Insurance Good News/Bad News

First published Feb. 10.

I was surprised and slightly suspicious to see a headline last week that Florida Governor DeSantis had announced a victory in stabilizing the ascending rocketship of homeowner’s insurance premiums in our state. It didn’t take much digging to uncover the rest of the story.

First the good news: For about 20% of policyholders with state-run Citizen’s Insurance, mainly in the southeast corner of the state, their renewal premiums will be slightly less than last year (5.6% average reduction). This is after multiple years with double-digit average increases; 10% in 2022, 10.7% in 2023 and 12.3% in 2024. It’s welcome news for that 20% of Citizen’s policyholders. For the remaining 80% of policyholders, their renewal notices will look like more of the same old, same old.

For the most common types of homeowner policies for a primary residence the statewide average increase is estimated at 6.6% and for all property types up 8.6%. For second homes and investment properties and all non-primary residence accounts, the average statewide increase will be 17%.

Note that Citizen’s does not provide flood coverage nor is flood damage covered by a homeowner’s policy from Citizen’s or any other insurance company as many property owners on the west coast of Florida found out last year during the two storm surge events. Flood insurance must be purchased in a separate policy through the National Flood Insurance Program. Another unwelcome discovery for many homeowners who did have federal flood insurance were the coverage limits. No matter the value of one’s home the maximum coverage available under the federal flood program is $250,000 for the structure and $100,000 for the contents. While welcome, a $350,000 check was little consolation for owners of multi-million dollar homes that were destroyed.

I’d be interested in hearing from readers about their own insurance increases. I have heard from some homeowners whose increases the last few years with providers other than Citizens far exceeded the already high average increases I noted above.

After a particularly frigid January, we woke up one morning last week to find that summer had arrived overnight. Straight from snow suits one day to shorts and flip flops the next. Hey, I’m not complaining, at least not about that. I will however repeat my annual whine about the seasonal slow play at the Cocoa Beach Country Club. If one is fortunate enough to actually be able to secure a tee time, it would be prudent to let the spouse know to expect an extended absence rather than to finally drag in the door five hours after teeing off. We expect slow play during snowbird season and prepare for it mentally but the reality is no less a bummer for that prep. We will survive. First world problems and all.

“Among men, hyperbole and character assassination mark the parameters of friendship.” _Doc Ford

Supply>Demand

As of this morning (first posted Feb 7) we have a total inventory of residential properties in Cocoa Beach and Cape Canaveral of 408 properties, 351 of those condos and townhomes. That is up from 346 total on December 28, an increase of almost 18% in five weeks. We haven’t had this much inventory since 2011.

In the most recent 30 day moving averages, properties closed for 91% of their original asking price and were on the market for 106 days. Average time on market of the inventory is dropping as new listings pour onto the MLS. However, in the midst of the flood of new listings, 20% of the current listings have been sitting for over six months. Over 40% of properties for sale today have come on the market just since mid-November. The 81 sellers who have been trying to sell for over six months have watched as 233 other properties around them found a buyer and wondered, “Why not me?” All while inventory continued to climb.

There may be issues with specific properties that explain taking over half a year to sell but in the vast majority of cases, the price is the issue. I would repeat my advice to sellers that now is not the time to play chicken with asking prices. With increasing competition and waning buyer demand, anyone hoping to sell has to accept that the market has changed and what the neighbor got last year is no longer relevant. I can’t predict what the market will do but the direction since early last year has been against sellers. Sticking with last year’s price and hoping for the market to heat back up might be the wrong bet. Fairly priced properties are selling. Over-priced properties are sitting. Sellers have the power to choose which group to be in.

“Market forces have a way of cutting to the chase rather quickly.” _JB Pritzker

I Just Want to Break Even

This post originally appeared at the new site on January 30. All new posts appear there first and most are republished here several days later. Some posts will only appear there. If you'd like access to all posts as soon as they are published, you can find them at this link. You can receive notifications of new posts emailed to you by subscribing for free. 

I’ve heard some variation of the “I just want to break even” many times over the years as new buyers embark on a search for a beach condo. Many buyers of oceanfront condos who don’t plan to reside in the unit hope to generate some income from their unit when they’re not using it. This is entirely possible in most condo complexes. The exceptions are those condos with long minimum rental restrictions. If a complex has a one year minimum rental period, of which we have quite a few like Xanadu or The Constellation, an owner’s plan to stay in the unit occasionally is not going to work. Likewise a complex with a six month minimum rental period like Coral Sands or Water’s Edge is going to be difficult to rent if the owner plans to use it during our high season between around Christmas through Easter. Finding a renter for at least six months that don’t include the months of December through April is difficult. Some owners get lucky but many sit empty when the owners aren’t there. The same holds true for three month minimum complexes like Solana Shores or Park Place. For owners who don’t plan to use their unit during snowbird season, finding a renter is usually easy and rents are highest during that time.

The chances of finding a renter outside of snowbird season become much more likely with minimum rental periods of a month or less. It’s not unusual to have visitors who stay for at least a month during the summer months. However, the bulk of our summer visitors are here for only a week or two so a one week or less minimum offers the greatest opportunity for income while still allowing some personal use. We have quite a few condo owners who stay in their units for snowbird season and enjoy income from weekly renters the rest of the year.

If you are hoping to buy an oceanfront condo that generates enough income to break even, your best shot at that is with a unit with a minimum rental period of one week or less in a complex like Sandcastles or Cape Winds. With decent management most of these units can cover all expenses and turn a profit. How much depends on how much and when the owners use the unit for themselves. Here’s a related post I did ten years ago with more on this subject.

All the Wrong Questions

Larry Walker

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June 22, 2015

The brutally cold winter of 2015 reignited a common dream for many, that of owning an income-generating vacation getaway in a warm oceanfront place. Cocoa Beach has made that dream a reality for many. Over the years I have gotten scores of requests for an ocean condo that would pay for itself while serving as a getaway for the owner. For most people, t…

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I hope everyone enjoyed our brief warmup this week. It’s been an unusually cold January. As we get into February I’m expecting a busier season than usual because of snowbirds displaced from their usual winter spots on the west coast of Florida that were damaged or destroyed by the hurricanes last year. Welcome.

On the wisdom of attending timeshare presentations for the free gift, Nisiprius said, “Stealing bait from mousetraps is dangerous, and I have a friend with an unwanted timeshare to prove it.”

A Snowbird Buyers' Market - Full Post

This post originally appeared at my new site at substack. To read posts without delay as I write them, you can subscribe to the blog to have new posts sent to your inbox as soon as they are published. Visit the new site here.

We are starting our 2025 property journey in Cocoa Beach and Cape Canaveral with a full tank of listings. There are a total of 390 residential properties for sale in the two cities this morning, 340 of those condos or townhomes. At our current thirty day average pace of sales that is enough supply to last until after Halloween.

The flood of new listings since the beginning of the year has pulled our median time on market for all listings down to 78 days but do not be fooled. One hundred of current listings have been languishing on the market without finding a buyer since last July or longer. It’s a good time for those frustrated sellers to reevaluate their strategy.

We are coming into our historically strongest season for sales which usually peaks in March and April. With a higher rate of new listings than sales, existing listings have more competition with each sunrise. New listings have the benefit of knowing which existing listings aren’t moving and at what price and have the opportunity to offer a better price their first day on the market. Those sellers with existing stale listings who really want to sell need to decide whether they want to continue risking no sale or face reality and price accordingly to get in front of the new listings. The comps that justified an asking price last summer have been replaced by more recent sales. Sellers and agents of older listings need to forget their comps from last year and do a brand new CMA based on more recent sales to determine what asking price is likely to attract a buyer now. For most of these old listings the right price will be less than their current asking price.

As I looked through the older listings one stood out for its unorthodox history of up and down price changes. It is an oceanfront condo and has been for sale since July of 2022. The unit has been tastefully remodeled and should appeal to most buyers looking for a 1/1 unit on the ocean. If anyone can figure out the reason for this pricing strategy I’m all ears.

• July 2022 - $360,000
• Nov 2022 - $350,000
• Jan 2023 - $340,000
• Feb 2023 - $315,000
• Aug 2023 - $319,000
• Sep 2023 - $317,000
• Oct 2023 - $312,000
• July 2024 - $320,000
• Aug 2024 - $310,000
• Sep 2024 - $305,000
• Dec 2024 - $350,000

Based on the fact that this unit is still for sale after two and a half years of trying, the up and down pricing strategy isn’t working. Logic tells me that if $350,000 didn’t attract a buyer two years ago, it’s not going to now. Here’s another;

• Jun 2023 - $525,000
• Aug 2023 - $515,000
• Sep 2023 - $499,999
• Sep 2023 - $515,000
• Nov 2023 - $480,000
• Dec 2023 - $490,000
• Apr 2024 - $480,000
• May 2024 - $460,000
• Jun 2024 - $450,000
• Dec 2024 - $420,000

And there it sits, still on the market after a year and a half with no sale even at $105,000 below the original asking price. The unit itself has been totally and beautifully remodeled and would appeal to most buyers looking for a unit in an oceanfront building. The problem is that there are no comparable sales to support the asking price of $420,000. Had the price been $420,000 in 2023 maybe it would have sold. We’ll never know but we do know that during the time it’s been on the market, taxes and condo fees alone have cost the seller over $27,000.

Hopeful sellers should take note of these examples and price their listings attractively from the beginning. Starting high “just in case” didn’t work for these two sellers and many others and it probably won’t work for anyone else in this market. The market has softened for condos during the time that these units have been for sale.

I would also encourage sellers to examine their listings in the MLS. Heaven forbid your unit that’s been listed since last year has been missing the condo name, like 27 of the current listings. There are buyers looking for a unit in specific buildings with auto-searches in the MLS that alert them to listings in the condos specified in their search. Your listing that has the subdivision name instead of the condo name will not trigger an alert to those people, the very ones you are marketing to. We also have listings with incorrect number of bedrooms, missing garages or incorrect condo fee information. Those mistakes could eliminate a listing from MLS searches using any of those criteria. Your agent might have made an honest mistake or maybe she doesn’t understand the MLS entry fields but, no matter the reason, in this market a seller cannot afford to exclude their listing from search results because of incorrect listing info.

See you at the new site. Link here.

“When you choose your behavior, you choose the consequences.” _unknown

A Snowbird Buyers' Market

After 21 years here at Blogger, I am in the process of changing platforms for the blog. This site will remain up but new posts will originate at the new site and appear here later. I would encourage readers to subscribe at the new site to receive new posts in their inbox the day they are published. Your email address will remain private and not shared or used in any way other than to send new posts the couple of times a month when they are published. Try sorting the list of posts as "Top" rather than "Latest" for a different experience. Please let me know what you think of the new platform.

My latest post, A Snowbird Buyers' Market can be read with this link. 

Off-topic but as I was looking at the four visible planets last night it hit me that even though I could see them at the same time, I was not seeing them as they were in the same moment. I was looking into the past and seeing Mars as it was three or four minutes earlier, Jupiter as it was over a half hour earlier and Saturn as it appeared over an hour earlier. Time travel without a machine.

"Even if you get a good wave, you still gotta paddle back out, you know?" _Tom Curren

Inventory Ramping Up - Sales Slowing

This little guy became disoriented during the last hurricane and when I approached him afterwards he walked over and hopped into my hand like I was a long lost friend. I took him back to the dunes where the rest of his family hangs out and hopefully he is still among those happily munching on my sweet potatoes and other plants that were not originally planted there for the marsh rabbits' culinary pleasure. However, I'm happy they enjoy them and will be planting new ones shortly.

Inventory in Cocoa Beach and Cape Canaveral has increased by about 11% in the two weeks since December 31 and we now have the highest number of condo and townhome units for sale since 2011. There have been 50 new condo and townhome listings added so far in January during which period only 15 units went under contract. Sixty five units have been for sale for six months or longer, most of them with multiple price drops that so far haven't produced a buyer. In addition to the highest inventory in fourteen years and rising rapidly, we had the lowest number of sales in fifteen years last year. Whether either of these trends persist into the year is unknown but the chart below illustrates that these trends have been ongoing for the last four years. 

Sellers take note. There are more of you competing for fewer buyers who are staring at once-again rising mortgage rates and skyrocketing condo fees and insurance. A third of the condo units currently for sale have monthly fees of $800 or more with sixty of them at $900 or more. While few were paying attention mortgage rates climbed almost a full point since September and are right at 7% at the moment for a 30 year fixed rate loan. If I was selling right now I'd not be expecting to get as much as I would have last year or the year before and if I was buying I'd be in no rush to offer unless I found the perfect unit at a price I liked. There are obviously exceptions to this but it's clear that this is no longer a seller's market. Conduct yourselves accordingly.

Pray for warmer weather, y'all. Floridians are suffering and many are woefully underequipped with cold weather clothing. Welcome early snowbirds and go ahead and laugh. The pain is real for us.

"If you don't remember what you said, it may be a sign you didn't say it." _Newt Gingrich

2024 - The Wrap

The year 2024 was eventful for real estate in Cocoa Beach. We began the year with the National Association of Realtors embroiled in a lawsuit over commission collusion in another state whose settlement would affect Realtors nationwide when new rules went into effect on August 17. On that date, it became mandatory for buyers to sign a Buyer's Brokerage Agreement with their buyer's agent before stepping foot in a property. That agreement must designate either a specific property, a type of property or an area, a time period and, controversially, how much the buyer will owe their agent upon closing of a property. BBAs are not common in our market and buyer reactions have been at times unsettling. There were buyers previously happy with and trusting of their agent who refused to sign the new agreements or modified the language because of their newfound distrust of the same agent for presuming to ask for a signature on a required document. Several of us found out how some of our clients really felt about us and it wasn't encouraging. Thanks to those who never wavered in their trust knowing we'd be fair regardless, just as we always were, at least those of us who are deserving of that trust.

Many agents saw the new BBA requirement as an opportunity to get a raise to 3% on every deal when those same agents had been happy to walk away with 2% to 2.5% prior to August 17. I would suggest that buyers tread carefully when signing these agreements especially those asking for high commission rates and especially those asking for a transaction fee in addition to the commission. There are very few situations where a transaction fee is justified. When you are presented with a BBA it is your right to negotiate the commission rate and your duty to refuse the transaction fee. The transaction fee is an attempt to pick your pocket and should immediately disqualify that agent from consideration. Don't be robbed. For the record, most sellers are still offering to pay the buyer's broker but in many cases it must be asked for as a concession when making an offer. A buyer will only be on the hook for the difference in what the seller is willing to pay and what the buyer agreed to pay their agent in the BBA. Buyers, don't agree to a high commission on your BBA unless you're willing to cough up some extra cash at closing to make up the difference.

Another big story this year was the impending deadline for condo milestone inspections and structural integrity reserve study. That deadline is today, December 31, 2024. We look to have several condos in our area who are going to miss the deadline. Those that have complied have seen their condo fees rise to fund the new reserve account which includes concrete repairs, something very few condos have ever reserved for. As of right now, the median condo fee of the units for sale is $650 monthly and likely to continue to increase. Buyers are advised to review the condo budget closely before committing to purchase a unit. Those associations who haven't implemented their new reserve funding will likely have a nasty surprise for the owners when they come into compliance.

We began 2024 with an inventory of 254 condo and townhome units and 31 single family homes for sale in Cocoa Beach and Cape Canaveral. Today, on the last day of 2024, the Cocoa Beach MLS is showing 298 condo and townhome units offered and 48 single family homes. Median time on market for the condos for sale is 95 days and for the homes, 184 days.

There have been 102 closed single family home sales during the year. Median selling price was $791,000 and only ten houses closed for less than a half million in the year. Median time to sell was 67 days and 45% of the sales were cash deals.

Condominiums, as always, had much higher sales activity than houses as there are many times the number of condos as houses in our two cities. There were a total of 501 closed sales during 2024 as of today. That number will creep up slightly over the next couple of weeks as tardy listing agents get around to closing their listings. It will still be the lowest number of condo sales in Cocoa Beach and Cape Canaveral since 2010. A little over 54% of the condo sales were cash deals. That percentage will probably increase this coming year with more stringent scrutiny of condo associations by lenders for condo loans. Here are condo unit sales numbers for the last twenty years.

There were only eight sales of condos in 2024 for a million dollars or more. Median selling price was $355,000 and median time on market was 72 days. Sixty units sold for $200,000 or less.

Predictions for 2025: I expect condo loans to become more difficult to obtain. On a condo sale last month the lender's underwriter required a copy of the last reserve study before he'd approve. This was an association that was already funding reserves at 21% of the total budget, over twice Fannie Mae's minimum requirement. Florida condo loans are already some of the more difficult mortgages to qualify for and any new requirements like this are going to add even more condo associations to the list of those who will not pass muster for a mortgage.

Speaking of not passing muster, some associations have stopped filling out lender condo questionnaires for prospective buyers. Without the completed and signed questionnaire, units in those building effectively become cash only sales. In the associations' defense, the new questionnaires have some very vague questions about the respondent's awareness of structural issues. Signing one's name to one of these documents could encumber the respondent with substantial liability which is why some association attorneys are advising the association not to fill them out.

I would advise any prospective condo buyers to carefully review condo docs including budget and to give more than a passing glance at the overall apparent condition of the building. You don't have to be an engineer to notice deferred maintenance. Buildings with obvious issues will have to be repaired and the owners will be the ones paying for it. Be aware that condo fees are likely to continue increasing although hopefully at a slower rate than this year's increases. Master insurance policies are becoming more expensive so it's probably prudent to expect fees to rise again to accommodate 2025's probably more-expensive renewal premium.

On the positive side, there are lots of new things happening in Cocoa Beach. Construction is underway on the new Westin Cocoa Beach on the 15 acre oceanfront site of the old Holiday Inn. The food court on the site of the old Yen Yens downtown is well underway and The Surf oceanfront luxury condo downtown has begun closings. The new City Hall downtown is close to completion and there are several smaller projects either under construction or soon to break ground. Cocoa Beach is changing but we're still a small friendly beach town with the same population that we had in 1970, 12,000 mostly happy souls, probably over half of them surfers. We're a good bunch and welcome our new residents.

I found a note today I made in the 90s about the surf wax graffiti on the seawall at 14th St. Here are a few choice specimens:

• Chad Can't Surf
• Eric Shreds...Lettuce ("lettuce" was added days after the original appeared)
• Smoke a Fatty

We lost one of the 14th St. crew this year and he'd be paddling out today for his annual end of the year surf, regardless the weather. RIP Dennis.

"Coach, you can play me or not play me but I'm only here for four years and then I've got things to do with my life." _Pat Tillman to his college football coach upon being told that freshmen players usually didn't play in their first year

Wrapping November

The Cocoa Beach and Cape Canaveral MLS is reporting that 30 condo and townhome units were closed in the month of November in the two cities. Median price for the closed units was $350,000 and median time on market was 111 days. Exactly half of the sales were cash deals and only four units closed for over a half million dollars.

For sale inventory in Cocoa Beach and Cape Canaveral has increased to 294 total condo and townhome units. Median time on market for these unsold units is 89 days. There are 47 single family homes listed for sale with a median time on market of 101 days. Twenty of the 47 homes are asking over a million dollars with a high of $3.795 MM for an oceanfront home in south Cocoa Beach. Lowest asking price is $525,000 for a half-duplex in Cocoa Beach. Just five houses closed in November with one closing for over a million dollars. The disparity between what's selling and what's for sale is widening.

This slow pace of activity usually continues through the upcoming holidays and begins to heat up by the end of January. Considering the decimation of snowbird rentals on the Gulf Coast pushing more snowbirds to our area, escalating costs of condo ownership everywhere in Florida and the robust 2024 growth of paper wealth in the condo buyer demographic, this snowbird season looks to be interesting as buyers and sellers are being pulled in opposite directions by powerful economic forces. Will prices hold up or are we due for a reality check? Condos are more expensive to own but the people who typically buy beach condos have just had one of their best years ever in investment growth. I look forward to following the drama as it plays out through April. Look for the play by play here. Happy Holidays all.

"If you don't go, you'll never know." _Jamie O'Brien (too old to be invited to the Pipe Masters)