Sunday, March 17, 2019

Watch Your Step

Here we are in the busiest month of the year for the Cocoa Beach area; the most traffic, most visitors and, usually, the busiest time for real estate sales. As I mentioned a few weeks ago, sales have been slower than what we usually experience during snowbird season. That trend continues. There appears to be no one reason for the slowdown other than somewhat optimistic pricing for residential property. It's certainly not for lack of real estate agents. I don't remember any other time when there were more agents working this small market, not even during the money-on-trees years of the mid-2000s. Visitors would be well advised to lower their voices when discussing a property search in public lest they be tackled by multiple nearby agents which will probably include their server and bartender. I'm starting to think that Uber requires a real estate license to become a driver given the number of real estate business cards I've been given during a ride.

The February numbers are in and it was a decent month despite being slower than last year. There were 43 total condo and townhome units closed in the month in Cocoa Beach and Cape Canaveral. Direct ocean units sold ranged from $239 per square foot for a nicely updated 2nd floor Majestic Seas 2/2 to $337 per square foot for a 2nd floor 3/2 Artesia in Cape Canaveral. Median price paid for direct ocean in February was $294 per square foot. Note that the price per square foot is an inaccurate gauge and is useful only as a starting point for comparison. Those units that can command selling prices over $290/square foots are usually remodeled and/or newer with garages and furnished.

There were 12 single family homes closed in the month, all in Cocoa Beach. Prices ranged form $1.26 MM for a direct ocean Cocoa Beach 4/3 to $315,000 for an updated 1763 sq ft 4/2 a few blocks from the beach. A three quarters of the home purchasers used mortgages while half the condos were purchased for cash.

Inventory is better than just a few months ago with 266 existing condos and 72 single family homes available this morning in our two cities. A third of the homes and 20% of the condos have been for sale for six months or longer. We know what that likely means, overpriced.

There are several new restaurants in downtown Cocoa Beach since my last list that I've not had the opportunity to visit. The 4th Street Filling Station is getting good reviews as is Luna. I'll try to do an updated list as soon as the snow has melted. Stay tuned.

"Only put off until tomorrow what you are willing to die having left undone." __Pablo Picasso

Monday, February 25, 2019

What Happened?

From January 1 through February 25 last year, a total of 98 condo and townhome units were closed in Cocoa Beach and Cape Canaveral. In the same period this year, we have closed 67. That's a surprising  slowdown considering that we began 2018 with an inventory of just 173 existing condo units for sale in our two cities but are sitting on 263 units for sale this morning, an increase of more than 50% in a year's time. 

What happened? My best guess is that sellers' expectations have gotten ahead of buyers' appetites. I've commented often in the last few years about the prevalence of overpriced listings and it appears that trend is dampening sales. Over a quarter of the current inventory has been for sale for over 180 days, many of them cancelled and relisted multiple times to appear fresh. If a listing agent is doing this, there's a good chance the property is overpriced. In fact, it's probably prudent for buyers to approach all listings as likely to be overpriced. 

At the risk of sounding like a broken record, buyers need to know the range of fair value of the properties that they are targeting for purchase. Neither the Zillow Zestimate nor the Property Appraiser's "market value" can be trusted to be close to accurate. Only a comparison of recent sales of comparable properties, adjusted for differences can be trusted to indicate the neighborhood of current value. As a side note, there is no trustworthy way to determine exact value, only a range. Any good buyer's agent can determine the fair range. If you can't trust your agent's opinion of fair value, you have the wrong agent.

Hope everyone has been enjoying the early summer weather while most of the nation has been experiencing crazy low temps and heavy snowfalls. Our trees and flowers like the hibiscus pictured have begun blooming early in response to the early warming. Some trees are sprouting new leaves even as last years old leaves continue to fall. No complaints here.

During the same time that sales were lagging here on the Space Coast, the little engine that could, the Mars Opportunity rover, received its last command from Earth. It was launched from Cape Canaveral Air Force Station in 2003. NASA engineers had sent over 1000 commands trying to reestablish contact after a major Martian sandstorm broke Earth contact with Opportunity last June. Designed to last just 90 Martian days and travel 1,100 yards (1,000 meters), Opportunity vastly surpassed all expectations in its endurance, scientific value and longevity. In addition to exceeding its life expectancy by 60 times, the rover traveled more than 28 miles (45 kilometers) by the time it reached its most appropriate final resting spot on Mars – Perseverance Valley.

"My battery is low and it's getting dark." __last message received from Opportunity as the sandstorm moved in and covered the solar panels

Thursday, January 31, 2019

It's Local and It's Different

Someone questioned why the statistics I reported in the previous post were so different than what they'd read elsewhere. The stats and trends presented on this blog are and always have been Cocoa Beach and Cape Canaveral specific and are almost always at odds with overall Brevard County stats. We've seen in the past that a housing crisis in Palm Bay may not even be felt in Cocoa Beach. Numbers reported by our MLS and repeated by news media and other real estate sites are for the county as a whole and don't present a clear picture of the individual markets within the county. The disparity was especially true during the Great Money Evaporation event of 2008-2009 and the subsequent recovery years. The trends and statistics of real estate activity in Cocoa Beach and Cape Canaveral will never mirror Brevard County as a whole.

In Cocoa Beach and Cape Canaveral there are four times as many condo and townhome units for sale as single family homes. In the county as a whole that proportion is reversed with three times as many homes as condos for sale. That difference makes the county statistics misleading for those only interested in the beach market. Readers can continue to expect only the Cocoa Beach and Cape Canaveral market conditions here.

Inventory has ticked up through the month of January. There are currently 265 existing condo and townhome units and 64 single family homes for sale as reported by the Cocoa Beach MLS. Note that my inventory number doesn't include units in proposed projects offered as pre-construction reservations of which there are thirteen today.

Random observations at the end of the first month of the new year;
Initial asking prices are becoming more ludicrous. Sellers have always had optimistic opinions on the value of their properties but that optimism has reached new heights in our market. A listing agent who wants to sell a property knows that accurate pricing is paramount but with the crazy increase in number of agents pursuing listings in our market most have adopted the strategy of taking a listing at whatever price the seller wants in order to get the listing. They know there's a good chance the seller will moderate their expectations after the market has failed to deliver a buyer in a reasonable time and may eventually lower the price enough to close a deal. Even if they don't it is another page on Zillow that will draw inquiries that can then be sold something else that is priced fairly.

A quarter of the units closed in the last 60 days sold in the first week on the market. Obviously they were priced right. Another quarter of those closed sales took from five to fourteen months to sell, all but one with multiple price changes along the way. Obviously overpriced. Buyers, you better have an agent who can recognize which properties are priced fairly and which are not. A buyer who chooses to deal directly with the listing agent needs to have the skills necessary to determine the fair number or odds are good that they will overpay for one of the majority of listings that are way over-priced. A 10% discount isn't a good deal on a property that is 25% over-priced.

The competition to stand out on Zillow has become fierce as have the tactics by agents to boost their numbers there. The transaction numbers, reviews and ratings can't be trusted and it's gotten worse. A seller might contact Josh Altman to list their property because his transaction numbers are so high but find themselves stuck with Mikey because Josh can't possibly handle fifty listings and, frankly, has other more important listings that deserve his direct involvement. The good news is that Josh will agree to the seller's crazy high asking price because it will give him another listing on Zillow to attract more inquiries. When Mikey closes your sale there's a good chance that Josh will get the credit which will help him boost his numbers and chances of getting the next inquiry. It keeps Mikey busy and Josh in Maseratis.

As I write this there is a 77 degree difference in the temp in Cocoa Beach and Chicago. 63 here, -14 there. It's not just the fishing and beaches that have made Florida so crowded. I'm thinking it might get worse.

I have squandered my resistance
For a pocket full of mumbles, such are promises
All lies and jests
Still a man hears what he wants to hear
And disregards the rest

__________________________Paul Simon

Friday, January 04, 2019

New Year, Same As The Old Year

This beautiful orchid decided to bloom again for Christmas and New Years. It's more beautiful than the picture reveals and its two neighboring orchids are about to follow.

We begin a new year in Cocoa Beach with about the same residential inventory and rate of sales we began last year with. The same supply/demand imbalance persists as well. It seems reasonable to expect most trends that we saw in 2018 to continue.

We began 2019 with 238 existing units for sale in our two cities. That's after a year in which we closed over 734 units. That's a 17 week supply at the average sales rate of the last twelve months. We would run out of supply by Easter without new listings. In addition, a large portion of the current inventory is overpriced, evidenced in part by the large number of listings on the market longer than six months and the high number of listings whose agents are repeatedly cancelling and relisting trying to trick the MLS days-on-market clock. It's still amazing to me that agents think that deceiving buyers with artificially low days on market will somehow sell an overpriced listing. If it ain't selling, it's the price, people.

While we're on the subject of prices let me share some observations about offers. I've prepared and received many hundreds of offers over the years and I've seen quite a few that never stood a chance of success, a large number recently. Beginning negotiations on a positive note helps and price and terms of the very first offer set the tone. Regardless of commentary to the contrary, emotions are a real part of most real estate transactions. We have humans on both sides so it's reasonable to expect human reactions and emotions. Assuming a property is priced within the range of what the data suggest is fair market value, an offer reasonably near that range will usually be received by a seller as a constructive beginning. An offer way below that fair range is usually received with negativity and little to no optimism that a deal will be possible. Constructive optimism or adversarial negativity. That first offer determines the tone of the negotiations and often has an impact on final terms. Anyone making a crazy low offer should be prepared to have to start over at a higher number when they receive no counter from a discouraged seller. Another thing; I have presented enough low offers to know that if one part of an offer is unattractive the other parts better be compelling if there is to be hope for a deal. An offer far below asking might be considered if it's cash, with a quick close. Might. An offer with a close more than 45 days in the future, contingent upon a mortgage or even worse, the sale of another property, better be close to the seller's wished-for selling price to stand a chance of consideration. Buyers who are compelled to offer low should consider the attractiveness of the terms and make them as shiny as possible if they hope to have any chance of success. New, overpriced listing might need a little seasoning time on the market before an unrealistic seller will consider reasonable offers.

Fifty two percent of MLS-listed condos and townhomes sold for cash in 2018 in Cocoa Beach and Cape Canaveral. Remember that when the next expert predicts that rising interest rates will kill the real estate market. Interest rates were not a consideration for over half of condo purchasers in our market last year.

Those of you hoping to purchase in Cocoa Beach or Cape Canaveral in 2019 should be aware of the low inventory and the preponderance of overpriced listings. It will help to have a good idea what type of property you want (and whether it is even reasonable in this market) and be able to act quickly when something matching that idea appears. You and your agent need the ability to estimate current fair value and you need the resolve to resist your urge to make a lowball offer "just in case". With our supply/demand imbalance no seller needs to sell below market value. The fact that an offer is cash is unlikely to entice a seller to sell cheap when over half of all buyers are paying cash. Despite everything, barring some outside force or event, we can reasonably expect the current sales rate of over 14 condo units and 3 houses per week in our two cities to continue. Good luck out there and feel free to contact me if you have any real estate related questions. Happy and rewarding New Year.

"She says, like, literally, music is the air she breathes...
I wonder if she even knows what that word means,
well, it's literally not that." __Josh Tillman

Sunday, December 09, 2018

I Tried to Call

For the antsy sellers out there, here's the way showing property usually works. I plan my list of showings and give the listing offices a one hour window for each. Typical day will have a list of eight properties. We plan to start at 10:00 AM with 30 minutes planned between showings. That includes 15 minutes showing and 15 minutes drive time. If everything goes according to schedule, we'll hit number eight somewhere around 2 PM.

The clients show up 30 minutes late at 10:30 because Junior upchucked his Happy Meal on the way and had to get a fresh change of clothes. We get everyone loaded up and breeze through property number one and we're at number two at 11, a little late but still within our one hour window. The charming homeowner is home and by the time we've heard the history of the home and her grandfather's role in the founding of the city it's almost 12. With one quick bathroom stop for little sister we're at number three by 12:30, now running an hour and a half late. The family loves number three and spends 45 minutes there. Junior is now complaining that he's hungry and Mom asks if we can run through a drive-through and pick up food for the kids. We pull up at showing number four at 2 PM now fully two hours behind schedule. While the family tours the thankfully vacant home I begin calling listing offices and agents to alert them of the schedule delay so they can warn the sellers. It's a Sunday afternoon and, as expected, two of the offices are closed. One of the listing agents has not put her cell number in the listing info so that seller won't be getting a notice of our tardiness and the other one isn't answering her cell so now we've got two potentially pissed off sellers when we show up.

The best laid plans often fall apart. I'm certainly not going to hurry up my buyers who may be spending more time than I planned in a property they like. I wouldn't dream of telling someone who is about to make the biggest purchase of their life that they need to stick to my schedule because they may upset some stressed out seller who only wants to sell their house to people who can show up on time. Life conspires to make us late. I wish I could tell every seller exactly when I'll be there and actually make it but it just doesn't work out that way. As far as calling the seller to alert them that we're running late, rarely am I given a seller's phone number. If it's a weekend or late afternoon, the listing office is often closed or if it's a certain local office regardless of the day, I have to leave a message on the automated answering system and hope for a call back. That seller just isn't going to get a warning that we're running late.

Sixteen shopping days to Christmas and there are 231 condo and townhouse units for sale in Cocoa Beach and Cape Canaveral. Asking prices run from $72,500 to $1,500,000. Fifty five units were reported as closed in the month of November in our two cities. Only three of the sold units brought over $450,000, two of them at Stonewood in Cocoa Beach and a gorgeous 8th floor south facing 3/3 at Michelina that sold for $930,00.

Single family home sales remained strong with eleven homes sold in the month, six of them over a half million dollars and two of those over a million. There are 66 homes currently offered for sale on the Cocoa Beach MLS. Showing activity has been strong and the year looks to finish with a slight increase in number of sales over last year's numbers. If you're looking, best of luck. You have competition for the few fairly priced listings among the scores of optimistically-priced properties that dominate the MLS. Happy holidays to all.

"Guilty feet have got no rhythm." __George Michael

Tuesday, November 20, 2018

Call Me If You Get An Offer

"My clients like the property. Call me if you get an offer." At first it seems like a reasonable request but upon further reflection it seems ridiculous. Maybe the agent's clients have been looking a long time and can't seem to bring themselves to actually make an offer. In that case maybe knowing that someone else wants the condo unit they liked might spur them to make an offer. The reality is that this ensures that they will only participate in multiple offer situations and will have to pay top dollar to win the contest. Chances of the listing agent calling the reluctant clients' agent are not 100%. Should they receive an attractive offer from another buyer, the seller and the agent may not want to spook them by enticing another offer into the mix. In this low inventory market, my best advice to prospective buyers is to make an offer if you find what you're looking for. Don't force yourself into a multiple offer scenario by waiting to see if someone else offers.

Activity feels like it's picking up. It's the 20th of the month and 28 condos and townhomes and eight single family homes have closed so far in the month in Cocoa Beach and Cape Canaveral. Half the houses sold for over a half million and two brought over a million, one direct ocean and one on a short canal in the Cocoa Beach Country Club area. Three of the direct ocean condo units brought over $300 per square foot. Inventory remains static with new supply appearing at virtually the same rate as the ongoing sales.

Those of you looking to purchase should keep in mind that you have competition out there. With our ongoing low supply, desirable, fairly-priced listings are selling quickly. Waiting for another offer on a property you like will assure that you pay more than you could have as the only buyer. I would advise for the same reason, low supply and strong demand, that you resist your natural inclination to offer too low. A low offer makes negotiations adversarial from the beginning and rarely yields a lower final price. An offer close to what your research tells you is fair value will be seen as constructive to a seller and might allow you to seal a deal somewhere below current value. Make a lowball initial offer and chances are you will be forced to bid against yourself without a counter from a seller you just convinced that you aren't serious. Good hunting.

The annual Art Show downtown Cocoa Beach begins the day after Thanksgiving. It's always fun with lots of cool art, good food and live music all day and night. Come on out and enjoy.

The rumor that The Fat Snook moved isn't true. The confusion may have started when Crush XI, the Snook's sister eatery moved to downtown Melbourne from Cocoa Village. Cocoa Beach folks, rest easy. We've still got the the kind of dining experience and food artistry one typically associates with much larger cities. Yours truly is not complaining.

"I'd like to ask your help. The people in the cheaper seats, clap your hands.  And the rest of you, if you'd just rattle your jewelry." John Lennon at the Beatles Royal Command Performance at the Prince of Wales Theatre, London. Nov 4, 1963

Friday, November 02, 2018

Backup Contract For The Win

I don't understand the reluctance to write a backup contract. It seems many agents and prospective buyers see them as not worth the time. In my experience, a backup contract is a good thing for everyone involved except the original buyer. In most residential  real estate contracts the buyer has the right to cancel the contract without penalty within his inspection period. That right is often abused by buyers trying to renegotiate price based on insignificant issues discovered during inspection. It's not uncommon nor unreasonable to ask a seller for repairs or a price concession for serious issues found during inspections as long as the request is within reason. "Within reason" doesn't include that giant stain on the bedroom carpet that was plainly obvious the day they first visited the property nor does it include a perfectly functioning 3 year old AC unit showing rust. It's the beach, OK? Rust happens. A seller holding a good backup contract has the power and incentive to refuse all requests including reasonable ones. A seller rejecting a perfectly reasonable repair request might just provoke the original buyer into canceling his contract allowing the backup to slide into primary position. A quick search of this blog for "backup" will find several posts. Backup, What Is It Good For? from 2014 covers the subject well for those who are interested.

The first of November 2018 and inventory of residential properties is virtually unchanged from the first of the year; 223 existing condo and townhome units and  65 single-family homes for sale in Cocoa Beach and Cape Canaveral. In the month of October a healthy 66 condos and townhomes were closed. Not bad for a traditionally slow time of year especially considering the pervasive overpricing of the inventory. The upper price ranges were active with 11 condos selling between $400,000 and $970,000. Eighteen of the sold condos sold in the first week on the market.

In the same month ten homes were reported as sold, six of them for $500,000 or more. Only two were on the market more than 75 days and seven of the ten sold in the first month on the market. A combo of low inventory and fair pricing made this possible. I wish most of the condo sellers had the same mindset. I suppose since the majority of condos are second home or investment properties, sellers are more likely to initially price optimistically than a home seller who usually needs to close in order to purchase a replacement home. Just a thought. Could be entirely wrong.

Red tide in the ocean in Cocoa Beach has come and gone depending on wind direction the last two weeks. Day before yesterday after strong onshore winds all night, stepping outside in the morning in some areas of Cocoa Beach was like being hit with tear gas, instant coughing. Yesterday the wind switched offshore and the air was clean and pure again. It's fine again this morning as I write this.

It's time to be making plans for the Thanksgiving Art Show in downtown Cocoa Beach. Should be a typical good time with an excellent lineup of live music planned for the main stage and the usual mix of excellent art. I hope to see many of you there.

If anyone is still looking for a snowbird rental, my office just had a beautiful direct ocean unit on an upper floor hit yesterday. Contact me or my office for details.

The exodus is here.
The happy ones are near.
Let's get together,
before we get much older.” __
The Who

Wednesday, October 03, 2018

I'm Not Taking Less Than My Appraisal

Dear Larry, I am under contract on a home in Cocoa Beach and I was able to negotiate a purchase price $10,000 less than a recent appraisal on the home. Did I get a good deal?

Maybe. Maybe not. Residential real estate appraisals are not definitive. An appraisal is the appraiser's opinion of the market value of a property on the date of the appraisal. In simple terms, the appraised value is the appraiser's opinion based on recent sales of nearby, comparable properties and adjusted for differences. Market value by definition is: the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

That recent appraisal was probably a refinance appraisal. A refinance appraisal differs from a purchase appraisal in that the appraiser is not in possession of a contract with a price (target). He is essentially going in blind and must come up with appraised value using comps alone. That doesn't mean that a refinance appraisal is less accurate but it does leave room for a greater range without that target contract number. The buyer who negotiated for $10,000 less than the refinance appraisal shouldn't be surprised if the new appraisal done for their mortgage comes in closer to their contract price than the refinance number. I have seen sellers refuse a fair offer because it was less than their refinance appraisal number. Unless the appraiser is offering to buy the property for his appraised value, remember to treat it as what it is, an opinion of value. Appraiser Tom Horn did a good write-up on the differences in appraisals.

Inventory of condos and townhomes in Cocoa Beach and Cape Canaveral has been virtually unchanged all of 2018 and is hovering at 222 existing units for sale in the two cities this morning. In the month of September we had 48 units reported as closed. Twenty three of those were cash deals. Eleven were in oceanfront complexes and those eleven closed at prices between $270,000 for a 1st floor Cape Winds 2/2 weekly rental unit and $675,000 for an impressive 2525 square foot 5th floor SE corner penthouse at Hacienda del Mar in south Cocoa Beach. Median price of all 48 was $230,000.

Activity in single family homes remained slow with only seven closing in the month. All but one were in Cocoa Beach. Three non-waterfront homes sold in Cocoa Beach at prices between $320,000 and $350,000. Someone paid $1.5 MM for a gorgeous 9 year old 3836 square foot pool home on the open river in south Cocoa Beach. There are 73 homes currently for sale.

Green fees at the Cocoa Beach Country Club changed to the higher winter rates on October 1 and will stay there until after snowbird season. Golfers can save on the rates by purchasing advance rounds. Ask for details in the pro shop.

Raised on promises
She couldn't help thinkin' that there
Was a little more to life
Somewhere else
After all it was a great big world  
___________________________Tom Petty