Sunday, March 26, 2017

There Will Be a Quiz

I skipped last week's summary so it's two for the price of one today. In summary, nothing much has changed with property sales almost exactly equaling new listings, a net zero effect on our meager inventory. For the seven days ending last Sunday, 23 condos and townhomes and 5 single family homes went under contract, six of them within a week of listing. During the same period there were 22 new listings.

In this most recent week, March 19 through March 26, there were another 24 new listings with 19 new accepted contracts, four of them in the first week on the market. There are 220 existing condo units and 66 single family homes for sale in Cocoa Beach and Cape Canaveral this morning. That is only slightly more than the number of properties that have gone under contract so far this year.

The Misunderstood and Often Wrongly-Administered First Right of Refusal

An unusual number of the condo transaction I've been involved in recently have been in first right of refusal complexes. There is a lot of misunderstanding about how this antiquated process works and how it should be carried out. From experience, I can say that it is often being done contrary to the procedure the condo docs proscribe. Procedures outlined in the condo docs vary among the dozens of local condo associations that have this right and the Board's or management company's interpretation of the docs is often wrong. First right of refusal gives the association and/or the members (owners) of the association the right to take over a contract to purchase from an outside buyer. For instance, if I contract to purchase a unit in a first right building, the association will offer my contract to the existing owners and they will each have the right to take my contract away from me and purchase the unit at the same terms. Some complexes mail a copy of the contract to all owners and some post it on a bulletin board or website. The length of time is usually between 10 and 21 days in our area. Most docs spell out that a sale to an existing owner is not subject to first right. There is a popular weekly rental complex in Cocoa Beach whose docs spell this exclusion out but the longtime management company insists on offering every contract out to the members regardless of whether the purchaser is already an owner in the complex. There are other complexes offering the right to members where that right only applies to the association and not individual members. I used to own in a complex with first right or so the owners thought. When challenged by a new purchaser, it was discovered that the first right did not and never had existed despite having been offered for over ten years. I would encourage everyone who owns in a first right building and especially Board members to read the condo docs carefully. There is a good chance that the procedure being used for the last two decades is wrong. It may be of little concern to an owner who is not involved in a dispute, but a lawsuit over the interpretation may prevent that innocent owner from being able to sell her unit.

And on another well-worn topic, I continue to receive requests to hold escrow deposits at title companies from agents who should know better. If there is an agent or broker out there who has a good reason for wanting a deposit held at a title company rather than a real estate broker's escrow account, I'd love to hear it. I'll give you a hint; there are none. In the event of a rare dispute over a deposit, I'll take a State of Florida free dispute resolution any day over dueling lawyers.

“We try to abolish intervals by our manic insistence on keeping busy, on doing something. And as a result, all we succeed in doing is destroying all hope of tranquility. You have to learn to immerse yourself in the silences between.”  ____from a book I read years ago that changed my perception of and the direction of my life. Thank you Lyall Watson for writing Gifts of Unknown Things

Tuesday, March 14, 2017

It Fell and Can't Get Up

You know you're in a beach town when the front rack of DVDs at the public library is all surf flicks. Cocoa Beach Library DVD room pictured.

Will the Cocoa Beach and Cape Canaveral real estate market ever return to a healthy supply of properties for sale? I hope for more inventory but I'm not optimistic. Our historical supply peak was in 2006 when we had just under 1200 condo and townhouse units for sale. The long decline began the following year with short sales and foreclosures dominating activity and continued dropping through 2015 when we bottomed at less than 200 units for sale with the distressed inventory depleted. We are only slightly above that number at present with 222 existing units for sale. At the sales rate we averaged last year, we have enough inventory to make it to mid-July. There were 24 new condo listings in the week from Sunday March 5 through March 12. Seventeen units were contracted during the same seven days. There does not seem to be anything suggesting an increase in the supply in the foreseeable future. Barring external events this should continue to urge prices higher.

There are 46 direct ocean units with a view currently available, over half asking above $500,000. Lookers are out in droves but are having an increasingly difficult time finding fairly priced listings. Sellers are listing properties above fair value and hoping for a home run. Over 60% of the total listings have been on the market over 60 days, a clear sign of overpricing in a year when two out of five sold properties were on the market less than a month.

I think it's safe to expect prices to continue to rise in the near future. Slightly higher mortgage rates seem unlikely to impact sales with 60% of all condo sales so far this year having been paid for with cash. Things are only slightly different with single-family homes, 40% of those purchases this year paid for with cash. Good hunting if you're looking. Know that you're not alone and need to be ready to move quickly if you hope to succeed in your search.

"it’s a lot of work not being cynical. Sometimes it just ****ing sucks. Because you have to listen to both sides of every argument – ARRRRGHHHH! All the time it takes, damn!"  ___Henry Rollins

Tuesday, March 07, 2017

February Roundup

Real estate activity in Cocoa Beach and Cape Canaveral continued at the same steady pace last week with 28 residential properties going under contract in the week from Sunday, February 26, to March 5. Six of those were on the market for a week or less. The inventory was barely changed with 27 new listings hitting the MLS during that same seven-day period.

There are currently 66 single family homes for sale in our two cities, exactly half of which have been on the market for less than two months. There are 244 condos and townhomes for sale, 27 of which do not exist yet giving a prospective buyer a universe of 217 existing units from which to choose. If an oceanfront building is a must-have, that number shrinks to 89 units with a median asking price of $375,000. A buyer looking for a direct oceanfront unit with at least two bedrooms and two baths asking less than $300,000 has two possibilities, both ground floor.

Closed sales for the month of February 2017 were considerably stronger than the same month a year earlier with 42 condos and townhomes closed, 40% of which were on the market less than a month and half of which were purchased with cash. Sixteen single family homes closed in February with a median time on market of 80 days. A third were purchased with cash.

The routine has not changed for those hoping to purchase. Have your financing and/or cash in order and be ready to move quickly when an attractive target presents itself. The best properties are going to those who act quickly. Our ongoing inventory shortage is showing no signs of abating.

After two days of temps in the 50s our winter that wasn't resumed with daily temps in the mid 70s to high 80s. The pleasant weather has made for crowded and slow conditions on the always packed (this time of year) Cocoa Beach golf course. For maximum enjoyment, golfers are advised to bring plenty of patience. The foursome in front will almost certainly be scavenging balls from every water hazard along the way slowing the pace even more.  After Easter, it's "back to good" to quote Matchbox 20.

Here am I floating
round my tin can
Far above the Moon
Planet Earth is blue
And there's nothing I can do.  __David Bowie

Sunday, February 26, 2017

My Calendar Must Be Broken

First off, I would like to thank all those who have offered comments, suggestions, and encouragement over the years. All feedback is appreciated. When I began writing this blog twelve years ago I made a decision to restrict my research and commentary to the Cocoa Beach and Cape Canaveral markets and to leave the rest of the county to others. This was probably originally rooted in laziness (less to research) but that narrow focus has allowed me to develop a deep understanding of this little market in the intervening twelve years. Other than macro themes affecting all markets, what was happening in Palm Bay or Merritt Island had little correlation to our beach markets. That hasn't changed. A buyer would be ill-advised to ask my opinion about or to engage my representation in the Titusville market. I would apply all of my experience to get the best possible deal with the least risk for my client but I wouldn't know what I may have overlooked in my research. There might be something market-specific and relevant to the property that only an involved local agent would know. To paraphrase a wise general, "we know there are things we don't know but there are also things we don't know we don't know. It is the latter category that tends to be the difficult one." If buying or selling beachside, I advise using an agent who is active in and knows this specific market. The consequence of an agent's ignorance can be costly for their client. Using an out-of-town agent is a risk that makes zero sense.

There were 25 new listings of residential property in Cocoa Beach and Cape Canaveral this past week. Four of them were under contract in four days or less. An additional 16 properties went under contract during the week. The tight inventory continues to be frustrating for those hoping to purchase. Someone looking for an east facing direct ocean condo above the ground floor for less than $350,000 has four possibilities this morning. If they must have a garage there is only one that will fit the bill. Raise that budget to $500,000 and there are several excellent units to consider. There is a new listing this morning in south Cocoa Beach, 4th floor, 3/2, tastefully and beautifully remodeled asking $499,000. Anyone looking in that price range would be advised to call their agent immediately. I doubt it will last for many days.

What a week it's been. For that matter, what a "winter" it's been. Thursday and Saturday were the two best days of surf so far in 2017. The water is warm enough that the wetsuits have been retired for another year. There has been a school of giant black drum roaming the beach between Port Canaveral and Sebastian Inlet for several weeks. They were off Cocoa Beach earlier this past week and several people caught the fish of a lifetime. I enjoyed seeing several of you on the riverboat last night. A good time was had by all.

"If you tell a big enough lie, and tell it frequently enough, it will be believed."  __Adolph Hitler

Sunday, February 19, 2017

Valentine's Week, 2017

There were no big changes in real estate activity in Cocoa Beach and Cape Canaveral the week of Sunday, February 12  to Sunday, February 19. The main themes of previous weeks remain firmly in place; low inventory and demand exceeding supply. Two-thirds of the 63 condo closings so far this year have been cash deals. Those hoping to purchase a condo who are planning to get a mortgage need to remember that when drafting their offers. Single family home buyers are more likely to use a mortgage with only a third of the 19 closed sales so far going for cash. Note to prospective buyers: one fifth of all closed sales so far this year sold in the first week on the market. If a property is desirable there will be multiple suitors immediately and the buyer who can't act quickly will lose out most times. I can say from repeated first-hand experience that those using an active local (Cocoa Beach) buyer's agent have a distinct edge. Three of my last four closings were under contract the first day on the market.

We had 25 new MLS listings of residential properties during the week. One was under contract within five days and one of the new listings was an old stale listing refreshed with a new MLS number. During the same week, another 28 previously listed properties went under contract, six of those single family homes.

Condo inventory is down to 216 existing units for sale in our two cities. That's less than the number of units that sold in a three-month period last spring. The same 27 pre-construction units are still offered with no takers since last week. Rounding out the shopping basket, there are 58 single family homes offered for sale, 28 of them waterfront.

The non-winter of 2017 continues to amaze with high 70s and low 80s most days. A wetsuit has not been needed this month for the several days of small, fun surf with surf temps hovering in the 70s.

Truth will always be truth, regardless of lack of understanding, disbelief or ignorance. __W. Clement Stone
Truth will always be truth, regardless of lack of understanding, disbelief or ignorance.
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Sunday, February 12, 2017

The Week of February 5, 2017

New listings in the week of Sunday, February 5 to Sunday, February 12 came on at the lowest weekly rate so far in 2017. We had just 21 new MLS listings of  residential properties in Cocoa Beach and Cape Canaveral. Two were under contract within three days and three of the new listings were refreshed older listings.

Fifteen of this week's new listings were condos or townhomes and six were single-family homes. During the same week another 19 properties that had been listed prior to last Sunday went under contract making a net inventory gain of zero for the week. Twelve properties were reported closed during the week, ten condos and two single families.

Condo inventory stands at 220 existing units in our two cities with another 27 pre-construction units (same as last week) in yet-to-be-built buildings. There are 61 single family homes offered for sale, 28 of them waterfront, highest asking price $2.995 MM for a brand new beauty on the ocean at 1st St. South. Lowest priced waterfront currently offered is a fixer-upper on a canal in south Cocoa Beach just off the open river for $379,000. Exactly a third of all residential properties on the market have been for sale for over five months. We know what that means.

The ocean end of the Minutemen streetscape project is taking shape and the finished product looks like it's going to be beautiful. [First photo above] There are two colors of pavers in the pedestrian only street laid in a pleasing pattern with a few scattered planters. Looks promising. The second photo shows the block between Atlantic and Orlando avenues. It still looks like a Todd Hoffman mining project but I'm very hopeful now that we've had a peek at the ocean end. Foot traffic last night downtown didn't seem to be deterred by the construction. Lots of people out enjoying the balmy weather and excellent live music at multiple venues. The Uber guys were busy.

“If I paint a wild horse, you might not see the horse... but surely you will see the wildness!” __Pablo Picasso

Saturday, February 11, 2017

The Appraiser Is Not Buying It

The moon setting over Merritt Island this morning just before sunrise in south Cocoa Beach.

I can examine the details of every single sale in Cocoa Beach every day for years, go in many of those sold properties and know things about many of the sales that aren't made public yet my opinion of property values in Cocoa Beach will never be held in the same high regard that an actual appraisal is. The one exception to this is the occasion when an appraisal comes in lower than expected. In those instances sellers are very willing to dismiss the appraisal as garbage. In most cases, in most minds, appraisals are seen as definitive proof of a property's present value.

I called a listing agent last week to alert him that I was sending over an offer on his new listing. I asked about the unusually high price when we talked and told him that I'd include comps with our offer to justify our offering price. He said not to bother, the owner had an appraisal done before listing and the asking price was at the appraisal number. He was as surprised as I was at the high number but the seller had firmly wrapped her arms around that number and expected to receive it. She didn't counter the very fair offer that I presented. A spendthrift purchaser may come along and pay the appraisal number but it's a long shot at best. Incidentally, the unit needs tens of thousands of dollars of renovations to approach average beach condo condition. Maybe she can get the appraiser to buy it since he and she are the only two people who believe his opinion of value. Or she can sit on it and let the rising market bridge the gap in a year or two.

Maybe my opinion of value is wrong and the appraisal is correct. They are both opinions and presumably based on the exact same data. The difference is that my opinion comes with a ready, willing and able buyer and the appraisal is accompanied only by an invoice for services rendered. The unit is still active this morning.

Public Service Announcement: Property owners and tenants, change your AC filters. Here on the beach, the inside air handler will last a decade or two longer than the five to eight year life of exterior compressor unit IF filters are regularly changed. The system will do it's job better and with less energy usage as well. The same condo unit I mentioned above had a filter change log taped to the air handler so that the date could be noted every time the filter was changed. That's a great idea in theory. The last entry on the log was dated 2014 with a note from the person changing the filter that she used the last filter and more were needed. There was no filter in the unit when I checked and no spares around. It looked like it might continue to blow air another day or two. Expected high in Cocoa Beach today, February 11, 2017, is 78 degrees under sunny skies. Enjoy.

“People would say to me, “Hey man, you look just like Paul McCartney”, and I’d say: “I wish I had his money!”” __Paul McCartney

Sunday, February 05, 2017

Wrapping Another Week - Feb. 5, 2017

I shot the photo above last week on one of those magical still mornings when the Banana River is a sheet of glass except for the scattered schools of bait fish and feeding dolphins. Sure makes it hard to concentrate on work when surrounded by this kind of beauty.

The week of Sunday, January 29 to Sunday, February 5 saw a welcome increase in new listings from the previous weeks of 2017. We had 40 new MLS listings of  residential properties in Cocoa Beach and Cape Canaveral. Seven of those were older listings that were relisted, all but one at lower, more reasonable asking prices. [Note to sellers: In this tight market, if it isn't selling it is most likely overpriced unless it's a special property with no appeal to the many prospective buyers who are actively looking to purchase. It's always worth taking a brief shot at landing a lottery winner who is willing to pay a crazy price but if that hasn't happened after a few weeks it might be time for a de-orbital burn to get the price back in Earth's atmosphere.]

Thirty three of this week's new listings were condos or townhomes and seven were single-family homes. Three were under contract by this morning. During the same week another 18 properties that had been listed prior to last Sunday went under contract. Thirteen properties were reported closed during the week, eight condos and five single families.

The busy week of new listings helped to increase our existing condo inventory to 229 units in our two cities and another 27 units in yet-to-be-built buildings. Nothing has changed with the tendency to over-price with still more than a third of the total on the market for over six months. The single family home inventory is little changed with 59 homes on offer, 29 of them waterfront.

Those of you hoping to purchase, and there are quite a few, understand that over half of all listings are optimistically priced. It is your and/or your agent's job to try to educate the seller when making a fair offer. The seller's mental number, no matter how crazy high, is usually very real to her but a well-thought out and well-supported argument for a fair price sometimes works. A low offer that can't be justified with sold comps is, in this market, a snowball in a Waffle House kitchen.

Drivers, please be careful on our streets. Every crosswalk this time of year is crowded with snowbirds and the frustration we all feel having to wait through an entire traffic light cycle to turn onto A1A does not justify some of the aggressive driving I'm seeing. Snowbirds, likewise, look behind and beside yourselves when on those crosswalks. There are less-than-reasonable people driving some of the cars waiting for you and it is prudent to stroll defensively. Let's all enjoy this beautiful "winter" weather.

...the plane brought me farther.
I'm surrounded by water
And I'm not going back again

I got my toes in the water, ass in the sand
Not a worry in the world, a cold beer in my hand
Life is good today. Life is good today.

_________________________Zac Brown Band