1,200. "We're having to do what everybody else is doing, readjust to the level of business we're doing," Green says.
Green admits taking on the role of president of a development company in a downturn is a challenge. She's not getting the accolades that her predecessor Dennis Gilkey did during the boom. "From adversity comes strength," she says.
-Jean Gruss
