When Betsy Seligman bought a home in a 55-and-over community just outside then-booming Fort Myers, Fla., three years ago, she thought she had found her retirement paradise.
Her hopes turned into a bad dream, however, when the development’s builder, Levitt and Sons, filed for Chapter 11 bankruptcy in November 2007 and halted construction.
Seligman and the roughly 100 other retirees there spent the next two-and-a-half years living in the sparsely built subdivision with none of the promised amenities like pools and tennis courts.
“We have a few people who just walked out of their houses, but we’ve maintained the community in that time, and we’ve just been hopeful that it would turn around,” says Seligman. Home values in the development have plummeted nearly 50 percent since the bankruptcy filing, she adds.
But Seligman and her neighbors now see a ray of light. A unit of Weston, Fla.-based developer Pinnacle Cascades purchased the retirement community earlier this month and plans to bring the project back to life.
“We’re delighted of course,” says Seligman, though she is waiting for more details.
The purchase of the Florida community is just one more sign that the devastated real estate market is slowly beginning to recover. Sensing opportunity, private equity firms, hedge funds and homebuilders have been buying up unfinished home sites or developments around the country, hoping to profit on the turnaround, says Jack McCabe, a Deerfield Beach, Fla.-based housing analyst.
"That activity has just begun within the last few months," McCabe says. "Homebuilders are optimistic that the worst is over and there will be demand for new homes in the near future. And so they're focused especially on the bubble markets, the ones that were hit the hardest— Florida, Phoenix, Las Vegas and different markets in California."
David Kraizgrun, principal of Pinnacle Cascades, purchased the retirement community—now called Cascades at River Hall—from Bank of America for $5 million and plans to break ground at the end of 2010, hoping to send a signal that the community is up and running.
"Florida will continue to grow," Kraizgrun says. "Prices are going up in the Northeast, people are approaching retirement age, all the projections say (Florida) is going to grow by 8 million people over the next 20 years. There just isn’t inventory to supply those people."
Kraizgrun's Cascades purchase includes 14 model homes, seven unfinished homes and 460 undeveloped lots. In addition to building houses on the property, he also plans to eventually build amenities like pools, tennis courts and a clubhouse. He said he intends on creating an active 55-and-over community, like the original residents had been promised.
Kraizgrun expects sales to be slow at first, but hopes things will pick up by the middle of 2011. He said his biggest challenge right now is fighting negative housing sentiment, which he blamed on the media.
"What needs to be out there is confidence that people can buy again," he says.
While they wait for additional details from Pinnacle, Seligman and the other residents of Cascades at River Hall are continuing to make the best of their situation.
One of the silver linings of their housing debacle, according to Seligman, is the close bond the residents have formed. They have organized block parties, a monthly "lunch bunch," card tournaments and a book club.
“We came her for an active lifestyle, and they didn’t provide it for us, so we had to make our own,” Seligman says.
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