The Prospects for 2007

McIntosh believes it likely will take two years to work through the surplus inventory. That's only if prices drop. Sellers' expectations in the fall already were declining by 10 to 20 percent, he says.

"The owners of the unsold inventory, on an individual basis, are going to come to terms with the reality of what the price has to be in order to sell a unit," he says.

Fishkind expects the region's real estate market to reach the bottom in 2007. Lee County, which he notes is one of the most overbuilt markets in Florida, will fare more poorly than Collier because it has a larger amount of inventory under construction, he says.

Across the region, in addition to conserving cash while riding out the storm, developers and builders need to be flexible on price and terms. Fishkind says it's not time to hold out with the expectation that things will improve soon.

"They'll get better, but they're not going to get better quickly. That suggests a strategy focused on making the product more price-attractive," he says.

The slowdown will continue to hit businesses hard, says International College's Kest. "I think you're going to find some builders going into bankruptcy. [They] just this year started to get into financial straits. [We] haven't seen a lot of filings yet, because it's a lagging indicator," he says. "It's going to surprise some people in 2007."

Some believe the new town of Ave Maria-the first significant development in eastern Collier-might be the bright spot for the county. "That could potentially be a huge impact on the economy. With the homes opening up there, students moving out there, it could potentially be a place where we see a positive housing market start to emerge," Nemecek says. "It's not going to be immediate by any stretch of the imagination."

Ave Maria and plans for Big Cypress, also in eastern Collier, are examples of how new-home sales are likely to bounce back faster than resales, because builders and developers-now competing with investors to whom they sold homes-can create a new market by offering communities at a broader range of prices.

"Everyone is constrained by the same influences, but value will find a market in every price range. It is not that people don't need shelter or want shelter, but merely that they have issues and concerns," McIntosh says. "It is my perception that the housing industry is already responding at an accelerated-and accelerating-rate to this new condition much faster than the resale markets."

McIntosh believes that much of the speculative attention in the residential market to spots such as Charlotte County and LaBelle were made on the "mistaken assumption" that they will benefit from Collier and Lee's development overflow.

"This reversal-outgoing of the tide, if you will-has made it evident that there remain many opportunities in the primary market area and therefore far less reason to focus on the remote markets," he says. "Not to say that Charlotte County does not have an inherent, locally-driven market. It does, but it is clearly retreating to its blue-collar aspiration as opposed to its very recently acquired upscale taste."

Williams admits the residential market is heading back toward "a more normal market" after the post-Charley boom. "After the storm, it's kind of an anomaly there. We were just in a different place."

She also anticipates that 2007 will see more office and flex space planned, permitted and under construction in Charlotte County, which lost much of its building inventory in 2004. "We simply have not had the buildings for companies to go into," she says. "But that's changing; we see a new horizon."

One commercial real estate worry in Lee County is the lack of industrial space, but more product is under construction or planned, which helps in recruiting companies, says Smith.

"If you don't have available buildings or suitable sites, companies will look somewhere else," she says. "In many parts of our community, it's very difficult to find space. [Some] companies can't wait to go through the process to have something built."

Based on population growth, Collier County will be too small by 3,700 acres by 2030 to adequately serve its populace, according to a land-use analysis by the Collier EDC. Nemecek says the needs are not only to build residential in eastern Collier County, but to create business parks so people can work close to where they live.

If housing prices continue to drop, Nemecek sees a benefit to the workforce. "We've spent the last two years struggling to keep a workforce here," she says. "Now maybe some of our workers can have more confidence they can find homes."

The silver lining, McIntosh says, is Southwest Florida's sunny weather between October and April. "The fundamentals of demand, other than supply and prices, are as good as they've ever been," he says.