When the Math Ain't Mathing

The westernmost point of Cocoa Beach looking across the Banana River towards Newfound Harbor, Merritt Island.

I thought I’d take a deep dive into the current affordability of a typical oceanfront condo. Our bread and butter property type in Cocoa Beach and Cape Canaveral is a moderately updated 2/2 unit in an older oceanfront complex with a view of the ocean. Unremarkable units of this type have recently been closing on both sides of $500,000 so I’ll use that selling price in our example. I’ll compare with sales of similar units from four years ago.

In the spring of 2021, 30 year fixed rate condo mortgages were available for around 3% interest with a 20% down payment. Prices were a little lower than the present with typical units like our subject closing in the low to mid $400s. Our example unit that closed for $430,000 in April 2021 would have had a combined monthly mortgage payment, taxes, insurance and condo fee of about $2470 after a down payment of $86,000.

A buyer paying $500,000 for that unit today with a down payment of $100,000 would be looking at a monthly cost before utilities of around $4330. In addition to doubled interest rates, most condo fees have seen a similar increase while both taxes and insurance have enjoyed their own not-insignificant inflation. In just four years the annual core costs for a new buyer of a modest 2/2 oceanfront unit has increased from around $30,000 to over $51,000. That goes a long way towards explaining the lack of enthusiasm for those properties in our current market. Absent any control over these runaway costs, sellers have but one tool with which to attract buyers and that’s price. Most have not not gotten the message and our inventory remains bloated with egregiously overpriced listings languishing on the market for months with no interest.

Even if a beaten-down seller was willing to accept $430,000 today for this unit, the same price he bought it for in 2021, the annual costs for the new owner would still be a staggering $47,000, an increase of over $17,000 a year for the privilege of owning a modest oceanfront condo in a declining market. No one would describe that math as attractive. The reality for many sellers who purchased in the last four to five years is that selling for more than they paid might be unrealistic today. Some of those with mortgages might be unable to close without bringing money to the closing table. Should they wait to sell hoping for more favorable conditions? I’m reminded of what Inspector Callahan, Dirty Harry, said to the punk about whether he had fired five or six shots.

The sellers that are pricing way above the recent similar sales “just in case” are playing an unwinnable game. As I noted in a recent post, new listings that are priced aggressively from the beginning are picking off the active buyers while the “just in case” crew stick to their high prices watching the trickle of buyers part around them to pursue other, more realistically priced properties. It’s a costly delusion. For what it’s worth, in May 2021 there were 74 closed condo sales while in our much more sedate 2025 market with eight times the inventory there were just 42 closed sales in May. Sellers, pay attention, it’s a competitive market and not everyone is going to find a buyer. Join the winners or watch them from the sidelines or, as Blue Oyster Cult put it more simply, on your feet or on your knees.

“Better a cruel truth than a comfortable delusion.” _Edward Abbey

Here It Comes

This post was first published at larrystake.substack.com on June 3.

In March we have a crescendo of converging human seasons when the peak of snowbird season overlaps with the annual gathering of school baseball teams for spring practice combined with a sprinkling of spring breakers, day-tripping bikers and NASCAR fans. It’s our busiest month here. Almost all of them are gone by middle of April.

In May, after a few weeks of very few visitors, we begin concurrent natural seasons that don’t involve large numbers of people, the Great Southern White butterflies (pictured above) return, the love bugs who have been hatching in small numbers sporadically all spring begin hatching en masse and the sea turtles return to our beaches again to lay their eggs. Mangoes are just starting to ripen and the one season we could all do without officially begins on June 1. I’m talking about the season that comes packaged with heightened background stress that’s part of every Floridian’s existence for several months every summer and fall. Between occasional shared glances at the sky we pretend a kind of peace until the wind rises and we find ourselves in line again, buying bottled water and toilet paper in ridiculous quantities. The anxiety becomes unavoidable by early August and, as last season demonstrated to the gulf coast, those west-facing beaches have to worry about potentially devastating storm surge from storms that don’t even make landfall nearby. Here on the east coast, our dunes are higher, our odds of surge less, but anxiety doesn’t respect geography.

Our inventory, to my surprise, continues to shrink after peaking at just over 400 condo units in March. There are 356 condo and townhouse units for sale this morning in Cocoa Beach and Cape Canaveral with a median time on market of 90 days. The reduction is not from a frenzy of sales, but from a growing pessimism: fewer new listings, more quiet withdrawals. There were only forty units closed in the month of May which makes it the second slowest May in eighteen years. Only May 2020 during the Covid shutdown saw fewer closed sales in the month.

The common thread? Concession. Not a single one of those forty homes sold for its original asking price. The median sale closed at 87% of initial hopes, with eight sellers settling for less than 80%. Only five homes sold within a month, and those were the ones priced to move, selling, unsurprisingly, for an average of 94% of their asking price. There’s a lesson in there if one chooses to hear it: price realistically, or wait and bleed.

Just over half of all condos sales were cash deals and the median selling price of all sold units was $300,000. The highest price paid was $1,075,000 for a top floor 3/2 Meridian with the seven lowest sales, all non-waterfront units, going for $200,000 or less.

As summer stretches ahead, I honestly don’t know what to expect. Sales are slow, inventory is shrinking, and sellers are squinting from somewhere back in 2023. Maybe it’s economic uncertainty, or maybe it’s just the natural rhythm of a second home market that has seen its share of market tides. But at the moment, the power belongs to the buyer. And their greatest challenge may not be in finding the right place, but in finding a seller living in the present. Asking price is a good indicator of which sellers those might be.

About turtle nesting season: remember to keep no lights visible from the beach at night that might distract nesting turtles. They have a hard enough time dealing with the folks who feel a need to get up-close selfies with them.

Koko Japanese Pub downtown continues to fill up their limited seating. Their success is well-deserved and I highly recommend a visit. Looks like the food court, Destination Station, on the site of the old Yen Yen’s Chinese is ready to open. Downtown Cocoa Beach has changed quite a bit in the last couple of years, for the better in my opinion. That big generous lawn in front of the new City Hall has become a kind of commons for music, frolic and gathering. Whoever fought for that patch of grass deserves a quiet toast.

How about that rain? After months of very little rain, our yards and fruit trees are drinking it up and just in time for mango season. Let the summer begin. Cheers.

“When the facts change, I change my mind.” _John Maynard Keynes

In-between Season and Doing Fine

 Ah, May at the beach. The snowbirds, baseball teams and spring breakers have departed. The weather has warmed up and the roads, restaurants, grocery stores, beaches and golf courses are uncrowded for a few weeks. By the end of this month traffic will pick back up as schools let out for summer and day-tripping inlanders join our early summer vacationers. In the interim, the locals are breathing a little easier and walking a little slower and enjoying this beautiful place that we share.

Our condo inventory has pulled back from its recent high. This morning there are 366 condo and townhouse units for sale in Cocoa Beach and Cape Canaveral. In the month of April 42 units found a buyer so we are looking at about a nine month supply at that same sales rate. Half of the remaining inventory has been for sale for three months or longer.

There are 79 single family homes for sale in the two cities and 11 homes found a buyer in April so about a seven month supply of homes.

Buyers are active in our market although cautious. The number of price drops exceeds new listing by a wide margin daily. As sellers accept the 2025 market reality and modify their expectations accordingly I believe we’ll continue to see a steady stream of sales barring some further macro shocks to the economic system.

Get out there and enjoy May at the beach. If you haven’t stopped by the Koko Japanese Pub downtown Cocoa Beach for a meal, make plans to. They are a welcome addition to our quite varied and good restaurant selection downtown. A shot of their chirashi bowl and bluefin roll (background) at top. Both excellent.

“It makes sense to dance while the music's playing.” _Maynard G. Krebs

Inventory Explosion

 
Happy Easter Sunday everyone. I was away for a week (strong hint at location pictured above) and came back to 98 new condo listings, 89 price reductions and a mere nine new contracts. Those who’ve been following our inventory trend in Cocoa Beach and Cape Canaveral will recall that at the end of December we had 298 total units for sale. That number has increased to 405 in the sixteen weeks since. Excluding units that listed and sold since the first of the year, 236 of the total units still for sale have hit the market since December 31. A small percentage of those have been for sale for longer but have had their combined days on market manipulated by listing agents taking advantage of a loophole in MLS policy that allows them to erase the days on market by relisting with a new MLS number thereby appearing to consumers to be a new listing. Among those not deceiving the market, about 200 units have been trying to sell since Thanksgiving or before, 23 for over 300 days, with no luck. It’s a tough market out there for sellers, especially those who are clinging to expectations in line with last year’s selling prices.

Condo fees continue their increase as tardy associations begin funding the new structural reserves. Over 135 of current listings have a monthly fee of $800 or more. Prospective buyers should be aware that there are condos whose fees still do not include structural reserve funding despite the fact that the association may have done their required structural integrity reserve study. The Legislature tossed condo associations a bone by extending the deadline until December 31, 2025 to begin that funding and many are taking full advantage of that extension. New owners in those procrastinating buildings who didn’t review the budget and SIRS thoroughly may get a nasty surprise when the full funding begins at the end of this year.

Asking prices are still widely separated from closed prices. The median dollar per square foot for closed condos in oceanfront complexes since January 1, excluding The Surf, a brand new condo downtown, is around $350 per square foot. Direct ocean units with good views are above the median. The median asking price of the same group of units for sale is $412/sq ft. The metric of $/sf is flawed and inexact so there will always be outliers but it is useful for contrasting overall seller expectations with market reality. Those two things are at odds in this market.

More than ever, participants in this market need to be aware of the trends and the realities of properties that are closing when deciding what to ask or offer. As always, knowledge is power. Best of luck out there. There are deals to be had if one knows what a deal looks like.

“I’m sorry my mic was broken for a second… At least you know I sing live.” _Lady Gaga at Coachella this weekend

Economic Policy & Effect on the Cocoa Beach Real Estate Market

First published March 7, 2025 at larrystake.substack.com. The reposts here typically lag about a week behind Substack but I thought the subject of this post deserved a swift repost.

I’d love to hear readers’ opinions and thoughts on the effects of a severely wounded stock market and the likelihood of a recession in the US (60% according to JP Morgan unless tariffs are ended) on our real estate market. Comment to this post with any thoughts or opinions. What does this mean for sellers and buyers of real estate?

Since January 1st, 82 of the 126 condos closed in Cocoa Beach and Cape Canaveral were purchased with cash. That’s 65% of the transactions. Single family homes were bought with cash at a lower rate than condos but still over 50% with 11 of the 21 closed homes paid for with cash. The majority of homes are purchased as a primary residence so they have always been financed at a higher proportion than condos of which a large majority are intended to be used as second homes or investments. Condos that are not primary residences and bought with mortgages typically require down payments of around 25% so a substantial amount of cash is required even when using a mortgage.

Where does the cash to purchase a condo or make the large down payment usually come from? In my over two decades of selling condos here, my clients have most often liquidated investments to fund the purchase. Will the double digit percentage decline in the total US stock market in just two days deter prospective condo purchasers? Are there any who have lost so much already that a purchase is no longer possible? On the other hand, will the prospect of a prolonged declining stock market and recession encourage people to seek investment in real estate as an alternative to stocks? Can Florida real estate be expected to appreciate in the same economic environment that is cratering stock valuations? Before “Liberation Day” our real estate market was already in a precarious position with the highest inventory level in fifteen years and rising and with a sales rate that’s been declining for the last three years.

Maybe the tariffs will be quickly rescinded or modified and the market and economy will reverse course. Or maybe the tariffs will turn out to be good for the economy, an outcome that seems so farfetched at this point that I feel foolish including it as a possibility. I am not an economist but I suspect that the pool of prospective buyers for real estate in Cocoa Beach, especially for condos, has taken a major hit that is likely to impact the number of sales and selling prices moving forward. We were not trending positively before and it seems almost certain that this week’s events will not have a positive effect. Somebody please convince me that my suspicions are unfounded. I encourage your comments.

On a positive note, as is always the case this time of year, traffic has lightened up and there aren’t as many people in restaurants, at the grocery store or on the golf course. The majority of our snowbirds and spring breakers have left for home and we will continue to see fewer visitors until the end of the school year when families begin taking their summer vacations in June. May is my second favorite month in Cocoa Beach behind October. Both are uncrowded months and both enjoy good weather (barring a hurricane in October) and for the few visitors who are in the know, some of the cheapest lodging rates of the year.

Related and interesting trivia: the number of cruise passengers who embarked on their five ships yesterday in Port Canaveral was about one and a half times the population of Cocoa Beach. The Royal Caribbean ship, Utopia of the Seas, that departed yesterday for Nassau has a capacity of 5668 passengers, almost half the entire population of Cocoa Beach. Thankfully very few of those passengers find themselves driving through Cocoa Beach.

Please let me know your thoughts about your expectations of our market going forward. I suspect I may be too close to this to have considered every angle and my mind’s music is forever stuck in a minor key. If you are uncomfortable commenting publicly feel free to contact me directly.

“The human mind is like a parachute. It has to be open to work.”

State of the Cocoa Beach Market

This post was first published at Substack on March 25. To receive notice of new posts when they are published subscribe to larrystake.substack.com at Substack.com.

Falcon launch yesterday as seen from the backyard. We were able to watch the rocket return and land at the Cape a few minutes later followed by the double sonic booms.

I concentrate most of my research and commentary on our condo market since condos and townhomes typically represent about five times the number of sales and listings in the Cocoa Beach and Cape Canaveral market that single-family homes do. Right now there are a total of 465 total residential listings in our market and only 74 of them are single-family homes.

Looking at this same time last year there were 41 homes for sale and they were selling at a rate of eleven per month so less than a four month supply on hand in March 2024. So far, in the eleven weeks since January 1, exactly twelve homes have gone under contract. At that sales rate we have about a 17 month supply if no increase in inventory so enough to last until about August of next year.

What does this mean for those who are trying to sell their homes? With about one home finding a buyer per week, competition for buyers has almost tripled in just a year. Sellers should expect to take longer to sell and should not expect to get as much as they might have last year. Without an uptick in the sales rate, with a 17 month supply, the math says several of the current listings will still be on the market this time next year. Those will be the ones unwilling to accept the current reality and who do not price accordingly. Those who aren’t paying attention and pricing fairly are not going to sell. Buyers are fewer and they’re skittish with employment worries and uncertainty with regards to insurance and the economy in general. Our current market demands a different strategy. Good luck to those hoping to sell and congratulations to those twelve who successfully picked off buyers so far this year. The other 74 still on the market would be prudent to study the details of recent comparable sales, primarily the selling prices. Knowledge is power.

This month marks the 21st anniversary of this blog. I have never been without material to write about. When I began writing about our market we were in the boom years of 2004 to 2006 when buyers were being chosen by lottery just for the opportunity to reserve pre-construction condos. The crash hit us hard in 2007 and we quickly transitioned from a strong seller’s market into a market dominated by distressed sales. There were zero distressed sales in 2007 but in 2008 we began seeing short sales as previously optimistic investors began unloading negative-equity properties with cooperation from their lenders. By 2010 over half of all sales were distressed, either short sales or foreclosures. It took until 2017 to completely work through our supply of distressed listings. Inventory was at its peak in 2006 and began a decline that lasted until 2015 when it stabilized for a few years before resuming its decline until 2022 when it finally bottomed. It has been steadily increasing since 2022 and we now have the highest inventory of residential properties since 2010 combined with a sales rate that has been in decline since 2021. We shall see how this works out but the trends in sales and inventory do not signal a healthy market. I would advise sellers to look at their competition and the comparable properties that are selling and price accordingly. That is imperative if they want to join the shrinking group who are being successful.

"If you are leaping a ravine, the moment of takeoff is a bad time to be considering alternative strategies." _John Cleese

What's It Really Worth? (revisited)

The Surf oceanfront condo downtown Cocoa Beach with the Coa Restaurant and Coa Lounge ground floor. The restaurant and lounge opened last week.

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This a post from 2015 with updated numbers and stats. The updated version was first published at Larry's Take at Substack on March 20.

"What do you think it's worth?" That's the (literally in some cases) million dollar question. No one wants to sell for less than actual value or pay more than, but no one, appraisers, tax authorities, Realtors nor Zillow, has an always accurate method for determining present value of a property. In the rare situation of multiple recent sales of identical properties we can get very close. For everything else, looking at recent sales of the most similar properties, holding a wet finger in the breeze and adjusting accordingly is the best anyone can do to estimate current value. These adjustments are where the variations happen.

How much more, if any, is an identical 10th floor unit worth over a 4th floor? 3rd over 1st? How much should I deduct for no garage or add for a second garage? No elevator? High ceilings? Forty year old versus 15 year old building? Is a weekly rental unit worth more than a three month minimum rental unit? How much discount for a compromised ocean view? Is a complex with tennis courts worth more? How about reserve account balances? There are so many variables that the best anyone can do is come up with their best idea and hope to land on the good side of their estimate.

This is where it can get interesting. If I do my homework and crunch the numbers carefully and come up with a number that I trust is close, I will probably still have to be flexible if I hope to consummate a sale as the other party's opinion of value is almost certain to be different than mine. If I treat my number as a line not to be crossed, I am setting up for failure. I have seen deals fall apart with buyers and sellers whose drop-dead numbers were ridiculously close but which neither would violate. If I am selling in a dropping market, it may not matter if I accept an offer for less than I had hoped and, in fact, it might be prudent. Same holds true for buying in a rising market. If similar properties have been appreciating, paying more than my opinion of value might make sense. This is especially true when inventory is low, unlike today. For everyone involved it helps to remember that both sides' numbers are ESTIMATES.

Where do we start? Let's look at our bread and butter property here in Cocoa Beach and Cape Canaveral, a direct ocean condo with two bedrooms and two baths. The usual starting point for estimating value of properties of similar size and condition with similar attributes is price per square foot. Direct ocean units currently for sale with two bedrooms and two baths have an asking price per square foot ranging from a high of $668 to a low of $313 per square foot. Both the high and the low may actually be priced to perfection depending on their amenities and condition which are varied. There are 19 units asking more than $450 per square foot despite the fact that only one unit has sold for more than $450 a square foot in 2025. That unit in a weekly rental building closed for $497 per square foot yet there are three units in weekly rental buildings currently asking more than $600. Unwarranted optimism? Probably. Remember, opinions and differences thereof.

Excluding the brand new units in The Surf downtown Cocoa Beach, and a one bedroom unit at The Oaks in Cape Canaveral, units of all sizes closed since January 1, 2025 with an unobstructed east ocean view sold for between $329 and $497 per square foot with half landing between $345 and $442 per square foot. To put that in perspective, that means a typical 1300 square foot, direct ocean 2/2 unit will most likely sell in this market for somewhere in a range of $448,000 to $575,000. Conditions, rental restrictions and amenities will determine where in that range, or outside it, a unit’s value is. Don't marry your opinion of value. There is obviously a lot of wiggle room surrounding it.

Our takeaway: Your opinion of value, just like mine and every seller's and every buyer's is just an opinion. The owner of the weekly rental condo who just dropped his price to $668 per square foot no doubt thinks his opinion of value is correct and that that price should surely attract a buyer. Now if he can just find a buyer with the same opinion he may be able to sell. Before the Boardwalk top floor 2/2 closed last month for $497 a square foot I thought that $450 a square foot was probably the top in this market cycle for any older, unexceptional 2/2 oceanfront condo here. My opinion had to change. Flexibility, my people.

There have always been outliers that sell outside the range and there will continue to be. There are units that deserve consideration even if above our recent selling range but those better be exceptional units and/or in exceptional buildings. In my opinion, most of the units currently asking above the recent selling range are unlikely to sell close to their current asking prices. The exploding inventory and growing reticence of buyers does not bode well for the sellers at the optimistic end of our pricing spectrum. Perhaps my take is flawed. We can hope.

"When I found the skull in the woods, the first thing I did was call the police. But then I got curious about it. I picked it up, and started wondering who this person was, and why he had deer horns." ___Jack Handy

Spreading Acceptance

Some of the listing and pricing histories of older MLS listings in Cocoa Beach and Cape Canaveral resemble the five stages of grief expressed numerically. The oceanfront condo that hit the market a year ago asking $629,000 that is now at $419,000 after eleven price drops appears to have reached the acceptance stage but the market may yet test that. Same story with the Cocoa Beach house optimistically listed a year ago for $1,050,000 now asking $699,000. Some of the other long-lived listings tell a different story. The listing that has reduced their price by just 3% from $459,000 to $445,000 over the course of two years tells me this seller either isn’t serious about selling or they’re unable or unwilling to bring outside cash to the table to cover negative equity. If the latter case, it’s an incubating short sale. That seller is, after two years, still in the very first stage of denial.

The overall optimism of sellers in our market is waning. A lot of listings have been languishing for months (85 for six months or longer) while more realistically-priced new listings are picking off buyers. The practice of pricing crazy high and hoping for a miracle is still alive just not as widespread as it was before last year. Some of those who went with this method in 2023 and 2024 failed to sell and their properties are among those still sitting on the MLS. In an appreciating market, like ours was up until 2022, pricing ahead of the trend worked sometimes. Problem is, we are no longer in a rising market and that strategy is not working. Agents and sellers are getting the message and the trend with new listings seems to be headed towards more realistic initial asking prices. Whether this will lead to increasing transaction numbers remains to be seen. We are well behind recent years in closed sales so far this year so I remain pessimistic about activity rising to anywhere near historical levels. The new units closing at The Surf condo downtown Cocoa Beach have propped up the number of closed condo sales making our market look healthier than it really is considering that most of those contracts were signed years ago.

Warning of the day: Transaction (junk) fees. It’s a repeat and longtime readers can skip this. You’ve heard it all before. Nothing has changed and people are still being robbed.

It’s one of my most often repeated messages but there are still consumers who don’t understand what they should expect to pay a real estate broker or how. Brokers and agents are taking advantage of the confusion and profiting from it. I was reading messages on a real estate forum yesterday and someone asked about two buyers’ agents they had interviewed. One was asking for 3% commission PLUS a $425 “administration fee” and the other wanted 2.5% PLUS a $725 fee.

Which is the better deal? Wrong question. One may be better than the other but they are both bad deals for the buyer. Despite the agents’ probable presentation of the fee as a normal and common expense, it is not. Asking a buyer to agree to pay a commission plus a junk fee is proof that those agents are putting their own interests before the client’s. The fee is one they owe their broker and it is no different than the agent’s MLS fees, a cost of doing business. Those agents have the freedom to work at a brokerage that doesn’t charge transaction fees or that keeps them low so that clients don’t wind up being asked to pay them. Hundreds of thousands of real estate agents in the US never charge a fee on top of the commission. They and their brokerages manage to thrive without resorting to what amounts to an auto-gratuity of a few hundred dollars slipped on their clients’ tab on a deal that they already made thousands on. Adding insult to injury, many if not most agents who engage in this odorous practice pitch the fee as “non-negotiable”. Don’t pay it and don’t leave your car keys unwatched around any agent who tries to get you to agree to one. If asked to pay one, ask the agent if you should include an extra $92 for the current quarter’s MLS dues. I mean, why not?

For those who may not have noticed, this is a warning that the speed limit through downtown Cocoa Beach and to the south end of town is now 30 MPH and there is a speed bump on southbound A1A at south 1st St. and northbound at 20th St. Cops are out and are willing to write you an invitation should you not be able to stay close to 30. You’ve been warned.

Write me up for 125

Post my face, wanted dead or alive

Take my license, all that jive

I can't drive 55

_Sammy Hagar