Saturday, December 17, 2011
With two weeks left in 2011 the number of residential property sales in Cocoa Beach and Cape Canaveral has exceeded by a good margin every year since 2005. As of this morning 543 MLS-listed condos and townhomes have closed in the year. Single family home sales in the two cities were strong as well with 133 closed so far this year.
One week before Christmas and 4 single family homes have closed in December, all in Cocoa Beach. Three of those were canal homes at prices between $353,000 and $540,000. The lone non-waterfront sale was a small 3/2 in north Cocoa Beach one block from the beach that went for $115,000. The canal homes included two short sales, one a big, rambling 3/4 with 2969 square feet needing work on a big lot with over 200' of waterfront in Snug Harbor that closed for $409,850. The other was a big (4168 square feet) 4/3 waterfront on Willow Green in Cocoa Beach Country Club that had been on the market for 1233 days with a starting price of $1.289MM. It closed last week for $540,000.
Twenty condos have closed so far in December including one Villa Verde "Mac Daddy" riverfront unit that sold for $375,000. Prices for the never-lived-in units in this five year old super luxury building in south Cocoa Beach are now about $1 million below original asking price. Six left as of this writing.
Five of the sold condo units were direct ocean. They ranged from a low of $165,000 for a 4th floor direct ocean Windward East 1/1 with garage to $300,000 for a 3rd floor direct ocean 2/2 with 1590 square feet and garage at Ocean Oaks in Cape Canaveral. The other two ocean buildings with sales were Stonewood and Xanadu.
Three of the condo sales were riverfront units in Cocoa Beach. They included a nicely remodeled ground floor Jamaica Cove 2/2 with boat slip and garage that sold for $149,900 as a short sale. A furnished 2nd floor Anchorage 2/2 with a carport in mainly original condition closed for $135,900. The other riverfront unit was a nicely remodeled 2nd floor Spanish Trace 2/2 that sold fully furnished for $162,000. Has a carport and 1284 square feet.
There have been 194 sales in 2011 that closed for less than $100,000. There are 54 units currently for sale asking less than that number. Only 11 units have closed this year for more than $500,000 with an inventory of 33 units currently asking more than a half million. Total MLS condo inventory in all prices this morning is 377 units, a 35 week supply at the current burn rate.
Sushi lovers in Cocoa Beach were devastated a couple of years ago with the closing of the sushi bar at Yen Yens. Until now, all the other sushi spots in our town were also-rans compared to Michael's creations. We have a worthy successor at last. Tucked away in the back of the uber-hip Surfinista downtown is Cocoa Beach's best sushi by a mile. It's somewhat of a secret so far but word is getting out. If you appreciate good sushi you'll not be disappointed. As a bonus, watch all ASP pro surfing events live on the big screens and vintage surf movies the rest of the time. Two snaps and a salute.
"First of all, we must internalize the "flatulation" of the matter by transmitting the effervescence of the "Indianisian" proximity in order to further segregate the crux of my venereal infection. Now, if I may retain my liquids here for one moment. I'd like to continue the "redundance" of my quote, unquote "intestinal tract", you see because to preclude on the issue of world domination would only circumvent - excuse me, circumcise the revelation that reflects the "Afro-disiatic" symptoms which now perpetrates the jheri curis activation." __Oswald Bates - In Living Color
Friday, December 09, 2011
Before 2009 we could always count on seasonal trends in real estate sales in Cocoa Beach and Cape Canaveral. A chart of the years before 2009 shows the same general trend, the year begins slowly but ramps up rapidly into February and peaks somewhere during the spring and then begins a steady decline from mid-summer through the end of the year. That trend has been absent the last three years. We can no longer count on the "spring selling season" or a very slow autumn. The biggest month in the last five and a half years was August 2011. Go figure.
For the month of November 2011 the Cocoa Beach MLS is reporting 49 residential sales in Cocoa Beach and Cape Canaveral, 37 condos and 12 single-family homes. There were only 8 sales below $100,000 largely because there is very little inventory left in that segment of the market. [Interesting tidbit: in 2007 there were only 8 sales the entire year for less than $100,000.] Thirteen of the 37 condo sales were for more than $200,000 with the bright spot being Magnolia Bay in south Cocoa Beach with four closed sales in the month between $340,000 and $450,000.
Only six direct ocean units closed in the month. Lowest price paid was $220,000 for a 4th floor 2/2 Canaveral Sands and highest was $348,000 for a 3rd floor Constellation 3/2. Others included Stonewood, Waters Edge, Ocean Pines and Cocoa Beach Towers.
For sale inventory this morning is 370 condo and townhouse units, 52 asking less than $100,000 and 34 asking more than $500,000. There are 59 single family homes offered for sale in Cocoa beach and 15 in Cape Canaveral. 130 homes have closed so far in the year.
"It is not likely that dullards, even if they make up the majority, will systematically outsmart and enrich themselves at the expense of a minority of bright and energetic individuals." ___Hans-Hermann Hoppe
Tuesday, December 06, 2011
It's been an interesting year. I have seen abundant displays of greed, incompetence, braggadocio, laziness, some old-fashioned craziness and, in the interest of fairness, a few cases of extreme professionalism. No, I'm not talking about Presidential candidates or Wall Street CEOs. I'm referring to my fellow practitioners of the gentle art of used condo sales. As sales have ramped up this year some of the boys and girls of real estate have been behaving with the grace of mace-wielding shoppers clutching two dollar, Black Friday waffle irons.
One random example: A listing broker told me recently that he was making so little money on his flat-rate listing that he wasn't going to expend any effort or expense to try to get our contract to close. This over a small issue that might have killed the sale. Problem with this flat-rate listing approach besides making very little money for him is that he doesn't care if the listings sell. The seller saved some money but probably had no idea how close his low-bid listing broker came to dumping the sale days before closing. We did close, no thanks to him. I wonder if the five other flat rate listings for the same seller are still languishing unsold because of the same self-inflicted lack of motivation.
Unrelated change of subject; While blistering condo sales in 2011 were getting all the attention, single-family homes were having an equally stellar year. Since January 1, 110 homes have sold in Cocoa Beach. Compare that to today's total for sale inventory of 60 properties. Canal and riverfront homes make up about half our home sales in Cocoa Beach and the numbers there are similar to the whole; 56 sold in 2011 and 28 actively for sale today.
A few random, pretty pictures for your consideration;
"The commitment to repaying a debt is inversely proportional to the age of the debt." _____Larry
Saturday, December 03, 2011
As we approach the end of the year it is prudent for most of us to contemplate year-end actions that might affect our 2011 tax liabilities. For property owners who tried and failed to sell in 2011 and those planning to sell soon, now is also a good time to reevaluate plans and expectations. Following are ten questions that every property seller should be asking themselves.
10: What is the best estimate of actual current market value of my property based strictly on recently sold, comparable properties close in size, condition and location to my property? What that number was last February when you first listed is likely to have changed.
9: Am I asking close to that number and am I willing to sell for close to that estimate or am I praying for a miracle? Like the Florida skunk ape, the existence of the wealthy uninformed buyer with no internet connection who is willing to overpay is still in doubt.
8: What is the supply of similar properties and do I think it's going to increase or decrease?
7: Are there any possible events looming that could affect the value of my property like impending foreclosures in my complex/neighborhood or possible expensive repairs or assessments?
6: Does my property show well?
5: Is it easy to show my property? You may not realize that your tenant has become difficult or that it is difficult for buyer's agents to get showing instructions or that your listing agent keeps the keys in her office rather than using a lockbox. If your listing agent doesn't answer his phone or his office is closed on weekends, you're missing showings to prospective buyers.
4: Is my listing broker offering the buyers' agents the same commission as competing properties? You might be surprised to find that he's keeping more for himself than he's offering out.
3: Do the answers to questions 4 and 5 reveal that your listing agent may be an impediment to the sale of your property? Might be time for a change.
2: How much is it costing me every month that the property isn't sold? In addition to taxes, fees, repairs and interest you have to figure opportunity cost on the equity (if any).
1: And number one; In which direction do I think (based on facts) my property value is headed?
Depending on the answers to all of those questions, it may be time to make some changes in your approach to selling. The market is robust with 655 sold MLS-listed residential properties in Cocoa Beach and Cape Canaveral so far in 2011. That's more than any year's total sales since 2005. Your property will sell if it is priced close to right and your listing agent is doing a good job. As with most of life's endeavors, knowledge is power.
Happy Holidays to all.
"Take your time, hurry up, the choice is yours. Don't be late." __Curt Cobain
Sunday, November 27, 2011
So far in the month of November there have been 31 closed residential properties in Cocoa Beach and Cape Canaveral as reported by the Cocoa Beach MLS, 25 condos and 6 single family homes. Of those, 5 condos were short sales and one single family home was a foreclosure making distressed sales 14% of the total residential market in November (so far). Our inventory as it stands this morning November 27, has exactly the same proportion of distressed offerings. Out of a total 445 properties (369 condos and 76 homes), 41 are short sales and 21 are foreclosures, 14% of the total, well off the numbers of the recent past. Of the total sales so far in 2011, 31% have been distressed.
Just one year ago, November 2010, a whopping 41% of all residential sales were distressed, 22 out of 54 total MLS-listed residential properties closed in the two cities. The second overwhelming wave of foreclosures being predicted by the "experts" for well over a year has yet to materialize in our market.
Downtown Cocoa Beach is hopping today with thousands of visitors here for the Art Festival which was serendipitously kicked off at 10 AM yesterday morning with NASA's launch of the Mars rover aboard an Atlas rocket. Only in Cocoa Beach.
"You can't find nothing at all, if there was nothing there all along." ---Ben Gibbard
Saturday, November 19, 2011
Monday, November 07, 2011
An enthusiastic canine criminal enjoying the cop-free zone south of the city limits.
After a lukewarm September of 32 condo sales in Cocoa Beach and Cape Canaveral, October roared back with an all-time record of 53 MLS-listed condos and townhomes closed in the two cities. That is more than any October on record including the boom years of the mid-2000s. That's as of this morning's reporting so the final number could be even higher. (One tardy listing agent finally marked a listing as closed yesterday that actually closed in June. This is the kind of stuff I have to deal which is why I always add the caveat that the numbers may change.) Sales ranged from a high of $590,000 to a low of $29,900. The median sale was $114,000. 28% of all sales were distressed, six foreclosures and nine short sales. A Mystic Vistas foreclosure that closed for $217,000 was the highest price of the 15 distressed sales .
66% of the sales closed for cash. The average sold for 93% of the last asking price. Weekly rental ocean buildings, of which there are about a dozen total in Cocoa Beach and Cape Canaveral, accounted for six of the sales with three of those in Canaveral Towers and one each in Sandcastles, the Marlin and Spanish Main. The Spanish Main unit was the top floor northeast corner and had been nicely remodeled. It had a full price contract within four days which was subsequently taken out by another owner in the first right of refusal process. Don't get me started. I know it's not fair but it exists. Buyers who negotiate good prices on good units often lose them to other owners who have the right to take over the contract at the same terms.
Two never lived in Magnolia Bay units closed at prices just slightly more than half the original offering price five years ago when they were being built. Both with developer financing and jacked-up commission to the buyers' agents. In another case of developer denial, the 4th floor northeast corner Ocean Paradise closed for $590,000 after sitting for years at an asking price that began right around a million bucks.
Someone stole a four year old, 2348 square foot Puerto del Rio 3rd floor 3/2 with massive wrap balcony for $163,950 in a short sale. It sold new in 2007 for $410,300.
A very nice, nine year old Cape Gardens 2/2.5 townhome with 1527 square feet and garage closed for $111,000.
A 2/2 Oceana in Cocoa Beach one block from the ocean with a garage closed for $78,000 as a short sale. Sold for $160,000 in 2004.
A Marlin ground floor 1/1, south facing, weekly rental unit sold for $76,000.
Condo and townhome inventory this morning stands at 369 units, the same level it's been since June. This is after having 500 plus units for sale for most of 2010. There are 59 units asking less than $100,000. That's the same number of units that have closed for less than $100,000 since early August, just three months to burn through today's total inventory. There are 37 units asking more than $500,000. It's taken since October 2009, two years, for that many half-million dollar units to close.
There were eight single family home sales in the month, all in Cocoa Beach, none in Cape Canaveral. All but two of those were canal homes and four of those sold for less than $300,000. Canal homes are the hottest segment of our market right now, especially in the areas closest to downtown. The lowest selling price waterfront was $214,000 for a small foreclosed 4/2 on De Leon with a pool. High price was $427,000 for a Mac Daddy 4548 square foot, 5 bedroom 4 bath, 2 story pool home on Yawl with a tiny bit of waterfront. Exactly half closed for cash. Only one sale was north of Laurie Wilson Park.
At the end of the day, the power in any relationship lies with the individual who cares the least. __Anonymous
Friday, November 04, 2011
The voters of Cocoa Beach will be voting on November 8 to express their opinion on whether to allow a zoning change in a small section of downtown to allow mixed residential and commercial. This sort of change requires a unanimous vote of the Commission and the one dissenting member forced this referendum to measure the voters' opinions. The exact language on the ballot is below.
Shall the City of Cocoa Beach adopt mixed use for downtown/Community Redevelopment Agency (CRA)?
The downtown/CRA vision plan developed over the last three years includes mixed use as a method to revive our local economic conditions and improve the downtown environment. Do you approve of allowing an additional mix of retail and residential uses downtown as long as it does not exceed the city-wide density caps as set in the City Charter?
[ ] Yes, to approve
[ ] No, to reject
Seems pretty straightforward at first glance (overlooking the words "revive" and "improve") yet there are some opponents to the change. Ostensibly, this will allow residential and business to occupy the same building. Proponents of the change have printed posters showing hip downtown areas in other cities with cafes and shops at street level and apartments above as the example of what one's "yes" vote will yield. I like it. But there is some confusion. I have been told by one downtown business owner that, if the vote is not yes, he will be closing his business because he wants to build, not residential, but more commercial above the existing business. Huh? I questioned his understanding of the vote but he is convinced that he can't build commercial on top of commercial without a yes vote. I hope someone more informed than me can help me out here. Does current zoning in the affected area prevent commercial on top of commercial? Is this business owner misinformed?
It seems doubtful that in the current economy one could sell new housing downtown for more than the cost to build. Same cost/returns math goes for rental units. Given that, what is the reason for the strong push to relax restrictions now? Greater possible uses of a property make that property potentially more valuable. It's a no-brainer for owners of the property affected. Even if current economic conditions don't support immediate change it still makes sense. Get it locked in while you can. Build or sell later when the economic climate will support the mixed use. This is where we get to the opposition's main point.
Even though most think nothing is going to change now, even with a yes vote, the idea that the door has been opened for changes in building restrictions causes concern for the opponents. The question in the referendum includes the language "as long as it does not exceed the city-wide density caps as set in the city charter". It does not say "height and density limits will never be allowed to exceed current levels". It stands to reason that a property whose value would increase with mixed use would also be worth more with greater allowed height and/or density. If a downtown building is worth $X under today's restrictions and is potentially worth $1.5X with mixed use, what would it be worth with doubled height and/or density limits? $2X, $3X...$5X? Pandora's box? Can we trust that height and density limits will never be relaxed? Just asking.
Living in Cocoa Beach just outside the city limits, I can't vote. Even if I could, I do not know today how I would vote. I like the way our downtown is especially with the recent changes (above; paver sidewalks, landscaping, etc.) and I want the businesses downtown to thrive. I also think it would be cool to have a downtown as pictured on the "Vote Yes" posters. I just don't know if that is what will materialize. Could there be "unintended consequences"? I'd appreciate any discussion and clarification. Repeating; I am neither for nor against.
Saturday, October 22, 2011
South Cocoa Beach shoreline.
A question that most buyers' agents mistakenly assume their clients know the answer to is; How do Realtors get paid? I am questioned about it enough to know that it is not understood by all. In most residential sales in Florida the seller pays all the Realtors' commissions. Let's look at a hypothetical example of the most common scenario involving a sale of residential real estate in Florida.
Alfie, a veteran agent with Snapper Realty, takes a $100,000 listing from a seller who agrees to pay Snapper 6% for selling her condo. Alfie puts the listing on the MLS offering to pay a buyer's broker 3% for bringing a buyer who closes on the property. Dilbert, an agent in his sixth month with Flounder Properties, brings a buyer who likes the property and a contract is executed for $90,000. The contract closes 45 days later. Snapper and Flounder each receive a check at closing for $2700 (3% each) from the seller's proceeds. Alfie, being a veteran and a mid-level producer, is on a 75/25 split with Snapper and gets a check for $1975 after paying a $50 E & O insurance fee. Dilbert, being a new agent, is on a 55/45 split with Flounder and gets a check from Flounder for $1435 for his first sale ever after only seven and a half months on the job. Not bad for a few minutes writing an offer and presenting it. Right? What was Dilbert doing the seven and a half months before he got his first check?
If he was an aggressive and devoted new agent it went something like this ( this is a fairly accurate description of my first year in real estate except that my one check that year was less than Dilbert's); on days he wasn't sitting floor duty or previewing listings, he showed more than 150 properties to 15 different clients and drove 2000+ miles showing those properties. He wrote 14 offers for five of the clients, five of which were accepted but four later cancelled for various reasons. He finally got the one remaining past all the usual barriers and closed seven and a half months after he first donned the blazer. His formula for success is now apparent. Get some listings, show more expensive properties, write more offers, get a higher closing ratio and a better split with his broker. If all that falls into place, he is on his way to riches in real estate. Should that be slow to happen, he only has to close nine sales per year like this one to creep over the US poverty threshhold of $11,344 after subtracting his self-employment tax of 13.3% (2011). This is before his expenses like MLS fees, association dues, electronic key rental, auto expense, license fees, continuing education and so on. His first few years as a used condo salesman may include a diet heavy on Ramen noodles.
Alfie is in a better position because of his higher split and his listing activity. He only has to close slightly over $2 million to gross 40 large after self employment tax. Realistically, because there are always some sales mixed in that pay less than 3%, dear Alfie needs to close more than $2.5 mil to bust into the highroller range north of $40 Gs. Lucky for him this year, one of Dilbert's clients stopped by an open house at one of his listings, liked the house and he was able to write up a several hundred thousand dollar contract, close the sale and pocket his biggest check of the year. Unfortunately, they never mentioned Dilbert. Poor Dilbert is still wondering what happened to that couple. He showed them a couple dozen houses and actually wrote an offer on one before they disappeared. When he finds out what happened, if ever, it'll be another step in his education.
Buyers take note. If you find a Dilbert you like who is working hard to find you a place, remember him when you're out cruising open houses or browsing listings online. If you speak directly with a listing agent mention that you're working with Dilbert and have him write and present any offers you make. Otherwise you might wind up making an unintentional big monetary gift to a listing agent who by law can't advocate on your behalf when putting a deal together on her listing. For instance, she is prevented from telling you that the seller previously accepted an offer for less than yours and would probably take less than you're offering. Dilbert is not likewise constrained and can advocate on your behalf. If you let the listing agent handle both sides, Dilbert gets a big goose egg for all his prior efforts and your underwear could be flapping in the breeze with your best interest uncovered and your wallet a little lighter.
For the record, neither the equal split between brokers nor the 6% total are universal. There are listings paying as little as 2% either because the listing broker is keeping the lion's share for himself or because the total commission is 4%. Dilbert's take-home pay in a 2% scenario isn't going to put much of a dent in his expenses. He may find it prudent if not a matter of survival to not show those listings paying lesser amounts. Sellers take note. Know what your listing agent is offering to the buyers brokers and consider the implications of choosing the low bidder for your listing.
Idiot, n. A member of a large and powerful tribe whose influence in human affairs has always been dominant and controlling. Ambrose Bierce
Sunday, October 16, 2011
Shrimp boat at sunrise.
Six ways to present an offer:
- Here's an offer for your property. I think it's fair.
- Here's an offer for your property and it's fair because it's exactly what the property appraiser's site says the market value is.
- Here's an offer for your property which is more than fair because it's 10% higher than Zillow's estimate of the property's value.
- Here's an offer for your property which is fair because these carefully selected comps I've included support that price. Never mind that two are nowhere near the size of yours and the other is a side view.
- Here's an offer for your property. I know it's worth more but this is all I can pay.
- Here's an offer for your property. It's fair because the last four comparable sales (attached) justify a fair value right around my offer price.
Zillow.com publishes an estimate of value for every residential property, called a Zestimate, on their website. I often see buyers, sellers and their agents using Zillow as confirmation of their opinion of value, when that Zestimate happens to coincide with their opinion. Is it an accurate estimate and should it be taken as credible? Let's look at recent sales and see just how accurate Zillow was with their estimate of value right before the sale. I used the first page of results for recent residential sales on Zillow (22 sales) of properties in Cocoa Beach for my research.
Of the 22 recent sales the Zestimate immediately prior to the sale was within 5% of the selling price for seven properties. Not bad. Five of those sold for more than the Zestimate and two sold for less. Another five sales landed between 5% and 10% of the Zestimate. All but one of those five sold for more than Zillow's estimate. That means that slightly more than half (55%) of recently sold properties closed within 10% of the Zillow estimate of value, all but three closing for more than the estimate. That means in a broad sense that we can trust Zillow to be within 10% around half the time.
What happens the other half of the time? The skew gets extreme. Four estimates were 20% or more off the closing price, all of them closing for more than the Zillow estimate. One closed for 20% more, one for 35% more, one for 85% more and one property that had a Zestimate of $163,000 sold for $325,000. That's 99% higher than Zillow's published estimate of value.
What does this mean for a buyer or seller of property? Feel free to use the Zestimate as substantiation of your opinion of value if it is to your benefit but don't place any value on it other than as a tool when negotiating with an uninformed party. Don't be surprised if your opponent rejects it as she may have done her own research or may be a reader of this blog.
What about using the property appraiser's "market value" as a gauge to establish fair value for a property? Using the properties that have recorded from the same list of 22 recent sales, the PA's "market value" was off more often than Zillow's and by a wider margin. Most often it was far below the eventual selling price but a few estimates were way above. Don't expect any accuracy except by accident when using either of these estimates of value. There is a reason appraisers use side by side comparisons with other recently sold, nearby properties of similar size, adjusting for differences when doing most residential appraisals. It is the only consistently accurate gauge of market value available to us. The amount of error and variation in the online estimates of value make them good for entertainment if one is so inclined but not as a reliable guide to a property's value.
By the way, the "I know it's worth more but this is all I can pay" offer has it's place. If a buyer wants a property but can't pay what the comps suggest is a fair price, it's sometimes worth a try. The seller may reject the offer but there's always a chance she will accept it. I've seen that kind of offer accepted.
"I don't know anyone who could get through the day without two or three juicy rationalizations." Michael - Jeff Goldblum's character in The Big Chill
Saturday, October 08, 2011
This is a question posted by a reader in the comments to an earlier post. I thought it relevant enough to respond in a post rather than the comments.
I'm new to shopping for a condo. Of course, your blog is helping tremendously but, I'm left hanging on at least one subject. I see corner units appear to be valued more than interior units. One owner told me the SE corner is more valuable. because the ocean breeze blows gently from the SE and it keeps the air circulating when the windows are open. I heard the lighting is better on a SE corner unit and saw the difference between NE and SE corner units at dusk. I also noticed wrap around balconies on corner units are not all created equal, but normally offer more outside space than interior units in the same buildings. I am perplexed over the value of a corner unit versus an interior unit in the same building. Is it merely buyer/seller preference or is there a no-kidding tax appraiser or lender appraiser value placed on a corner unit versus an interior unit?
This is much discussed and a question which has no clear answer. As pointed out, corners come in all shapes and sizes. All other things being equal, a corner should command more than an interior unit. However, all things are rarely equal. Besides the issue of size, here are some questions a buyer or an appraiser must consider when comparing a corner unit to a non-corner (by no means a comprehensive list);
- Is the balcony better than the interior units? Some interior units have better balconies than the corners like the double-wide interior units at Cape Winds. Some buildings like the Constellation have extra balconies in all units, corners and interior.
- Are there more windows or extra balconies and do they make the unit more or less desirable?
- Does it have a better garage? Often the prime garage units or extra garage spaces are assigned to the corners.
- Is the privacy and/or view compromised because of a building next door or the pool deck just below? A southeast corner with a wrap balcony staring at the building next door might be less desirable than an interior unit in the same building.
I would generally prefer a southeast corner to a northeast because of the exposure to the southern winter sun. However, if there is a building immediately next door to the south, maybe not. The northeast corner in that particular building might have better views and more privacy. With our winds generally out of an easterly direction I don't see a significant wind exposure difference between northeast and southeast. In some buildings which have neighboring buildings on both sides the interior units might command a higher price than the corners. Ultimately, each corner unit has to be judged on it's features. There is no one-size-fits-all adjustment. I asked a local appraiser this same question last week. This is the response;
Adjustments for corner unit vs interior are obviously most relevant when a condo is new and there is a selection of units to choose from. For existing condos, I do not make an adjustment for end unit vs. interior, as, like you indicate – there are just not enough comps to extract a supportable adjustment.
There you have it. Thanks to the appraiser for the input. Draw your own conclusions. You probably know what you like when you see it and what it's worth to you. Hopefully the seller of that perfect unit is willing to accept what you're willing to pay. Good luck in your search.
"Under some conditions, it is rational for competitors to make their products as nearly identical as possible." __Hotellings law
Saturday, October 01, 2011
A tasty snook caught in the surf with a Yo-Zuri minnow.
October 1, 2011 and the mullet run is in full force with billions of mullet making their annual migration down the beach shadowed by predators of every sort; tarpon, snook, bluefish, jacks, Spanish mackerel, sharks, ladyfish, trout, redfish and others. It's almost impossible to drop a baited hook or lure in the water without it being immediately crushed by a hungry something.
UPDATE 10-16 - The sold numbers for condos changed since the original post when the tardy listing agents finally recorded their sales for September. I edited the numbers below to reflect the changes. The trend didn't change, just the total sales.
Mortgage rates continued their drop in September with the average 30 year fixed rate hovering just above 4%. That extremely low rate didn't seem to be a factor as far as condo sales were concerned in Cocoa Beach and Cape Canaveral. Of the 32 condo sales in September recorded on the Cocoa Beach MLS, 25 or 78%, closed for cash. Things were a little different with single family home sales with only three out of eight (38%) closing for cash.
Two of the eight single family home sales were foreclosures but there were no short sales closed in the month. The highest sale was a foreclosed 5 bedroom canal home in the Cocoa Beach Country Club area that sold for $680,000. The lowest price was $155,000 for 3/2 in Harbor Heights, the other foreclosure. It sold after 14 days on the market for $5000 more than asking price. Another of the Enclave of Cocoa Beach homes closed, this one for $515,000. The eight homes closed for an average of 95% of last asking price.
No condos closed in the month for more than $349,000. Slightly more than half were oceanfront. Of the 32 recorded sales, 47% were distressed, seven foreclosures and eight short sales. The short sales took an average of 105 days from contract to close. The 32 condos sold for an average of 91% of last asking price.
Condo inventory in Cocoa Beach and Cape Canaveral this morning stands at 365 units, seven of those in a yet-to-be-built building and 15 at Mystic Vistas. There are 39 listings asking more than $500,000. Ten units have closed for more than $500,000 in 2011. By contrast, 150 units have closed for less than $100,000 this year with just 55 units actively for sale right now asking less than $100,000.
[update 10-16] What I forgot to mention in the post above was the extreme fall-off in the number of condo sales. With 32 recorded condo sales, September 2011 was the slowest month this year. We have to go back to December 2009 to find a month with fewer sales. With inventory at such a depleted level this trend is likely to continue. It's getting very difficult to find attractive deals in the well picked-over MLS and priced-right new listings are selling quickly. A third of all sales in September sold in less than 30 days on the market. The more specific a buyer's criteria, the faster he should be prepared to move when a matching property gets listed or price-dropped into reasonable range.
The temp was in the low 60s this morning when the sun rose over the ocean and highs for the next 10 days are not expected to exceed 84. It's a great time to be in Cocoa Beach. Our summer visitors are gone for the most part and the winter guests have yet to arrive. The beaches are deserted, there is very little traffic and you can walk onto the Cocoa Beach Country Club golf course without a tee time. Not to mention the fishing is on fire and the occasional passing tropical storm blesses us with clean surf. See you on the beach or in the water.
"In the short run, the market is a voting machine. In the long run, it is a weighing machine." ______Warren Buffett
Monday, September 26, 2011
Not the Bahamas. It's the tip of the Cape on September 25, 2011.
Mission creep: the tendency of a target or goal to change or evolve as a mission progresses. It's a rare property search that doesn't involve some mission creep.
A typical condo search will usually begin a with a list of important criteria. One's mental image of the perfect ocean condo might be a three bedroom, upper floor corner unit with a two car garage in a complex with tennis courts, pool and hot tub that allows weekly rentals and large dogs. If searching in Cocoa Beach and Cape Canaveral that search is over before it begins as that particular unit doesn't exist. The mission to find an acceptable unit is going to have to creep away from the initial target. There are some criteria or combo of criteria that so limit a buyer's choices that a unit is unlikely to ever be found. If looking in Cocoa Beach and Cape Canaveral for a three bedroom condo that allows weekly rentals the choices are immediately reduced to five complexes. The same shortage of choices exists with complexes that will allow a dog over 50 pounds. Combine the two criteria and you've eliminated all the possibilities. Similarly, making a two car garage a must have will severely restrict the possibilities. Not impossible but begin to add other unbending criteria and the list starts to rapidly shrink.
It makes sense before beginning a search to list all the things that are important and to decide which ones are must-haves. A list of pretty units assembled from the MLS or Realtor.com might not contain a single unit that will work because of missing features or restrictions not mentioned in the listing. Talk to your agent about the reality of finding a unit that matches your criteria before putting together a list of units that look good but may not work for you. You might decide that a two car garage is not as important as being able to bring Scrappy Doo to the condo with you. Prepare for the possibility of mission creep. Deals are out there and flexibility increases your choices.
"It is widely believed, especially in the court of public opinion, that a true theory can have no failures and a false theory no successes." ___Eliezer Yudkowsky
Monday, September 12, 2011
Grounded sailboat at Jetty Park, Port Canaveral.
Photo by Lauren Lulich.
In the month of August twelve single family homes closed in Cocoa Beach as reported by our MLS. Median price was $315,000, and all but three were waterfront, two of those oceanfront. There was one reported single family home sale in Cape Canaveral but it was actually a half-duplex. Prices ranged from $681,000 for a short sale 5 year old Snug Harbor home on Edwards Bay to $239,000 for a non-waterfront 3/2 with a 3 car garage on Esther. Another of the twelve Enclave homes in Cocoa Beach closed in the month making five this year. This one sold for $490,000, a far cry from the original million dollar plus asking. Two of the 12 August sales were short sales and none were foreclosures making a total of 17% of home sales distressed. Seven of the buyers paid cash.
August was a record month for condo sales with a total of 57 MLS-listed units closing in the two cities. None sold for more than $500,000. Median price was $133,500. A whopping 79% (45 units) of the 57 total sold for less than $200,000. The former bread and butter of our market, direct ocean units, made up only 14% of the activity (eight units) a reflection of one of the most heavily impacted parts of our depleted inventory. Eight of the total were foreclosures and ten were short sales making 32% of the total condo sales distressed. Highest price paid of the 18 distressed sales was $203,000. Forty three or 75% of the total of the buyers paid cash. The average sale was for 91% of the last asking price.
Inventory this morning, September 12, 2011 is at it lowest point in my memory. There are 353 total condo and townhome units for sale in Cocoa Beach and Cape Canaveral and 74 single family homes. Of these 427 residential units for sale, eleven are foreclosures and 56 are short sales making 16% of the total distressed, well off the recent crazy high percentage.
We are now in the sweet season with the summer crowds gone and snowbirds yet to arrive. What little traffic there is is just blissful locals with surfboards and fishing rods hanging out of our vehicles. There is surf most days, the water is warm, the air not so much and the mullet run is in full swing. If you've never visited Cocoa Beach in September or October you have missed the best time of year.
Many men go fishing all of their lives without knowing that it is not fish they are after. __Henry David Thoreau
Wednesday, August 31, 2011
I didn't have any reason for choosing the categories below other than whimsy. We are feeling the supply squeeze in several areas of our market as the numbers illustrate.
Cocoa Beach and Cape Canaveral MLS - August 31, 2011
Condos and townhomes for sale
Total all prices__360
Condos sold since January 1, 2011
Total all prices__373
Single-family homes for sale
Total all prices_______73
Single-family homes sold since January 1, 2011
Total all prices_______98
I never keep a scorecard or the batting averages. I hate statistics. What I got to know, I keep in my head. __Dizzy Dean
Sunday, August 28, 2011
Last week RealtyTrac published it's findings about foreclosure and distressed sales for the second quarter of 2011. According to their release, "sales of homes that were in some stage of foreclosure or bank owned accounted for 31 percent of all U.S. residential sales in the second quarter of 2011, down from nearly 36 percent of all sales in the first quarter." In Florida the number was 35% of all second quarter home sales trailing six other states. Highest level of distressed sales was Nevada with a whopping 65% followed by Arizona 57%, California 51%, Michigan 41%, Georgia 38%, and Colorado 36%. Florida at 35% was just one percent more than Michigan at 34%.
Looking at the MLS data for Cocoa Beach and Cape Canaveral, 26% of all Q2 sales of residential properties were distressed putting us in the same range as Virginia and Washington state. As of this morning August 28, distressed properties make up just 14% of total MLS residential inventory in the two cities.
My numbers for our market, because I've used only the MLS data, are probably slightly different than the numbers would be using the RealtyTrac methodology. However, because I suspect that private, non-MLS sales are probably skewed more towards non-distressed sales than the other way, my numbers may actually overstate distressed activity as a percentage of total sales. Because they do contain the lion's share of sales I trust that they reflect the local reality. Draw your own conclusions.
I hope all of you in the Northeast make it through Irene unscathed with no residuals except a good story. Most of us here are moving a little slower this morning after two days of epic surf. Stay safe.
Sunday, August 21, 2011
August property sales have somehow maintained (so far) the strong pace of the first half of the year even with a rapidly declining inventory. Of the 41 closed residential sales posted in the Cape Canaveral and Cocoa Beach MLS as of this morning, August 21, 27% were distressed, five foreclosures and six short sales. Ten of the 41 sales were single family homes, all in Cocoa Beach and all but one waterfront. Two were direct ocean, one a 50 year old cottage with small guest house that sold for a shocking $415,000. Small and needing work but wow, $415. I would have expected a bare lot on the ocean to bring more than that.
Surprisingly, with 30 year fixed rate mortgages at an all time low (4.15% national average) cash is still king and almost the only game in town where condo sales are concerned with 81% closing with cash. The majority of single family homes are also selling for cash with only four of the ten home buyers getting a mortgage. I suppose that property at depressed levels is a more attractive parking spot than equities after the hammering of the stock market in the last month.
Inventory this morning stands at 369 condo and townhome units in Cocoa Beach and Cape Canaveral and 77 single family homes. Of the single family homes for sale, 39 are waterfront, exactly the number of waterfront homes that have sold in the last six months.
I'll get into specific August sales of note in a later post. Highest forecast temp for the next ten days is 90 and that's just for one day. We look to get some effect from Tropical Storm Irene next weekend which is expected to be a hurricane by then. Tis the season. Off now to enjoy some waves from the persistent small swell that's been hanging around for what seems like weeks. If you have any questions about property or have anything to share about our market shoot me an email to firstname.lastname@example.org. Peace.
Efficiency is intelligent laziness. __David Dunham
Sunday, August 07, 2011
In December 2007 the owner of a top floor (5th) direct ocean 2/2 unit in Cape Canaveral listed his unit for sale for $399,900. Two direct ocean units had already sold in the building that year, both ground floor and both for at least $125,000 less than his asking. The following year 2008, two other direct ocean units, 3rd and 4th floors, sold for $312,000 and $265,000. He held strong with his asking of $399,900 for his original-condition unit until June of 2009 when he dropped his asking to $350,000. Three months later another ground floor unit closed for $210,000. Unmoved, he held firm until February of 2010 when he dropped his asking to $320,000. The following month, March, two nicer 2nd and 4th floor corner units closed for $250,000 and $240,000. He responded by dropping to $299,000 in April. In November another corner unit closed for $250,000, this one top floor. His response was to drop to $274,900 in December. He dropped again to $260,000 asking price in February this year and watched as a much nicer top floor unit closed for $225,000 last month before finally accepting an offer this past week, price unknown. He refused an offer of $295,000 from one of my clients at one point during the saga.
Here's another very interesting history of an attempt to sell a single family Cocoa Beach home. Our story begins in November 2003. Prices are the MLS asking price.
Nov 2003 - $579,000 original listing agent
Dec 2004 - $749,900
Feb 2005 - $829,000
Mar 2005 - $869,000
May 2006 - $949,500 new listing agent
Jun 2006 - $898,000
Nov 2006 - $868,000 back to original agent
Dec 2006 - $855,000
Jan 2007 - $799,000
April 2007 - $729,000
Sep 2007 - $696,000
May 2008 - $699,000 new listing agent (3rd)
Jul 2008 - $669,000
Nov 2008 - $629,000
Jan 2009 - $599,900 back to original listing agent
Apr 2009 - $589,700
Oct 2009 - $574,000
Feb 2011 - $456,000 new listing agent (4th)
Aug 2011 - $439,000 new listing agent (5th)
This listing has had five different listing agents and eleven different MLS numbers over the years. The MLS right now is showing a total combined days on the market as two.
How about the new condo that, since being completed in 2006, was offered on and off by the developer at prices from the high $600,000s until 2009 when it was listed for $499,000 and stayed on the MLS with steadily decreasing prices until it closed last week for $319,000.
Or the other 92 listings in Cocoa Beach and Cape Canaveral that have been on the MLS for more than a year? That number is probably more than twice that if you include the listings that have had their "days on market" number manipulated downward by resourceful agents trying to disguise the stigma of a high DOM number. Barring a condition that renders a property unsaleable, if it's been for sale for a year without selling, the price is almost certainly too high.
Changingminds.org says this about denial, "In its full form, it is totally subconscious, and sufferers may be as mystified by the behavior of people around them as those people are by the behavior of the sufferers. It may also have a significant conscious element, where the sufferer is simply 'turning a blind eye' to an uncomfortable situation."
I'm never short (pun intended) of good short sale stories. This was the best of several this week. The listing agent of a short sale called the buyer's agent yesterday with a progress report. The contract was signed by the seller and negotiations with the bank started in April. Listing agent said that the 2nd lien holder had responded wanting more money than the $6000 being offered them by the 1st mortgage lender.
"How much?" the buyer's agent asked.
"They didn't say." listing agent. "I didn't ask but the second mortgage is more than the first."
Hmm. Turns out that some genius at SunTrust signed a subordination agreement on the $450,000 home equity loan that was in first position back in 2006 when the owner of the 2/2 ocean condo went to Amstar for a second loan of $396,000. The result of that subordination agreement was that SunTrust became 2nd lien-holder on their $450,000 behind Amstar's $396,000 1st mortgage position. This could have something to do with SunTrust being so difficult lately with condo loans. You know, barn door slams after the horses have galloped away. I wonder if the Einstein at SunTrust who signed the subordination agreement in 2006, effectively throwing $450,000 out the window, is still employed by the bank. Maybe he's the one in underwriting venting his frustration on new borrowers. On the other hand, the guy at Amstar who demanded the subordination agreement from SunTrust might make a good Federal Reserve Chairman. As smart as his move was at the time, Amstar, or whoever is holding that 1st position note today, is still going to lose $150,000 plus. Hurtful but nothing like the almost half million dollar hit SunTrust is about to take. Incidentally, the asking price of this short sale in April this year was $255,000 or $591,000 less than the amount owed, not including back fees and interest. Think this short sale is getting approval? I'll venture a wild guess of NO WAY.
I wonder how this $450,000 loan is portrayed on the bank's books. It is essentially worthless but it is obviously worth more as an accounting entry than the $6000 being offered by Amstar. The bigger question is how much of this zero-worth stuff is sitting on this and other banks' books.
" The problem with quotes you find on the internet is that you cant be sure how accurate they are." - Abraham Lincoln
Saturday, August 06, 2011
I mentioned recent increasing scrutiny of condo associations by mortgage lenders in my last post. Just when we thought it couldn't get any more difficult to get a condo loan it did. Tougher rules have been in place for a while now but getting the package through underwriting appears to have just hit a new level of friction. If you're selling, better hope your association management has the required documentation close at hand and is going to be responsive to the lenders often-complicated requests for documents, questionnaires, affidavits and policies. There are management companies that are resistant to Realtors' and lenders' requests for info, often unknown to the very associations that hire them.
If you own a condo and think you'll ever want or need to sell, it would pay to know whether your association will pass the scrutiny of the mortgage lenders. Most of the condo loans I'm seeing now are requiring associations to meet the FHA, Fannie or Freddie standards. Some lenders may make loans in complexes that do not meet these requirements but it makes for a larger audience of possible buyers if your association does pass the test for FHA.
Things will be easier for your mortgage-seeking purchaser if;
- At least 51% of the units are owner-occupied.
- No entity or person owns more than 10% of the units.
- Project is fully complete and not subject to additional phasing or additions, AND
- At least 90% of the total units are conveyed to unit purchasers other than the developer, AND
- Unit owners control the homeowners association.
- At least 10% of the budget provides funding for replacement reserves for capital expenditures, deferred maintenance and replacement cost of major common elements.
- There is adequate funding for insurance deductible amounts.
- No more than 15% of the total number of units in a project are 30 or more days delinquent on the payment of their Homeowners Association assessments.
Not meeting any of those items can trigger a full review (think root canal) or can kill the sale. Pay close attention to "adequate funding for insurance deductible" and "at least 10% of the budget provides funding for replacement reserves". If your association has a 10% hurricane deductible on a policy of $3 million dollars then the lender is going to want to see $300,000 in the bank to cover that. If the budget is $700,000 annually, they are going to want to see $70,000 per year being paid into reserves. When an association is voting on the annual budget it is normal for some owners to want to keep monthly fees as low as possible. They may not realize when they vote against an increase in condo fees that they are building an impediment to the future sale of their and their neighbor's units. Funding the reserves at a rate of less than 10% of the total budget or not keeping the amount of the hurricane deductible in the bank might prevent an increase in the monthly fees next year but it also might push your unit into the cash-buyers-only category. Consider your vote carefully.
Selling right now? Don't underestimate the much more attractive nature of a cash offer. A cash deal is much more likely to close considering the current gauntlet of hurdles for a mortgage. If you accept a contract contingent upon a mortgage, be ready to step in and assist in the document request stage and don't pack your stuff until the loan has final approval. My list above is not complete. Requirements are different depending on the lender and type of loan. One constant is the incredible amount of information they want.
My intention here is to prepare condo sellers and buyers for some of the friction in the loan process. Buyers and sellers are successfully closing condos financed with mortgages every day but plenty don't make it to the finish line because they got blindsided by an unknown requirement. To be prepared is better than not. Good luck out there.
"Microsoft isn't evil, they just make really crappy operating systems."
Tuesday, August 02, 2011
Gopher tortoise galloping across dune line behind Cape Winds condos.
Inventory may be shrinking but July's sales sprinted as if before bulls. There were 45 reported sales of condos and townhomes in the Cape Canaveral and Cocoa Beach MLS in the month. For perspective, that was 12% of the total condo inventory. There were 10 single family homes closed in the month or 13% of the total home inventory.
The lowest priced home sale was in Cape Canaveral, $150,000 for a small 2/2 in Ocean Woods. Cocoa Beach home sales ranged from $190,000 for a 66 year old, 3/2 across the street from the beach in south Cocoa Beach to $600,000 for a nicely remodeled direct ocean 3/2 on an over-sized lot a few blocks south of downtown. Only two of the July sales were canal homes. One was a small 3/2 short sale on Bougainvillea that sold for $280,500 and the other was a beautifully remodeled Snug Harbor 4/2 on Edwards Bay that closed for $400,000 just 7 days after hitting the MLS. Another of the 3 year old Enclave homes sold. This one had 4 bedrooms, 3 baths and had 3462 square feet and a 3 car garage and closed for $510,000. Asking price on this one just a couple of years ago was over a million dollars.
A third of the single family homes had a contract in less than a week on the market and the ten sold for an average of 93.7% of asking price.
The under $100,000 condos were on fire with a quarter of the condo sales landing under the hundred grand mark. Lowest price was $32,000 for a 1/1 Ocean Mist in Cape Canaveral. Other complexes with sales under $100,000 included Star Beach, Atlantic Gardens, Lamp Post, Rio Vista, Riverview Manor, Canaveral Breakers, Four Seasons and Twin Towers.
Other sales of note:
Two direct river Fountain Cove 2/2 units closed for $135,000 (5th floor) and $156,500 (4th floor) and a 4th floor 3/2 sold for $190,000. All three units were in the B building.
A big 3/2.5 townhome w/garage in Cape Canaveral 2 blocks from the ocean sold for $140,100.
Short sale 2/2 Sutton Place in south Cocoa Beach just one unit back from the ocean closed for $105,000. Ocean views from all windows.
Top floor 3/2.5 corner unit Treasure Island direct river w/boat slip, 1827 square feet closed as a short sale for an amazing $150,000.
A short sale 4 year old, 2nd floor Puerto del Rio 3/2 with 1852 sq ft and garage closed for $155,000. Sold for $325,000 new in 2007.
Two foreclosures at Solana Lakes closed in the month. A 1698 square foot 2nd floor 2/2 sold for $160,000 and a 2nd floor 3/2 with 1956 square feet closed for $199,000 which was $6500 above asking price.
A super nice top floor corner 3/2 "D" building Mystic Vistas sold as a short sale for $190,000. Sold new in 2006 for $448,000.
An A building Stonewood ground floor 3/2 sold for $195,000. 1588 sq ft and garage.
A 4th floor NE corner direct ocean La Mer 3/2 w/garage sold for $230,000 with the seller paying $10,000 towards an assessment.
A furnished top floor Shorewood, F building 2/2 with garage and a tiny peek of the ocean closed for $212,500.
A 2nd floor direct ocean Hacienda del Mar 2/2 in south Cocoa Beach sold for $240,000.
Two corner units closed in the month in the 5 year old direct river Garden Bay building. Both were 3/3.5 units with 2600 square feet and 2 car garages. A 3rd floor sold for $305,000 and a 4th floor for $319,000.
We also saw 3 units sell in Magnolia Bay in south Cocoa Beach. A 3rd floor, 2183 square foot 3/3 closed for $359,000, a 2nd floor 3/3 with 2552 square feet sold for $469,000 and a 3rd floor corner 3/3 with 2455 square feet sold for 4380,000. All had 2 car garages.
Second highest condo sale for July was a 2nd floor direct ocean 3/2.5 with 2291 square feet at Ocean Estates in Cape Canaveral that sold for $477,500.
High sale for the month was a 2nd floor direct ocean short sale at Artesia in Cape Canaveral. This 3/3.5 unit had 2478 square feet and closed for $549,900.
Of the 45 condo sales in July five were foreclosures and eight were short sales. Only one exceeded $500,000. There are 41 active MLS units asking over $500,000 this morning with total inventory of condos and townhomes at 380 units. Fourteen of those are foreclosures and 50 are short sales making 17% of our active supply distressed. Only 56% of condo purchases in the month were for cash, a substantial reduction from previous months. There were quite a few owner financed deals in the mix.
On another subject, I am becoming convinced that another big change is in the works for condo mortgages. I have two delayed closings this week because of abnormal documentation requests from underwriters for two different national lenders. Without getting into the ridiculous details, it appears to me that in spite of the already very stringent documentation requirements for Florida condo mortgages, we are about to see a whole new level of friction from mortgage lenders if not outright withdrawal from the Florida condo mortgage market. If you have a condo loan in the pipeline right now you know what I'm talking about. You heard it here first.
"Somewhere, something incredible is waiting to be known." Carl Sagan
Saturday, July 30, 2011
Reasons for fishing numbers 8 and 9, above and below. Grill not necessary.
There are any number of properties advertised for sale that are not really for sale. There are owners in situations who may need to demonstrate to someone like a bank, a relative or a court, that they are trying to sell a property when, in fact, they have no intention of selling. In most cases these kinds of "not really for sale" properties are overpriced to discourage actual inquiries. Another type of "NRFS" property is one with multiple owners with one owner unwilling to sell. That owner's unwillingness to sell may not be known to the others until an offer actually arrives. The list includes relatives, in-laws and ex-spouses. They can all have the power to prevent a sale.
There are other listed properties that aren't really for sale without that fact being known to any of the participants, like the short sale listings that have no chance of being approved because the deficiency is too big to fly or the seller can't or won't provide satisfactory documentation to the bank. They are on the market but can't be purchased. Then there are sellers who think they want to sell but have an unrealistic idea of their property's worth. Their idea of value may be based on a neighbor's sale in the past, coffee shop talk, misinformation from their listing agent or just fantasy. Whatever the case, the condo owned by the guy who "will not sell for less than X dollars" is not for sale if X dollars is much above market value.
A decent portion of our MLS inventory matches one of the above descriptions of "not really for sale", most in the unrealistic expectations category. Since there is no good way to determine which listings fit one of these categories I have used the total Cocoa Beach and Cape Canaveral MLS inventory numbers to calculate our burn rate. Understand that, since there is an unknown number of "NRFS" properties included in the inventory, the months supply numbers are actually less than the numbers below.
First: Condo and townhouse MLS inventory. Using the most recent three months closed sales compared to today's total inventory we find that we have just a six month supply of units priced below $200,000, our most active market segment. For units priced between $200,000 and $400,000 we have a 13 month supply. Once we get over $500,000, we have enough units currently for sale to last for 42 months.
Total single family home inventory is 80 properties. The most active price segment is under $200,000. Today's inventory in that price segment will be gone at the current sales rate by mid-October. Between $200,000 and $400,000 we have a 6 month supply, enough to last until the first of February. There are enough houses asking over a half million to last for 19 months without factoring in the "NRFS" listings.
If you're looking in the active market segments you are probably already aware of the dearth of decent listings. The burn rate tells us that this is not getting any better. A good strategy at this point is to have your wants and needs well defined and to be aware of the competition for good properties. Good ones don't last long. We listed a really nice Snug Harbor home in July that was under contract in 5 days and closed in eight. A smoking deal Michelina short sale this past week had three offers on the first day. I've seen several other closed sales in the month of July that qualify for smoking deal status. Good deals are out there for attentive and ready to move buyers. I'll detail the standouts in my next post on the July wrap-up.
"Politics is when you say you are going to do one thing while intending to do another. Then you do neither what you said nor what you intended."
Thursday, July 21, 2011
Continuing the commentary from the last post about valuing a property. My review of recent sales suggests that using the Property Appraiser's published "market value" is a pointless exercise unless it can be used to one's benefit against an uninformed opposing party in negotiations. With a margin of error of 45 to 50%, the PA's number should be considered for entertainment purposes only.
Dismissing the PA's number, to value a property we're left with either Miss Cleo or the comps. With apologies to fans of Miss Cleo I think recently sold comparable properties are the best starting point for determining another property's value. Identical condo units in the same building are perfect comps as are identical homes in the same neighborhood. The reality is that, in most cases, there aren't "identical" comps. In that case one has to look for the most similar and then make adjustments. The most commonly used starting metric for comparing similar properties is dollars per square foot. If a 1000 square foot unit closed last week for $100,000 then another very similar unit with 1100 square feet should be worth close to $110,000, all other things being equal. The big stinker there is the "all other things being equal" part. They never are, equal that is. We also need to consider that both units may have exactly identical garages, have access to the very same amenities and share an identical view. This makes a comparison based only only unit size (even with adjustments for condition) flawed from the get go. Place the properties in different buildings or neighborhoods and the comparisons become even less accurate. We can't accurately calculate the value of Starry Night based on the selling price in francs per square centimeter of Vincent's Bedroom in Arles . I think comparing Cape Winds to Sandcastles just as flawed although less extreme.
Consider that a direct ocean 2/2 with 1286 square feet and a garage at Sandcastles in Cocoa Beach will command no more rent per week than a Cape Winds 2/2 with 934 square feet and open parking in Cape Canaveral. Are they worth exactly the same because of identical potential income? I don't think so but I don't think a straight $/sf comparison is remotely accurate either. Seems illogical to think that an otherwise similar 2/2 unit in one of the two buildings should sell for a 27% premium to the other.
My point in all this is to caution buyers and sellers about their or their agent's opinions of value. Putting a fair value on a property is not an exact science. If buying, do your best to get the lowest price possible and use all the tools available to substantiate your offers. Just be aware that in the end only you know what a property is worth to you. The commonly used valuation scales are all flawed. It's horseshoes. Closest one scores.
"Sheep only have 2 speeds - graze and stampede." _________________Colonel Dave Grossman
Sunday, July 17, 2011
Sign at one of the beach crossovers in south Cocoa Beach. The prayers were answered this morning. Chest to head high north swell hitting all the southern beaches.
It is an almost daily experience for me to have a conversation with a buyer or seller of real estate (or their agent) who is using the Property Appraiser's "market value" of a property to support their own belief of the value of a property. Folks, the only time the PA's "market value" has any worth when buying or selling a property is when you can use it to your advantage in negotiations and can convince the other party to accept it as accurate. First of all let's see what the PA says about the different values that are displayed in a property record. From the PA's website;
What is the difference between market, assessed, and taxable values?
The market value is the most probable selling price, based on the actual sales of similar properties, less the typical costs of sale.
The assessed value may be less than the market value if the property is a residential property having homestead exemption and is therefore protected by the "Save Our Homes" Constitutional assessment limitations.
The taxable value is the assessed value less any applicable exemptions.
_________________________________________________Right away we see that the PA's market value is not the expected selling price but the expected net after selling expenses. A seller's typical selling costs (real estate commission, doc stamps, title policy, etc.) are deducted from what the PA's black box tells him the value is. OK, seems reasonable. Add about 8% to market value and we should have the expected selling price of a property. Not so fast. That assumes that the black box is spitting out accurate numbers. Let's check the actual numbers.
I pulled up the last 27 residential property sales in Cocoa Beach and Cape Canaveral excluding quit claims. I then compared the selling price to the Property Appraiser's 2010 market value. Only five sales fell within 10% of market value, one exactly on the money, two for 2% more and two for 7% less. Of the 27 total, 12 sold for less than market value. They averaged a 19.5% discount to the published market value with one selling for a 45% discount. The 14 that sold for more than market value averaged selling for 29% more than the PA's market value with one selling for 50% more.
Conclusion: The Property Appraiser's published market value is not accurate. If it is to your advantage during negotiations in buying or selling feel free to use it to bolster your position but know that you risk looking foolish and potentially losing negotiating strength if the other party knows the truth or at least reads this blog. This same all-over-the-map inaccuracy applies to Zillow as well. Your best guide to actual market value is using recently sold, nearby comparable properties and making the necessary adjustments to reach an accurate number. One last thought on that process. Beware getting married to a dollar per square foot number. It's a good starting point when the comps are close in size but it is not the end-all metric for establishing value. Ultimately, a buyer decides what they are willing to pay and a seller decides what she is willing to accept. When those numbers intersect, true market value is established.
Good luck in your negotiations. As always, knowledge is power.
"I wasn't worth a cent two years ago and now I owe two million dollars." __Unknown
Saturday, July 09, 2011
Perfect surf in south Cocoa Beach.
Once again it's time for the July halftime report; what's selling, what's not and my best guess at where we're likely headed in the second half. We hit the ground running in January with a strong sales pace fueled in part by a large number of distressed sales (foreclosures and short sales). As we moved into spring sales numbers remained high but the proportion of distressed sales began to decrease. Sales began to lag last year's pace in May.
In the first half of 2011 there were 276 closed sales of MLS-listed condos and townhomes in Cocoa Beach and Cape Canaveral compared to 255 last year. There were 8 condo sales over the half-million dollar mark in the first half while 99 of the total sold for less than $100,000. Distressed sales made up exactly one third of the total, 45 foreclosures and 45 short sales. Only eleven of the 90 distressed sales exceeded $200,000 while 50 sold for less than $100,000.
There were 72 single family home sales in the first half, 60 of those in Cocoa Beach. Median price was $240,000 with 19 above $300,000. Thirty three were waterfront. Of the 72 total, 7 were foreclosures and 14 were short sales, or 29% of the total distressed.
Single family home inventory stands at 79 in the two cities with the majority (68) in Cocoa Beach. Over half (42) are waterfront, lowest asking price $239,900. Only five of the 79 are distressed, two foreclosures and three short sales.
Condo and townhome inventory is at 375 units, having been cut in half in just 30 months. Distressed sales make up 16% of the total, 48 short sales and 12 foreclosures. There are 44 listings asking over $500,000 or a 33 month supply at the current sales rate. There are 62 listings under $100,000 or less than a 4 month supply in that market segment.
Lower numbers of distressed listings and the severely depleted inventory will lead to continued slowing of sales through the second half.
Probable bottoming of condo prices in the lower price ranges because of the supply and demand dynamic.
Continued downward pressure on condo prices in the highest price ranges for the same reason and the fact that many recent purchasers of luxury units are underwater.
With three quarters of current condo sales closing with cash, mortgage rates will continue to be mere background noise. The high rate of cash sales will likely continue based on two factors. One: Mortgages have become increasingly difficult for condos with many mortgage-contingent contracts failing to close. Two: the less obvious factor is the current low yield on savings that has savers looking for alternative tangible investments like property over eroding US dollars.
The absence of three or four Space Shuttle launches a year is going to have some impact on local businesses. Whether that will trickle down to the property market remains to be seen. We've known this was coming since the President announced the end of the program in 2004 so it seems likely that much of the impact to the property market is already baked in. We are still the closest beach to Orlando and the coolest little beach town in Florida, only now without the Space Shuttle. With the last mission in orbit as I write this, the outcome will be evident shortly.
"Prediction is difficult, especially about the future." ____Niels Bohr