Friday, May 19, 2017

Fear and Loathing in Cocoa Beach

I apologize for the long interval between posts. Over the last couple of weeks I began writing two different tales of shenanigans and outrageous behavior in the local real estate market, a favorite subject for writer and reader. Alas, a moment of level-headedness led me to shelve both articles. Rather than leave the reader hanging, briefly, one was about an episode of collective insanity at one of Cocoa Beach's largest (and tallest) condos. After years of willingly filling out prospective buyers' lenders' questionnaires, the association decided that they would no longer complete the required form. I happened to be the unfortunate agent with a buyer seeking a mortgage who was first confronted with the new policy. The association, after refusing to complete the form, referred the lender to the association's attorney who likewise refused citing imagined liability. What the association and their attorney failed to anticipate was the consequence of not completing the form. Without a completed form, the 108 owners in the building would not be able to sell to someone who needed a mortgage to purchase. It would effectively become a cash-only building. Here's what the form looks like for those interested.

After a few owners were alerted to the consequence of the new policy a small uprising ignited, the questionnaire was swiftly completed by a Board member and the loan package proceeded to underwriting, disaster averted.

The other tale of real estate drama I chose not to share was having my behind chewed viciously by a listing agent over some excluded contents in a "fully furnished" condo. She felt that I was being unreasonable in asking for an excluded items list prior to making our best and final offer. We ultimately offered without the list which was then produced, five days after listing, with, in our opinion, excessive exclusions. We ultimately reached agreement but not before I endured a scathing tirade and a hangup. All part of the job. About hangups: I got to thinking that punching the red "END" button on a cell phone, no matter how vigorously, is not nearly as gratifying as slamming a heavy phone receiver into its cradle. The millennials among us will never experience that warm fuzzy. On to real estate activity in Cocoa Beach and Cape Canaveral.

Since May 1, fourteen single family homes and 45 condos and townhomes in our two cities have received accepted contracts and another 70 new listings have come on the market. During the same time 46 properties have closed. Over half, 26, of the sold properties sold for cash, no mortgage. Inventory this morning sits at 206 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral. There are another 27 pre-construction units offered but they seem to be attracting very little attention despite compelling pricing at at least one of the projects. There are 72 single family homes for sale in the two cities, half of them waterfront and just under half asking over a half million.

Super boat races in the ocean off Cocoa Beach this weekend. Best places to view other than from a helicopter or boat will be in the stretch from about the Pier to Xanadu. The boats will be available for up close viewing on their trailers Friday night downtown. Hope to see some of you there.

"We felt the lightning
 And we waited on the thunder."  __Bob Seger

Sunday, April 30, 2017

This Is No Social Crisis

Minutemen Causeway streetscape is nearing completion. Landscaping is being plugged in and it looks like the finished product will be beautiful. It's very welcomed. The oceanfront block is closed to vehicular traffic and is pedestrian only now, pavers and planters from Atlantic Ave. to the beach.

Sales activity in Cocoa Beach and Cape Canaveral continues at a plodding pace thanks to the depleted and showing no signs of changing inventory. With a total condo and townhome inventory of 209 existing units in the two cities, finding a suitable property has become more of an epic quest than a narrowing down of suitable possibilities. Those looking for a single family home are even more constrained with a total of 72 possibilities, half of those asking a half million or more.

In the two weeks since Sunday April 16, forty three people were successful in their condo search and were able to put units under contract. During the same two weeks nine single family homes were contracted. With a roster of hundreds of agents trying to get a slice of the beach pie and only a few dozen actually involved in transactions, you may soon find your last agent bagging groceries at Publix. Those with a gainfully employed spouse may have the luxury of retreating beyond the break on a locally shaped log. Tasty waves in Cocoa Beach are in much greater supply than attractively-priced real estate listings.

A third of the condos were on the market less than a month and half of those less than a week. It's competitive for buyers and units that are priced right when listed are gone quickly. This has changed seller and listing agent behavior. Why not overprice and see what happens? The seller can always reduce the price later and the listing agents need inventory so anything, no matter the price, is good for them. Speaking of overpaying, buyers, when faced with an unreasonable seller of a property they like, have to ask themselves whether it makes sense to knowingly overpay by X% now or risk not finding another suitable property during the time prices move up by X+Y%. Buyers who made this difficult decision at any time in the last several years came out ahead. Buyers who think like I do that the demand and supply dynamic will continue to nudge prices higher should not run from a small overpayment. Conversely, buyers who think that prices will not continue the current trend should stick to their guns and not pay a dime more than what the comps suggest is current fair value. It's important to know how to figure out what that number is or have an agent who can. No matter who is doing the estimation remember that one comp does not determine fair value. Randolph may have sold his unit down the hall for $220,000 but that doesn't automatically make mine worth $220,000 when similar units in other buildings are selling for $250,000. Be smart and look at all angles. Creative thinking may be rewarded.

You can't always get it
When you really want it
You can't always get it at all
Just because there's space
In your life it's a waste

___________________The Who - Another Tricky Day

Thursday, April 20, 2017

Welcome to the Slowdown

Snowbird season ended with a bang Easter Sunday and we woke up Monday morning to a different, much less hectic town. I can once again drive from downtown Cocoa Beach to Port Canaveral for lunch and expect to make the trip there, eat an excellent fish sandwich dockside and drive back in little more than an hour if need be.

In the week from Sunday April 9, 2017, through Sunday, April 16, a total of 18 condo units and seven single family homes received accepted contracts in Cocoa Beach and Cape Canaveral. The homes were in a range of asking prices between $289,900 for a non-waterfront 4/2 three blocks from the beach to $749,500 for a gorgeous two story 3000 square foot beauty on a canal.

None of the condos contracted during the week were asking over a half million and half of them were under $200,000. Current condo inventory for sale stands at 210 exiting units in the two cities. That's about a three month supply at the current sales rate. Pickings are slim for the fairly large numbers of prospective buyers.

Those of us in south Cocoa Beach have been entertained in the last week or two by frequent sightings of a wild bobcat that has been roaming the dunes. The swamp rabbit that's been eating my backyard flowers has apparently been successfully avoiding contact with this large predator as I continue to wake up every day to fewer flowers. Those of you with pets are probably well-advised to keep the little fluffies safely inside for a while.

Crews have been making noticeable progress (finally) on the Minutemen streetscape project with the center block leveled and sidewalk work begun. Palm trees are going in on the ocean end of Minutemen and my first impression is positive. It's a great visual improvement. Don't forget Friday Fest this Friday night downtown. I hope to see y'all there.

"A Southern accent is not a club in my bag." __John Oliver

Sunday, April 09, 2017

Winding Down

The crush of snowbird season 2017 is firmly behind us now. After Easter we will drift into a brief slow season before school is done for the year and summer vacations kick in. Anyone who has only seen Cocoa Beach during the busy snowbird or summer seasons might be surprised at the laid-back feel here in late April and May. It's a good time to be in Cocoa Beach.

Property sales were slower in Cocoa Beach and Cape Canaveral this past week, Sunday April 2 through today. There were 15 condos and two single family homes contracted during the seven day period while we gained 13 new condo listings and 5 new single family homes. Our inventory of properties for sale is virtually unchanged from last week with 219 existing condos and townhomes and 68 single family homes currently offered. Only a third of the single families have been for sale for longer than three months. In contrast, over half of the condos have been for sale longer than three months, a sure sign of overpricing. Of the 174 condos closed so far in 2017, 54 sold in the first two weeks on the market with 35 of those gone in the first five days. Price it right and it's gone immediately.

I would advise those of you looking to purchase to get your finances in order prior to starting the search. If you're going to be getting a mortgage, talk to lenders now, choose the one you want to work with and begin the process. You are guaranteed to become frustrated along the way with the many requests for documents so getting in front of that will make your life less stressful. Same for cash buyers. Know how long it will take for your funds to become liquid and have a proof of funds document ready to provide with your offer.

Post-Inspection Price Reductions

The large majority of purchase contracts that I see for beach properties are written using the FAR-BAR "As-Is" contract. "As-Is" in theory means that the contract is for the property in the condition it's now in, "as-is". In practice, "As-Is" means the buyer is willing to purchase the property for this price IF no deal-killing conditions are found during inspection. It's not uncommon for the buyer to go back to the seller after inspections have been done and ask for either repairs or a price concession for issues found during inspection. That is fair for hidden issues. Here on the beach the number one hidden issue is a rooftop AC compressor with one rusted foot in the grave. That is a reasonable issue for price renegotiation if it wasn't disclosed already. Going back after inspections and asking for concessions for issues that were either disclosed or are plainly visible is not going to be well received. The "As-Is" contract gives the buyer "sole discretion" to cancel the contract and receive refund of deposit if done within the inspection period. That puts total control of the contract (read: negotiating strength) in the buyer's hands. If the seller refuses to renegotiate the buyer can either stick with the original contract and move forward or cancel. It's worth keeping in mind that in the current market, a seller stands a good chance of finding another buyer while a buyer may have a much harder time finding another suitable similar property.

It's Master's Sunday and we have four players within two stokes of the leaders, Justin Rose and Sergio Garcia. It's gonna be a good one. John John Florence won the Margaret River Pro in West Oz yesterday at Main Break in sizable and challenging surf. John has all the raw talent that we saw from Kelly at the same age. The Cocoa Beach business golf league kicks back off this Tuesday at noon. Anyone who'd like to get together for a weekly nine holes is welcome. It's fun, rates are super low and there is a chance to win a few bucks on a skin. Come on out. It's a friendly bunch of guys and girls. Tee off anytime between noon and dark.

"My parents didn't want to move to Florida but they turned sixty and that's the law."  __Jerry Seinfeld

Tuesday, April 04, 2017

The Difference a Week Makes

More of the same this past week in the real estate market but a lot different feel around town otherwise. We are into the winding down of snowbird season 2017 with the departure of the first major wave of northward migrations last Saturday. The traffic in Cocoa Beach was noticeably lighter Monday April 2. By the time Easter has come and gone it'll be back to dusty little cow town with walk-ons at the Cocoa Beach Country Club golf course the rule rather than a reason for the starter to look at the offender like an antler-sprouting Under Armour-wearing alien.

Condo sales in the week beginning Sunday March 26 were right in line with the previous trend; 24 units under contract in the week with five of them under contract in less than seven days. There was not a lot of oceanfront unit activity probably because that segment of our inventory is the most picked over and depleted. There were 22 new condo listings in the same seven day period along with seven new single family home listings. Nine homes went under contract during the week.

As of this morning, there are 67 single-family homes for sale in Cocoa Beach and Cape Canaveral at prices between $379,000 for a fixer-upper canal home in south Cocoa Beach to a brand new direct ocean five bedroom beauty downtown offered for $2.995 MM.

The condo inventory managed to shrink despite it's alarming low level with the combo of sales and withdrawals exceeding the new listings. We are down to 213 existing units for sale in our two cities. If I'm looking for an ocean condo I am encouraged to see that there are 100 listings showing as oceanfront. Being the skeptical sort I have to take a closer look. I must eliminate six as they are proposed and not in existence yet. Another 35 are asking over a half million and about half of the remaining have either no view or a peek so tiny as to be nothing more than a cruel reminder of what might have been. As a public service I must remind readers that those listings that appear too good to be true are exactly that, in every single case. When I receive an email about the very nice looking, 16 year old oceanfront 2 bedroom, 2.5 bath townhouse in Cape Canaveral asking $170,000 I don't even have to look at the MLS to know that it's another Villages of Seaport listing that the agent has misleadingly classified as "oceanfront". Listing agents feel justified doing that because the Villages property has a sliver of oceanfront that is as much as a half mile from some of the lovely townhomes. Owners in those units rarely repeat their first trek to the beach from their "oceanfront" condo opting instead to load the car rather than melt another pair of flip flops strolling the blacktop to the beach.

Negotiating tip 72: keep the chances of finding a replacement property in mind before walking away from a negotiation. Personalities often overtake logic during adversarial back and forths. Walking away from a $5000 impasse in negotiations and then waiting six months to try to buy another might make sense for a $100,000 property. Walking away over $5000 on a half-million dollar condo of which there are few available could very well cost much, much more six months down the road when the next target appears. Relative and absolute dollars are different. No one wants to overpay but sometimes the decision to overpay a little now for a property that hits all the buttons is more prudent than taking a gamble on finding a similar property later for today's price. We must play the cards we are dealt. Small unpleasantries now can eliminate large unpleasantries in the future.

Good hunting out there. I'm here if you have questions or a good knock-knock joke. Publix is safe once again. Feel free to approach the free coffee or blood pressure machine without fear of a running check against the beach toy display.

"The funds in your retirement account can be exchanged with zero transaction costs. Every day you do not sell them, you are deciding to buy them." __Ketawa - Boglehead

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