That’s not a Baby Ruth

As of this morning, November 17, we are eight condo sales away from matching the total for the entire year of 2008 in Cocoa Beach and Cape Canaveral. Sales recovered from a miserable first half of the year with a tremendous second half push that caught most everyone by surprise. Let’s parse the numbers as they stack up today.

The bulk of the sales activity this year was concentrated in the lower price ranges with half of all condo sales closing below $180,000. Only 72 condos closed for more than $300,000.

Inventory levels for the active parts of our market are once again at healthy levels. The sub-$180,000 condo inventory will last less than 13 months at the average sales rate of 2009 so far. If we use the more recent sales rate, that supply will be gone in less than one year. As we move up the price scale, the absorption rate extends. In the $200,000 to $300,000 price range, we have a 17 month supply using the average sales rate for the year, slightly less using the more recent rate.

The bracket between $300,000 and $500,000 is holding a 23 month supply, slightly less using a more recent sales rate. High but far below levels of the last two years. Even I, perennially cautious, am encouraged by these numbers. But, wait. There’s something unsavory floating in the champagne, orange sherbet punch. My half-empty sensibilities are to be rewarded when I look into the luxury condo numbers.

Of the 363 recorded MLS condo sales in the two-city market, only 23 were for more than $500,000 and only 12 were for more than $600,000. Of the 23 sales, more than half were at the Meridian where buyer’s agents were being paid as much as 5% to bring a buyer.

Inventory for over-$500,000 condos stands at 66 this morning. Only four remain at the Meridian, all resales, and the excessive buyer’s agents’ commissions disappeared with the last developer’s unit. If I use all >$500,000 sales so far this year to determine supply I get 30 months worth of inventory in this price range. However, if I strip out the Meridian sales and the Meridian listings to get a more accurate picture of the luxury segment, I see that we have a 59 month supply. However, as bad as this looks, it is not an accurate picture. This is just the number of MLS-listed units. The shadow inventory in luxury units is substantial. There is but one Magnolia Bay unit listed on the MLS with dozens remaining unsold. One Ocean Club unit is offered on the MLS, the only recorded sale in the empty building. No Villa Verde units are MLS-listed in that entirely unsold building. There are others but these hint at the size of the invisible supply that is hanging on the sidelines.

What are we to conclude from this exercise? Overlaying my elementary arithmetic on elementary economics, I foresee a bottom up recovery in the Cocoa Beach and Cape Canaveral housing market. The lower price range appears to be at or close to a stable supply and demand level with the mid-range not far behind. The turd in the punch bowl at our recovery party is obviously the luxury condo segment. With the supply so skewed from the demand I can only predict more price erosion and an indeterminate recovery time for $500,000 plus condos. For those of you thinking of venturing into this market segment, be aware of the numbers and the very real possibility of more depreciation before the bottom is reached. Buzzword for you is Cuidado! If you’re unlucky enough to be trying to sell a unit above a half million dollars my advice is to price aggressively unless you can wait for years and are willing to risk further price erosion. In addition, you may also want to consider following the Meridian’s successful strategy of luring buyer’s agents with excessive commission and/or bonuses. It’s a distasteful practice but one that has been proven to work.

In other news, the surf has been magnificent and is still beautiful this morning after days of good waves. A visiting friend from Miami paddled out with me this weekend and caught his first waves after 16 years out of the water. He was as stoked as a 12 year old grommet and is now in love with Cocoa Beach. I am honored to live in this special place.

“Two out of three ain’t bad.”______Meatloaf

 

Mid September Update

Thanks to all who chimed in on the last post. Closings are slow but plugging along with 20 closed condos and townhouses so far in the month of September in Cocoa Beach and Cape Canaveral. Sales ranged from $32,000 for a foreclosed, 464 sq. ft. 1/1 condo conversion in Cape Canaveral to $335,000 for a brand new, 3rd floor, direct river, 3/2.5 with 2210 sq. ft. at Garden Bay in Cocoa Beach. Other sales of note closed so far included;

Ground floor 2/2 Cape Winds direct ocean for $210,000

2nd floor, direct river, Harbor Isles 2/2 for $220,000

16th floor, direct ocean Stonewood 2/2, very nice for $315,000

6th floor, south ocean view Royale Towers 2/2 for $225,000

There have been three single family homes sold so far, all in Cocoa Beach. They ranged from a small, trashed 3/2 short sale on Samar that sold for $110,000 to a direct river 4/2 on Bali that closed for $389,000.

Checking the MLS this morning I find a total of 131 pending or contingent residential properties in the two cities. Over half of these contracts are short sales. Of 716 total active residential listings, only 94 are short sales. This skew between offered and contracted numbers makes it clear that the action in MLS-listed properties is heavily concentrated in the distressed properties. If you’re hoping to take advantage of the market, don’t make the mistake of only looking at distressed properties. There are a few sellers who understand the market dynamics who have priced their properties accordingly without the hassles of the short sale process. On the other hand, if you have a good property contracted as a short sale at a good price and are losing patience because of the length and opacity of the process, be strong. Unless you find something better in the meantime, your patience may be eventually rewarded with approval. We have had a flood of short sale approvals recently after months of very little contact from the lenders, so, be aware of the frustration of the process, be patient and have a Plan B in case you don’t get approved.

Snook are still being caught in the surf and the mullet run hasn’t really peaked yet, so, there’s plenty of opportunity for everyone to get out there on the beach and catch a great dinner.

“The unspoken word never does harm.”_____Lajos Kossuth

 

The World is a Vampire

Delta rocket launch, sunrise Aug. 17, 2009

We’re halfway through August and, as expected, activity has slowed. We’ve had 12 closed sales from the Cape Canaveral and Cocoa Beach MLS, 11 condos and one single-family home. The home was a small 3 bedroom, 1.5 bath short sale on south Orlando Ave. that closed for $139,000. The sold condos ranged from $79,900 for a foreclosed, non-waterfront 2 bedroom 2 bath unit at Costa del Sol to $425,000 for a 5th floor direct ocean, southeast corner at Crescent Beach Club in south Cocoa Beach. This unit had 2278 square feet with 3 bedrooms, 2 baths and a massive wrap balcony.

An interesting sale was the 2nd floor, southeast corner at Palmas de Majorca in downtown Cocoa Beach. This 3/2 unit had been on the market for 731 days, always overpriced and was down to $549,000, the most recent still-too-high asking price when something enticed the seller into accepting $400,000. Maybe he read my “Breakdown, go ahead and give it to me” post or perhaps the appraisal came in low. At any rate, for $186 per square foot, this one was a deal. The too-close boardwalk traffic intruding on the privacy from the 2nd floor probably contributed to the low price. It was, beside that shortcoming, a very nice unit.

Another good deal was a Constellation 3/2, this one on the 6th floor with 2419 square feet and panoramic views of the ocean and the Banana River across the street. Sold for $395,000 or $163 per square feet. Don’t expect to get a smaller unit for these $/sqft numbers as large size contributes to the low ratio.

Someone picked up a 2/2 direct river, 2nd floor Sunset Harbor for $146,000. Needed some updating. Another foreclosed 4 bedroom, 2.5 bath Perlas del Mar in Cape Canaveral sold for $165,000. It sold new two years ago for $450,000.

The 3rd floor south ocean view Cape Winds, 1 bedroom 2 bath unit that was offered as a short sale for $150,000 got a contract in just seven days.

That’s it for now. New listing activity is slow as are sales and there have not been a lot of compelling new offerings. That is normal for this time of year. If the short sale bottleneck opens up we could have a surge of closings which would be welcome. I received lender approvals this week for two short sales that have been in the system for 105 and 75 days while I have four others that have been leapfrogging desks for up to 150 days without approval. Go figure.

“Despite all my rage, I’m still just a rat in a cage.”
_____________Billy Corgan

 

If it’s not working, just bang on it harder

This week’s launch of space shuttle Endeavor as seen from the backyard.

Those of you who get my direct updates will be interested to know that both the Coral Sands and Constellation oceanfront listings that I mentioned recently as attractively priced have accepted contracts after 11 and 4 days on the market respectively. Price it right and they will come, even in a crappy market. Apparently the concept of pricing to sell escapes the seller of the oldest listing in our MLS. The unit is a 2/2 riverfront condo in Cape Canaveral that has been listed for a remarkable 1512 days since May 2005. The listing is now at 57% of the original asking price and the commentary actually describes the seller as “motivated”. Not surprisingly there is not a single photo of the unit on the MLS, just three exterior photos of the complex and no showing instructions. Even after four plus years chasing the market down and reaching the “motivated” state, this unit is still priced $25,000 higher than the lowest priced identical unit currently offered in the complex. Between slack listing agent and overpricing, this unit is at the center of a perfect storm of bad decisions that look to extend it’s time on the market indefinitely.

With a similar time line, a Shorewood unit in Cape Canaveral finally closed this week after 1158 days on the market. It sold for 51% of it’s original asking price in April 2006. An early price cut might have saved this seller six figures. Two other “priced-right” listings have closed this month after less than two weeks on the market. Both closed for 90% of asking price. Yin meet yang. A total of 16 properties have closed so far in the month of July in Cocoa Beach and Cape Canaveral, only one for more than $310,000. Our inventory of condos stands this morning at exactly 666?! It is a devil of a market after all.

Bonne chance to all sellers out there as we ease into slow season. Be aware that the competition for buyers will be intense from this point until New Years. Conduct your negotiations and decisions pertaining to pricing accordingly. Buyers, read the previous post, Self-defeating games.

Depend on the rabbit’s foot if you will, but remember it didn’t work for the rabbit._________________R. Shay

 

Putting right along

Photo above was taken from the top floor of Xanadu looking south towards downtown Cocoa Beach. The Pig and Whistle Pub is the brown roof building in the dead center of the shot. The white buildings on the river in the top left are Harbor Isles with Merritt Island off in the distance.

Sorry for the lag between posts as I’ve been traveling. We are back on the regular schedule now.

Action in the Cocoa Beach and Cape Canaveral condo market has been strong so far this month with 46 accepted contracts since June 1. Fourteen of those were short sales and a few others were foreclosures. Only 2 of the units were asking above $500,000. With sales at Meridian winding down to the last few developer units I expect the over-$500,000 sales to drop off the cliff. Of the fourteen condo sales over $500,000 so far in 2009, eight were Meridian units. That leaves us with a rest-of-the-market sales rate of one half-million-dollar-plus condo per month. That’s with an inventory this morning of 97 units, eight years worth not even factoring in the shadow developer inventory which will easily swell that number by 50% or more. Not good news for the luxury condo market.

We have had an impressive 25 closed condo sales so far in June, two over $500,000, both at Meridian. Twenty of the thirty sold for less than $230,000. That paints a pretty clear picture of our market. If I gave any credence to median price numbers that metric would look horrific year over year. The bright spot in all this is the fact that so many units are selling despite significant hurdles with financing and the difficulty of bringing a short sale to the closing table.

Only one single family home has closed this month in our market, a direct Banana River home on Jack Drive that closed for $450,000. Another three went under contract since the 1st.

Of the sales of note so far this month, my favorite has to be the Fountain Cove 3rd floor unit that closed Monday for $185,000. I presented an offer exactly one year ago today on this unit for $190,000 when it was listed for $243,500. Not only did the listing agent rudely dismiss the substantiating comps we included with our offer, she actually called back after the seller refused to counter to deliver a second message from the sellers, “Tell them to go buy another condo.” We did. You can read the entire sadly funny exchange here. Others of note included;

• A five year old top floor, 1918 sq.ft. Solana on the River closed for $215,000 as a short sale.
• A 2 year old 3/2 Puerto del Rio in Cape Canaveral with 1862 sq.ft. sold for $205,000 as a short sale.
• A direct river River Bend 3/2 with 2050 sq.ft. and a boat slip in south Cocoa Beach was stolen for $260,000.

MLS inventory June 18, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____681
over $500,000_________97 – 14 sold since New Year’s Day
Single family homes____102
over $500,000_________39

“If you can’t make it good, at least make it look good.”
_________________Bill Gates

 

So long Spring, hello Summer

A quiet morning this week in south Cocoa Beach.

It’s the last day of May and the month has been another busy one in the Cocoa Beach and Cape Canaveral real estate market. We’re still lagging last year’s numbers but the pace is steady. May was the peak month for condo sales last year and there is no reason to think 2009 will be different. There were 36 closed condo sales in the two cities during May as indicated today in the Cocoa Beach MLS. Only 2 of those sales were for more than $385,000, one, as always, a brand new Meridian penthouse for $630,000 and the other, a huge Ocean Pines penthouse with 65′ of ocean balcony that sold for $575,000.

There were nine single family home sales in the month with eight of those in Cocoa Beach. Six were waterfront with the highest price paid for a massive, 2 year old, 6354 sq.ft., 7 bedrooms and 4.5 bath canal home that closed for $690,000.

Other notable deals of the month included;

A Brisa del Mar condo conversion 2/1 that sold new in 2006 for $200,000 sold as a short sale for $76,400.

A very nicely remodeled, non-waterfront Oaks 2/2 in Cape Canaveral sold for $85,000

Direct Banana River ground floor, River Lakes 2/2 in south Cocoa Beach was stolen for $130,000

Four year old Shores of Artesia townhome, 1 block from ocean, sold new in 2005 for $307,000. The new buyer got it for half off in a short sale for $150,000. On the market just 17 days.

A huge (2424 sq.ft.) Perlas del Mar w/2 car garage didn’t last long on the clearance table. This 2 year old unit sold new in 2007 for $453,000. The brain trust at JP Morgan Chase agreed to dump it for $162,000. Also on the market for just 17 days.

A 2-year old, 3/3.5 townhome in a small building (Sea Shell Cay) close to Villages of Seaport that sold new in 2007 for $437,000. It was also a foreclosure and closed for $166,250, full asking price. Sold in 6 days.

A direct Banana River Rock Pointe, oversized 2nd floor 2/2, went for $180,000.

A 3-year old Cape Canaveral Bayport villa w/2 car garage that sold new in 2006 for $350,000 sold for $190,000 as a short sale.

There were 3 excellent deals in weekly rental ocean condos this month. One was a ground floor Ola Grande 2/2 next door to the Cocoa Beach Pier that sold for $200,000. This unit rents for $800 to $1100 per week. Do the math. A 4th floor southern view, 2/2 next door at Chateau by the Sea closed for $202,000 and a 3rd floor north facing Sandcastles 2/2 was stolen for $210,000. Similar rents for all and all three sold fully furnished.

A ground floor direct ocean 2/2 at Beachwinds in Cocoa Beach closed for $280,000.

A very nice, partially furnished Harbor Isles 3/2 corner, direct river sold for $285,000.

A nicely remodeled, 3rd floor, southern view Windward East also sold for $285,000.

A rarely available, east end unit, 3rd floor, 3/2 at Cocoa Beach Towers closed for $340,000.

And rounding out the most interesting deals of the month, a partially remodeled, huge (2484 sq.ft.) 3/2, 2nd floor direct ocean with balconies on both the east and west sides at Constellation way down in south Cocoa Beach (Little Malibu) sold for a remarkable $385,000 or $155 per square foot.

In the sky, there is no distinction of east and west; people create distinctions out of their own minds and then beleive them to be true.
____________Buddha

 

Halftime Report

The kind of morning that has me running through all my excuses for trading the desk and the Blackberry for a beach chair and a Randy Wayne White novel.

Halfway through May and this market is very active. Lenders are still killing deals right and left but a substantial number of persistent buyers are riding deals through closing. I have not experienced this level of activity in a few years. As of this morning, May 16, a total of 19 condos have closed in Cocoa Beach and Cape Canaveral at prices from $25,000 for a small foreclosed Golden Gate Manor 1/1 to another new, top floor Meridian for $630,000. All but two sales were for less than $300,000. Deals of note included the following:

Oceanfront buildings
3rd floor east corner small, 3/2 Cocoa Beach Towers – $340,000
3rd floor south view 2/2 Windward East – $285,000
3rd floor south view 2/2 Driftwood Villas – $210,000
Ola Grande ground floor 2/2 – $200,000

In non-waterfront sales, 2 units at the 4-year old Shores of Artesia closed for $170,000 and $150,000. The latter was a short sale. A foreclosed, ground floor corner 3/2 at Portside Villas went for $130,000. A big, 3-year old foreclosed Perlas del Mar 3/2.5 sold for $162,000. Sold new 2 years ago for $453,000. A big, 3/2 Bayport villa short sale closed for $190,000. New price in 2006 was $350,000.

In Banana River buildings there has only been one closed sale so far in May, a 2nd floor 2/2 at Rock Pointe for $180,000.

Of the contingent and pending contracts yet to close are several that will qualify as smoking deals. I will report on them as they close.

Piss and vinegar can’t be summoned on command. The muted colors of a muted life will not suddenly brighten because you think it a good idea they should.
___________Travis McGee

 

Eyes right

A golfer pauses in his game yesterday at the Cocoa Beach Country Club to snap a photo of the space shuttle Atlantis taking off for it’s mission to repair the Hubble space telescope. Astronaut Mike Massimo has promised to do occasional Twitter updates from the shuttle. You can follow him here.

Twelve days into May and sales are chugging along with 9 condos closed so far in Cocoa Beach and Cape Canaveral. Only one closed single-family home in the same period, a trashed 4/2 canal-front on Riverview in Cocoa Beach that sold for $225,000. The condos sold so far this month ranged from a tiny Golden Gate Manor for $25,000 to a 3rd floor, remodeled, south view 2/2 at Windward East that brought $285,000. A foreclosed Perlas del Mar that sold new in April 2007 for $435,000 went for $162,000 last week.

Short sale contracts continue to clog the system helping to push the number of contingent or pending contracts showing on the MLS to 105 this morning. Recent experience leads me to believe that only a fraction of these will close. Problems abound for purchasers ranging from tighter requirements for condo loans to unresponsive short sale lien holders. When it all comes together, patient buyers have scored some outstanding deals so far this year. I expect that to continue although supply for certain property types has become slim. Direct ocean, 2nd floor or higher units that are priced right are downright rare. Unrealistic sellers of those same units do, however, exist in great numbers.

If you’d like to get daily updates of all interesting activity (MLS and other) in Cocoa Beach and Cape Canaveral you can receive them by following my Twitter feed here.

Nancy Astor: “Sir, if you were my husband, I would give you poison.”
Winston Churchill: “If I were your husband, I would take it.”

 

April Wrap-up

5′6″ double winger fish by Larry Mayo

For all the activity we saw in April, actual closed sales fell below the same month last year, a trend we’ve yet to break in 2009 . There were a total of 34 closed condo sales in Cocoa Beach and Cape Canaveral compared to 42 in April 2008. A significant departure from previous months was the sale of five units for more than $500,000. Single family homes had a brisk month with eight closed sales ranging from a small 3/2 foreclosure on Watts Way that sold for $179,000 to a brand new 2361 sq.ft. canal-front, foreclosure on Bougainvillea that went for $447,455.

There are a surprising 80 contracts on condos and townhomes that are in contingent or pending status this morning that were executed since March 14. It’s probably safe to say that many of these will not close. We are seeing an increasing number of contracts not survive to the closing table. The main culprits are failed financing and the often too-long short sale process.

MLS inventory May 5, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____688
over $500,000_________96 – 10 sold since New Year’s Day
Single family homes____98
over $500,000_________35

I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.
______________Alan Greenspan

 

How Soon is Now?

Late afternoon vapor trail from the launch of shuttle Discovery last week.

In the week since my last post, five more condos have closed in the Cape Canaveral and Cocoa Beach MLS. Out of the five, four sold within 19 days of being listed. That, ladies and gentlemen, is evidence of aggressive pricing. As I’ve been saying, price it right and it will move.

A few aggressively priced active condo listings selected from the MLS this morning. Several are short sales;

3 bedroom, 3 year old, 1562 sq.ft. no garage in Cape Canaveral – $132,500
3 bedroom, 3 year old, 2424 sq.ft. 2-car garage Cape Canaveral – $180,000
2 bedroom, 5 year old, 2055 sq.ft. 4th floor direct river Cape Can. – $239,900
2 bedroom, older 2nd floor, direct river, 1244 sq.ft. w/garage
__and boat storage in south Cocoa Beach – $150,000
4 bedroom, 7 year old, 1670 sq.ft.. 2 car garage Cape townhome – $230,000
2 bedroom, 2nd floor, nicely remodeled direct ocean Cocoa Beach – $245,000

In addition to these listings there has been a slew of price reductions on unsold new units this month, but, until the new complexes are down to the last remaining units, I can’t recommend taking the risk of the related association uncertainty in these complexes. One developer added 16 new luxury units to the MLS in the last week at prices ranging from $399,000 to $1,700,000. We now have an inventory of 101 condos asking over $500,000 in the Cape Canaveral and Cocoa Beach MLS. I expect price reductions to continue in this over-crowded and slow-moving segment of our market. Sales in the 11 weeks since Jan. 1 in this same (over-$500,000) price range total 3 units, 2 of them at the Meridian.

While prices continue to deteriorate in all price ranges, inventory, especially in the sub-$500K range, has dropped considerably from it’s high three years ago. We are now over 30% below our peak inventory levels set in May of 2006. Deals are still there but they are disappearing quickly when the price hits the sweet spot. Competition for the deals in the sub-$400,000 range is keen.

The national average for 30 year fixed rate mortgages according to Freddie Mac’s weekly survey dipped below 5% this week. That’s good news for borrowers IF they can meet the ever-increasing requirements for a loan. If you’re shopping for a condo, talk to your lender before you look at properties. That lender you’ve always worked with may not be able to write a loan for a Florida condo and/or your down payment requirements may be different than you think.

“If past history was all there was to the game, the richest people would be librarians.“
__________________Warren Buffet