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.