Sunday, December 18, 2005

Pre-construction realities

I am still not certain of the accuracy of our new MLS, so, I'm not posting my normal sales stats. However, from direct observation, there has been a surprising surge of activity in the last two weeks with buyers out in force, taking advantage of the huge and still-increasing inventory.

We are seeing quite a few pre-construction buyers in soon-to-close buildings dropping prices close to the original pre-construction prices. This is a trend I believe will continue through 2006. By the way, in one new riverfront building, over three quarters of the units are currently for sale. Zero have flipped so far. The days of plunking down 10% on a pre-construction unit and doubling or tripling your money in a year or so are definitely over. We will probably see many of these "investors" clinging to their expectations and refusing to sell at realistic levels. They will soon be paying thousands of dollars a month for their "investment" unit, hoping for resumed appreciation. That said, if you want a beach get-away in a great little beach town, now is a great time to be looking. You can still buy a nice direct river condo two blocks from the beach for under $300,000.

My opinions about investment returns and direction of our market are not shared by the bulk of the real estate community. In fact, the National Association of Realtors continues to use words like "slowed market" and "soft landing" and, while admitting to probable slowing sales, they project no drop in prices. Being cautious and realistic, I think a possible pullback is likely in some areas of our market. As the current crop of new, high-end units hits the market, the high inventory will encourage some investors to moderate their expectations and many will likely reduce their asking prices rather than make payments. Hopefully those who actually close will begin using their new units and will bring their friends and family to our beautiful beaches and enjoy our area for all it has to offer. Not a bad consolation prize. If my home stays at a level valuation for years I am still the winner. I get to fish the river, breathe the fresh ocean air and I still paddle out for a fun surf when conditions are good. Yesterday the surf was a blast and I enjoyed trading waves with one friend and an occasional dolphin for a couple of hours. Until next time, take everything you hear about real estate with a grain of salt and do your homework. It really is about location, location, location.

One last comment. Nothing I have said here applies to single-family homes in Cocoa Beach. That market is entirely separate from the condo market and is affected by mostly different dynamics. I doubt we will ever see more than 10 new homes built in a year again in Cocoa Beach. There is no more land. Most new homebuilding here begins with a teardown. For that reason, we will never have a sudden big increase in new inventory like we've just seen in high-end condos.

Sunday, December 04, 2005

A Tale of Two Cities

It was the best of times, it was the worst of times. As this applies to Cocoa Beach and Cape Canaveral, our current market is the best of times for buyers and the worst of times for sellers.

Like a carrot on a stick urging the horse forward, buyers are retreating just as sellers are coming to terms with the changed market. We have seen an incredible 124 price reductions of MLS listed properties in Cocoa Beach and Cape Canaveral in the last 30 days. Most notable was a developer's reduction of two pre-construction townhome units from $595,000 to $450,000, a drop of over 24%. Will we begin to see developers drop prices in unsold units to prices below what early buyers paid? Possibly. However this plays out, these signs do not point towards a continued bull run. My advice is to stay away from all pre-construction unless you plan to live in the unit. If you are purchasing, research recent sales and be aggressive with your offer and back up your offer with stats. Feel free to quote my stats here as they come from our MLS and are meticulously sorted to eliminate anomalies and mis-stated listings. If the seller is unyielding, move on to another property. There is a record inventory right now and it's increasing daily, so, there is plenty to choose from.

My object here is not to dissuade you from purchasing but to urge you to exercise caution and not to expect the quick profits of the last six years. I'm not predicting a drop in prices but I think it is possible, at least in some areas of our market, most likely new high-end condos. As always, Cocoa Beach is the best place in Florida to live and the coming months may present a good opportunity to acquire a special property. Contact me if you'd like to go out there and play this hand.

The opinions here are my own and, as you may have guessed, are not popular within my industry. I'm just calling it like I see it.

My flow of stats may be interupted in the coming weeks as we shift our MLS to a new system. I will resume the postings of stats as soon as I'm sure of the credibilty of the data.

Tuesday, November 29, 2005

Buyers' Market in Full Force

You'd have to be living in a cave not to have heard about the "cooling" real estate market. Cooling is an understatement when applied to our local market in Cocoa Beach and Cape Canaveral. We had a snail's pace of sales these last 2 weeks with only 15 total contracts and are at a new record inventory of 732 residential properties listed in our MLS. This contrasts with 465 total on April 2nd of this year. If you're a buyer, you are officially in the driver's seat. This does not necessarily mean that the bull run is over. This is always the slowest time of the year, so, next year we may be looking back at this as a great buying opportunity.

Interest rates eased slightly this week with the 30 yr. fixed at a nationwide average of 6.28%.

MLS Stats for Nov. 29, 2005

contracts last 14 days

condos over $500,000____ 3
condos under $500,000__ 10

homes over $500,000____ 0
homes under $500,000___ 2

active listings

condos all prices_______650
condos over $500,000__ 165

homes all prices_______ 82
homes over $500,000__ 42

Tuesday, November 15, 2005

MLS stats for Nov. 15, 2005

No commentary today, just hard facts. Buyers, your time is now.
Record high inventory, record slow sales.

MLS Stats for Nov. 15, 2005

contracts last 14 days

condos over $500,000____ 2
condos under $500,000__ 12

homes over $500,000____ 1
homes under $500,000___ 1

active listings

condos all prices_______621
condos over $500,000__ 165

homes all prices_______ 79
homes over $500,000__ 41

Wednesday, November 09, 2005

Another milestone

After passing the milestone of 500 active condo listings in Cocoa Beach and Cape Canaveral in September of this year, we broke through 600 this week, less than 2 months later, at the same time that the rate of sales hit it's yearly low. What this means for buyers is bargaining strength and plenty of choices. For sellers it's a reality check. The days of multiple, over-asking-price offers are over, at least in the short term. I still see plenty of optimistically-priced properties but we are starting to see sellers come to terms with the changed market and set their prices accordingly. If you're looking to purchase in our area, this is your best opportunity in years. I expect an increase in activity in January as our snowbirds arrive (at a less frenzied pace than the last few seasons), so, your chances of hammering out your best deal will be before that time. Email me for a list of my favorite deals of the moment.

Wednesday, November 02, 2005

Mortgage rates, taxes and a slowed market

Here's a new listing from another office this week. Direct river, 2/2, 2nd floor condo with views across the wide part of the Banana River. The ocean is just across the street. Somewhat over-priced at an asking price of $370,000, furnished, but if the seller will get realistic this is an impressive unit in my favorite part of Cocoa Beach. Here's the view from the living room.



Freddie Mac reported this week that mortgage rates are at the highest point in 18 months with an eighth consecutive weekly increase. Will rising rates kill the real estate market? Maybe not. Consider the fact that new mortgage products introduced in recent years have multiplied the pool of qualified buyers by a factor of 2 or 3 according to lenders. With products such as no-doc and stated-income loans, buyers that couldn't otherwise find financing can now qualify for loans. Also consider that as rates move up, stretched buyers have alternatives to conventional 30 year fixed rate mortgages with products such as interest-only, 40 year, and other loans that offer lower payments. I not suggesting that buyers use these products, just that the impact of rising rates may be less this time than in previous periods of rising rates.

Property taxes. I am often asked by buyers what the property taxes are for a property. Unknown to many is the fact that the amount of tax the current owner is paying is not relevant to what a new owner will pay. Any change in ownership will trigger a new assessment based on current value. Many homesteaded properties have assessed values that are far below actual current value. In Florida homesteaded properties receive a $25,0000 reduction in the assessed value and, more importantly, the assessed value annual increase is capped to the lesser of 3% or the CPI. In the last ten years the CPI has been less than 3% eight times. What this means is that the $500,000 home you're considering may be on the tax roles for less than $100,000 with a current tax bill of less than $1000 annually. The purchaser of that property will probably be looking at a substantial increase in his taxes by the second year after purchase. To figure your possible tax liability on a new purchase you can go to the Brevard County Tax Appraiser's website and use the handy auto-calculator there or, for ballpark estimates, use my rule-of-thumb of 1.6% of the purchase price. This is for easy projections only. Your actual tax bill may be more or less but it's close most of the time.

Here are the stats for the last two weeks. As you can see, sales have slowed even more and inventory is climbing rapidly. If you're thinking of purchasing, you have much more negotiating strength now than you'll have after the holidays when our winter visitors arrive.


MLS Stats for Nov. 2, 2005

contracts last 14 days

condos over $500,000____ 3
condos under $500,000___ 6

homes over $500,000____ 2
homes under $500,000___ 1

active listings

condos all prices_______588
condos over $500,000__ 157

homes all prices_______ 65
homes over $500,000__ 41

Friday, October 28, 2005

Hurricane Impact on Prices

Is it possible for a hurricane to impact the value of property that was physically undamaged? In Louisiana and neighboring states after Hurricane Katrina, undamaged property, both commercial and residential, saw immediate increased demand and prices as people and businesses were forced to relocate. Another less obvious effect post-hurricane is the increase in the prices of building materials and labor. Florida builders have reported price increases in plywood and OSB sheeting ranging from 30 to 50% since the first of September. Asphalt shingles have been increasing steadily at around 5% per month with manufacturers struggling to keep up with demand and actually rationing some suppliers. Before the storms we were seeing cement costs rising about 20% every 6 months and similar moves in sheetrock. In addition to these rapidly rising costs, much of the construction labor force has shifted to the Katrina devastated areas. This has contributed to increased labor costs for Florida builders. How does this impact existing property value? It increases the costs to replace and the costs to build new competing properties. This increase has not shown up yet in the prices of MLS listed properties as we are in the middle of the seasonal slow season and we're on the heels of a big run-up in prices. However, the economic reality is that it must trickle down to asking prices at some point. I think this is bullish for existing Florida property values. As always, these are my own opinions based on reported facts and lots of creative thinking. Email me if you'd like to share your own thoughts. larry@southcocoabeach.com

Tuesday, October 18, 2005

Change of sentiment

It's been a while since my last update. I thought, considering the slow state of the market, that I'd take the opportunity to get away with my wife, Kim, and spend a little time in the mountains of North Carolina. My trip was eye-opening for me. The pace of construction across the south seems as strong as it is here in Florida. In fact, after looking at prices and paces of other markets, I have changed my opinion on the near future trend of our Cocoa Beach market. Even with 30 year fixed-rate mortgages back up over 6% and increasing supply in our local market, I think that now is a great time to add properties to your portfolio. That is, carefully-selected properties.

As you can see from our stats below, our condo inventory is steadily increasing with a lot of new properties in the high end. Because of the slow season, it's taking longer to move units and buyers are in a powerful bargaining position. Consider a new listing from another office this morning;


View at River Lakes

1244 sq. ft. unit for $299,000 in River Lakes on the Banana River with boat slips available on request. I own a unit in this great complex that had zero damage during last year's storms and has healthy reserves and is 2 blocks from the ocean. This is exactly the type of investment property that I think makes sense right now. I'm still very bearish on pre-construction condos in the high end because of the over-supply. We are already seeing desperate sellers in a few of the luxury projects that are nearing closing and I suspect that there will be some very attractive deals in the coming months. If you'd like a list of my favorite current targets, email me at larry@southcocoabeach.com or call me at 321.917.5786. Until next time, be safe and get out and enjoy this great October weather before Hurricane Wilma interrupts.

MLS Stats for Oct. 20, 2005

contracts last 14 days

condos over $500,000____ 4
condos under $500,000__ 12

homes over $500,000____ 3
homes under $500,000___ 2

active listings

condos all prices_______558
condos over $500,000__ 156

homes all prices_______ 63
homes over $500,000__ 38

Sunday, September 25, 2005

The lazy days of September

Things are quiet in Cocoa Beach this time of year. The students are back in class and our winter visitors won't arrive for a few months. The water is still warm, we've had great surf for weeks, the fall mullet run is on, the fish are biting and you can play 18 holes with a cart at the Cocoa Beach Country Club for a paltry $24.



These are just a few of the reasons why I love Cocoa Beach and why September and October are my favorite months of the year.

Our market is quiet as well. In the last 14 days we have had only 25 residential properties contracted in Cocoa Beach and Cape Canaveral. That is our slowest rate of the year by a good margin. Our inventory has reached a new record level as well. We have crossed the 500 level in MLS-listed condos with 150 of those priced over a half million dollars.


MLS Stats for Sept. 25, 2005

contracts last 14 days

condos over $500,000____ 4
condos under $500,000__ 18

homes over $500,000____ 1
homes under $500,000___ 2

active listings

condos all prices_______507
condos over $500,000__ 150

homes all prices_______ 62
homes over $500,000__ 37

If you'd like to take advantage of the slow season in your property search, email me at larry@southcocoabeach.com or give me a call at 321.917.5786. Now, step away from the computer and go outside and enjoy the best time of the year. See you in or on the water.

Tuesday, September 20, 2005

Irrational Exuberance with a twist

Irrational exuberance. Those famous words were uttered by Federal Reserve chairman, Alan Greenspan, during a speech on December 6, 1996 in reference to soaring stock prices. Here is the entire speech for those of you so inclined.

Irrational exuberance is alive and well in our local real estate market but not where one would expect. In the red-hot real estate market of the last 5 years, there has been plenty of justified exuberance as values have skyrocketed. We have seen some property values double in less than two years. The fortunate property owners during this period have every right to be exuberant. The local newspaper has printed countless articles about high appreciation rates and increasing home prices. Buyers have been very aggressive in accumulating properties in order to participate in this unparalleled boom and prices have continued to climb, at least until now. It has become evident in my market, Cocoa Beach and Cape Canaveral, that the pace has slowed considerably. Buyers have become fewer and more cautious. The sellers, on the other hand, are being much slower to come to terms with the slowed market. I continue to see over-priced new listings and increasing inventory of homes and condos. The unwillingness of sellers to adjust their asking price to the new slowed demand has brought us to a teetering point. It can go either way. The buyers can regain their previous zeal for properties and resume paying ever-increasing prices or sellers can get aggressive and reduce prices to attract reticent buyers. My gut feel is that the irrational exuberance today is that of the unbending sellers, clinging to the hope of ever-rising values. As always, I could be wrong. I have demonstrated that capacity in the past. In any event, I believe that buyers should negotiate aggressively and use this softening to their advantage. Good luck out there. Do your homework and don't overpay.

Saturday, September 10, 2005

Between Storms

An interesting thing happened this past week. Buying activity picked up significantly after being pretty much flat for weeks. We have seen 5 houses over $500,000 go under contract in just the last 7 days. I can't say for sure what spurred this burst of activity but the expected easing of Fed policy in response to the Katrina damage and the projected, prolonged low interest rate scenario could have eased some fears of a cooling market. Maybe buyers are realizing that whatever happens to the housing market in general, if you want a place in Cocoa Beach, now is better than later. We are seeing a still-increasing supply of homes and condos on the market but activity has picked up in a normally slow time of year.


MLS Stats for Sept. 10, 2005

contracts last 14 days

condos over $500,000____ 5
condos under $500,000__ 40

homes over $500,000____ 6
homes under $500,000___ 0

active listings

condos all prices_______455
condos over $500,000__ 134

homes all prices_______ 64
homes over $500,000__ 37

I received the pre-construction pricing for the Magnolia Bay third building this week. Ten percent down and a ten percent note held by the developer. One building left to be released. Expected completion, late 2006. If you'd like to receive the price list, email me. As always, be careful in your negotiations and do your homework. I'm off to catch the last of the Hurricane Ophelia swell.

Friday, September 09, 2005

Freddie Mac Grants Three-Month Suspension of Mortgage Payments for Borrowers Affected by Hurricane Katrina.

Freddie Mac News Archive:� Freddie Mac Grants Three-Month Suspension of Mortgage Payments for Borrowers Affected by Hurricane Katrina.: "Return of Some September Payments to Cash-Strapped Storm Victims Planned

McLean, VA – Freddie Mac (NYSE:FRE) today announced several special policies intended to put emergency funds in the pockets of single-family mortgage borrowers impacted by Hurricane Katrina.

'We are determined to do all that we can to help the victims of this disaster,' said Freddie Mac Chairman and CEO Richard F. Syron. 'Therefore, we are instructing our servicers to suspend mortgage collections for the months of September, October and November in some of the key major disaster areas designated by the Federal Emergency Management Agency. This temporary suspension will apply to every borrower with a Freddie Mac-owned single family mortgage in these FEMA designated zones, regardless of the condition of their home,' Syron said."

Read the entire article by clicking the link at the top.

Monday, September 05, 2005

After the Storm

When I wrote the previous post about calm weather ending for Cocoa Beach because of a small tropical storm, I couldn't have known how devastating a storm Katrina was destined to become. We have all been moved by the tragedy of the storm's effects in Louisiana and Mississippi. If you haven't helped out yet, please consider giving money to the American Red Cross or, if possible, volunteer your time to the Volunteers of America or any of the many organizations who are helping. In times like these the pulse of the Cocoa Beach market seems trivial when so many have lost everything.

Wednesday, August 24, 2005

Calm in Cocoa Beach

I shot this view one morning last week looking back at Cocoa Beach from about 8 miles offshore. Conditions have been extremely calm and beautiful on the ocean recently.



The market is still calm, as well. Sellers for the most part don't seem to be responding to the slowed rate of activity and I continue to see very optimistic pricing. We currently have a 90 week supply of over-$500,000 condos in our MLS. That number will grow as current and planned projects add supply. I think the long-term effect will be beneficial for lower-priced properties but I would not want to be holding a pre-construction contract in the high range unless I planned to live in the property. Investors in a few of the luxury buildings have been progressively reducing prices as completion approaches and the reality of having to close becomes imminent. Are the great days of rapid appreciation over? Who knows. I browsed listings in my old home of Destin, Florida and found quite a few listings in oceanfront buildings for over $1000 per square foot. Compared to that market, our $350 to $400 per square foot range appears downright cheap.

Mortgage rates took a breather last week and actually pulled back a bit. According to Freddie Mac, the national average for a 30 year fixed-rate mortgage is 5.8%.


MLS Stats for August 24, 2005

contracts last 14 days

condos over $500,000____ 3
condos under $500,000__ 31

homes over $500,000____ 2
homes under $500,000___ 4

active listings

condos all prices_______451
condos over $500,000__ 137

homes all prices_______ 57
homes over $500,000__ 36

Another interesting statistic is the number of new condos for sale. According to the MLS there are 133 condos built in 2005 currently for sale.

The calm ocean will be changing very shortly as Tropical Storm Katrina approaches. Expect a windy weekend. If you'd like an honest informed agent to help you find property in Cocoa Beach and Cape Canaveral, email me or call me at 321.917.5786.

Wednesday, August 10, 2005

Irrational Exuberance

Will this man kill the real estate market?



Alan Greenspan would like to think that he can cool the real estate market with monetary policy and rhetoric. Even with repeated speeches about bubbles and irrational exuberance, the fact remains that long term rates have moved down over the last year as the Fed raised short-term rates. We're starting to see a reversal of that trend as mortgage rates creep upward. This is not a surprise after this long run of historically low rates. Should you be concerned about mortgage rates as a real estate investor? Definitely. If you're still holding on to an adjustable-rate mortgage, it may be time to lock in while long term fixed-rates are still below 6%. The bigger question for many is should I take profits or should I continue to add properties to my portfolio. That is a more difficult question to answer.

There's a change in the air here in Cocoa Beach and Cape Canaveral and it's more than just the approach of peak hurricane season. As I mentioned in a recent column, things are slowing in the real estate market here and it's not evident whether it's the normal dog days slowdown or the end of the ride for runaway appreciation. Regardless, the reality is, at least to me, that the easy money has been made and things are changing. If you want a place in a great little beachside community, Cocoa Beach is still right at the top of my list. If you want to speculate on real estate here hoping for double-digit annual appreciation, you may want to reconsider. We are seeing strong resistance to the ever-rising prices and properties are not moving like they were only a few months ago. If you already own investment property here, I would hold on. We may see the market take off again in January as it usually does. Until January, however, expect little activity. Pre-construction? That's another story altogether.

If you're thinking about investing in pre-construction condos, stop right now and think through your strategy. If you can't afford to close and begin making mortgage payments, I would advise you to not play this game. The stakes are too high and you have way too much competition. Many recent pre-construction prices (not all) have already factored in strong appreciation and, if that appreciation does not happen, you may be looking at closing on a unit that is not worth any more than you paid at pre-construction. Of particular danger are the multi-building developments. If you buy pre-construction in an early building during a market softening, you will be competing with the developer when you try to sell your unit. We are seeing this exact scenario being played out right now at several developments, most notably Island Pointe in Merritt Island and at Solana on the River in Cape Canaveral. Early buyers are trying to sell their completed units for a profit while the developer is still offering pre-construction units in the later buildings. It's comparable to trying to beat the house in a casino game. The house always has the edge. Keep an eye on Magnolia Bay in Cocoa Beach and Mystic Vistas in Cape Canaveral.

OK, that's the negative news for the week. On the positive side, Discovery is safely back on Earth and Cocoa Beach is still a wonderful place to live and visit. The fish are biting and a small storm swell is expected tomorrow from Tropical Storm Irene. If you'd like to find a special property in our community, I can help. As a buyer, you have more power right now than at any time in the last few years. Call me at 321.917.5786 or email me.

If you're spending time at the beach, don't forget your sunscreen and drink plenty of water. Have fun and watch for baby turtles and nesting mother turtles early evenings.


MLS Stats for August 10, 2005

contracts last 14 days

condos over $500,000____ 6
condos under $500,000__ 26

homes over $500,000____ 0
homes under $500,000___ 1

active listings

condos all prices_______443
condos over $500,000__ 129

homes all prices_______ 62
homes over $500,000__ 36

Wednesday, August 03, 2005

A different kind of bubble




I was reminded yesterday why I love and live in Cocoa Beach. The morning began with one of those sunrises that make you want to charge into the day and live life to the fullest.

After checking the morning update for new properties and for the previous day's activity, I attended a short meeting where we discussed a specific sale last week by a condo owner who was so determined to avoid paying a real estate commission that he advertised and sold his condo entirely on his own. He was successful and achieved his goal of paying no commission, yet he accepted an offer of $175,000 that was conservatively $50,000 less than reasonable value. In this particular case, good comps would have been easy for the owner to get, yet he was so fixated on commission that he shot himself in the foot.

After the meeting, I settled into my office to write a new update about the whole subject of valuation when I received a phone call. "Dude, tide's almost low and the waves are fun." What's an earnest real estate agent to do? This agent bailed on work and paddled out for a lunchtime surf break. I'll trade real estate bubble for ground swell bubble most any day.

The ocean today was warm and the water was as clear as the Bahamas. The waves were small and fun. At least one other real estate guy was seen in the water.

This is one of those things that we have to think about when we talk about the "bubble". Will appreciation cool off? Probably. Will Cocoa Beach become undesirable? Never. Days like today remind me that special places like my home of Cocoa Beach have an attraction that will not go away no matter what the real estate market does as a whole. If you're investing in real estate, special places make more sense and seem more prudent than generic locales. And you can always ride a wave in your back yard as you enjoy the financial benefits.

Cocoa Beach is geographically restricted. Ocean to the east and Banana River to the west. Simply put, there is no more available land for new construction. We also have density and height restriction (no more buildings over 4 floors). What this means is that our supply will not be increasing much more. The character of our small city should always be much as it is today. Jim Cramer likes to say, "When investing, buy best of breed." Considering our location, our finite supply and, of course, our surf, Cocoa Beach qualifies as best of breed. As always, I could be wrong. I'm definitely biased. Here's a shot of one of my retired neighbors playing yesterday afternoon.

Friday, July 29, 2005

Oceanfront Pick of the Week

I'm getting tired of all the talk of impending doom and the collapse of the real estate market, so, instead of repeating my somewhat tired commentary on the "bubble", I'm going to pick out my favorite property this week and explain my reasons for picking it. First, a little background that supports my pick. Most investors' favorite target in real estate these days is pre-construction. Today I have 2 closings in a new riverfront condo project in Cape Canaveral. One of the closings is in danger of failure because the investor who purchased the unit is having trouble getting financing and may not be able to close by today's deadline. If that happens, he loses his deposit. Developers are far less flexible when it comes to extending closings for strapped buyers. For that reason, and the fact that developers' contracts usually contain no financing contingency, pre-construction carries considerably more risk than normal purchases. If you can't close, for whatever reason, your deposit is at risk.

Considering that risk, I think that carefully selected existing properties may be more suited to the average person wanting to invest in beachside real estate. We are seeing continued strong appreciation in waterfront properties with increasing demand in the lower price ranges. With that in mind, my pick this week is a cute little one bedroom condo in an oceanfront building in my favorite part of the beach, Crescent Beach. This unit has been completely redone with new tile, new kitchen and bathroom and has an excellent ocean view from a large balcony for $285,000. It's small, 750 sq. ft., and has no garage, BUT, it's under $300,000 and it's on the beach. This is not my listing, so, this is not a self-serving selection, just an honest opinion. Others may disagree. Here is the view from the balcony.




There are others that I like but if I have to pick one, this is it this week.

Interest rates continued their upward crawl this week according to Freddie Mac. If you're investing in this market, I can't stress enough the importance of knowledge and due diligence. If you don't know the market, find an informed agent who knows what's going on and let them guide you to the perfect property for you. There are dangerous investments right now and there are excellent ones. The difference is often not obvious. As always, use sunscreen, drink plenty of water if you're spending any time outdoors and be loyal to your hard-working agent.

Tuesday, July 26, 2005

Discovery is up


Proud Cocoa Beach residents watch Discovery leave Earth while surfers enjoy the surprise north swell and beautiful conditions. All work in Cocoa Beach ground to a halt as everyone turned their eyes skyward.

Monday, July 25, 2005

Space Shuttle Set To Go



The shuttle is poised for a second try at launch tomorrow. It's been a while since we've seen a shuttle flight and Cocoa Beach is excited. Our real estate market is less than excited and seems to be in a slow simmer at the moment. Over half of all condo sales in the last 14 days were under $400,000. The upper range continues to languish and we're seeing properties in all price ranges sit longer than they did earlier this year. Summer is historically slower, so, I'm unwilling to call this anything but a seasonal slowdown.

An interesting footnote is the fact that no Portside Villas units have gone under contract in the last 14 days. That's with 26 units actively for sale on the MLS. Word is that the first 2 buildings will close in August or September.

MLS Stats for July 25, 2005

contracts last 14 days

condos over $500,000___ 3
condo under $500,000__ 32

homes over $500,000____ 2
homes under $500,000___ 4

active listings

condos all prices______420
condos over $500,000__ 126

homes all prices______ 59
homes over $500,000__ 36

Sunday, July 17, 2005

Waiting on the Space Shuttle

It has been an intense week here on the Space Coast with the impending launch of the Space Shuttle Discovery and the return to space for the U.S. manned space program.



Residents of our area are very proud of our astronauts and engineers and all those who contribute to this incredibly complicated and dangerous endeavor. If things go as planned, we should see a second try at a launch the end of this week. So far we are enjoying the flood of journalists and film crews from all over the world. In the absence of launch news they have been scrambling for stories since the first launch delay. There was even a film crew in my favorite sushi bar, Yen Yen, last week.

Our market continues at a somewhat subdued pace as is normal for this time of year. Inventory is almost unchanged and the pace of sales is holding steady. I had to adjust my MLS stats this week as we had a group of 39 developer contracts go contingent or pending all at once. I subtracted these numbers from the totals because they are not accurately portraying actual sales during the period. Investor demand for pre-construction remains high with not enough first-round, pre-construction units available to fill that demand. There is continuing resistance from buyers in the high-end resale units. If you're playing with pre-sales in the high end, you better be prepared to close. At the other end of the range, sales are robust. Portside Villas is maintaining brisk resale activity, I believe, because the current prices still represent good value and they are in a very sweet spot of the market, under $300,000. We will probably never again see new construction beachside for under $300,000.

You may want to read an interesting article in today's Florida Today about condo conversion This is a trend we've been seeing in our area that we can probably expect to continue. With property values soaring and rents flat, it is inevitable that this happens. Take a recent conversion, Brisas del Mar in Cape Canaveral.



This 14 unit apartment building represented some of the developer units I factored out of my stats this week. This property as rentals was probably generating around $100,000 a year in gross rents. Converting to condos yielded around $2.6 million before costs. With numbers like these, we can expect this trend to continue. There are still quite a few rental properties in Cocoa Beach and Cape Canaveral that are suited to conversion.

Other developments locally are the ground-breaking of the 77 unit Magnolia Bay complex on the river in south Cocoa Beach and the tear-downs of 2 more houses on the west side of S. Atlantic Ave. This is a trend I see continuing. There are quite a few old houses across the street from the ocean that are candidates for tear down and replacement. We saw a tear-down condition home built in the 1920s sell recently for $649,000. It commanded that price because it sits on a lot large enough to build 3 units. Expect to see luxury townhomes or condos there soon.

Here are the numbers for July 17, 2005.

contracts last 14 days

condos over $500,000___ 6
condo under $500,000__ 31

homes over $500,000____ 3
homes under $500,000___ 3

active listings

condos all prices______417
condos over $500,000__ 126

homes all prices______ 55
homes over $500,000__ 32

Do your homework, get pre-approved before you start your search for property and keep your procrastination in check. It can cost you a fortune.

Monday, July 04, 2005

Happy Independence Day

Happy Independence Day - Yesterday, as I cruised down the Banana River from Cocoa Beach to Port Canaveral and the ocean, I considered the recent changes in our river shoreline. Beginning in south Cocoa Beach on the river we passed five condo developments under construction and 3 others yet to break ground. As we headed north we saw to the west on the eastern shore of Newfound Harbor in Merritt Island, dozens of large new homes and one new, 3-building condo project. Under the 520 bridge and north to the Port, we saw 4 new developments on the shoreline in Cape Canaveral. There are over 600 new units in just these existing riverfront projects in Cocoa Beach and Cape Canaveral. Add the planned projects, unfinished new oceanfront and non-waterfront developments and the supply of new units beachside is well over 1000. That's a lot of supply for a market that recorded 39 units sold in the last 2 weeks. Where is the disconnect? There are two distinct sides to the new supply market. One is the pre-construction market which is dominated by investors who rarely plan to live in the units. These sales most often don't show up in our MLS. The secondary market, on the other hand, are the buyers who are purchasing for residences or for second homes. These sales do show up in the MLS and are reflected in the numbers I report here. Draw your own conclusions. Noteworthy this week; sales in the over $500,000 range have ticked upward significantly. Also of note is the fact that mortgage rates continued their fall. Here are the numbers for July 4, 2005.

contracts last 14 days

condos over $500,000___ 8
condo under $500,000__ 31

homes over $500,000____ 5
homes under $500,000___ 3

active listings

condos all prices______417
condos over $500,000__ 124

homes all prices______ 53
homes over $500,000__ 31

Have a safe 4th, use sunscreen and drink plenty of fluids. It's hot out there. Remember, it's a $200 fine for possessing fireworks in Cocoa Beach.

Sunday, June 26, 2005

The Swamp Ape & Negative Cash Flow

Negative Cash Flow. I get a lot of requests for "a good beachside investment property that will break even or generate a little cash". Folks, that has become the swamp ape of the Florida coast. In other words, they are rumored to exist, some sightings have been reported but no actual photos can be found (except for the one below and it is somewhat suspect).



With recent years seeing unprecedented buying of second homes and investment property on or near the beach, the supply of rental properties is huge. Rental rates have barely budged in years while selling prices have headed for the stars. What that means for investors is that income can no longer be a criteria for making your buying decisions. If you must have positive cash flow, you haven't been and won't be buying beachside unless you are paying all cash or making a substantial down payment. Don't let the dreaded phrase, "negative cash flow" scare you away. There are some extreme exceptions to this such as high-occupancy, short-term rentals that are owner-managed combined with interest-only loans. At any rate, let's explore a real world example.

Example; an oceanfront condo in Cocoa Beach that just sold for $380,000 this month is next door to an identical unit for rent at $1350 per month. That's $16,200 in income before any management fees. This particular unit can expect about $8800 in condo fees, property taxes and insurance. If the new owner has an 80% mortgage at 5.75% for 30 years his annual mortgage expense will be $21,288. That boils down to cash out of pocket at $13,888 per year. There are other variables such as tax savings, repairs, vacancies, damages but the fact is that this new owner had better have around $1157 per month of extra money to take care of his new investment. Does that make this a bad investment? Not when you consider that this same unit according to tax records has appreciated at 38% per year since it was last purchased in 2003 and stands a good chance of continuing to appreciate. These rates of appreciation can't possibly continue, you're probably thinking. I agree except that all the new supply of oceanfront condos approaching and exceeding a million dollars has pushed a large number of buyers down into this lower price range and continues to do so. There is a far greater supply of buyers willing to pay $500,000 for a unit than there are buyers for million dollar units. Building has not slowed and demand is still high so I expect a reduced but substantial rate of appreciation to continue for select price ranges. Any investment in real estate at this stage of the game has risk. Interest rates could skyrocket, the so-called "bubble" could burst and everything will have been a bad investment. However, if you choose your targets carefully you can mitigate that risk and enjoy healthy returns on your investment barring a catastrophe. Make sure you know what areas of the market are moving, what areas are not and don't walk away from an otherwise good investment because of negative cash flow.

In our example above, this owner will make over $20,000 a year after debt service and expenses if appreciation cools to 10% and will still make money at only 5% appreciation per year. He also has the possibility of having another 38% year in which case he stands to make a healthy six figure return in one year. I measure all my investments by comparing risk and reward. The possibility of making six figures on the high side and breaking even on the low side meets my criteria. Do your own due diligence and if you're buying in another market, find a guy like me who understands and studies his market and use him to help you select your properties. If you're buying in Cocoa Beach or Cape Canaveral, you've found your man. Email me at larry@southcocabeach.com or call me at 321.917.5786 and I'll help you locate the perfect property.

Tuesday, June 14, 2005

June 14 Update -

An early tropical storm was all over the news last week but turned out to be an anti-event. Hurricane season is high on everyone's radar and should be on buyers' minds as they select properties. Storm damage was inconsistent and there were quite a few properties that suffered NO damage during last year's active season. The market has not rewarded these storm-tested properties with a price premium but they should, in my opinion, command a higher price than properties that suffered storm damage. Be sure to ask your agent about a property's performance during last year's storms before making your offer.

There has not been a lot of change in our activity since my last update. Rate of sales is pretty constant and the activity is still concentrated in the under-$500,000 range. We have a 48 week supply of over-$500,000 condos at the current sales rate and a 17 week supply of under-$500,000 units. Mortgage rates dropped once again last week to their lowest level of 2005 at an average of 5.66% nationwide for a 30 year fixed rate. Our strong appreciation rate continues for the lower priced properties but we are seeing some resistance to ever-increasing prices in the high end.

MLS statistics for Cocoa Beach and Cape Canaveral

Active listings:

Condominiums______418
__over $500,000____120

Single family homes___55
__over $500,000______34

Contracts in the last 14 days

__condominiums_____40
__over $500,000______5

Single family homes___4
__over $500,000______4

If you have specific questions about our market or properties, you can email me at larry@southcocoabeach.com or call me at 321.917.5786. Be aware of the sun and the heat when you're out there in our beautiful Florida outdoors and take cover at the first sign of an approaching thunderstorm. A lightning strike will ruin a good day at the beach or the golf course.

Here's one of our new buildings in south Cocoa Beach. Oceanfront penthouse, 3 bedrooms, 4 baths, 3400 sq. ft. with rooftop deck; $1,700,000.

Monday, May 30, 2005

Memorial Day Report - HOT!

What a beach day it was yesterday. Light offshore winds and family picnics up and down the beach. Did I say HOT? It was hot. Certain areas of our market continue to be red hot, as well.

I can't seem to turn on the news or pick up a magazine without being confronted with the phrase "real estate bubble". For an investor in a hot market such as Florida, that phrase is sure to increase the heart rate. I just purchased another waterfront property myself this month. Am I crazy? Perhaps. I'm a little different from most of the profiled flippers in the money magazines in that I live and work in my market as an active real estate agent and know from first hand experience the trends of supply and demand in my market. I have access to statistics and I deal with buyers and sellers every single day. I think I have mitigated my risks by identifying the areas of my market that are most likely to give me a good return with the least risk. All property types in my market are not equal in their risk and likely return. Having said that, I could be wrong.

Mortgage rates took another drop this week and the national average is now at 5.65% for a 30 year fixed rate as reported by Freddie Mac. That's lower than the point at which we began the year. The predicted rise in mortgage rates is taking it's sweet time to happen.

MLS statistics this Memorial Day in Cocoa Beach and Cape Canaveral.

Active listings:

Condominiums______422
__over $500,000____112

Single family homes___54
__over $500,000______35

Contracts in the last 14 days

__condominiums_____43
__over $500,000______3

Single family homes___9
__over $500,000______3

I don't want to keep repeating the same message in every update but the statistics keep pointing to the same thing; the under $500,000 range is where the action is right now in our market. We have a supply of 147 properties over $500,000 and had 6 sales in that range in the last 2 weeks. At that rate it will take almost a year to sell our current supply. Contrast that to our supply of 329 properties under $500,000 selling at a current rate of 23 per week and you see that we have less than a 15 week supply. If you're on top of numbers like this, it's easy to make decisions about where to invest your money here. You can still purchase very nice direct river condos with beautiful views of the islands like this for just over $300,000.



I could be wrong, but, I believe that condos in this price range in good locations are your best bet for continuing returns on your investment. If you'd like to know what's available out there, shoot me an email at larry@southcocoabeach.com I promise to freely share my knowledge and perceptions of our market with you as my buyer in a completely unbiased manner. Cocoa Beach is small enough that, if you buy here, I'll probably be bumping into you in the grocery store, so, I want you to be happy to see me. Enjoy the holiday and don't forget the sunscreen.

Incidentally, updating an ongoing story, there are 35 MLS-listed, assignment-of-contract units active in Portside Villas today. Prices continue to rise at the same time that supply is increasing. This anomaly can be explained by the unprecedented under-pricing of these units at last years pre-construction prices and the ongoing optimism of the investors. Those who have already flipped have made incredible returns on their investments but the remaining sellers continue to increase asking prices. Is $262,500 too much for a brand new 1168 sq. ft. 2 bedroom condo walking distance to the beach and the Port? I'll keep you posted as this story unwinds through the end of the year.

Tuesday, May 10, 2005

May 10 update - Cocoa Beach

May 10, 2005

Even though mortgage rates continue to drop, the supply of homes and condos in Cocoa Beach and Cape Canaveral, according to MLS records, has changed little in the last 14 days. New projects are adding supply at an even pace to units sold. We have had 42 condos go under contract in the last 14 days; 3 over $500,000. Stats as of this morning, May 10 are as follows:

Active condominiums_______ 433
over $500,000____________ 134
built 2004 or later__________163

Active single-family homes____ 60
over $500,000______________ 38

Contingent last 14
single family homes________3
condos_________________42
over $500K______________3

Construction of new condos is continuing at a strong pace, especially in the extreme southern end of Cocoa Beach where the island is at it’s most narrow part. This is where I live and is my favorite part of Cocoa Beach. We have the Banana River on the west side of A1A and the Atlantic Ocean on the east. The low population density here keeps the beach uncrowded. There are currently over 200 condos under construction or planned in this 3/4 mile stretch. Considering how many high-end condos sit empty for out-of-town owners, I suspect I'll still be able to stroll an uncrowded beach even after the build-out is complete. I foresee a short-term crunch in the sales of new condos here with all the new supply, but, long term, this area will always be special. This is the time to be aggressive with offers as sellers severely outnumber buyers in this predominantly over-$500K market.

If you’d like a list of current projects, email me or give me a call at 321.917.5786.

As always, these opinions are mine alone.

Thursday, May 05, 2005

Real estate boom: Will a bust follow? - May. 4, 2005

Real estate boom: Will a bust follow? - May. 4, 2005: "NEW YORK (CNN/Money) - The number of U.S. metropolitan areas experiencing booms in real estate prices spiked 72 percent in 2004, according to a report from the Federal Deposit Insurance Corporation (FDIC).

Still, that represented just 15 percent -- a total of 55 -- of the country's 362 metro areas, leading some to question whether the reports of a real estate bubble have been greatly exaggerated."

Friday, April 29, 2005

Real Estate Weekly - U.S. mortgage rates edge lower

Real Estate Weekly: Real Estate Weekly -- April 29 - General News - Personal Finance: "U.S. mortgage rates creep lower

U.S. mortgage rates edged lower in the week ending Thursday, marking the fourth straight week of declines, Freddie Mac said."

Monday, April 25, 2005

Pre-Construction Sampler

I'm deviating a little from my normal general take on the market with today's post. I get so many inquiries about pre-construction that I thought I'd present a sampling of what's out there in Cocoa Beach and Cape Canaveral. From low to high, here are a few. Only one of these is my own listing. Most of these can be held for 10% of purchase price until building is completed. Some will probably not be completed until late in 2006.

Portside Villas - 3 BR/2 BA - 1523 sq.ft. $289,900


Maddison Caye 3 BR/2.5 BA - 1618 sq.ft. $449,000


Ocean Waves 2 BR/3 BA - 3000 sq.ft. $595,000


Mystic Vistas 3 BR/2 BA - 1994 sq.ft. $629,000


Un-named 4 BR/3.5 BA - 3610 sq.ft. $895,000


Almar 4 BR/3.5 BA - 2713 sq.ft. $800,000


3800 Ocean Beach 3 BR/2.5 BA - 2433 sq.ft. $975,000


Crescent Palms 3 BR/3BA - 2293 sq.ft. $649,900


Ocean Club 4 BR/3.5 BA - 3904 sq.ft. $1,279,900


This is only a sampling of what's out there. If you'd like a more complete list or info on specific projects email me or call me at 321.917.5786

Friday, April 22, 2005

April 22 Market Update - Cocoa Beach

April 22, 2005

Tax filing day has passed and the season has perceptibly changed in Cocoa Beach. The snowbirds have departed, traffic has eased, the grocery stores are peaceful and golfers can once again play a round of golf at the beautiful Cocoa Beach Country Club without an advance tee time.



We are anxiously preparing for next month's launch of the Space Shuttle. There is no other place in Florida where you can stand on your balcony and look over the ocean to a spacecraft leaving Earth. Check out this view of a night launch from the balcony of the 2100 Towers northeast penthouse.



For more photos of this incredible condo, click here.

Freddie Mac reports a continuing drop in mortgage rates with the 30 year fixed nationwide average at 5.80% this week, the third weekly drop in a row. Florida Today newspaper reports that median home prices in Brevard County are at $192,500, a whopping 106.5% increase in 5 years.

Market activity has continued it’s trend of increasing supply according to MLS records. We have had 32 condos go under contract in the last 14 days; 5 over $500,000 and 27 under $500,000. We have seen 121 new or changed listings during the same period. 37 of the changes were price reductions and 6 were price increases. Single family home sales have been brisk with 8 contracts (4 over $500,000) during the period from a supply of 54 active listings. Here's one example; a direct river home on Danube River Dr. overlooking the Thousand Islands. Listed for $749,900. This is the view.



Stats as of this morning, April 22 are as follows:

Active condominiums_______ 459
over $500,000_____________ 132
built 2004 or later__________170

Active single-family homes___ 54
over $500,000______________ 32


There has been some activity off the MLS record that is significant. A new development in Cocoa Beach between 4th and 3rd streets south has been announced. The entire block is being developed into luxury single family homes with prices beginning at $965,000. I have been told by the listing office that 17 of these are already reserved. This is remarkable in that the MLS reports only 5 properties (both condos and single-family) going under contract in the last 120 days over $900,000. Other off-the-record activity are two reported sales at Portside Villas of 2 bedroom units for $247,000 and $252,000. If these reports are accurate this represents a nice jump from the previous $230,000 range. There is still considerable inventory of re-sale units at Portside and I continue to think these represent good value as the lowest-priced new construction on the beach.



According to the developer, the first buildings should close in August or September.

There has been very little movement of investor re-sale units in new condo projects. The supply of investor-owned units represents, I believe, a good buying opportunity for informed buyers. There are many beautiful, brand-new units available at very attractive prices from investors who never planned to live in the units. As prices continue to soar towards and beyond the $1 million mark in new buildings, the current supply of under-$500,000 new units are worth a look. Here's an example; a southwest corner unit in Majestic Bay for $458,900. Building will be completed in May and this unit will immediately be increased in price if seller has to close. Check out the view.



If you’d like a list of current supply of units that I like, email me or give me a call at 321.917.5786. You can see selected listings here.

As always, these opinions are mine alone. I could be wrong about my projections and assumptions but I am on the front line and I do know my stuff, so, chances are, I’m closer to right than wrong.

Sunday, April 17, 2005

Rates Drop Again This Week

Freddie Mac's Primary Market Mortgage Survey: "
LONG-TERM MORTGAGE RATES TAKE A DIP

One-Year Arm Rises, While Five-Year ARM Eases Slightly

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 5.91 percent, with an average 0.7 points, for the week ending April 14, 2005, down from last week when it averaged 5.93 percent. Last year at this time, the 30-year FRM averaged 5.89 percent."

Saturday, April 09, 2005

April 9 Update

Good news this week as mortgage rates dropped slightly. Freddie Mac’s Thursday survey reports a national average of 5.93% for 30 year fixed rate and 5.48% for 15 year fixed. Activity in the Cocoa Beach and Cape Canaveral market continues to be dominated by increasing inventory and slowing sales. According to our MLS, there were 135 new condo listings in the last 14 days with 36 units contracted in the same time period. There were 21 new single-family home listings with 6 contracts in the period.

ACTIVE LISTINGS TODAY

Condos all prices_____428
-Over $500,000______135

Single family homes___57
-Over $500,000_______34

The obvious trend in these numbers is increasing supply. If you’re purchasing, you have more power to negotiate than you did a few months ago. I expect this trend to continue as pre-construction speculators are forced to close on contracts that they had hoped to flip. The upside is that there are bargains to be had now and in the months to come. If you want to receive alerts of new properties as they are listed, email me at larry@southcocoabeach.com

Saturday, April 02, 2005

Larry's Take - April 2, 2005

Mortgage rates continued their upward movement this week although the pace has eased to a crawl with the 30 year fixed-rate, national average at 6.04% as reported by Freddie Mac. Market activity in the Cocoa Beach and Cape Canaveral market has slowed as well according to statistics gathered from our MLS. In the last 14 days, 28 condos in all price ranges went under contract, compared to 48 in the preceding 2 week period. Just 5 units over $500,000 have gone under contract during the whole 4 week period. During this same 4 week period, 11 single family homes have been contracted in the same area with prices ranging from $275,000 to $749,000.

Statistics for currently active MLS listings in Cocoa Beach and Cape Canaveral

Single family homes - 45 from $279,900 to $1,700,000 (30 over $499,000)
Condos - 420 from $99,000 to $2,525,000 ( 29 over $1 million and 139 over $500,000)

Of significance in these numbers is the fact that 76 of the condo listings over $500,000 were new listings during March. During the same time that these 76 new listings hit the market, only 5 units in the same price range went under contract. In fact, only 8 condos over $500,000 have gone contingent since Jan. 1, 2005. That is in sharp contrast with the 95 units under $500,000 that were contracted during the same time period. As I’ve stated in recent reports, I think there is opportunity in the under $400,000 condos. I also think that single-family homes, especially waterfront, represent good opportunity for appreciation. The very limited supply of waterfront, single-family homes should continue to propel this segment of our market. As always, these opinions are my own. Do your own due diligence before purchasing any real estate. If you’d like an informed, accredited buyer’s representative to help you find property in Cocoa Beach or Cape Canaveral email me at larry@southcocoabeach.com or call me at 321.917.5786. I know our market and will work hard to find you what you want. You can view some featured properties at beachKulture.com

The numbers I’ve used here were gathered from our MLS. There probably were private sales that happened outside the MLS system that will change these numbers, but the overall trends reflected are accurate.

Friday, March 25, 2005

March 25 - Mortgage rates top 6%

Freddie Mac's weekly mortgage survey reports this week that the national average for 30 year fixed-rate mortgages has topped 6%. The average 30 year fixed rate stands at 6.01% with .7 points and the 15 year fixed-rate is at 5.56% also with .7 points. This is the first time since July 29, 2004 that the 30 year rate has topped 6%.

Wednesday, March 23, 2005

March 23 - Where is the action?

One question that I get almost every day is, "What area of the market is hottest now and where are the opportunities?" According to our MLS, in Cocoa Beach and Cape Canaveral, 73 condos under $400,000 have gone under contract in the last 30 days compared to 16 condos over $400,000. Most expensive unit was a 3 bedroom 3 bath unit at Ocean Oaks in Cape Canaveral. Out of the total of 89 units contracted, 57 were under $300,000. Based on this and my own perceptions of trends I see with the buyers I work with every day, I believe the biggest opportunity right now is in river or oceanfront condos under $400,000. The ever-increasing supply of high-end units continues to push buyers into this range and it looks to continue in the near future. High demand should continue to push prices upwards. If you'd like to receive alerts of new units as they appear or a current list of available units, give me a call at 321.917.5786 or email me at larry@southcocoabeach.com

March 22 - Fed Raises Rates on Tuesday

RisMedia.com - Fed Raises Rates on Tuesday

RISMEDIA, March 23 – The Federal Reserve Tuesday raised interest rates again, boosting the federal funds rate by a quarter percentage point to 2.75%.

While the mortgage markets already increased their rates anticipating the Fed action, similar increases throughout the year could impact real estate sales.

"We see the Federal Reserve continuing to raise rates for the next five meetings," says Lawrence Yun, senior economist for the National Association of Realtors. "The cycle … will slowly impact the mortgage rates."

Friday, March 18, 2005

MARCH 18, 2005 - Onward and upward

Mortgage rates continue their upward climb with the 30 yr. fixed rate, national average at 5.95%, as reported by Freddie Mac. This is the fifth consecutive weekly rise in rates. In our beach market, new listings continue to pour into the market. In the 14 days since my last update, 164 new listings (condos) have hit the MLS in Cocoa Beach and Cape Canaveral. Of those 164 new listings, 51 are above $500,000 and 63 are new (built 2004 or later). This confirms the trend that I mentioned before; that our condo market is making a significant shift towards bigger and more expensive units. I continue to believe that this shift presents an opportunity in the older, under-$500K condos. As buyers are pushed out of the high-end market, demand in the lower-priced units has increased, driving prices ever higher. I continue to buy units in desirable river and oceanfront complexes. By the way, in this same 14 day period, only 4 units over $500,000 went under contract indicating a continuing shift towards a buyer’s market in high-end units.

Investor resale units are still languishing in several projects with 25 units now active in Portside Villas. A few of these units have been assigned but new listings continue to appear. Even with this over-supply, I believe that these units are attractively priced at these levels, ($210,000 - $290,000).

Single-family home prices continue to climb with prices of the 35 listed homes in Cocoa Beach ranging from $295,000 to $1,700,000. Cheapest waterfront home currently active is a 2/2 on Esther Drive for $489,000.

If you’d like to investigate investment possibilities in Cocoa Beach or Cape Canaveral properties email me at larry@junkbeach.com or give me a call at 321.917.5786. As always, I'm on the front line to represent you.

MARCH 4 , 2005 - Larry's take on the Cocoa Beach Market

As we enter the month of March, market activity is brisk, but, not across the board. Mortgage rates rose again this week for the 3rd week in a row to a national average of 5.77% for a 30 year-fixed rate mortgage. Florida today reports that existing home sales in Brevard county in January 2005 rose by 33 percent from January 2004. Statewide, home resales rose an average of 10% with some markets such as Miami, Ft, Lauderdale and Ft. Pierce/Pt. St. Lucie were actually negative over last year. This is a reflection of perceived higher value in Brevard County as measured against other more expensive areas in Florida.

Our beach market continues to be divided between hot and slowed segments. We are seeing good interest in condos priced under $400,000, mainly in existing complexes. The new waterfront complexes have pushed prices to levels that have nudged a lot of buyers to older complexes that are priced at more palatable levels. Direct river units today in older buildings range from $249,900 for a unit at Cape Shores to several in the $300,000 to $320,000 range in several other river complexes such as The Commodore, River Lakes and Harbor Isles. In oceanfront complexes, there are currently 154 units active in the MLS with prices ranging from $179,900 for a 1 bedroom, 700 square foot unit at the Saturn in Cocoa Beach to a pre-construction 5th floor penthouse at the Ocean Club in Cape Canaveral with 4 bedrooms and 3904 square feet for $1,279,900. A quick unscientific survey of the area in south Cocoa Beach between 18th St. and Patrick Air Force Base (about 3/4 of a mile) reveals a total of over 200 new condos either under construction or planned. Cheapest price I can find among these 200 plus units are a few units for $549,900 in the 77 unit Magnolia Bay project next to the Lobster Shanty slated to break ground next month. These 200 plus units represent over $150,000,000 of new high-end supply for our market in only a 3/4 mile stretch. New projects continue to sprout in Cape Canaveral with 131 new condos on our MLS this morning priced from $210,000 to $1,279,900.

I perceive a short-term oversupply of new construction condos. We are seeing multiple units on the market from investors in complexes such as Solana on the River, Bayside, Puerto del Rio, Mystic Vistas and Portside Villas. As of this morning there are 23 investor resales in Portside Villas in Cape Canaveral on our MLS ranging in price from $210,000 to $290,000. At these prices the investors expect to make $60,000 to $90,000 profit on their investments of $12,000 to $20,000. Not bad for a one-year play, IF, they can find buyers. A few contracts have already flipped for nice profits but the increasing supply may force prices down as the investors approach closing date. This project is still attractive as it represents the lowest prices for new beachside units.

Other new construction is marching ahead but I'm starting to see a lot of units languish on the market especially in the over-$500K level. In the last 90 days, 100 condos over $500,000 have hit the MLS in Cocoa Beach and Cape Canaveral. Only 14 units in this same area and price range have gone contingent in the same time period. This tells me that supply has, at least in the short term, outstripped demand. I would exercise caution with pre-construction condos and be aggressive with offers. We have shifted from a seller's market to a buyer's market in high-end condos in a very short time.

Good hunting out there. There are still attractive deals to be made for the well-informed buyer. All opinions and/or statements here are based on my own observations and research. Do your own due diligence before making an offer and, for your own protection, make the use of an accredited buyer's agent whether it's me or another qualified agent. As always, if you have any questions or need help acquiring your next property, email me or give me a call. I'm on the front line to represent you.