Friday, November 24, 2017

Art Show and Declining Inventory

As I write this early on Black Friday the crews are setting up barricades on Brevard Ave. in preparation for the annual Cocoa Beach Thanksgiving Weekend Art Show. Weather is predicted to be mid 70s with no rain. Tonight, among others, on the big outdoor stage will be Nashville's Radio Romance (around 9 PM). We enjoy plenty of excellent live music at multiple venues all the time in downtown Cocoa Beach but country music is sorely under-represented. That omission will be undone, if only briefly, in grand fashion tonight.

We find ourselves approaching year-end 2017 with a total of only 187 existing condo and townhome units for sale in Cocoa Beach and Cape Canaveral. Compared to the 634 units that have closed so far in 2017 our MLS inventory looks like the TV department at Walmart right now. Like Walmart, the only things not sold already are either unattractively priced or just now being wheeled out onto the sales floor. Over a quarter of all condo listings have been for sale for six months or longer. So far in November, the low end of the condo market has been the more active segment with half of the 40 closed sales under $200,000. Only five of the 40 were ocean units and only one sold for over $500,000, a 7th floor remodeled direct ocean Constellation 3/2 in south Cocoa Beach that closed for $635,000 or $298/sf.

There are 52 single family homes listed for sale on the Cocoa Beach MLS in our two cities this morning with 147 having closed so far in the year. It's the same overpricing story, exactly a quarter on the market for over six months. Nine homes have closed so far in November ranging from a small cottage close to the beach in Cape Canaveral going for $266,000 to a 5000+ square foot direct ocean beauty in south Cocoa Beach bringing $1.975 MM.

I hope to see many of you on the street downtown this weekend as the Art Show kicks off tonight continuing through Sunday. Hot Pink perfroming tomorrow around 7:30 on the outdoor stage and Radio Romance doing an acoustic set at Juice n Java about the same time. I heard the old Art Festival organization that bailed on Cocoa Beach is doing something somewhere else but not sure about that. Schadenfreude, baby.

"Take me back to the place I love the most. Take me to the coast." __Radio Romance

Monday, November 06, 2017

Downhill to Christmas

With another month on the books and but two to go for 2017 we are running just ahead of this time last year in number of closed residential sales in Cocoa Beach and Cape Canaveral and look to finish the year somewhere around 700 closed condos and townhouses.

In the month of October, 41 condos closed in the two cities with the high end awakening from a short slumber. Six units closed at prices between $450,000 and $895,000 with four exceptional oceanfront units bringing over $300 per square foot. Oceanfront condo sales of note included:

  • A 5th floor direct ocean NE corner Artesia 3/3.5 with 2478 square feet and a two car garage that sold for $895,000.
  • A 4th floor direct ocean Meridian 3/2 with 2072 sf that closed for $740,000.
  • A nicely remodeled and furnished 4th floor direct ocean SE corner Canaveral Sands 2/2 with 1316 sf that closed for $450,000.
  • A modestly updated and furnished 5th floor direct ocean Cocoa Beach Towers 2/2 with 1161 sf and no garage or washer/dryer that sold for $350,000. Ability to rent weekly contributed to the unusually high price.
  • A 3rd floor direct ocean Sol y Mar 3/3 with 2298 sf and a 2 car garage that closed for $615,000. This was an exceptionally good deal for the buyer in this 11 yr old luxury building.
  • A fully furnished direct ocean 6th floor Palmas Majorca 3/2 with 1801 sf in downtown Cocoa Beach that sold for $470,000.
  • A nicely updated 6th floor south ocean view Royale Towers 1/1 with 888 sf and a garage that closed for $225,000.
  • An updated and furnished Shorewood north facing 1/1.5 with 888 sf and garage and a peek of the ocean that closed for $225,000.

There were others but these caught my eye as a good representation of what is selling in oceanfront buildings. There were eight single family homes closed in the month all in Cocoa Beach, one riverfront home closing for over a million dollars.

Those of you who have enjoyed hearing Nashville's Radio Romance at Juice n Java or the big stage at the Art Show will be pleased to know but probably not surprised that they won the Nash Next 17 contest last week in Nashville out of 1500 contestants. They won a contract with Nash Next Records under Scott Borchetta's Big Machine Label and the sky appears to be the only limit now. They will be appearing on the big stage once again at the Thanksgiving Art Show this year and at Juice n Java the following evening. This may be the last time we'll get a chance to see the boys in Cocoa Beach as their career has just taken a huge turn. Congrats, guys.

The rains finally stopped long enough for the ground to dry out and the golf course to reopen. Hopefully we have left the worst of the rains behind us and won't be seeing any more messages like the one pictured.

After three years of not being able to keep red snapper caught in the Atlantic we were granted two weekends to fish with a limit of one fish per person per day. The weather didn't cooperate the first weekend but a few folks made it out the second (last) weekend and a few fish were caught. We are closed once again for these fish until the powers that be decide to toss us another crumb, hopefully during a month other than October when the weather stands a better chance of being fishable.

"There's a fine line between fishing and just standing on the shore like an idiot." ______________Steven Wright

Wednesday, October 18, 2017

Into Each Life Some Rain Must Fall

And fall and fall. My tongue-in-cheek comment in the previous post about growing rice on the Cocoa Beach Country Club golf course is looking less snide than realistic today. Cocoa Beach has received over a foot of rain since I wrote that post. My friends and I managed to squeeze in six holes yesterday before rain closed the course once again. The average October rainfall in Cocoa Beach is 4.76 inches. We received 7.3 inches on the first day of the month and, so far, we're at 12.85 inches and counting with over 2 inches yesterday. The silver lining, if you can call it that, is that the Banana River has finally receded enough to accept limited runoff.

Real estate activity has resumed at its typical fall pace since the hurricane with 49 condos and townhomes and nine single family homes contracted since the storm passed. Inventory remains very low with a high proportion of optimistically priced offerings. For instance, $413 per square foot for a 32 year old 2/2 oceanfront condo in mainly original condition or $309 a foot for a 44 year old 2/2 unit with a tiny oceanside balcony and Formica countertops. Neither of these unremarkable units has a garage.

About price per square foot: It is not an exact metric for determining value but is a good starting point. If other 30 to 40 year old units without garages of approximately the same size and condition with a similar view are selling for $250 per square foot then my unit is very unlikely to command $400 or even $300 a foot no matter the depleted inventory. High demand and low supply contribute to rising prices but they rarely induce buyers to pay way above fair value. Finding an agent willing to take an overpriced listing, however, is easy. Agents will take unsaleable listings with the hope that the seller will eventually come to their senses but even without an eventual price drop the listing has value for the agent. Buyers who inquire about the overpriced listing can be shown other fairly priced offerings. An agent's willingness to accept a listing at an unjustified high price is not confirmation of the possibility of getting close to that number. The agent may just be seeing the listing's potential as a good lead-generator. I'm looking at you, side view Cape Canaveral condo in original condition without a garage asking the same outrageous $305 per square foot since last December. Drop the price by 20% and I'm guessing a buyer will materialize.

"How's a beer sound, Norm?"
"I don't know. I usually finish before they get a word in."
__Norm Peterson

Sunday, October 01, 2017

September by the Numbers

It may not feel like it to most Floridans but we get missed far more often than we get hit, thank goodness. The 2017 storm season so far illustrated above.

Three weeks post-Irma and we are gradually getting ourselves back together. The streets of Cocoa Beach and Cape Canaveral are still lined with piles of debris and blue tarps adorn many structures including my office. The administration of the City of Cocoa Beach is operating out of temporary quarters and probably will for a while. The heavy rains the last few days on top of our already saturated ground has the City Manager considering whether to shoot for at least one rice harvest at the golf course while conditions are so favorable. The river remains too high to accept any runoff  so new precipitation sits where it lands.

As expected, sales numbers were off in September as we lost a big chunk of the month to Irma. In September 2016, with no storms, 66 condos and townhomes were closed in Cocoa Beach and Cape Canaveral. This September, just 40. The rising trend of condo mortgages continued with 60% of all condo sales financed. High dollar condo sales were particularly slow with only two sales exceeding $375,000.

Another persistent dynamic is low inventory and fast sales. Over a third of the closed condos sold in less than two weeks. That's to be expected with an inventory of 193 units and an average monthly sales rate of 60. The fast sales are only happening with the units that are listed at fair prices, not the overpriced listings that predominate the MLS. It's not unusual to see sellers take a long shot with an initial optimistic asking price and then reduce when the market doesn't respond. One problem with that is some become married to that crazy number and hang there in Neverland for months. Well over half of all current listings have been on the market for over three months. In a market where a third of listings sell in the first two weeks that is a sure sing of overpricing.

The eleven closed units that were on the market over 90 days had dropped their initial asking price by an average of 7% before selling. Once reduced they sold for an average of 97% of the new asking price. All but one of the 14 units that sold in two weeks or less sold without a price drop. Seven units sold in the month at or above asking price and all 40 closed for an average of 96% of last asking price. This tells me that these sellers weren't willing to accept much below asking price regardless of whether the asking was fair or not. Consider that when deciding on an offering price.


September was an excellent month for waves with a couple of truly epic clean, well-overhead days. We lost some sand to the constant battering but considering the amount and size of the constant swell the erosion was minimal. The beach fishing suffered with this year's mullet run unfishable from the beach during the rough days. I strapped my lifeguard stand to a coconut tree for the storm but sadly it wasn't worth saving once freed.

There's something about this Sunday
It's a most peculiar gray
Strolling down the avenue
That's known as A1A
I was feeling tired, then I got inspired.
And I knew that it wouldn't last long
So all alone I walked back home, sat on my beach
And then I made up this song.

__________________________J. Buffett

Saturday, September 16, 2017

After the Big Blow



My plastic yard flamingos survived their second hurricane, unmoved.

Around midnight Sunday, I began to question my decision to ride out Irma in a little oceanfront condo in south Cocoa Beach, especially considering that my mother-in-law was a hunkering down in the next room on my recommendation. I'd had my wife evacuate her to Cocoa Beach from her home in the projected path on the west coast. A storm passing 100 miles away shouldn't be a threat. Right? But, with no Weather Channel updates since the power went out at 7:30, and the intensity of the noise outside, I couldn't be certain that the storm hadn't taken a hard turn and was hitting Cocoa Beach directly. My doubts began when the first air conditioner blew off the roof and into the pool. I had an idea what it might be but with all shutters closed I couldn't be sure that it wasn't a Cessna. We all eventually managed to drift off to sleep in the absence of a shutter failure and woke early wondering what sunrise would reveal.

Not bad. No catastrophic building failures were visible in our immediate area but most every building was showing some signs of damage with older buildings faring the worst. Elsewhere Cocoa Beach had a few buildings that are probably total losses like the Sea Aire Motel and the funeral home among others. The downtown area was especially hard hit with many commercial buildings losing their roofs including my office and the Police Department/City Hall. It's now six days later and many areas of Cocoa Beach are still without power including my neighbors right across A1A in south Cocoa Beach and most of downtown. Water supply to Cocoa Beach was lost during the storm but most properties had water restored by Wednesday. During the waterless days I, like many residents, used a debris filled pool for my daily bath and as a water supply for flushing toilets.

Some traffic lights are working today and a few businesses have reopened. I just heard that downtown will likely not have power restored until after the weekend. Overall, we were fortunate to escape with the damage we had. I know those who suffered the greater damages or those still without power don't feel very lucky but it only takes a look at the Keys to confirm our fortune.

I won't try to detail all impacts but thought those who aren't here would appreciate some report of the impact. We are battered, bruised but still standing and, some of us, looking forward to a cooked meal.

"Get up, stand up: don't give up the fight." __Bob Marley

Tuesday, September 05, 2017

Grape Sky in Morning

I'm not sure what sailor's advice there is for purple sunrises but we got a beaut last week.

The first week of September and all of Florida is on alert for approaching Category 5 Hurricane Irma. It's still too early to know where landfall will be but most of us have our plans in place should we need to move.

I wish I could report that the inventory situation is improving but it's not. Our for sale inventory in Cocoa Beach and Cape Canaveral stands this morning at a mere 194 existing condos and townhomes and 54 single family homes. At the August rate of 18 closed sales those 54 homes will be gone in three months. The 194 condo units for sale will last 81 days if we continue to close 74 units a month as happened in August. Of course, that assumes all 194 are fairly priced. That isn't the case. Many of the overpriced of the 194 will continue to linger while new, fairly priced listings sell around them.

Six direct ocean units sold for $300 per square foot or more during the month. All six were nicely remodeled and had garages and three were sold fully furnished. The other ten direct ocean east facing units brought between $226 and $270/sf with 1st floor units and those without garages bringing the lower prices. We're seeing more buyers using mortgages for condos than earlier this year with slightly more than half of the 74 condo sales financed.

Twenty one of the condos sold in the first week on the market and over half sold in a month or less. When I look at the units still for sale, over a third have been on the market for over four months, a sure sign of overpricing in this tight market. Thirty one units are asking over $300 per square foot. A few deserve it and will probably get it but the vast majority are hoping for a miracle that's not going to happen. Sellers need to realize that lack of inventory doesn't mean buyers are going to pay whatever dream number they hang on their property. Buyers should be familiar with the comparable units that have closed to come up with fair offering prices. Offers well below asking price better have justification from sold comps. A fair offer well below asking that can be justified with comps stands a chance at success as long as the seller is reasonable. Unfortunately, most of the overpriced listings are not being sold by reasonable people. The market may be tight but the units that are selling are, for the most part, selling for fair value. I still get a lot of calls and emails from people looking for "deals". In 2017, in this market, that is usually a fool's errand that goes unfulfilled. Finding a fairly priced property is task enough and, so far, in this rising market, is being rewarded.

I hope everyone fares well through the upcoming weather. LW out and hunkering down.
Completely off-topic but good advice about loaning money:

If you face the choice between feeling guilt and resentment, choose the guilt every time. If a refusal saddles you with guilt, while consent leaves resentment in its wake, opt for the guilt. Resentment is soul suicide.” ~Gabor Maté, MD 

Thursday, August 31, 2017

Getting Too Cute

I was reminded this week that experience alone is not a good measure of the quality of service one can expect to receive from a real estate agent. I closed a deal last week with a freshly licensed agent on what may have been her very first deal. I didn't ask not wanting to embarrass her. At any rate, recently out of real estate school, she handled everything from first showing to closing like a seasoned pro. She was responsive to every obstacle that presented itself and never fumbled once through the several week transaction. Her client was well-served and probably didn't realize how well they were being represented.

This week I am trying to put together a deal with an older agent with several decades of experience under his belt. Like far too many experienced agents, he is embarrassingly out of date on his contract knowledge and has asked for several crazy changes to the contract that are dangerous for his client and that will likely sabotage the deal. He has taken two days to respond to every question or counter-offer and I'm currently on day three waiting for a response to our last counter. I doubt that his elderly client is aware of how he's mishandling the listing. She only knows that he's got enough experience to be good at what he does. Not. Those of us with years of experience run the risk of becoming too cute for our clients' good. Prime example is the very common demand for escrow deposits to be held at the title company. That's a no-no that any new agent knows the reason for. Not so with many experienced agents who should know better.

Buyers and sellers, don't let your agent's preoccupation with the minutiae of the deal torpedo the deal itself. Question their recommendations if they don't sound right to you. The difference of a few days on a contractual time period may not be material and in most cases is not worth losing a deal over. I'm looking at you Mr. 15-day-VA-loan-approval guy. Likewise, demanding a delay of title commitment by a few days is of little benefit to a seller and actually damaging if it contributes to a buyer withdrawing. Eyes on the ball, guys. No score, no check.

I took the picture above of a shoreline in Mosquito Lagoon this week on a fishing trip with Travis Tanner. My Bahamian buddy and I fish with Travis every year and this trip was like every previous year, plenty of fish and a great experience. We caught all the redfish we cared to pull on and had a great day on the water. I highly recommend Capt. Travis if someone wants the fishing trip of a lifetime in these pristine waters in the shadow of the launch pads. He can be found at mosquito-lagoon-fishing.com A trip would be a great present for a loved one.

"I get up in the morning looking for an adventure." __George Foreman

Sunday, August 13, 2017

Ripping Cocoa

I sat down at the Abaco Inn last week for an afternoon hydration and a guy on a nearby stool nodded and said, "I used to surf Cocoa all the time." Huh? I guess he saw the confusion on my face and pointed at my Cocoa Beach Surf Company baseball cap. Cheers. If you surfed in Cocoa it was on a boat wake. I remembered the agent from Orlando coming to our office who called saying he had been all over Brevard Avenue but could not find our office. The Orlando TV stations and newspapers are notorious for making this same mistake.

Remember the Oscar Meyer bologna kid? My city has a first name. It's C O C O A. My city has a last name. It's B E A C H. If, like either of these people, one omits my city's last name, the margin of error is about 10 miles and in the case of the bar patron, the Indian River rather than the Atlantic Ocean. The Orlando agent was scouring Brevard Avenue in Cocoa Village not Cocoa Beach, three bridges and 20 minutes drive time away.

Small things can undo large things. It's not uncommon for a contract to specify issues to be completed prior to closing. Examples: "front door to be replaced", "all contents to be removed and unit cleaned", "broken window to be replaced", "hurricane shutters to be serviced and operational", "refrigerator to be installed". The buyer's final walk-through prior to closing confirms to their satisfaction that the agreed upon items have been completed. No fridge and closing doesn't happen until it's delivered or an agreeable price concession is made. If the buyer needs an item to be done in advance of final walkthrough, the timeline needs to be specified in the contract. I saw  an otherwise solid contract fail a couple of weeks ago because the buyer demanded an appliance installed a month before closing rather than by closing. A simple missing clause on a contract torpedoed the deal.

I called a listing agent yesterday to discuss her overpriced oceanfront condo listing. It's not unusual in these calls for a listing agent to tell me that she realizes the asking price is high but the seller insisted on the asking price and it might take some time for him to realize that the market isn't going to deliver his expectation. Other times, like yesterday, the listing agent can't or won't admit to the pricing error. In this case the unit is overpriced by at least $80,000 yet the listing agent, for some reason, is hanging her hat on a number that can't be supported by any comps. Go figure. Unsaleable listings still draw page views on Zillow so she may be able to steer inquiries to someone else's properly priced offering. In that context, any listing at any price is worth having.

Nothing much has changed with our low inventory other than properly priced listings are selling and being replaced by more optimistically priced ones. Condo and townhome inventory is still below 200 existing units in Cocoa Beach and Cape Canaveral yet we still manage to close 12 to 15 every week. School started this week and there are drastically fewer vacationers in town. I think it's safe to say real estate activity will follow that lead and cruise from now through Christmas at a more relaxed pace. Snook season opens in a couple of weeks and the mullet run will follow shortly. Sharpen your hooks and patch the cast net if it needs it.

From an outstanding recent Vice interview with Liam Gallagher. The one below is from a series of questions about various Oasis lyrics:

Interviewer: What about "I ain't good lookin' but I'm someone's child…" [from "D'You Know What I Mean"]? 
Liam: Well, I don't know about that. You can tell he (Noel) wrote that one, can't ya? Even when I sing it I'm going, "Not too sure about that one…"