Saturday, May 05, 2018
Attention listing agents: If you received an alert that I accessed your electronic lockbox for a listing that I didn't make showing arrangements for, you can relax. It is, almost certainly, because you didn't mark your lockbox and I was opening multiple boxes looking for the keys to a unit I was scheduled to show. At secure condo buildings, there is generally an exterior location where all the lockboxes are located like the palm tree with bike chain at River Bend, or the PVC pipe in the flower bed at Windward East or the chain link fence around the tennis court at Xanadu. No problem until a buyer's agent is faced with multiple identical lockboxes with no unit or broker markings. Then it becomes a total guessing game. All of you know that the Walker Bagwell lockboxes have a bright wide green stripe, easy to identify in a forest of lockboxes. Zero failure-to-identify rate and no royalties should you decide to adopt the idea (in another color please). I and every other buyer's agent would appreciate easy-to-identify lockboxes. I failed to show a unit this week because I couldn't figure out which box belonged to the unit we wanted to see. I gave it a shot but thirty minutes later after two wrong guesses and two round trips out to the tennis courts, we gave up and went to the next property. Friction.
We resume our regularly scheduled post here. Inventory has been creeping up (read: improving) and this morning we have a total of 241 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral according to the Cocoa Beach MLS. There are an additional 21 units advertised in to-be-built buildings. Single family home inventory remains low after a very busy month with 16 sales and stands at 56 for sale today in the two cities.
April was a blockbuster month for sales with 81 condos and townhomes closed during the month at prices from $80,000 to $2.2 MM. Seven oceanfront units cracked the $300 per square foot barrier with the one-of-a-kind Cocoa Cabanas penthouse bringing $415/sf at a selling price of $2,200,000. This unit, completed last year, has six bedrooms, five and a half baths, 5300 square feet, three garages and the best of the best in finishes and fixtures. Villages of Seaport continued to be busy with seven units closing in April. Xanadu and Harbor Isles in Cocoa Beach were also busy with multiple closing in each complex.
Demand and activity remain strong so I think it's safe to say that, absent some unknown negative macro event, upward pressure on prices will persist. Buyers need to keep in mind what this means when drawing their line in the price sand. Whatever the fair value of a property today, in this market, it is likely to be higher later. Keep this in mind before walking away over an insignificant amount in tight negotiations. I've watched several stubborn sellers successfully stand firm and wait for the market to catch up to their expectations. This is more true with income properties than owner-occupied. Sellers' circumstances vary but buyers would be prudent to be mindful of market direction and inventory.
I had a deal fall apart this week because of a failed mortgage. After placing the unit back on the market I had three calls to show within the hour and had a new contract by dark. Demand. My advice to clients is the same as it has been for the last several years; know which criteria matter, be realistic about what it's going to cost and be prepared to act when a target is acquired. About mortgages; one's glowing credit score, high income and assets are probably not going to be enough to convince a conventional mortgage lender to lend on a non-warrantable condo. In short that is a complex that doesn't conform to Freddie Mac and Fannie Mae's conventional guidelines. Some of the issues that will disqualify a complex are:
A single entity owns more than 10% of the units
Less than 51% of the units are owner-occupied
More than 15% of the units are in arrears with their association dues
There is litigation in which the homeowner’s association (HOA) is named
Most loan officers will promise that they can perform in a borderline complex (weekly rentals) but experience tells me that the majority of them will fail to close. For those looking at weekly rental units, a mortgage is probably going to be impossible or at best, difficult. Be realistic.
Things are happening in downtown Cocoa Beach and are especially exciting for those who appreciate a good meal. The site of the iconic Mango Tree is now a flat lot awaiting a new Fat Snook building. All is not lost, however, as Luca, the talented chef from the old Mango Tree, is now at the Pompano Grille creating new deliciousness. Recently opened at the corner of Minutemen and Orlando Avenue downtown adjacent to the Heidelberg is the new Flavour Kitchen & Wine Bar We walked around the corner to check it out last night after attending the Brian Dowdall showing and celebration of life at the Studios of Cocoa Beach and enjoyed a few craft beers and, from the small bites menu, tuna tacos and flatbread pizza. The entree selection looked enticing but will be explored another time. The plentiful selection of wine and craft beers and the cozy, hip decor will have me back. They're having a grand opening May 27 for those interested. By the way, PBS did an excellent piece about Brian last year.
Looks like the offshore fishing tournament scheduled for today will be contending with high winds and seas. Several hundred boats were registered but if called off for weather, the prizes will be raffled to the registered captains. The party at Rustys at the Port this afternoon should be a good one either way.
"You might be the prettiest, tastiest, most wonderful peach in the world but there’s just some people who don’t like peaches”. _ishnite
Tuesday, April 10, 2018
The beach re-nourishment crew and the majority of the winter visitors are gone as Cocoa Beach eases into the recess between the snowbirds and summer vacationers. It's a good time here and the slowdown is welcomed by most. There are a few spring breakers roaming around and some of the more reclusive locals have been spotted emerging from their lairs where they've been waiting out the snowbird exodus. Count me among them. May is a great time here with light traffic, small waves, warm water and low summer rates at the Cocoa Beach Country Club. Things will pick back up as schools begin letting out for the summer.
March was a busy month for residential real estate sales in Cocoa Beach and Cape Canaveral. Sixty condo units and thirteen single family homes closed in the month. Median selling price for condos was $200,000 with only three units closing for more than $500,000, all three oceanfront south Cocoa Beach. Villages of Seaport in Cape Canaveral has been unusually active with eight units closed in the month and another six units contracted since March 1 and awaiting closing. Less than half of all condo buyers in the month used a mortgage. Slightly more than half of the sold units were on the market less than a month.
Single family homes at the low end of the price range were more active with eight of the thirteen closed selling for less than $400,000. Over half of the homes sales were cash deals.
Golf business league at the Cocoa Beach Country Club starts again today for 2018 and is every Tuesday, tee off anytime from noon until dark. Everyone is welcome. Nine holes is $18 with optional skins for a couple more dollars if one is so inclined. Hope to see a bunch of you there.
"Big dogs eat first, I guess. " __Matt Warshaw
Sunday, March 25, 2018
A portion of another excellent Cocoa Beach mural on the north wall of Coconut's Fish Market.
Those tired of reading about bad listing agent behavior may want to skip this one.
Browsing my hotsheet one morning this week I notice a price reduction on a three quarter of a million dollar luxury oceanfront condo unit that's been on the market a little more than a month. I browse the photos to refresh my memory of the unit and to see if it really should command the still-high $350 per square foot price. It might, considering the remodel job, the fact that it's a corner unit and is being offered fully furnished. Problem is, I can't really tell from the listing photos because they appear to have been shot with a Kodak Brownie with Vaseline smeared on the lens. I know the listing agent would like to get a check for selling this listing but she's hampered the process with poor photos. Friction.
On the same hotsheet is another unit, same building that is more aggressively priced that has been on the market for 94 days and that has a newly accepted contract. It might have sold sooner had the listing agent bothered to put the condo name in the listing. Anyone doing a search for listings in this particular complex over the last 94 days wouldn't have found this one because it had no name entered. Friction.
In this day of universal access to the MLS and the syndication of listings to Zillow et al, non-MLS marketing has become far less effective at selling specific listings. A marketing effort made by a listing agent in non-MLS media is good for every other comparable listing including those that do nothing but exist on the MLS. A buyer attracted to a Cocoa Beach condo by a slick ad in the Dubai Gulf News will almost certainly check the easily browsed comparable listings before making an offer. Knowing that, it is imperative that MLS listings be complete and with accurate descriptions and good photos. I cringe to think of the buyers who declined to view the first listing mentioned above because the photos made the unit look so dark and small or who missed the second because the absent condo name made it invisible in a search for that building.
Takeaway: Sellers should be concerned more with how their listing appears on the MLS than by fancy extra marketing efforts. A Wall Street Journal classified for a Cocoa Beach condo is less effective than good photos in the MLS. The appearance and content of a seller's MLS listing should take precedence over all other marketing efforts. Those who settle for crummy photos or bad descriptions are not taking full advantage of the current robust market.
"Mr. Gorbachev, tear down this wall." __Ronald Reagan
Sunday, March 18, 2018
Listings with easier access are selling fast. Since March 1, fifty-five condo units have gone under contract, twenty-five in a week or less on the market, ten of them asking $499,000 or more. All price ranges are active right now with waterfront, both ocean and river, especially strong.
There are currently 155 existing waterfront units for sale in Cocoa Beach and Cape Canaveral with another 12 to-be-built units offered. Asking prices range from $74,900 to $1.13 MM. For those looking there are possibilities. As always the ability to know what price is fair is paramount.
The old Cocoa Beach Public that was torn down and currently being rebuilt is taking shape and we just heard that the newly remodeled Cocoa Beach Winn Dixie will not be among the 37 WD stores slated for closure in Florida. The Cocoa Beach City Commission has been discussing and taking public comment about relaxing the 45' height restriction and whether to allow dogs on the beach. Opinions on both sides of both issues are heated. Change is afoot.
"I overthink your punctuation use. " __Lorde
Monday, March 05, 2018
If the meager for sale inventory in Cocoa Beach and Cape Canaveral were magically repriced overnight to within 5% of fair market value, I suspect over half would sell in two weeks. The demand for property remains high but the supply of fairly priced listings is not enough to satisfy that demand. I'm amazed that so many sellers insist on crazy high prices and that agents are willing to take on those listings. Some agents do it knowing there's a good chance the owners will drop the price later when the market doesn't deliver a buyer. Others will take a listing that will never sell knowing it will garner inquiries from prospective buyers. When those buyers realize they can't negotiate a fair price on the over-priced listing they'll move on to something else. Agent finds them something else at a fair price, gets paid and the over-priced bait continues to attract fresh prospects. Rinse, repeat. For an agent willing to put in the time and with the skills to work this angle efficiently, the results can be worth it. The over-priced sellers can continue to hope for a miracle. In this rising market, appreciation will eventually catch up to all but the most optimistic fantasy prices. Other than opportunity costs and mortgage payments, our recent rate of appreciation has been enough to cover condo fees and property taxes for most properties. However, considering a boring S&P index fund returned over 20% in 2017, the opportunity cost was significant for those who rode the year out clinging to an unrealistic price.
The evidence for overpricing is overwhelming. Exactly three condos have sold in our two cities in 2018 for more than $300 per square foot. Two were beautiful units in newer buildings and the other was a beautifully remodeled corner on a high floor. All three were direct ocean, third floor or higher. There are units that are worth $300 a foot and higher but they must be special. Any unit in the Meridian or a new oceanfront building will bring over $300/sf but in the older buildings a unit must be in exceptional condition to cross that threshold. Example: I saw a new listing in Emerald Seas last week asking $327 a square foot that was worth every penny of that, in my opinion, due to an exceptional total remodel and tasteful included furnishings. Congrats to the buyer that contracted that one. It's a beauty.
Looking at the inventory of condo and townhouse units for sale this morning I find 44 asking over $300 per square foot, 15 of them over $350/sf. Only a handful of these 44 are worth within 10% of their asking price. Not surprisingly, well over half have been on the market for over a year. Many of those have had their days on market manipulated to appear to be new listings. Some change their asking prices frequently to trigger inclusion on lists of price-changed listings. All it takes is a change of $1 lower or higher to trigger that inclusion. It will, however, take more than cute MLS tricks, marketing in Dubai, or the most beautiful agent in Florida to sell a property for 25% more than it's worth. I'm guessing the buyer of that funky unit close to the Pier asking $396/sf is not going to be willing to pony up that number no matter the "$80,000 native coral wall framing the ocean view".
It's exciting to get an email like the one below from the City. This was the warning last Friday.
And this below is the reality this morning, Monday, 10.8' with a 16 second period.
The forecast was spot on. The swell was showing already Friday and was filling in nicely by Saturday evening. It's off it's face this morning with double-overhead freight train lefts breaking well offshore. The angle of the swell is hard out of the north so those beaches north of downtown will be significantly smaller than the south beaches not shadowed by the Cape. Streets north of the Pier to the Port will be best for those wanting a more manageable size. Breaking waves should be significantly larger than the open ocean measure of 10.8' at locations south of downtown Cocoa Beach all the way to south Florida. The Reef Road break in front of Mar a Lago in Palm Beach should be one of the best and biggest. Be safe out there. We look to have a few days of epic conditions after the wind switches offshore tonight or tomorrow.
"The problem of the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." __Bertrand Russell
Wednesday, February 21, 2018
Sales activity in Cocoa Beach and Cape Canaveral has been brisk as is normal this time of year. In the first three weeks of February, 58 condos and townhomes have gone under contract. Twenty two of those were in oceanfront buildings and eight were in canal or riverfront buildings. The majority of the activity was in units asking less than $200,000 when contracted. The over $400,000 bracket was strong with eight sellers finding buyers in that range.
Over half of the contracted units were on the market less than 14 days continuing the trend of fast sales for properly priced units. Not surprisingly, about a quarter of the still available inventory has been for sale for over six months, during which time, over 300 units have closed. The reason is obvious.
Inventory remains tight with only 221 existing condo and townhome units for sale in our two cities. There are an additional 21 yet-to-be-built units available for reservation. The lowest priced currently available direct oceanfront unit with at least two bedrooms is a ground floor 2/2 with garage at The Windjammer in Cape Canaveral asking $295,000. Those with a sub-$300,000 budget but willing to accept a side view of the ocean in an older building have 10 units to consider.
If we bump the budget to $400,000 for direct ocean with a view and garage, the short list begins with a gutted 3rd floor unit with 1344 square feet in south Cocoa Beach asking $310,000. For move-in ready with the same criteria there are only four, two in Cocoa Beach and two in Cape Canaveral, all asking $399,000. Raising the budget to $500,000 adds another seven to our list of possibilities, several of those over-priced. I wasn't kidding when I said tight.
The phone is already ringing with snowbirds looking for accommodations for the 2019 season. Those who haven't reserved for next year need to be making inquires now if they don't want to be stuck with leftovers.
It's time for the annual cobia run northward up the coast. Usually when we've had a sufficiently long period of cold weather, the fish will have been pushed south of here and will be congregated waiting to move north as water temps warm back up into the 70 degree range. After particularly cold winters the leading edge of the run can be thick with fish. Some are starting to show up but so far just in small numbers. The water may have warmed back up too quickly to keep them concentrated. Consequently, it's been hit or miss so far. Good luck if you're out there and feel free to drop off a slab at my office, skin-on preferably. Makes grilling much easier.
"I would like to die on Mars, just not on impact." __Elon Musk
Sunday, February 11, 2018
Condo inventory in Cocoa Beach and Cape Canaveral has increased a smidgen since my last post while single-family home listings have receded to their lowest level ever. There are currently 219 existing condo and townhome units and a mere 46 single-family homes currently for sale on the Cocoa Beach MLS. That's less than a four month supply of both at current sales levels. I received three inquiries in less than an hour of entering a listing in the MLS this week.
Prices remain strong and continued upward with overpriced listings predominating the landscape. Sellers who are renting their properties to snowbirds can be more stubborn with their opinion of value during the season while they're collecting inflated rents. It can be difficult to negotiate a fair price early in the year from a seller who may be looking at collecting 5% of the asking price in rent in the next few months. Their high ground starts receding at the end of March when the annual northerly migration begins. This is especially true in the complexes with longer than one month minimum rental restrictions. Finding a renter willing to sign a lease for at least three months after March and vacate by New Years can be a difficult task.
Those looking to purchase a condo here who hope to mix personal use with rental income are well advised to be aware of rental restrictions and their implications. Anything longer than one month minimum will be an obstacle. Some years it may work out, others not.
Shower thought of the day: I wonder what new owners in the condominium across the street from my house think when they realize that Waste Management empties their dumpsters two or three times a week between 6 and 6:30 AM. There are units on the second floor whose master bedroom sliders are level with the dumpster being slammed against the truck. It's loud at my house. It must sound like encore at a Motorhead concert in those units.
Three bedroom waterfront unit, $369,000.
Monthly fees: $435
Buyer's agent's local knowledge: Priceless
I had no idea when I quoted Ursala K. Le Guin (pictured above) in my last post that she had passed away the day before. Many thanks to her for the stories that inspired this young boy to imagine worlds far different than the one he found himself living in.
"If you don't stick to your values when they're being tested they're not values. They're hobbies." ________Jon Stewart
Tuesday, January 23, 2018
No, your computer problems weren't caused by Russian hackers and the listing agent did not lie about another offer to trick you into paying more with a bogus call for best and highest. With the critically low inventory it is safe to expect any desirable property priced within the ballpark of fair value to receive multiple offers. It is also safe to assume that another buyer faced with the same tiny inventory might consider paying over what you think is fair current value. What you should consider paying is up to you. Whether negotiating as the only buyer or making your best and highest in a multiple offer situation, it is a worthwhile exercise to estimate what the cost of buying later might be.
Example: A nice unit at Harbor Isles in Cocoa Beach is listed for $300,000. Comps suggest that $280 to $295 is probably in the range of fair current value. The unit satisfies all my criteria. It is the only unit in Cocoa Beach currently for sale that does satisfy my criteria. I prepare an offer and am told by the listing agent that there is another offer and both buyers' agents are asked to bring their best and highest offer. I had already decided that I would be willing to go as high as $295,000 to get this unit. Based on that, I submit my best and highest offer of $295,000 only to miss out to the other buyer who offered $300,000. I continue looking for another suitable unit but with the very skinny inventory am unable to find something that appeals to me. Finally, months later, an almost identical unit is listed in the adjacent building asking $320,000. We now have the previous unit as the best comp at $300,000.
Takeaway for prospective buyers: Make an effort to know the range of fair value for the properties you're interested in and be realistic with the offers you make knowing that the low inventory is always looming. Holding out for a "deal" may leave your search open-ended.
Three weeks into the new year and the 2018 snowbird season is throttling up with a vengeance. Probably due in part to the fact that everything north of the Florida line has been frozen tundra since December. New listing activity has been strong with 80 new units listed this month so far. Sales activity has been brisk as well with 48 units going under contract since January 1, seventeen of those just listed since New Years Day. That leaves us with a total of 194 existing condo and townhouse units available in Cocoa Beach and Cape Canaveral this morning. How is our bread and butter oceanfront inventory? Looking for a direct ocean unit with at least two bedrooms and two baths asking less than $400,000? There are six. Don't want ground floor? Now there are four. Must have a garage? We have a grand total of three units. It'll be a short day.
I'm happy to help those who are hoping to purchase in our area. If you'd like the benefit of my experience and knowledge of this market, shoot me an email or call. I'll do my best to help you find the perfect beach place at the best possible price.
"The direction of escape is toward freedom. So what is ‘escapism’ an accusation of?" ________Ursula Le Guin