Short sales and slackers

Short sales have been very much a part of our market for the last two years. The percentage of closed short to total sales in recent months is at or near the historical peak even as inventory of short sales (and foreclosures) has dropped to below 20% of all residential MLS inventory in Cocoa Bach and Cape Canaveral as of this writing.

Every short sale has a life of it's own and, in my experience, no two take the same path to eventual closing or failure. The fate of a short sale rests primarily with the listing agent and her negotiator (if she is smart enough to have one). It is the listing agent's (or her negotiator's) responsibility to gather the paperwork required by the lender(s) and to timely submit complete packages and to follow the convoluted steps from start to finish. A good listing agent will keep the buyer's agent informed of progress, or lack thereof, along the way. Most fail to do this during the long process. I thought I'd relate my experiences with several recent short sales.

Short sale number one had a contract that was executed on December 18, 2009. It was initially negotiated by an attorney hired by the seller which left the listing agent out of the loop. This listing agent is experienced and determined and refused to be kept out of the info flow. She dogged the attorney's office for progress reports when they failed to offer them and shared those updates with the buyer's agent during the first seven or eight months of negotiations. When the attorney's offcie was unable to get approval, the file was handed over to a title company to attempt to resume negotiations. At slightly more than eleven months since the offer the sale closed. Without the listing agent's persistence and sharing of progress with the buyer's agent this short sale would likely not have happened.

Short sale number two also had an attorney hired by the seller involved. The attorney's office was uncommunicative with the listing office and seemed not to understand the process. By the time the bank finally issued acceptance well over a year later the buyers had moved on. Maybe better communication from the attorney could have kept the buyers engaged and committed. Maybe not.

Short sale number three also had an attorney negotiating with the bank. This experienced and competent lawyer was able to get approval relatively quickly except that the bank wanted the seller to contribute some cash at closing in exchange for release from all other liability. As the seller didn't have any cash this looked to be a deal killer but, in this case, the contract price was low enough that the buyer was willing to contribute (with the bank's knowledge) the amount for the seller and the sale closed. Seller walked with no liability and the buyers got a great deal.

The attack of the listing agent:

I have had an unusually high number of encounters with incompetent and lazy listing agents and offices in recent weeks. I am reminded of a post from 2008 in which I talked about the obstacles some listing agents and offices put between their clients and the sale of their property. You can reread it here: Dear Ms. condo seller

Last weekend I was stymied yet again by the same office that keeps all listings' keys in their office and is closed on the weekend. Not a problem when the buyer's agent has advance notice but for those not uncommon times when a client shows up unexpectedly on a weekend and wants to see properties, all of this office's listings are off limits. I won't even go into the 22 mile double round trip necessary for agents from downtown offices wanting to show downtown listings.

I showed a property recently which was easy to show as the showing instructions said to pick up the key in the condo's office and show. Great, except that after showing and deciding to present an offer, there is no answer at the listing office during weekday business hours and the agent does not respond to email AND his cell phone goes directly to voice mail with a full mailbox. The listing agent responded for the first time 48 hours after the offer had been emailed to him and three days after the offer was first presented, no further response.

Another listing agent responded to a call for showing instructions with the tidbit that the short sale unit was "disgusting". We looked at it anyway and decided to make an offer. The agent quickly acknowledged receipt of the offer and then stopped answering emails and phone messages. Next contact was six days after presenting our offer with the news that she had received another offer and we should present our best offer. We revised our offer and presented it with her quick acknowledgment of receipt. She then went back into blackout mode and finally responded two days later with an email that she had two offers and was "processing" them. We are now 10 days since the initial offer and she is incommunicado. We may need an intervention from her broker to force her to do her job. However, having displayed her incompetence in the listing process, we are concerned that she will have the ability to close a short sale. I suspect she won't.

Unfortunately, these are not atypical experiences. If you are a seller, it is a good idea to ask your agent how your property is to be shown. Requiring buyer's agents to go on a scavenger hunt to get the keys is only effective as a deterrent to a sale. If you have a tenant in your property, have a talk with your tenant before listing and make sure they understand that they must allow showings. I can' tell you how often I call to show a tenant-occupied property only to get some weak excuse from the tenant why today isn't a good day. In it's most extreme case I have known tenants to change the locks so that the listing agent's keys wouldn't open the door. You may think your house is for sale when it's really not.

Have you called your listing office today? How about the listing agent? If buyer's agents can't get through to your agent or her office, you are less likely to sell. Guess which days are busiest for showings. Saturday and Sunday. Guess which days real estate offices are most likely to be closed. Yep. Pick up the phone and call your listing office on the weekend. Call your listing agent any afternoon on her cell. If you're not getting answered buyers agents aren't either.

If yours is a short sale it is critical that your listing agent or her negotiator be experienced in the process. Your sale may be complicated enough that you'd be better off with an attorney. If you decide to use an attorney for the process be sure to hire one that specializes in distressed sales. Not all attorneys are competent in short sale negotiations. A good one should be able to get you out with less post-sale liability.

A last comment about listing agents; There are many good ones. I find myself across the closing table from the same ones again and again. I respect and admire many of my listing colleagues and appreciate their professionalism. You know who you are. It is the not-small number of incompetents who make the road bumpy for their clients and those of us representing buyers that I have a problem with. Match one of these with a difficult and unreasonable seller and you have a headwind of epic proportions.

We've enjoyed a few days of beautiful December weather after the bitter cold snap earlier this week. The shot at the top was Thursday this week, windless and in the 70s. Happy and safe holidays to all.

I can see every monster as they come in.__Truman Capote

November Wrap-up

Warmer days.

November was a good month for luxury condo sales in Cocoa Beach and Cape Canaveral. According to the Cocoa Beach MLS, out of 39 total condo and townhome sales, four were for more than a half million dollars and six others were at $300K or above. Seven of the ten highest priced closings were cash deals. Eight of the 39 were short sales and nine were foreclosures. Only three of the 17 distressed sales exceeded $200,000. There have been only 18 closed sales of condos exceeding $500,000 so far this year.

Highlights in the non-distressed sales included;

Three brand new units at Ocean Paradise in south Cocoa Beach closed this month with three more under contract and only four units left for sale in the building. All the action here happened after the last big price cuts on these units in late September. One unit sold at a $200,000+ discount to asking price.

Two big (2819 square feet) corner units at Solana Shores in Cape Canaveral closed one day apart for $555,000 and $565,000. Forth and third floor respectively.

A fifth floor corner at Emerald Seas closed for $395,000. It was a 3 bedroom, 2.5 bath with 2394 square feet and sold fully furnished.

The second floor south unit at the four year old Almar in south Cocoa Beach sold for $380,000. There are only two units per floor in this small direct ocean building. This unit has 2713 square feet, 4 bedrooms, 3.5 baths and a 2 car private garage.

A third floor direct Banana River southwest corner unit at the four year old Garden Bay in Cocoa Beach sold for $340,000. This unit has 2600 square feet with 3 bedrooms, 3.5 baths and a 2 car garage.

A 2nd floor direct ocean 2/2 at Sea Era Sands in Cape Canaveral closed for $247,500. 1409 square feet and garage.

Two units sold in the month at Solana Lake in Cape Canaveral. Both were 2/2 units and closed for $184,000 (third floor, 1698 sf) and $208,000 (fifth floor, 1828 sf).

A nice 2nd floor, 2/2 Spanish Trace direct river unit closed for $135,000. This complex is right across the road from the CB schools and a short walk to the Country Club. Carport instead of garages.

A fully furnished direct river, 2nd floor end unit at Cape Shores in Cape Canaveral sold for $126,000. Open parking, 2/2 with 1082 square feet.

A small but nice 2 bedroom, 1 bath unit at Twin Palms in Cocoa Beach 2 blocks from the beach sold for $67,000.

Among the distressed sales these were interesting;

Top floor (5th) Cape Winds southeast corner direct ocean 2/2 closed as a short sale for $250,000 eleven months after the contract was signed. Cape Winds is one of the very few complexes that allow weekly rentals.

A side view 2nd floor Michelina 3/3 closed as a short sale for $299,900. Four years old, 2411 square feet with garage. This one only took five months from contract to close.

A very nice top floor 2/2 with 1409 square feet and garage at Sea Era Sands in Cape Canaveral sold for $245,000. This short sale closed quickly with only two months from contract to close.

Another short sale closed at Diplomat of Cocoa Beach. This was a ground floor 2/1 with open parking that went for $74,900. Needed a little TLC. This one was three months from contract to close.

Two Mystic Vistas foreclosures closed for $194,000 and $150,000. Both units were 2000+ square feet. The lower priced sale was a never-sold unit taken back from the developer while the higher priced unit sold new in 2007 for $544,900. Ouch!

A foreclosed direct ocean, top floor 2/2 unit at the 33 year old Crossway in Cocoa Beach closed for $155,000. Open parking and 1250 square feet. It sold five years ago for $370,000. Another foreclosure with the same floor plan on the same floor in the building also sold in November for $190,000. It last sold in 2004 for $360,000.

Last of our distressed sales was a foreclosed five year old Majestic Bay townhome in Cape Canaveral. This big 2307 square foot, 3 bedroom, 3.5 bath unit has a 2 car garage and sold for $128,000. Sold new in 2005 for $308,900.

Condo and townhome inventory in all prices stands at 482 this morning with 77 of those offered as short sales. There are only 24 foreclosures in the mix. Much of the rest of the current inventory is overpriced which is why it's still there. The supply of distressed sales continues to shrink. Prices of non-distressed properties have continued to drift downward although at a slower pace. For established older complexes and single-family homes I don't foresee a whole lot more downward movement in average selling prices barring total economic collapse. There is a reservoir of pain yet to be realized in the higher price range especially in the newer buildings. As always, I could be wrong. Pray that I'm not.

“No matter how cynical you get, it’s impossible to keep up.” _______________Lily Tomlin

Random observations

Looking west on Minutemen Causeway yesterday.

I hope everyone had an enjoyable Thanksgiving holiday. Weather looks beautiful for the last day of the Space Coast Art Festival in downtown Cocoa Beach and I'll be rejoining the crowds here shortly. It's always a fun time. I crunched a few numbers this morning looking for trends from the almost-finished year. My findings mixed with some random anecdotal observations are below.

Trends in 2010 in Cocoa Beach and Cape Canaveral

• High-end newer condos saw prices drop significantly closing the gap with older luxury units. We saw sales at Ocean Club, Magnolia Bay, Michelina, Ocean Paradise, Garden Bay and other new luxury developments at numbers hundreds of thousands of dollars below previous asking prices. This pressure on prices will likely abate as supply diminishes but there is more pain yet to be felt at at couple of large, recently completed complexes starting with "M".
• While mortgage rates hit an all-time low, difficulty in getting a mortgage hit an all-time high, especially for condos.
• The number of condo sales was up for the 4th straight year.
• Inventory continued to drop. Now at pre-boom levels.
• Short sales and foreclosures made up more than a third of all sales. Of these distressed sales, the vast majority were clustered in the sub-$100,000 range. Only 7% of the distressed sales were for $300,000 or more.
• Of 127 pending sales, 80 (63%) are distressed.
• Of 586 currently active residential listings in Cocoa Beach and Cape Canaveral only 102 (17%) are short sales or foreclosures. This seems to suggest that once the 80 pending distressed sales close, we may be out of the woods for this cycle. We will, of course, see more distressed sales but likely not at the pace of the last couple of years. It appears the bulk of the weak hands have folded. As always, I could be wrong.
• Some buildings will continue to buck the trend because of limited supply, strength of owners, age and other factors. Because Mystic Vistas is imploding doesn't mean that Solana Shores owners are going to give away their units.
  

I welcome all comments, predictions and other observations. It is almost noon and downtown Cocoa Beach is wrapped up in Art Show visitors. I'm out there. Have a good one wherever you are.

The end of the world call, so far throughout history, has been the losing bet. _________Barry Ritholtz

repeat: Ten questions for prospective condo buyers

This is repeat of a post from last year that is still relevant. Some of you may have missed it then.

I've seen many a search for a beach condo grind to a halt or take an abrupt turn when a buyer encountered an issue that they hadn't considered earlier. One's mental image of the perfect beach getaway may be at odds with the reality. Below is a list of ten pertinent questions prospective buyers of beach condos should have asked and answered prior to beginning the search.

1. If planning to get a mortgage for the purchase, how much down payment will the lender require? Mortgage requirements for Florida condos are different than those for condos in other states and for houses. Expect to have to put down 25 to 30% in most cases for Florida condos. Your pristine credit does not matter.

2. What will my taxes be? Forget what the current owner is paying. It does not apply to the new owner except (sometimes) for the first partial year of ownership.

3. Will there be a problem with my English Mastiff? Probably. Most condos have rules limiting the number and weight of pets. Some don't allow any pets at all.

4. Do the condo fees cover all expenses? No. In most condos the monthly fees cover insurance and maintenance for the building, water and sewer, basic cable, lawn care, common area electric and other common expenses. Some condos also include hot water in the fees and some even cover AC units. At the other end of the scale, some do a special assessment every year when the insurance bill arrives and a few complexes with artificially low monthlies seem to assess every time the wind changes direction. Be suspicious of condos with too-good-to-be-true low monthly fees.

5. Will the insurance on a Florida condo be sky high? No. As the condo fees cover the insurance for the building, the unit owners have only to cover the interior and contents of their units. I pay less than $1000 per year for a small 2 bedroom beach rental condo.

6. If I don't like the layout will I be allowed to remodel my unit? Yes. In most cases, any interior alterations that do not affect the structural integrity of the building are allowed. Removing non-load-bearing walls and building new walls are common alterations. Exterior alterations in most cases are more tightly restricted. Replacing the tired wooden front door with a hip new stainless steel door will likely not be allowed.

7. Are ground floor units undesirable? Not according to the people living in them. If you don't plan to go to the beach often, you will prefer the view from an upper floor. If you're one of those people or families that will be on the beach a lot, you may want to consider the lack of barriers (stairs or elevators) between your unit and the beach. I've found that the people in the ground floor units are the ones who spend the most time on the beach. Bonus here is that the ground floor units usually sell at a decent discount to higher floor units.

8. Can the condo association bill me for repairs to the building without my consent? Yes. All owners in a complex share the expense of maintaining the common elements and the board has a duty to maintain those shared assets. When the time comes to repair the balconies or replace the roof, if sufficient reserves don't exist, each owner will be assessed their share of the total. Sometimes an association will get a loan to pay for a large expense and increase monthlies to cover the repayment of the loan. This is why it is vital to review the condo budget and to read minutes of recent meetings. A buyer should be aware of recent and/or upcoming repair projects. Some buildings have reserves to pay for future expenses and some have none. Lack of reserves may kill chances of a mortgage. If considering a unit in an older building, all other things being relatively equal, a building that has recently completed a large renovation project is more desirable than one staring at an upcoming project.

9. If the seller agrees to pay the assessment for the upcoming concrete restoration project should I be concerned about anything else? Yes. The assessment might not be enough to take care of unexpected issues that surface during the project. Even more important, are you prepared to deal with the noise and inconvenience of the project for an extended period? Major concrete projects in addition to being expensive, are unbearably noisy, balconies are out of use and often pools are covered for the duration. As stated in number 8, a building with recently finished project is preferable all other things being equal.

10. Will I be able to rent my unit out for some income when I'm not using it? Maybe. Some condos have no rental restrictions while others have up to a one year minimum rental period. If you are prohibited from renting for less than a year, you won't be using the unit at all if you choose to rent it. If you buy a unit in a building with a one month or longer minimum rental, you may have a hard time picking up a monthly or longer tenant outside of the January through April season. You can read my detailed post on rental restrictions and their implications here.

This is by no means a comprehensive list but it's a good start. Knowing about restrictions and issues may eliminate a lot of wasted effort in your search. If anyone has others I've not included, please add them in the comments below.

I know that things are getting tougher
When you can't get the top off from
the bottom of the barrel.
_____Green Day

October 2010 rundown

Somewhere in Cape Canaveral, November 3, 2010.

Welcome and best of luck to our new Cocoa Beach City Commissioner.

The month of October 2010 saw 45 condo and townhome sales in Cocoa Beach and Cape Canaveral as reported on the Cocoa Beach MLS. Only four of the sales exceeded $187,000 and 40% closed for less than $100,000. There was one lone sale above the half million dollar mark, a beautiful 4th floor southeast corner at the 5 year old Carlyle in south Cocoa Beach. This unit has 2713 square feet, 3 bedrooms, 3.5 baths, a 2 car garage and expansive views over the ocean and the three mile wide Banana River across the street. It closed for $590,000 having sold new in 2005 for $850,000. It was offered for $1.15 million in 2007 with no takers.

The 2nd highest priced sale was a 2502 square foot, 5th floor Diamond Bay of Cocoa Beach. This 3 bedroom, 2.5 bath unit has expansive Banana River views and a big 2 car garage. Sold for $310,000.

A 3rd floor C building Stonewood 3/2 with a side ocean view sold for $280,000.

A direct ocean Canaveral Towers 2nd floor 3/2 closed for $240,000. Fully furnished with two ocean balconies. This is a weekly rental building with excellent income opportunities for owners who choose to rent.

A 2nd floor direct ocean Sand Dunes 1/1 in Cape Canaveral closed for $187,000. It was fully furnished and came with a 1 car garage.

A direct river Bay Club of Cocoa Beach (across the street from the schools on Minutemen) sold for $175,000. This top floor (2nd) corner unit had 1570 square feet, 3 bedrooms, 2 baths and a boat slip. No garages at this small building.

Mystic Vistas in Cape Canaveral was active in October with four recorded sales as of this morning although there may be some others not accounted for yet. The sales so far recorded ranged from a jaw-dropping $130,000 to $187,000. All were 3/2 units between 1994 and 2010 square feet with garages.

Another Perlas del Mar unit closed as a short sale for $161,000. The train of foreclosures and short sales may be coming to an end in this unfortunately timed complex. Every sale in the last two years there has been either a short sale or a foreclosure. As of this morning there is only one unit actively for sale on the MLS. These big, luxurious units sold for as much as $345,000 new a few years ago.

A direct ocean, 2nd floor, 2/2 southeast corner at Windjammer in Cape Canaveral sold for $160,000, quite a deal even though the unit was in original condition. In fact it was such a compelling price for the buyer that another owner exercised their first right of refusal and bought the unit, pushing the original buyer out.

A 2nd floor direct ocean 1/1 at Royale Towers in Cocoa Beach sold for $150,000 fully furnished with garage.

Two more direct Banana River units sold at Pebble Cove of Cocoa Beach. Both were top (4th) floor 3/2 units with 1344 square feet and garage. One closed for $135,000 and the other, in slightly better condition, sold for $146,000. This same unit sold in March of this year at the same price, $146,000.

An Oak Park townhome in Cape Canaveral closed as a short sale for $128,000. Not bad for a four year old 1855 square foot, 4 bedroom, 2.5 bath with 2 car garage. Sold new in 2006 for $299,900.

Two Villages of Seaport 2 bedroom 2.5 bath townhomes sold in the month for $124,000 and $127,000. Both had open parking and were built in 1985. A 1/1 built in 2002 in the same complex sold for $88,000.

Another ground floor lakefront Harbor Isles of Cocoa Beach 2/2 with private garage sold for $120,000.

A Royale Towers C building 1/1 unit on the ground floor closed for $98,000. Had a garage and a tiny peek of the ocean. Sold for $175,000 just three years ago.

Two Banana Bay of Cocoa Beach 2/2 townhomes with open parking closed in the month setting new lows for the complex, one for $90,000 and a foreclosed unit for $68,250.

A four year old 2nd floor 2/2 in Portside Villas Cape Canaveral closed for $89,000. It last sold in 2006 for $195,000.

One of the non-waterfront Four Seasons 2/2 units with open parking sold for $82,500.

Another complex setting a new low was The Diplomat in Cocoa Beach. A ground floor, non-oceanfront 2/1 in need of extensive repairs went for $64,000.

Non-condo residential sales were quite brisk for the month with 14 sales of MLS-listed homes in the two cities. Prices ranged from $105,000 for a 5 year old 2/2 half-duplex with garage in Cape Canaveral to $960,000 for a super nice 4/3 single family on 75 feet of direct ocean beach just south of downtown Cocoa Beach. Cocoa Beach canalfront home sales ranged from $360,000 for a gorgeous remodeled 3/2 with 2373 square feet and pool on Barrello to $201,000 for a 1592 sf home in need of extensive work or possible tear-down on Trinidad.

Deal of the month had to be a 3/2 with 1440 square feet and pool on the canal on Barrello that went for $237,000.

Lowest price for a freestanding single family was a foreclosed, non-waterfront, fixer-upper in Snug Harbor on a .17 acre lot that closed for $123,000.

I've been imitated so well I've heard people copy my mistakes.______________Jimi Hendrix

A luxury condo case study

I thought it would be interesting to review the luxury condo market in Cocoa Beach and Cape Canaveral as it stands in the last quarter of 2010. Some of my comments from one year ago about the same market segment are here. For my number-crunch, I chose the poster child of successful sales in a crappy market, the beautiful Meridian of Cocoa Beach pictured above. This complex was built and marketed by an experienced long-time developer in our area who has built 21 complexes in Cocoa Beach and Cape Canaveral since 1977. They were able to sell their last remaining unit out of 64 in December 2009 about two and a half years since the first unit closed, a remarkable feat in a horrible market while every other developer was floundering with few or no sales. Of the strategies they employed to sell their units, in addition to "decorator credits" paid back to buyers, they offered jacked-up commissions to buyers' agents. Of the last 13 developer units sold, all paid either 4% or 5% to the buyers' agents. A $30,000 plus potential payday is enough to set most agent's tails a wagging. This strategy along with exorbitant bonuses was employed by other developers in our area as the market tanked boosting buyers' brokers paydays on some sales over the $50,000 mark. For the record, I have always thought bribing buyer's agents a smelly practice and have commented frequently about it on this blog.

We have seen five total resales at the Meridian (all between $550,000 and $575,000). One other unit is under contract at the present, a short sale asking $500,000. The first resale happened in January 2008 just 17 months after it's purchase for $150,000 more than the short sale price of $550,000. The developer was able to move the remaining 13 unsold units after this short sale closed although by mid 2009 they were starting to drop prices of similar units below $550,000 in order to exit the project. The second resale happened a year and a half later in August 2009 and, although not a short sale, sold for over $100,000 less than the purchase price two years earlier. The last three resales all closed this year. None were short sales but all represented over $100,000 loss to each of the sellers.

As of this morning, October 24, there are six units offered for sale and one short sale under contract . Two of the six are asking slightly more than they paid (cuckoo) and the other four are asking below their purchase price, one more than $200,000 less. What are we to conclude from our research? To me, it seems that there will be more price drops in this complex and very likely more short sales. Excluding the resales, only four owners bought for less than $575,000, the highest of the resale prices. That means that there is likely a considerable number of underwater owners who have been blindsided by the resale prices since the developer's departure. How long do they hang on looking at a six-figure paper loss with fingers crossed hoping for a turnaround?

There is a level at which these units will sell and the market seems comfortable with the recent low to mid $500,000 range for the interior units although it's conceivable that it could inch lower. None of the corners have resold. We saw immediate sales recently at Ocean Paradise in south Cocoa Beach when the developer dropped prices significantly on the unsold units there and I expect, at or near the current lower asking prices, that the building should sell the remaining units. Buyers who have been waiting for deals on luxury condominium units have now and in the near future opportunities to be rewarded for their patience. There are other new luxury buildings with similar dynamics where deals have already been and will be happening as reality becomes manifest. There are two pending short sales at Sol y Mar for less than $450,000. These units sold as high as $900,000 four years ago. As units at Michelina have been offered in the high $400s and low to mid $500s recently they have sold.

Inventory of $500,000 plus units stands at 44 right now, half that of early 2009. Some of that is due to asking prices drifting below the half million dollar mark but a significant part of the reduction is because of sales. Meanwhile, the October weather continues to be perfect. I encourage beach time. The ocean water is at 80 degrees and the mullet run is still on and the beaches are deserted with the exception of the beach behind Coconuts where the annual Slater Brothers Surf Contest is happening this weekend. The boys were skating the big ramp set up on the beach under the full moon the last two nights.

What we don't know keeps the contracts alive an movin'
They don't gotta burn the books they just remove 'em
___________Rage Against the Machine

Parsing Septembers

A fisherman stalking flounder at Jetty Park, Port Canaveral one beautiful day last week.

With a lot of media chatter about mortgage rates at another all-time low this week my curiosity got me to wondering how much impact the cheap money was having on our current condo sales. Knowing how stringent requirements for condo loans are at the moment, I didn't expect to see a lot of condo sales involving financing even with 30 year fixed rates below 4.2%. The results confirmed my suspicions. Money may be cheap but, for Florida condo buyers, the series of hoops that the lenders are requiring a buyer to jump through has become a test that is increasingly difficult to pass. The chart below is of mortgage rates since September 2007.



In addition to the most recent month, September 2010, I pulled results for the preceding three Septembers to get a feel for the trend in place. In September 2010 there were 34 total closed MLS-listed condo sales in Cocoa Beach and Cape Canaveral. Of the total, 65% were cash sales. The cash deals were scattered across all price ranges. Looking at September sales in the last four years we find that as mortgage rates were declining the percentage of cash sales was climbing. Much, but not all, of that trend is a reflection of the tightening requirements for condo loans during that time. Back in September 2007 cash sales represented only 21% of the total condo sales in our market. It has been on a steady climb since as the chart below shows.



Taking our same four Septembers and filtering for distressed sales, we find that in 2007 there was not a single short or foreclosure sale of a condo in Cocoa Beach or Cape Canaveral as reported by the MLS. Looking at our chart below of the same metric (percentage of distressed condo sales in September since 2007) we see that that percentage has been on a steady increase with 56% of the 34 sold units in September 2010 being either short sales or foreclosures.



The last stat I pulled up was condo and townhouse inventory in Cocoa Beach and Cape Canaveral in each of the four Septembers. Readers of this blog will know that our inventory has been on a steady decline since 2006 with the present number at a record low, 484 units, 19% either short sales or foreclosures. It is interesting to note that even with distressed sales making up only 19% of total inventory, they made up 56% of the total sales last month. You can draw your own conclusions from that anomaly. If you're thinking of pursuing a short sale, know that of the 9 closed short sales in September, four closed in 2 months or less and five took from four to more than six months to close. Tip; all four of the fast closes indicated in the listing narrative that the sale price was "bank approved".



As always, if you'd like a bulldog, well-informed buyer's agent to represent you in the battle with the often-difficult and uninformed sellers, I'm your man. My goal is to get my clients the best possible deal on the best possible property and, as my posts indicate, I do my homework and know my market and I enjoy it. You can email me at larry@southcocoabeach.com

“I don't know what this means. I don't think it means anything.”
_______Eddie Vedder

It's here- Best month of the year

October, my favorite month in Cocoa Beach. We had a two day tropical system that moved out on the last day of September and the sun rose October first on a cloudless, gorgeous day. The storm surf cleaned up overnight and the locals were treated to a day of light offshore winds and classic Cocoa Beach conditions ranging from overhead plus in the morning to chest high perfection as the sun set over the river.

There were 33 condo and townhome sales in the month of September as recorded in the MLS in Cocoa Beach and Cape Canaveral. As always this number will likely creep upwards in the next few days as the ever-tardy listing agents update their sold listings. We had two $500K plus sales in the month, a 1st floor Meridian (actually second floor over the garage) direct ocean, fully furnished 3 bedroom, 2 bath with 2180 square feet and a one car garage that closed for $554,000. It sold just three years ago for $649,900 although that price may have included large concessions by the developer. The Meridian developer was offering significant "decorating credits" to some buyers to prop up the comps as they sold out the project. The other half-million plus sale was, in my opinion, a "smoking deal", a bank-owned 6th floor Ocean Oasis in downtown Cocoa Beach that sold for $535,000 ($162 per square foot). It sold new in 2005 for $935,000. This 6 year old direct ocean unit had 4 bedrooms, 3.5 baths in a spacious 3293 square feet and had a 2 car garage.

September also saw two Stonewood B building units close. One, a NE corner 4th floor, 3/2 with 2170 square feet that closed for $394,500 and a 16th floor, very nicely remodeled 2/2 that sold for $311,500.

A Xanadu 2 story penthouse (16th floor) 2/2 short sale finally closed after being on the market for 666 days. It was in good condition, with 1982 square feet, was furnished and closed for $296,500.

Mystic Vistas in Cape Canaveral was hot in the month with four closed sales from a low of $180,000 to$222,500. Three of the four were short sales and the other was bank-owned.

A four year old Garden Bay direct Banana river first floor, 3 bedroom 3.5 bath with 2350 square feet and a 2 car garage sold for $290,000, a deal in my opinion.

The best one bedroom 2 bath unit in Cape Winds closed for $155,000. This unit was top floor closest to the ocean of the one bedroom units with a sweeping south ocean view. With excellent on-site management in this popular weekly rental complex the buyer has the flexibility of mixing decent rental income with personal use.

A ground floor 3 bedroom 2 bath Harbor Isles lakefront unit closed for $147,500 destroying my bottom call on these units over a year ago. Even my well-developed pessimism was too conservative regarding the decline in this complex. I assumed the amenities, management, and location would insulate this well-run community from the degree of price-retreat we were seeing in other less-desirable complexes. Oh, well. A falling tide does indeed affect all boats.

Of the 33 sold units in September, over half were distressed; 9 bank owned and 9 short sales, a higher rate of distressed sales than we've seen in 2010 as a whole. So far this year there have been 67 closed condo short sales in the two cities and 78 closed bank-owned units out of 355 total closed sales.

Our inventory has dropped below the 5oo unit mark with a total of 492 units this morning although because of end of the month expirations the true number will probably move slightly above 500 in the next few days. There are currently 75 active condo short sales on the MLS and 25 bank-owned units and 76 other distressed sales showing as pending or contingent. Those numbers seem to indicate that the supply of distressed sales is drying up. Time will tell. In the meantime, the mullet run is still on, the north swell is lingering, the sky is cloudless with a slight breath of wind, air temp of 78 degrees and a water temp slightly above 80 degrees, Heaven. I'm out there.

Forget what we're told
Before we get too old
Show me a garden that's bursting into life
____Snow Patrol

30 days hath September

The 18th of September, 2010, the surf is big and sloppy from Hurricane Igor churning past far out in the Atlantic, the fall mullet run along the beach is in full swing and 18 condos and townhomes have closed so far in the month. Two sales exceeded the half million dollar mark, one a three year old direct ocean 3/2 Meridian unit that sold for $554,000, 95 thousand less than it sold for just three years ago. The other was a huge (3293 square feet) 6th floor, 4 bedroom 3.5 bath, direct Ocean Oasis in downtown Cocoa Beach. It closed for $535,000, exactly $400,000 less than the selling price new in 2005.

Other sales of note included:

Stonewood Cocoa Beach, B building, direct ocean 4th floor NE corner, 3/2, 2170 sf, sold for $394,500.

Three year old direct river ground floor Garden Bay 3 BR, 3.5 bath, 2350 sf and 2 car garage. Sold for a song at $290,000.

A five year old, 4th floor direct Banana River Majestic Bay in Cape Canaveral. This super nice 3/2 unit has 1984 square feet and a private 2 car garage. It sold for an unbelievable $205,000. Might go down as the deal of the year in Cape Canaveral.

A four year old, no ocean view, D building Mystic Vistas 3/2 closed for $180,000, a new low number for the complex.

In the "Rip van Winkle" category, a sale finally happened in the ill-conceived three year old Pier Resort complex. This was a 3 bedroom, 3 bath, 1900 square foot unit that closed for $169,900. It sold new in 2007 for $480,000.

The best 1 bedroom 2 bath unit in Cape Winds closed this month. This one was the top floor, closest to the ocean of the one bedroom units, had an expansive southern view of the ocean and closed for $155,000.

Anecdotally, sales activity right now is very brisk for both homes and condos. Looks like we may have a repeat of last year's abnormally strong fall. Inventory continues to contract along with the number of distressed sales. Condo and townhome inventory in Cocoa Beach and Cape Canaveral stands at 523 units this morning.

"A nickel ain't worth a dime anymore."__Yogi Berra

Pictures and numbers

Mortgage rates have continued their plunge. Payments on a $200,000 loan for 30 years are now below $1000 per month. Monthly payments for the same amount for a 15 year fixed is only a couple of hundred dollars more than the 30 year payment was just two years ago.



Condo sales for August exceeded last year's numbers after July's faltering pace. Inventory continues to decline and it seems unlikely that the fall numbers will match last year's which were abnormally high. We'll see. Low prices and low rates have buyers on the prowl but the dearth of good inventory is hampering the search for many.



MLS inventory Sept 1, 2010 Cocoa Beach & Cape Canaveral

Condos, all prices_____541
over $500,000_________56 - 13 sold this year
Single family homes___117
over $500,000_________35

Snook season did not open today as it normally does. Season opening has been delayed until September 16th to allow the population a little recovery from the fish kill during last winter's prolonged cold snap. Surf has been big and sloppy the last few days from the Hurricane Danielle swell combined with hard onshore winds. We expect the swell from Hurricane Earl to arrive by tomorrow. Please be careful at the beach in these conditions. A little one can be swept away in a heartbeat and even strong swimmers can get in trouble with this much water moving around. We lost an experienced surfer last weekend when the swell was peaking. Condolences to his family and friends.

"Squalls out on the Gulf Stream,
Big storm's comin' soon.
I passed out in my hammock,
And God I slept till way past noon."
____Jimmy Buffett

Have I forgotten?

Lake Atlantic on a hot summer morning.

During the events of the last couple of months I may have lost contact with some of you. If I haven't responded to an email or call please accept my apology. I am back in Cocoa Beach now and ready to resume our conversations and/or property research. If you have been waiting on a response from me please contact me again at larry@southcocoabeach.com Again, sorry for the break in communication.

Supply and demand at work

Goodbye, Dad. I'm gonna miss the hot days picking vegetables with you in your garden. I won't forget about always doing the right thing.

Sorry for the gap between posts as I've been away from Cocoa Beach. Not surprisingly, not a lot has happened in the market in recent weeks. The slowing sales trend I noted in the last post has continued into August. The well-picked-over condo inventory is being reflected in the low sales numbers. Anecdotaly, the demand seems to still be there. As of this morning, only 15 MLS listed condos have closed in Cocoa Beach and Cape Canaveral in August. Prices have ranged from $50,000 for a non-waterfront, foreclosed Cape 2/2 condo to $245,000 for a five year old 3/2 Bayport villa with 2 car garage.

Other sales of note included a 7th floor Royale Towers "C" building, south ocean view 2/2 with garage that sold fully furnished for $216,000.

A furnished 2/2 townhouse-style Royal Mansion with a peek of the ocean closed for $180,000. Open parking and on-site management for short-term vacation rentals (40% fee). Note that condo fees for the 2/2 units here is $568 per month.

A direct river ground floor 2/2.5 in Waters Edge West in south Cocoa Beach closed for $166,500. This unit has a big private garage and a deeded boat slip.

A foreclosed, big (1350 sf) 2nd floor, 2/2 Fountain Cove direct river with garage sold for $138,000. This unit last sold in 2005 for $315,000.

Another lakefront Harbor Isles 2/2 has closed for $110,000. This one was 2nd floor with private garage. Only one unit sold for less in this complex in the last ten years. That was in 2001 for $106,000.

Two of the popular Diplomats 2/1 units have closed, one for $85,500 and one for $85,000. These numbers take us back to 2002 levels in this complex.

A cute 2nd floor 1/1 south ocean view Beach Villas in south Cocoa Beach sold for $92,500. Open parking and a big wide balcony with a good ocean view.

I expect the slow sales rate to continue indefinitely as a result of the low inventory. My take on price trends is split. There are at least two stories there. While prices have been holding steady in the older direct ocean units in that sweet $200,000 to mid-$300,000 range, prices in the luxury buildings in the upper range ($500,000+) have continued to erode and I expect that trend to continue.

"I hate to say it but you're so much more endearing with the sound turned off."
_______from "Talk Shows on Mute" by Incubus

July roundup

My expectation of sales slowing in the 2nd half of 2010 seems to have been confirmed by the July numbers as they stand today. After beating last year in all months but one this year so far, July came up short with only 28 sales compared to 41 last year. My take on this is the well-picked-over, smaller inventory is leaving a lot of prospective buyers off the playing field when they can't find a suitable listing in their target property type. I mentioned a couple of posts ago about direct ocean upper floor units in the mid $200 and $300,000 range dominating the condo sales. That trend continued through the end of July with the 9 highest dollar sales of the total 28 fitting that description.

The highest price condo sale of the month in Cocoa Beach and Cape Canaveral was $368,000 for a nicely remodeled, direct ocean, 4th floor northeast corner, 3 bedroom, 2 bath unit at Ocean Pines in downtown Cocoa Beach. Another nicely remodeled 3rd floor unit in the same building closed for $305,000 and a 5th floor, 3 bedroom, 2 bath next door at the 10 year old Palmas Majorca sold for $332,000.

The lowest price for a direct ocean unit in July was $191,500 for a 2nd floor, 2 bedroom, 2 bath foreclosure at Sun Club in south Cocoa Beach. It had no garage and needed work.

Now for a study in contrasts. Someone paid a surprising $295,000 for a 910 square foot, 2nd floor direct ocean, 2/2 with no garage at Chateau by the Sea. Three days later someone closed on a 1568 square foot, 5th floor 2/2 direct ocean Wavecrest with garage in south Cocoa Beach for $276,500. Both units were furnished. Imagine an astute buyer looking for comps to aid in formulating an offer on another unit and finding these two sales closing three days apart at prices of $176 per square foot and $324 per square foot. Which is relevant? Chateau is a weekly rental building which means income possibilities are much greater than Wavecrest. Wavecrest is 11 years newer and in much better condition. I think neither of these sales can be taken alone to form any conclusions about the market. I just mention them as an observation of extremes.

"A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain."______Robert Frost

Humphrey come home - He's on the way

Good news, bad news. Good news first. Humphrey has been located. Bad news; because he was found wandering late at night by a couple as they were leaving town for vacation, he is presently taking a vacation in North Carolina with two shelties but will be home soon. We are all very happy.

Captain Hiram's

Captain Hiram's on the mainland at Sebastian, a fun boat ride lunch destination from Cocoa Beach via the ocean or the river.

Three weeks into July and 19 MLS-listed condos and townhomes have closed in Cocoa Beach and Cape Canaveral. Prices have ranged from $28,000 for a 1/1 short sale in Cape Canaveral, three blocks from the beach to $305,000 for a remodeled partially furnished 3rd floor 2/2 direct ocean unit at Ocean Pines in Cocoa Beach.

An interesting observation about the sales so far is that the six highest prices were all direct ocean 2/2 units above the ground floor in older buildings and none were short sales or foreclosures. Prices ranged between $250,000 and $305,000. This type of unit is the bread and butter of our market. Anecdotally, there seems to be more demand for direct ocean 2/2 units than any other condo type in our market. While prices for this property type have eroded along with the general market, the degree of depreciation has been less than other property types that experienced overbuilding during the boom years. Consider the many Cape townhomes built in the last 6 years that are selling for a third of their new price, e.g. Portside, Perlas, Sea Spray, etc.

The direct ocean buildings built in the last ten years have not included any two bedroom units. The trend during the boom was to build bigger, more luxurious units with at least three bedrooms. The norm in the years before 2000 was to build a mix of mostly 2/2 units with a few 3/2 units. Those older units are filling the niche for buyers wanting direct ocean but unable or unwilling to pay $400,000 plus for a big newer unit. If this is your target property type be aware that other buyers are becoming comfortable with the current prices levels and are contracting and closing these units in this apparent sweet spot range of mid $200s to low $300s. Expect to pay slightly more for nicer units.

"I definitely don't think that I'm hot doo-doo. I don't."
_________Drew Barrymore

Lazy days of summer

I'm guessing that by now most of the stragglers have updated their listings. The number of Cocoa Beach and Cape Canaveral MLS-listed condos and townhomes closed in the month of June is at 44 units as of this morning. None of the late arrivals exceeded the high number for the month which was $430,000 for one of the bank sale Ocean Club units.

Sales are plugging along so far in July with several nice direct ocean units closing last week. These included an upgraded and fully furnished 3rd floor Ocean Pines 2 BR, 2 BA with garage that closed for $305,000. A top floor (7th) Windward East, Sand Dollar floor plan (wide living room with two sets of sliders) 2 BR, 2 BA with garage went for $299,000. A big 5th floor 2 BR, 2 BA unit with garage at Wavecrest in south Cocoa Beach sold fully furnished for a surprising $276,500. That qualifies for "smoking deal" status. In Cape Canaveral, a super nice, remodeled Canaveral Sands 2/2 with garage sold unfurnished for $260,000.

Off the ocean a short sale Portside Villas 3 BR, 2 BA has closed for $105,000. It sold new four years ago for $239,000.

As prices have retreated, I've been seeing first right of refusal being exercised more frequently. This process deserves to be misunderstood as it often is. What it usually means (in our area) is that a contract for sale of a unit is offered to all the current owners who have the right to match the contract and purchase the unit themselves under the exact same terms of the original contract. Some associations mail the contract to all owners and some simply post the contract in the lobby or common area. (Not optimal for out-of-town owners.) Time periods are typically in the 10 to 14 day period during which time an owner intending to exercise his right must declare his intentions and present a matching contract. Should more than one owner declare intention to exercise, the condo docs spell out the process for determining priority. Some associations use numerical proximity while others decide based on physical proximity of units. Others let the seller decide which contract to accept. The end result is that the original buyer is out. It's not fair but it is the way it is.

One unintended side effect of the process is that all owners are aware of a contract price even in the event of a failed sale. I can think of one unit in south Cocoa Beach that is on the market for $25,000 more than the posted contract that failed. All the owners in the building and clued-in agents who perused the bulletin board during the posting period are aware of what those sellers were willing to accept. They are understandably upset at the process.

We saw asking prices in another large complex domino down when a low-priced contract went out to the owners a couple of weeks ago. If you're offering on a unit in a first right complex be aware of the chance of losing your contract.

"You can have anything you want,
But you better not take it from me."
______Guns n Roses

June Numbers

Cocoa Beach from the east.

The real estate market in Cocoa Beach and Cape Canaveral is not typical. With condos and townhomes making up the majority of sales here, investment and 2nd home purchases dominate the activity. While other more typical markets benefitted from the first time homebuyer credit, we didn't get the boost that some may have expected. Our June sales were right in line with last year's numbers with 39 closed sales of MLS-listed condos and townhomes in the month in the two cities compared to 41 in 2009. That number will likely wind up equal to or higher than last year's as lazy listing agents and inefficient offices get around to updating listings in the MLS that actually closed in June.

In going through the numbers of closed sales and recent price reductions, I'm getting a sense of renewed downward pressure on prices in some market segments. The bank liquidation of the Ocean Club building will likely negatively impact the troubled high end market as eleven buyers in the luxury market are now out of the picture having purchased there. There is one unit left in that building now, $849,000 for a 4565 square foot penthouse, not a great deal for a unit with a big chunk of it's ocean view obscured by the Coral Seas building immediately east.

Eleven of the closed condo sales in June were for less than $100,000 and none exceeded $430,000. Eleven of the total were short sales and nine were bank owned. It doesn't take Miss Cleo to figure out that with that level of distressed sales happening, unrealistic sellers are not going to find a buyer. Sellers take note: you are competing with the banks for buyers and you must accept that aggressive pricing is paramount in selling your property. If you're looking to buy, as always, define your wants, line up your purchase money and be ready to move when a priced-right property matching your criteria becomes available. I'd also advise being aware of current closed prices for your property type. Throwing out unresearched lowball offers hoping for a miracle is not a purchasing strategy. If you can't substantiate your offer price, you are probably wasting your time. Focusing on getting a big discount to asking price rather than getting a good deal may cost you a deal on an aggressively-priced property. I've said this before but it bears repeating. A strategy of offering an arbitrary percentage of the asking price is stupid. Nothing matters but the final purchase price and some asking prices are more realistic than others.

"An investment in knowledge pays the best interest."
______Benjamin Franklin

Big changes for condos revisited

Father's Day 2010 just before sunrise, south Cocoa Beach.

A followup to the post about the new condo law going into effect July 1. I have been very involved over the years with sales in the few weekly rental complexes that exist in Cocoa Beach and Cape Canaveral. Unlike other coastal areas in Florida, most ocean condos in our two cities do not allow short-term rentals of units. This dearth of competition is great for the owners of the limited number of vacation rental condos. However, there have been attempts in recent years by groups of owner-residents and (rumored) the hotel/motel industry to limit or restrict weekly condo rentals in our area. Two issues in the new law are of particular interest to owners and prospective buyers of vacation rental condos.

I mentioned in the other post the sprinkler system retrofit rules. There has been some anxiousness among owners in these complexes as the cities and state began making noises about possibly requiring short-term rental buildings to be retrofitted with sprinkler systems. This really reached a feverish pitch when a small group of resident owners at Cocoa Beach Towers attempted to stop weekly rentals at their building just north of the Cocoa Beach Pier. The City of Cocoa Beach and the State of Florida became involved and the sprinkler system issue became a focus. It was eventually decided that the building could not be forced to retrofit under the existing law and the new law reiterates that fact.

Another reiteration in the new law concerns associations that try to change rental restrictions by a vote. The law states (paraphrasing here) that any amendment that prohibits renting or leasing of units, changes the permissible lease term or that specifies or limits the number of times a unit may be rented within a certain period will only apply to owners who consent to the amendment and owners who acquire title to their unit after the effective date of the amendment. This should alleviate concern for investor owners in buildings like Cocoa Beach Towers that have a large enough contingent of owner-residents to conceivably pass such an amendment.

To read a synopsis of the entire bill, go to Donna DiMaggio Bergers excellent condo law blog and scroll down to her June 10 post about the bill and link to the synopsis.

As always, I am not an attorney nor ever wanted to be. For legal advice, seek the advice of a lawyer rather than trusting my Barney Fife interpretations. If using me for the services for which I am trained, real estate, and the information I've freely disseminated here for the last five years, I appreciate your loyalty.

"You'll miss 100% of the shots you never take."____Wayne Gretzky

A day in June

Our depleted MLS inventory continues to drag on activity. We never saw the usual increase in new listings that we've come to expect every spring and it's making the search for good properties tougher than it's been in a long time. The good properties that do come on that are priced right are selling. If you're looking to purchase, it will pay to have your ducks lined up in advance and be ready to move when the opportunity presents itself. The competition is intense in desirable property types like weekly rental condos.

Twenty MLS-listed condos and townhomes have closed so far in June in Cocoa Beach and Cape Canaveral, none for more than $430,000. Sales of note include:

The highest price sale so far; a four year old, top floor (5th), 4 bedroom, 3.5 bath, direct ocean northeast corner at Almar in south Cocoa Beach. This unit has 2713 square feet and a private 2 car garage. Sold new in 2006 for $900,000 and closed this month as a short sale for $430,000.

A beautifully remodeled 5th floor southeast corner direct ocean at 2100 Towers in Cocoa Beach sold for $350,000. This over-sized (1600 square feet) 2 bedroom, 2 bath unit with a single garage sold fully furnished.

A super nice direct ocean 3 bedroom, 2.5 bath, 2 story unit at Cocoa Beach Club closed for $280,000. This unit had been over-the-top remodeled and was never rented even the Cocoa Beach Club allows weekly rentals. This was a deal.

Two Spanish Main units in the popular weekly rental building in downtown Cocoa Beach have closed. One, a furnished 3 bedroom, 2 bath, 2nd floor with a peek of the ocean from behind the pool with some remodeling sold as a short sale for $240,000. The other was a foreclosed 2 bedroom, 2 bath, 3rd floor in need of lots of work, also behind the pool. Sold for $214,000.

A cute but small direct ocean, 2 bedroom, 2 bath, 4th floor at Ambassador Shores in south Cocoa Beach sold fully furnished for $200,000. Even without a garage, that's a smoking deal.

A direct canal front, 1st floor, 2 bedroom, 2 bath in original condition with garage and boat slip at Beachwalk in Cocoa Beach sold for $169,000.

A 5th floor direct Banana River, 2 bedroom, 2 bath unit at Costa del Sol in Cape Canaveral closed for $145,900. It had a private garage and was in mainly original condition.

Two short sale Oak Park townhomes, both with 1855 square feet and 2 car garages have closed. One was a 4 bedroom, 3.5 bath that sold new in 2006 for $299,900. It closed last week for $135,900. The other was a 4 bedroom, 2.5 bath that sold new in 2006 for $318,000. It closed last week for $129,000.

A lakefront 3 bedroom, 2 bath ground floor at Harbor Isles in Cocoa Beach sold for $115,000. Needed work but had 2 private garages.

A foreclosed 2 bedroom, 1 bath at the Diplomat in Cocoa Beach sold for $107,000. Two week minimum rental at this very popular with snowbirds complex.

A small, furnished 1st floor 2 bedroom, 2 bath flat at Villages of Seaport in Cape Canaveral sold for $103,000.

And a short sale, 2nd floor condo conversion at Brisa del Mar on Ridgewood in north Cocoa Beach sold for $58,000. This same unit sold for what now seems insane, $178,000, when 1st converted in 2005.

Three single family homes have closed so far this month, only one worth noting. It was a short sale direct river pool home that had one of the nicest remodels that I've ever seen. It had 2730 square foot, 3 bedrooms, 3.5 baths in like brand new condition with top of the line everything and a beautiful view of the islands. Closed last week for $510,000.

"A ship is safe in harbor, but that's not what ships are for."_________William Shedd

Big changes for condos on July 1

The new Distressed Condominium Relief Act signed into law by Governor Crist on June 1 will take effect on July 1. There are provisions within Senate Bill 1196 that will have a significant impact on almost all Florida condo associations. Some highlights of the Act are;

Lenders liability for past due assessments in foreclosure
Lender's (First Mortgagee) liability for unpaid assessments when acquiring title through foreclosure or deed-in-lieu after July 1, 2010 is increased to the lesser of 12 months unpaid assessments or 1% of the mortgage debt. This is an increase from the lenders' current 6 months liability and a welcome aid for troubled associations with multiple foreclosures.

Association's right to collect rent from delinquent units
If a condominium-unit owner is more than 90 days delinquent in paying monetary obligations to the condominium association, the bill authorizes the condominium association to require that the condominium-unit owner's tenant, in lieu of paying rent to the unit owner, pay the rent directly to the condominium association to cover a unit owner's delinquent monetary obligations to the condominium association. This will put a halt to the all-too-common practice of unit owners collecting rent while not paying condo dues (and often not making mortgage payments as well).

Delinquent owners banned from the pool.
In addition to authorizing fines, a condominium association is authorized to suspend the right of a unit owner to use the common elements, common facilities or other association property until such unit owner has paid the required assessments (maintenance), as well as suspend the voting rights of the delinquent unit owner. This applies to any "monetary obligation" that is more than 90 days delinquent. It also extends to the unit owner's tenants, guests and invitees.

Fire Sprinkler System
The bill states that a condominium association cannot be required to retrofit its fire sprinkler system before the end of 2019 (instead of 2014). The association may still vote to forego retrofit. Buildings of less than four stories with exterior walkways providing egress are exempt.

There are several other provisions but these are the ones that will apply to the greatest number of associations in the Cocoa Beach and Cape Canaveral area. A complete synopsis of the bill can be read at Donna DiMaggio Berger's excellent condo law blog.

"Sometimes not getting what you want is an amazing stroke of luck."_________the Dalai Lama

Revisiting rental restrictions

Prospective condo buyers who haven't been reading this blog for long may benefit from reading a few posts from the past. Many buyers embark on a search for a condo without considering what issues are important to the selection of a unit. Some people never intend to rent their unit but many hope for some rental income to help with expenses. I've addressed the issues of rental restrictions on several occasions and for those buyers who haven't considered the impact of restrictions on their enjoyment and/or prospect of income from their unit, here are three good ones from last year that will, hopefully, assist in refining your search.

Ten questions for prospective condo buyers

Positive cash flow, does it exist?

Why rental restrictions matter

“Faced with the choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy on the proof.” __________John Kenneth Galbraith

May sales

The month of May 2010, with 49 closed sales of MLS listed condos and townhouses in Cocoa Beach and Cape Canaveral, was the biggest May for condo sales in our market since 2006. This has been true for every other month so far this year except February. Only eleven of the total sold for more than $200,000 but only two were for less than $75,000. The sub-$75,000 condo market has been very active in recent months with a big supply of short sales and foreclosures but that supply appears to be drying up as investors have been actively buying those rock-bottom units. In another divergence from the trend, four units closed for over $500,000. I've been talking about the trouble in this market segment for a few years and the recent sales are confirming my predictions that the over-supply had to lead to considerable price reductions before sales would resume. The highest priced sale was a bank liquidation, the 3556 square foot, four bedroom penthouse at the Ocean Club in north Cocoa Beach that sold for $750,000. That's half the once asking price. Get the price low enough and buyers will make peace with a compromised view.

The northeast corner penthouse at 3800 Ocean Beach Blvd. closed for $675,000, three years after selling new for $1.1 million.

The former developer's model at Meridian of Cocoa Beach sold for $552,500, having sold new for $649,900 in 2007.

And the fourth of the half-million plus sales was a 7th floor Michelina that closed for $552,500, three and a half years after selling new for $865,000. We have passed crunch time for several new buildings that are sitting dead in the water right now. Either the note holders are going to continue to ignore reality while carrying these buildings (the strategy they've clung to so far) or they are going to have to take the same step that the Ocean Club bagholder was forced to take, keep reducing prices until the buyers are willing to step in. I can think of three new buildings in south Cocoa Beach with zero sold units and several others with less than 50% sold. All of these are luxury units with current asking prices from $475,000 to over a million and, so far, itty bitty price reductions have failed to produce more than a couple of sales. Stay tuned, tipping point approaching.

"How people treat you is their karma; how you react is yours." _____Wayne Dyer

Just around the corner

The crew at Walker Bagwell Properties has moved it's offices just around the corner to 125 N. Brevard Ave., across the street from the Pompano Grill. Look for the beautiful ancient live oak tree out front.

Out of the 33 closed condos and townhomes closed so far this month in Cocoa Beach and Cape Canaveral, only four sold for more than $250,000. Interestingly, of those four, three were in weekly rental complexes, two in Boardwalk and one in Sandcastles. Look for a comprehensive wrap-up of the month's stats early next week.

"He who hesitates is poor."___Mel Brooks

Shifting dynamics

Our MLS condo inventory in Cocoa Beach and Cape Canaveral appears to have stabilized at around the 600 unit level having been below that number for the last seven months. In May 2006 inventory was close to the peak at 1047 units while today, four years later, we stand at 581 total MLS-listed condos and townhouses in the two cities ( short sales and bank-owned units are down to 19% of the total). With monthly sales running at almost the same level as sales in 2006, and 45% less inventory, there appears to be a dynamic building that, absent a flood of new inventory, could impede continued price erosion. This is not a bottom call, just an observation of market conditions that haven't existed for some time. There is still an unknown quantity of underwater and otherwise troubled owners who are not yet represented in the actively for sale numbers but we know from the stats that a significant number of the distressed owners have already been shaken out in the brutal decline of the last three years.



The predicted higher mortgage rates have not materialized so far. Rates have been in a steady retreat since March with the average rate for 30 year fixed rate mortgages back below 5% this week. I was made aware yesterday of new mortgage money available for Florida condo loans to qualified borrowers with 25% down. Those of you paying cash need to get your proof-of-funds documentation together before offering. All foreclosures and many other sellers are going to require proof of funds if you offer cash. Proof of funds documentation is usually an account statement in your name (account numbers can be blacked out) showing liquid funds in excess of the purchase price or a letter from your banker stating the same. Don't grump. This is no different than having to document credit worthiness when applying for a mortgage and is just part of the process.




"There is nothing wrong with change, if it is in the right direction."
______Winston Churchill

From April showers to May flowers

The little house on the hill that's been home for the last week. Almost the exact same distance from Cocoa Beach as Marathon in the Florida Keys.

Not surprisingly, the real estate market in Cocoa Beach and Cape Canaveral did not grind to a halt in my absence. There have been eight new single family home listings, all in Cocoa Beach, at prices from $143,000 for a a small 2 bedroom 2 bath in Cocoa Isles to $469,000 for a nicely remodeled pool home on canal with boat dock and lift off Minutemen. Of the 13 price reductions on other homes during the same time, none were significant. Five single family homes closed during that time at prices between $94,900 for a small, foreclosed 3 bedroom 1.5 bath cottage on Woodland in Cocoa Beach to $380,000 for a big (3061 sq. ft.) 3 bedroom, 3.5 bath on Ridgewood in Cape Canaveral.

The condo market, as always, was much more active. There were 33 new listings during the same 12 day period. Prices began at the low end at $29,900 for a small, Fannie Mae owned studio at Essex House in Cocoa Beach. The highest priced new listing ws for the northeast penthouse unit at 3800 in Cocoa Beach. This 5th floor unit sold for $1.1 million new in 2007 and is offered now for $774,900. I expect some action on this one as the seller is offering an obscene buyer's agent bonus on top of the commission. Two very optimistic Meridian sellers are offering their units for $669,000 and $724,900, both more than they paid new a few years ago.

Other new listings of interest include a Park Place top floor southwest corner with a southern ocean view for $269,900. A 2nd floor corner, direct ocean 2/2 Windjammer in Cape Canaveral hit at an asking price of $214,500.

A total of 21 units have closed as of this morning so far this month at prices from $33,250 for a 1/1 Star Beach unit in Cape Canaveral to $355,000 for a 6th floor nicely remodeled 3/2 Crescent Beach Club unit in south Cocoa Beach. Two Boardwalk 2/2 direct ocean units in downtown Cocoa Beach closed for $312,000 and $340,000. These units both had garages and weekly rentals are allowed.

A direct river River Bend 3/2 in south Cocoa Beach closed for $307,000. A 7th floor, north facing Sandcastles 2/2 with garage closed for $260,000. Weekly rentals allowed. And the smoking deal of the month so far, a lakefront, ground floor Harbor Isles 2/2 with garage closed for a shocking $110,000.

Look for more updates in the next few days.

"No vacation goes unpunished." ____Karl Hakkarainen

A little break

Larry is taking a little break from the hamster wheel and will not be posting again until after May 15 when he returns from chasing fish and waves on his favorite tropical island. Unless things have changed drastically in the last six months, cell phone coverage and internet are not readily available. Those of you needing help with Cocoa Beach real estate in the meantime can contact the most capable Danielle in Larry's office in his absence. Her email is danielle@walkerbagwell.com

As a quick follow up to the last post about slack listing agents, the agent who hadn't return the call to request showing her listing has still not returned the call a week and a half later. She has company. I called another listing agent last Thursday to show his listing. Again no answer and I left a message requesting showing instructions. I left another message a couple of hours later. As of this morning, Sunday, still no returned call. His clients must think that the market really sucks as they are priced well below the comps after reducing the price by over a third since November and are still getting no showings. Your regularly scheduled programming here will resume in two weeks. Hasta luego.

"Fishing is much more than fish. It is the great occasion when we may return to the fine simplicity of our forefathers. "_____Herbert Hoover

"None but natives ever master the art of surf-bathing thoroughly."_______Mark Twain