- Associated Press - Saturday, June 27, 2015

FORT MYERS, Fla. (AP) - Creative destruction has become a new norm for southwest Florida as the region’s housing market continues to gain steam.

Teardowns, or knockdowns, are homes purchased simply to be demolished and replaced with larger, more modern homes. They’re on the rise in parts of the area because of a number of the same factors driving the overall housing market.

“The market is definitely there and we’ve had no problem selling them,” said Joe Orlandini, a Fort Myers Beach developer. “I actually can’t get them (new homes) up fast enough.”

As with almost everything in real estate, a big portion of the teardowns can be attributed to their location. Lots close to the water or those with choice views and other desirable qualities most likely already have homes on them. This means buyers and developers looking for the best locations in Southwest Florida must often purchase existing homes, Areas on the water in Naples, Bonita Springs and Fort Myers Beach are hotbeds for teardown activity, whereas inland Cape Coral and Collier County are not, said Steve Dodge, founder Windover Development, based in Massachusetts.

“In an area like Bonita Springs where you’ve got first-, second-, third-generation houses and land near a really pretty beach, the land is more valuable than the beach,” he said. “There’s a finite amount of beach. Nobody is going to build more beach and people are always going to want to be on the beach.”

During the recession, Windover purchased multiple beachfront lots on Bonita Beach, Barefoot Beach and Fort Myers Beach to put up new luxury homes on.

When it comes to teardowns there are two main classes of buyers: developers who purchase existing lots and homes on speculation, or “spec” to demolish them and put up new, larger homes in hopes of selling them for profit, and individual homeowners who want to put their dream home on their dream lot.

Many affluent buyers opt to tear down homes rather than remodel because the Federal Emergency Management Agency requires homeowners in certain flood zones to keep their remodeling costs to less than 50 percent of the value of the home.

“Most of these houses were built in really great locations in the 1960s and 1970s and people are realizing it’s cheaper to tear down these homes and put up what they really want,” said Jeff Miloff, partner at Miloff Aubuchon Realty Group.

Demolition of an existing home on a lot can run anywhere between $10,000 and $25,000, depending upon the size of the structure, but that’s a relatively insignificant amount of money for a buyer looking for their perfect home.

That often entails expanding homes multiple hundreds of square feet, building higher ceilings and adding multicar garages. There’s also the allure of living in a brand-new home.

“People want new. There’s always a premium on new,” Dodge said. “You take roughly the same home, same fixtures, same bedrooms and square footage and the now home will sell for about 10 percent more money.”

Moving forward, some parts of the region are likely going to see a slowdown in teardowns because the existing homes in the area have already been demolished and rebuilt.

“The inventory of knockdowns is already significantly depleted on Bonita and Barefoot (beaches). Most of the homes have already been knocked down,” Dodge said.

Other areas, like Fort Myers Beach, will likely continue to see the trend continue. Orlandini said he has 12 to 15 under construction and more in the permitting process.

“Fort Myers Beach is such an extreme situation because a lot of the demolition of older houses hasn’t happened. We have several being built and in most cases we have someone on our door before we can even finish,” he said.

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Information from: The (Fort Myers, Fla.) News-Press, http://www.news-press.com

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