Free Falling

Mortgage rates have been in virtual free fall for the last month dropping almost three quarters of a point in 30 days. The monthly payment on a $300,000, 30 year fixed rate mortgage this week is about $150 less than the same mortgage initiated just 30 days ago.

Condo sales for the month of November were slow as expected and exactly matched last year's number for the same period with 17 closed sales reported on the Cocoa Beach and Cape Canaveral MLS. Only one sale exceeded $325,000 and seven of the sixteen were either short sales or foreclosures. Notable sales included a foreclosed two year old, 3 bedroom, 2.5 bath townhouse in Cape Canaveral, one block from the ocean that sold for $149,900. Selling price exactly two years ago when it was new was $350,000.

There have been 120 price reductions of condos during the month of November increasing our somewhat meager supply of attractively-priced units. Two of the price reductions were in one of my favorite river buildings, Majestic Bay in Cape Canaveral. I like this 3-year-old building for it's very private location, the extra amenities and excellent construction and workmanship. One of the units is a 1900+ sq. ft., 2nd floor unit with a private 2 car garage offered as a short sale for $279,000. It sold in February 2006 for $445,000. The other drastic price reduction in the building was the developer's personal 4th floor corner unit with a deeded boat slip and 2 car garage. The price of this gorgeous unit with many extras was dropped from $475,000 to $349,900 making this one of the smoking deals of the moment.

"In the middle of every difficulty lies opportunity."
_________Albert Einstein

Tremors

I received word yesterday and confirmed this morning that a lis pendens or notice of foreclosure has been filed against one of our local developers on 16 of the unsold units in a big condo development in Cape Canaveral. This will likely further depress prices in this complex which took a hit earlier this year when the developer auctioned off several of the unsold units. One bright spot in this unfortunate situation is that at last these units, once sold, will begin contributing monthly condo fees. The association, until now, has been receiving no monthly fees from these units. We also had a sweeping series of price reductions of luxury oceanfront units at Meridian and Michelina on the beach this week. While the crack sales team at Meridian has accounted for fully half of all over-$500,000 MLS-listed condo sales in Cocoa Beach this year, no MLS-listed Michelina units have closed since the developer's model sold in May this year. By the way there are 4 units at Michelina offered for $1.49 million and above, one for a cool $3 million.

In south Cocoa Beach, the developer has reduced at least one unit at Magnolia Bay to well below pre-construction prices. A few blocks south, another short sale is being offered at Crescent Palms, this time a south corner penthouse with 3000+ square feet that sold new in December 2005 for $775,000. Suggested price now is $399,000. The MLS-listed unsold units at the new buildings Ocean Cove, Ocean Paradise, Garden Bay and Garden by the Sea were all withdrawn on September 11 and have not been relisted as of this morning.

There have been 10 closed sales of MLS-listed condos and townhomes so far this month in Cocoa Beach and Cape Canaveral. Only one was for more than $295,000. During the same period, three single family homes closed, one a short sale of a gorgeous Country Club waterfront home that sold for $449,000.

There are a couple of new listings of direct ocean units in weekly rental buildings this week that are realistically priced for those of you who have been waiting for something with high income potential priced right.

MLS inventory Nov 21, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____748
over $500,000_________91 - 29 sold since New Year's Day
Single family homes___116
over $500,000_________36

In case you were wondering, the ship in the photo is the 370' yacht, Le Grand Bleu , currently docked at Port Canaveral. You may have seen it across the channel if you've dined at Grills recently. This monster of a private yacht was a gift from Russian billionaire Roman Abramovich to his friend Eugene Shvidler. Thank goodness he didn't give it to me as the fuel bill for the twin 3600 HP engines is probably out of my budget.

"Never let the fear of striking out get in your way."
_______Babe Ruth

Dear Ms. Condo Seller

Dear Ms. Condo Seller,

I had a buyer stop in unannounced this morning wanting to see oceanfront condos. I called your listing broker hoping to show your unit. The broker informed me that they would not be putting a lockbox on your unit and that, instead, buyer's agents would have to pick up the key in their office, an 11 mile round trip from your unit to pick up the key and another 11 miles to return it. I applaud their effort to save money by not spending money on silly tools like lockboxes but, unfortunately for you, in trying to see as many units as possible today, our schedule does not allow the time necessary for the trips to pick up and return your key. Good luck selling your condo in these difficult times. Oh yeah, love the blurry pixelated cell phone photos of your unit on the MLS. If I squint my eyes and shake my head while looking at the photos, your unit looks lovely.

Sincerely,

The Buyer's Agent

P.S. I don't mind driving an extra 22 miles for my buyers and, next time, with advance notice, I will pick up the key in advance but, today, the situation did not allow that. You may want to request that your broker provide a lockbox and decent MLS photos. Remember, you're only looking for one buyer, so, you don't want to chance excluding anyone with difficult access or unappealing photos.

"I cannot give you the formula for success, but I can give you the formula for failure..."
_______Herbert Swope

Disclaimer: This letter was not actually sent to the seller as that would be inappropriate, although the story is true. My intention in posting this is to inspire all sellers to investigate the efforts of their brokers and to be proactive in reducing friction in the selling process. Successfully selling a property in today's competitive market involves more than correct pricing and effective marketing. Providing easy access is paramount as are decent MLS photos.

Silly Games and Pompano

November surf fishing in Cocoa Beach, hoping for a pompano.

Below is the listing history of a waterfront home in Cocoa Beach.

07/18/08	$1,199,000
08/25/08	$1,189,000
08/28/08	$1,184,000
08/29/08	$1,179,000
09/02/08	$1,174,000
09/03/08	$1,169,000
09/05/08	$1,164,000
09/14/08	$1,159,000
09/16/08	$1,154,000
10/02/08	$1,149,000
10/07/08	$1,143,000
10/09/08	$1,139,000
10/10/08	$1,129,000
10/24/08	$1,124,000
10/25/08	$1,119,000
10/27/08	$1,114,900
10/29/08	$1,109,900
11/06/08	$1,100,000
11/07/08	$1,090,000
11/08/08	$1,080,000
11/09/08	$1,070,000
11/11/08	$1,050,000

I'm not sure what the strategy is here but apparently the seller believes that there is a buyer out there who will make a move when the price hits the magic number. With such teeny price drops the seller is obviously afraid of selling too low but must have some motivation in selling unless this is just a crazy MLS experiment. After 22 price drops in 4 months without a sale, two things are obvious; the price is still too high and the seller is not serious about selling. I always investigate the current and previous listing histories of target properties before making an offer in hopes of getting some indication of the seller's level of motivation. Much can be learned from these histories. My take-away from this particular history and the silly series of small price drops is that this seller is not realistic about the market and will probably be reluctant to accept well-researched comps and a fair offer. If you are trying to sell your property, I would advise researching recent sales and competing properties and to price your property at or just below what the comps tell you is fair market value. Don't waste your time playing games like this seller if you really want to sell.

"Never play cat and mouse games if you are a mouse."
_____Don Addis

Reason # 81 to Love Cocoa Beach

I took the photo above of the Living Bread Fellowship, a tiny church in south Cocoa Beach and my official polling location during the voting rush before work this morning. Note the long lines of voters. I was able to stroll in, vote and be out in about 15 minutes in what will likely be the heaviest election turnout in American history. Just another in the long list of benefits of small town living and, specifically, of living in Cocoa Beach.

We had a total of 23 closed MLS-listed condo sales in Cocoa Beach and Cape Canaveral in the month of October and 6 single-family home sales. That number could drift slightly higher as tardy listing agents update their listings. There were no sales for more than $500,000. In fact, and not surprisingly, there has been only one closed condo sale of over $500,000 since August 1.

Among sales of note, was a 4 bedroom, 2 year old Oak Park townhome in Cape Canaveral for $180,000. Sold just 2 years ago for $299,900. A very cute, remodeled, 2nd floor, 1/1 at Sutton Place on the Ocean in south Cocoa Beach was picked off for $110,000.

Mortgage rates continue to be volatile with 30+ basis point swings happening three times in the last 30 days. We are currently hovering around 6.3% for 30 year fixed rate mortgages, just below the 5 year high set in July of this year. That rate could change quickly and significantly in either direction if the recent volatility continues.

There remains a dearth of decently-priced direct ocean condos. If you're looking, be prepared to wait but be ready to move when something attractive does come on the market. There are quite a few buyers on the sidelines waiting for a decent deal. The total number of listings is shrinking as many sellers write off the last quarter of the year when sales are at their yearly lows and pin their hopes on the snowbird season which cranks up in force in Cocoa Beach and Cape Canaveral in January. Expect more new listings then.

"Perhaps we are asking the wrong questions."
______Agent Brown - The Matrix

Bummer

"No one told me that it was going to be this bad."

Imagine that you just purchased a unit in an oceanfront building at what seemed a good price and the seller was honest enough to disclose, and kind enough to pay, the upcoming assessment for concrete repairs. You probably felt good about your purchase until the crews finished setting up and got into the heavy jackhammer work making life in the building unbearable during working hours. After talking to neighbors in the adjacent building who just finished their concrete project, you realize that you're faced with up to two years of daily tooth-rattling noise, construction equipment and crews everywhere and a swimming pool that's unusable because it's been covered for protection from the concrete dust. Mortgage payments, condo fees, property taxes and utilities continue to be due for the duration of the project whether you can comfortably use your unit or not.

Concrete renovation projects are part of life in oceanfront buildings (thankfully, not frequent) and knowing about upcoming projects and the possible implications for life in the building during the project is part of the homework that I am constantly mentioning here to prospective condo purchasers. If a prospective owner doesn't consider the life interruptions that are part of major projects, they may have regrets even if they are OK with the cost. As part of due diligence for a condo purchase, I recommend reading the minutes of as many recent association meetings as are available in addition to inspecting the financials and budgets. Upcoming projects may or may not have been mentioned in a meeting, so, it's always a good idea to ask direct questions to the seller, their listing agent, board members and neighbors, if possible. In addition, a good buyer's agent should have some knowledge of the history of past projects on the building and should be investigating possible upcoming work on your behalf.

The building pictured above has just begun it's concrete project. There are units for sale in this building priced at the same level as units in similar buildings in this part of the beach that have recently completed their concrete projects. All other things being equal, the choice for an informed buyer is easy. Do your homework.


"However beautiful the strategy, you should occasionally look at the results. "
______Winston Churchill