Crunch time

Sunrise on the 11th at 11th Street.

At the risk of sounding like a broken record, the inventory situation in Cocoa Beach and Cape Canaveral is critically low. There are 372 total condos and townhomes on the Cocoa Beach MLS this morning in the two cities. Of those, 54 are asking less than $100,000 and 54 are asking more than $400,000. In 2011 there were 27 sales for over $400,000 and 189 for less than $100,000. You can easily see the implications for sales in 2012. Without more supply the downward pressure on prices is disappearing.

The depletion of supply is due to the fact that the normal supply of new properties for sale was interrupted during the recent troubled years. Some units that may have appeared on the market in 2011 and 2012 were pushed on the market earlier as owners who bought or refinanced near the top were forced into short sales or foreclosure as prices tumbled after 2007. This unnatural bump in supply in recent years is the reason for the record number of sales we’ve seen and the reason we’re not seeing the normal number of new listings. The chart below shows the dynamic at play since 2006, the peak year for inventory and prices.

In 2011 there were 100 short sales of condos and 83 foreclosures. This morning, January 11, 2012, there are 29 total condo foreclosures on the market and 28 short sales. In single family homes, there are 4  foreclosures available and 5 short sales. The time of abundant distressed deals is coming to an end.

I can’t remember there ever being a time when there were just two units for sale at Xanadu in Cocoa Beach. At Ocean Pines, Crescent Beach Club and several other big oceanfront buildings there are zero units for sale. Looking for one of the 2/1 Diplomat units? None offered for sale at the moment. Ocean Paradise or Solana Shores? One unit in each complex for sale. How about Harbor Isles? In this large multiple building complex there only 3 units for sale, two 2/2 units and a lone direct river 3/2. The 3/2 is probably the nicest one in the complex and has a breathtaking view over the islands and is your only choice if you want a 3/2. If you were waiting for a lakefront 3/2, there are none available at any price.

Our take-way from these facts? Be aware of the fact that there is less supply than demand at the moment. If you’re looking to buy and find something you want, don’t spend too much time contemplating your offer. You can be certain there are other prospective purchasers looking at anything that is desirable and priced right. Make sure your buyer’s agent has you protected in the contract language and have your finances in order. If hoping to get a mortgage, go ahead and talk to your lender first and let her know that you are looking at Florida condos. Knowledgeable and/or well-advised sellers of condos will want to see a pre-approval letter specifically mentioning a Florida condo accompanying your offer. If you plan to pay cash, have proof of funds like account statements or a bank letter ready to submit with your offer. Good hunting and don’t shoot your fellow hunters.

“If you do the job badly enough, sometimes you don’t get asked to do it again.” Calvin

 

Random insanity

A few random thoughts inspired by recent events:

Are stated “living” square footage numbers in the MLS all measured the same way? Seems that measuring the perimeter and using the gross area which includes walls is as acceptable as measuring the actual “walkable” space which doesn’t include walls. I don’t know if condo square footage as stated in the tax record is perimeter, walkable or some of both. I do know that some sellers of condos will state a square footage in excess of the tax record claiming an error in the tax record. Just yesterday I questioned the stated size in an MLS listing and the agent immediately reduced it by over 100 square feet. When asking +-$184 per square foot, that little difference is enough to feed a small town at the Fat Snook and then give them all a biplane ride over the beach.

Is feedback from prospective buyers or their agents constructive information for sellers of property? Consider that the typical feedback request I receive when I show property asks me what I think about the condition of the property, how it showed, whether the buyer has any interest and, get this, whether I think the price is “too low”, “just right” or “too high”. What the…? As the agent representing a buyer do they honestly think I would ever check “too low” or even “just right”? No way. There is always the chance that I will be presenting an offer on this property either for this client or another. Do I want the seller to have received feedback from me saying I thought the price was too low? Asking me (or any other good buyer’s agent) for feedback is giving us a chance to plant a seed of doubt in the seller’s mind about their asking price without even writing an offer. Sellers take note.

Is an appraisal an accurate measure of a property’s value? Sometimes but certainly not always. I’ve seen buyers walk away from a perfectly good deal because of an appraisal below their contract price and I’ve seen sellers refuse a good offer because they were hanging their hat on an optimistic appraisal number. Appraisers are human and because of time and distance constraints required of comps they often have to use dissimilar properties and then make arbitrary adjustments to arrive at their “estimate” of value, the appraisal number. In addition, it is probably prudent to question any appraisal ordered and paid for directly by a principal to a transaction.

Would you agree to short sale your underwater property if the bank would give you $35,000 at closing? That’s exactly what is happening in short sales right now. Several banks including Chase, Citi, Bank of America and Wells are actually giving checks for as much as $35,000 to sellers for short selling their underwater property. An agent in my office completed a short sale Christmas week in which the seller received a $30,000 check from their lender. If you’re underwater and receive a letter from your lender offering some sort of incentive check for doing a short sale, save that letter. Ironically, these same lenders sometimes take a year to approve a short sale. I’m not sure who dreamed us this perverse incentive or why but it seems to me that it would encourage every underwater homeowner to immediately stop making payments in hopes of getting the letter. Of course, I’m not a banker and probably not smart enough to understand the logic. Que sera sera. Happy New Year.

“No fashion error was ever made in black.” Calvin Klein

 

The week before Christmas

With two weeks left in 2011 the number of residential property sales in Cocoa Beach and Cape Canaveral has exceeded by a good margin every year since 2005. As of this morning 543 MLS-listed condos and townhomes have closed in the year. Single family home sales in the two cities were strong as well with 133 closed so far this year.

One week before Christmas and 4 single family homes have closed in December, all in Cocoa Beach. Three of those were canal homes at prices between $353,000 and $540,000. The lone non-waterfront sale was a small 3/2 in north Cocoa Beach one block from the beach that went for $115,000. The canal homes included two short sales, one a big, rambling 3/4 with 2969 square feet needing work on a big lot with over 200′ of waterfront in Snug Harbor that closed for $409,850. The other was a big (4168 square feet) 4/3 waterfront on Willow Green in Cocoa Beach Country Club that had been on the market for 1233 days with a starting price of $1.289MM. It closed last week for $540,000.

Twenty condos have closed so far in December including one Villa Verde “Mac Daddy” riverfront unit that sold for $375,000. Prices for the never-lived-in units in this five year old super luxury building in south Cocoa Beach are now about $1 million below original asking price. Six left as of this writing.

Five of the sold condo units were direct ocean. They ranged from a low of $165,000 for a 4th floor direct ocean Windward East 1/1 with garage to $300,000 for a 3rd floor direct ocean 2/2 with 1590 square feet and garage at Ocean Oaks in Cape Canaveral. The other two ocean buildings with sales were Stonewood and Xanadu.

Three of the condo sales were riverfront units in Cocoa Beach. They included a nicely remodeled ground floor Jamaica Cove 2/2 with boat slip and garage that sold for $149,900 as a short sale. A furnished 2nd floor Anchorage 2/2 with a carport in mainly original condition closed for $135,900. The other riverfront unit was a nicely remodeled 2nd floor Spanish Trace 2/2 that sold fully furnished for $162,000. Has a carport and 1284 square feet.

There have been 194 sales in 2011 that closed for less than $100,000. There are 54 units currently for sale asking less than that number. Only 11 units have closed this year for more than $500,000 with an inventory of  33 units currently asking more than a half million. Total MLS condo inventory in all prices this morning is 377 units, a 35 week supply at the current burn rate.

Sushi lovers in Cocoa Beach were devastated a couple of years ago with the closing of the sushi bar at Yen Yens. Until now, all the other sushi spots in our town were also-rans compared to Michael’s creations. We have a worthy successor at last. Tucked away in the back of the uber-hip Surfinista downtown is Cocoa Beach’s best sushi by a mile. It’s somewhat of a secret so far but word is getting out. If you appreciate good sushi you’ll not be disappointed. As a bonus, watch all ASP pro surfing events live on the big screens and vintage surf movies the rest of the time. Two snaps and a salute.

“First of all, we must internalize the “flatulation” of the matter by transmitting the effervescence of the “Indianisian” proximity in order to further segregate the crux of my venereal infection. Now, if I may retain my liquids here for one moment. I’d like to continue the “redundance” of my quote, unquote “intestinal tract”, you see because to preclude on the issue of world domination would only circumvent – excuse me, circumcise the revelation that reflects the “Afro-disiatic” symptoms which now perpetrates the jheri curis activation.” __Oswald Bates – In Living Color

 

November by the numbers

Before 2009 we could always count on seasonal trends in real estate sales in Cocoa Beach and Cape Canaveral. A chart of the years before 2009 shows the same general trend, the year begins slowly but ramps up rapidly into February and peaks somewhere during the spring and then begins a steady decline from mid-summer through the end of the year. That trend has been absent the last three years.  We can no longer count on the “spring selling season” or a very slow autumn. The biggest month in the last five and a half years was August 2011. Go figure.

For the month of November 2011 the Cocoa Beach MLS is reporting 49 residential sales in Cocoa Beach and Cape Canaveral, 37 condos and 12 single-family homes. There were only 8 sales below $100,000 largely because there is very little inventory left in that segment of the market. [Interesting tidbit: in 2007 there were only 8 sales the entire year for less than $100,000.] Thirteen of the 37 condo sales were for more than $200,000 with the bright spot being Magnolia Bay in south Cocoa Beach with four closed sales in the month between $340,000 and $450,000.

Only six direct ocean units closed in the month. Lowest price paid was $220,000 for a 4th floor 2/2 Canaveral Sands and highest was $348,000 for a 3rd floor Constellation 3/2. Others included Stonewood, Waters Edge, Ocean Pines and Cocoa Beach Towers.

For sale inventory this morning is 370 condo and townhouse units, 52 asking less than $100,000 and 34 asking more than $500,000. There are 59 single family homes offered for sale in Cocoa beach and 15 in Cape Canaveral. 130 homes have closed so far in the year.

“It is not likely that dullards, even if they make up the majority, will systematically outsmart and enrich themselves at the expense of a minority of bright and energetic individuals.”         ___Hans-Hermann Hoppe

 

A random walk down A1A

It’s been an interesting year. I have seen abundant displays of greed, incompetence,  braggadocio, laziness, some old-fashioned craziness and, in the interest of fairness, a few cases of extreme professionalism. No, I’m not talking about Presidential candidates or Wall Street CEOs. I’m referring to my fellow practitioners of the gentle art of used condo sales. As sales have ramped up this year some of the boys and girls of real estate have been behaving with the grace of mace-wielding shoppers clutching two dollar, Black Friday waffle irons.

One random example: A listing broker told me recently that he was making so little money on his flat-rate listing that he wasn’t going to expend any effort or expense to try to get our contract to close. This over a small issue that might have killed the sale. Problem with this flat-rate listing approach besides making very little money for him is that he doesn’t care if the listings sell. The seller saved some money but probably had no idea how close his low-bid listing broker came to dumping the sale days before closing. We did close, no thanks to him. I wonder if the five other flat rate listings for the same seller are still languishing unsold because of the same self-inflicted lack of motivation.

Unrelated change of subject; While blistering condo sales in 2011 were getting all the attention, single-family homes were having an equally stellar year. Since January 1, 110 homes have sold in Cocoa Beach. Compare that to today’s total for sale inventory of 60 properties. Canal and riverfront homes make up about half our home sales in Cocoa Beach and the numbers there are similar to the whole; 56 sold in 2011 and 28 actively for sale today.

A few random, pretty pictures for your consideration;

 

 

 

 

“The commitment to repaying a debt is inversely proportional to the age of the debt.” _____Larry

 

Ten year-end questions for property sellers

As we approach the end of the year it is prudent for most of us to contemplate year-end actions that might affect our 2011 tax liabilities. For property owners who tried and failed to sell in 2011 and those planning to sell soon, now is also a good time to reevaluate plans and expectations. Following are ten questions that every property seller should be asking themselves.

10: What is the best estimate of actual current market value of my property based strictly on recently sold, comparable properties close in size, condition and location to my property? What that number was last February when you first listed is likely to have changed.

9: Am I asking close to that number and am I willing to sell for close to that estimate or am I praying for a miracle? Like the Florida skunk ape, the existence of the wealthy uninformed buyer with no internet connection who is willing to overpay is still in doubt.

8: What is the supply of similar properties and do I think it’s going to increase or decrease?

7: Are there any possible events looming that could affect the value of my property like impending foreclosures in my complex/neighborhood or possible expensive repairs or assessments?

6: Does my property show well?

5: Is it easy to show my property? You may not realize that your tenant has become difficult or that it is difficult for buyer’s agents to get showing instructions or that your listing agent keeps the keys in her office rather than using a lockbox. If your listing agent doesn’t answer his phone or his office is closed on weekends, you’re missing showings to prospective buyers.

4: Is my listing broker offering the buyers’ agents the same commission as competing properties? You might be surprised to find that he’s keeping more for himself than he’s offering out.

3: Do the answers to questions 4 and 5 reveal that your listing agent may be an impediment to the sale of your property? Might be time for a change.

2: How much is it costing me every month that the property isn’t sold? In addition to taxes, fees, repairs and interest you have to figure opportunity cost on the equity (if any).

1: And number one; In which direction do I think (based on facts) my property value is headed?

Depending on the answers to all of those questions, it may be time to make some changes in your approach to selling. The market is robust with 655 sold MLS-listed residential properties in Cocoa Beach and Cape Canaveral so far in 2011. That’s more than any year’s total sales since 2005. Your property will sell if it is priced close to right and your listing agent is doing a good job. As with most of life’s endeavors, knowledge is power.

Happy Holidays to all.

“Take your time, hurry up, the choice is yours. Don’t be late.” __Curt Cobain

 

Waiting on a foreclosure

In response to a request for comments on the state of the distressed market:

So far in the month of November there have been 31 closed residential properties in Cocoa Beach and Cape Canaveral as reported by the Cocoa Beach MLS, 25 condos and 6 single family homes. Of those, 5 condos were short sales and one single family home was a foreclosure making distressed sales 14% of the total residential market in November (so far). Our inventory as it stands this morning November 27, has exactly the same proportion of distressed offerings. Out of a total 445 properties (369 condos and 76 homes), 41 are short sales and 21 are foreclosures, 14% of the total, well off the numbers of the recent past. Of the total sales so far in 2011, 31% have been distressed.

Just one year ago, November 2010, a whopping 41% of all residential sales were distressed, 22 out of 54 total MLS-listed residential properties closed in the two cities. The second overwhelming wave of foreclosures being predicted by the “experts” for well over a year has yet to materialize in our market.

Downtown Cocoa Beach is hopping today with thousands of visitors here for the Art Festival which was serendipitously kicked off at 10 AM yesterday morning with NASA’s launch of the Mars rover aboard an Atlas rocket. Only in Cocoa Beach.

“You can’t find nothing at all, if there was nothing there all along.” —Ben Gibbard

 

Approaching Thanksgiving

It’s the week before the Space Coast Art Festival in downtown Cocoa Beach and historically a slow time for property sales. Not so this year as sales are maintaining the brisk pace of the record-setting October. So far this month, twenty MLS-listed condos and five single-family homes have closed in Cocoa Beach and Cape Canaveral. Only four of the condo sales were for less than $100,000 as inventory in that segment of the market continues to shrink. Magnolia Bay units continue to move with two closed so far in the month for $340,000 and $365,000. Direct ocean units above the ground floor in older buildings with garages are selling in the $163 to $193 per square foot range.

Prices at the uber-luxury Villa Verde building on the Banana River in south Cocoa Beach have been slashed to almost a third of their original asking prices. This 2007 project was a victim of bad timing and no units sold until last month. Prices for the 2875 square foot 3/3 units now start at $345,000 or $120/square foot. In my opinion, an incredible price for this level of construction and amenities.

The bank is selling the last of the developer units at 5 year old Mystic Vistas in Cape Canaveral at prices below $200,000. For a 5 year old luxury 3/2 condo with a peek of the ocean this is quite an aggressive price  (under $113 per square foot). There are five left as of this morning.

A very fortunate buyer was able to get a 3rd floor Cape Winds 1/2 foreclosure for $90,000 before it ever hit the MLS. These units rent for as much as $900 a week. The math is quite attractive at a $90K purchase price.

Other notable sales included;

A third floor Constellation 3/2 in south Cocoa Beach that closed for $348,000.

A side view 2nd floor Solana Shores 3/2 with 2095 square feet for $277,500.

A nicely remodeled 4th floor direct ocean Waters Edge 2/2 in south Cocoa Beach for $260,000.

A 4th floor direct ocean Ocean Pines 2/2 short sale for $230,000.

A 4th floor direct ocean Canaveral sands 2/2 for $220,000.

A 1650 square foot 2nd floor 3/2 canalfront Captain’s Cove in Cocoa Beach with a deeded boat slip and lift sold for $175,000.

There are quite a few interesting deals under contract that haven’t closed yet that I’ll detail in a later post. Be sure to try to make it to the Art Festival in downtown Cocoa Beach Thanksgiving weekend. If it’s like years gone by, a good time will be had by all.

Husband points are like Frequent Flier Miles. You can earn a bazillion of them but there is always a blackout period when you really need to use them. ___Dr. Guano

 

October in the rearview

An enthusiastic canine criminal enjoying the cop-free zone south of the city limits.

After a lukewarm September of 32 condo sales in Cocoa Beach and Cape Canaveral, October roared back with an all-time record of 53 MLS-listed condos and townhomes closed in the two cities. That is more than any October on record including the boom years of the mid-2000s. That’s as of this morning’s reporting so the final number could be even higher. (One tardy listing agent finally marked a listing as closed yesterday that actually closed in June. This is the kind of stuff I have to deal which is why I always add the caveat that the numbers may change.) Sales ranged from a high of $590,000 to a low of $29,900. The median sale was $114,000. 28% of all sales were distressed, six foreclosures and nine short sales. A Mystic Vistas foreclosure that closed for $217,000 was the highest price of the 15 distressed sales .

66% of the sales closed for cash. The average sold for 93% of the last asking price. Weekly rental ocean buildings, of which there are about a dozen total in Cocoa Beach and Cape Canaveral, accounted for six of the sales with three of those in Canaveral Towers and one each in Sandcastles, the Marlin and Spanish Main. The Spanish Main unit was the top floor northeast corner and had been nicely remodeled. It had a full price contract within four days which was subsequently taken out by another owner in the first right of refusal process. Don’t get me started. I know it’s not fair but it exists. Buyers who negotiate good prices on good units often lose them to other owners who have the right to take over the contract at the same terms.

Two never lived in Magnolia Bay units closed at prices just slightly more than half the original offering price five years ago when they were being built. Both with developer financing and jacked-up commission to the buyers’ agents. In another case of developer denial, the 4th floor northeast corner Ocean Paradise closed for $590,000 after sitting for years at an asking price that began right around a million bucks.

Someone stole a four year old, 2348 square foot Puerto del Rio 3rd floor 3/2 with massive wrap balcony for $163,950 in a short sale. It sold new in 2007 for $410,300.

A very nice, nine year old Cape Gardens 2/2.5 townhome with 1527 square feet and garage closed for $111,000.

A 2/2 Oceana in Cocoa Beach one block from the ocean with a garage closed for $78,000 as a short sale. Sold for $160,000 in 2004.

A Marlin ground floor 1/1, south facing, weekly rental unit sold for $76,000.

Condo and townhome inventory this morning stands at 369 units, the same level it’s been since June. This is after having 500 plus units for sale for most of 2010. There are 59 units asking less than $100,000. That’s the same number of units that have closed for less than $100,000 since early August, just three months to burn through today’s total inventory. There are 37 units asking more than $500,000. It’s taken since October 2009, two years, for that many half-million dollar units to close.

There were eight single family home sales in the month, all in Cocoa Beach, none in Cape Canaveral. All but two of those were canal homes and four of those sold for less than $300,000. Canal homes are the hottest segment of our market right now, especially in the areas closest to downtown. The lowest selling price waterfront was $214,000 for a small foreclosed 4/2 on De Leon with a pool. High price was $427,000 for a Mac Daddy 4548 square foot, 5 bedroom 4 bath, 2 story pool home on Yawl with a tiny bit of waterfront. Exactly half closed for cash. Only one sale was north of Laurie Wilson Park.

At the end of the day, the power in any relationship lies with the individual who cares the least. __Anonymous

 

Mixed signals

The voters of Cocoa Beach will be voting on November 8 to express their opinion on whether to allow a zoning change in a small section of downtown to allow mixed residential and commercial. This sort of change requires a unanimous vote of the Commission and the one dissenting member forced this referendum to measure the voters’ opinions. The exact language on the ballot is below.

Shall the City of Cocoa Beach adopt mixed use for downtown/Community Redevelopment Agency (CRA)?

The downtown/CRA vision plan developed over the last three years includes mixed use as a method to revive our local economic conditions and improve the downtown environment. Do you approve of allowing an additional mix of retail and residential uses downtown as long as it does not exceed the city-wide density caps as set in the City Charter?

[ ] Yes, to approve
[ ] No, to reject

Seems pretty straightforward at first glance (overlooking the words “revive” and “improve”) yet there are some opponents to the change. Ostensibly, this will allow residential and business to occupy the same building. Proponents of the change have printed posters showing hip downtown areas in other cities with cafes and shops at street level and apartments above as the example of what one’s “yes” vote will yield. I like it. But there is some confusion. I have been told by one downtown business owner that, if the vote is not yes, he will be closing his business because he wants to build, not residential, but more commercial above the existing business. Huh? I questioned his understanding of the vote but he is convinced that he can’t build commercial on top of commercial without a yes vote. I hope someone more informed than me can help me out here. Does current zoning in the affected area prevent commercial on top of commercial? Is this business owner misinformed?

It seems doubtful that in the current economy one could sell new housing downtown for more than the cost to build. Same cost/returns math goes for rental units. Given that, what is the reason for the strong push to relax restrictions now? Greater possible uses of a property make that property potentially more valuable. It’s a no-brainer for owners of the property affected. Even if current economic conditions don’t support immediate change it still makes sense. Get it locked in while you can. Build or sell later when the economic climate will support the mixed use. This is where we get to the opposition’s main point.

Even though most think nothing is going to change now, even with a yes vote, the idea that the door has been opened for changes in building restrictions causes concern for the opponents. The question in the referendum includes the language “as long as it does not exceed the city-wide density caps as set in the city charter”. It does not say “height and density limits will never be allowed to exceed current levels”. It stands to reason that a property whose value would increase with mixed use would also be worth more with greater allowed height and/or density. If a downtown building is worth $X under today’s restrictions and is potentially worth $1.5X with mixed use, what would it be worth with doubled height and/or density limits? $2X, $3X…$5X? Pandora’s box? Can we trust that height and density limits will never be relaxed? Just asking.

Living in Cocoa Beach just outside the city limits, I can’t vote. Even if I could, I do not know today how I would vote. I like the way our downtown is especially with the recent changes (above; paver sidewalks, landscaping, etc.) and I want the businesses downtown to thrive. I also think it would be cool to have a downtown as pictured on the “Vote Yes” posters. I just don’t know if that is what will materialize. Could there be “unintended consequences”? I’d appreciate any discussion and clarification. Repeating; I am neither for nor against.