"Harry Krause" wrote in message
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`Bubble City': Workers Flee Naples, Florida's High Home Prices

Aug. 7 (Bloomberg) -- Beth Ireland gave up after spending a year looking
for a $300,000 house in Naples, Florida. She quit her job as a nurse
manager and moved to Pittsburgh.

``It's nuts,'' said Ireland, 54, who left in June. ``When all is said and
done, we can't afford to live in Naples.''

Naples, on the Gulf of Mexico in southwestern Florida, boasts more than
130 art galleries, posh hotels and private jet service, according to its
tourism Web site. Jobs are plentiful -- but home prices average almost
$500,000.

Locals call Naples the ``bubble city,'' with home prices that have surged
140 percent since 2001. It's the most overvalued housing market in the
country, driven by an influx of retirees and second-home buyers, according
to a June report by National City Corp. and Global Insight economists.

Teachers, nurses, paralegals and other middle-income workers are pursuing
housing -- and jobs -- elsewhere. That's making it tough for employers,
which are giving big raises and housing subsidies and still finding it
difficult to hire or keep staff.

``We have a workforce housing problem of acute proportions,'' said Edward
Morton, chief executive of Naples- based NCH Healthcare System, which
operates hospitals employing more than 4,000 people. ``It is a crisis that
will only get worse.''

The hospital system provides apartments for 250 employees at below-market
rates, and will house 150 more in the next several years.

Teachers, Law Enforcement

The Naples-based Collier County School District raised pay an average of 6
percent on July 1. Still, 15 teachers who planned to move to Naples
withdrew from contracts that were to begin this month because of housing
costs, said Debbie Terry, the district's recruitment director. The
district had 65 unfilled jobs three weeks before the start of the school
year.

The Collier County Sheriff's Office hasn't been able to fill almost 100
positions, even after offering signing bonuses of as much as $3,000 since
Jan. 1, said Darlyn Estes, senior human resources analyst.

Naples, named after the Italian coastal city, lies across the peninsula
from Miami, about 100 miles (160 kilometers) to the northwest. Its
population of 300,000 had an unemployment rate of 2.3 percent in May, near
a 10-year low and half the U.S. rate of 4.6 percent.

Per-capita income in the Naples area was $42,846 in 2004, ranking ninth in
the U.S. among metropolitan areas, according to the U.S. Bureau of
Economic Analysis. The dollar figure increased 2.9 percent annually from
1994 to 2004, according to the agency.

Employers' Needs

Randstad USA, a staffing company that typically provides clerical and
factory workers, has been receiving requests from employers for a wide
range of jobs, including engineers. The number of inquiries about
relocating to Naples, meanwhile, is at a 12-year low, said Kelli
Faulconer, senior branch manager.

Hospice of Naples, where Ireland worked, has lost about 10 percent of its
200 employees in the past year because of housing costs, Chief Executive
Karen Rollins said.

Housing appreciation extends throughout Florida. Miami, West Palm Beach,
Sarasota, Fort Pierce and Punta Gorda also were among the 20 most
overvalued U.S. markets, according to economists at Cleveland-based
National City, Ohio's largest bank, and Global Insight, a forecasting firm
based in Waltham, Massachusetts. Most of the other markets were in
California.

Florida's Legislature passed a law in June to encourage builders to
construct cheaper housing in coastal markets. The law provides tax
incentives and loan programs and authorizes school boards to provide
housing for teachers.

Slowing Sales

The situation may be easing, as rising interest rates cool housing markets
in Florida and nationally. In June, the average price for an existing home
in Naples fell 8 percent to $451,500, according to the Florida Association
of Realtors. Prices had topped $500,000 for three months in a row.

The city was still Florida's most expensive market, and demand by
second-home buyers and affluent retirees probably will keep prices high,
said Jo Carter, president of the Naples Area Board of Realtors.

Homebuilders have been targeting affluent buyers. Naples has the most
private golf holes per capita of any U.S. city, according to the National
Golf Foundation. The size of homes has increased 10 percent in the past
decade and more than a third of homes are bigger than 3,000 square feet
(300 square meters), according to the county appraiser's office.

Some middle-income workers who bought homes more than five years ago are
selling and taking their profits.

Simone Gartner, 42, a paralegal who lived in Naples 36 years, sold her
duplex residence, which had doubled in value to $310,000, in 2004. She
rented a condo and moved in with friends before relocating to
Kernersville, North Carolina, in June.

``I'm tired of the expensiveness,'' said Gartner, who now pays monthly
rent of $650. ``I cashed out at the right time.''


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Doesn't sound like a good idea to be overleveraged in housing in Naples.

The least expensive house in my neighborhood (1600 sq ft) just sold for
$1.25 million a couple of weeks ago. My next-door neighbor just listed his
2400 sq ft. home for $1.6 million. It'll take a helluva market correction
to bring prices back down to the $825k I paid in March, 2004.

But Naples is overdue for a correction. Anybody who bought in 2005 is going
to take a bath if they try to sell right now. I'm hoping this chases the
speculators out of the market, so that people who work down here can get
back into the housing market for something under $300k.

When you get an unemployment rate at 2.3%, you end up scraping the bottom of
the barrel...having to employ the "unemployables".