Honey, I shrunk the inventory

The shot above is of shuttle Discovery a few years ago as seen
from south Cocoa Beach. Endeavour is set for launch this
afternoon for it's last mission.
[update: Launch rescheduled again. No sooner than May 16.]
Discovery's next mission, which will be the last ever shuttle
launch, is scheduled for June 28.

The rapidly shrinking MLS inventory of condos and townhomes in Cocoa Beach and Cape Canaveral sits at 392 this morning, a record low. For perspective that is 63% less units for sale than at the peak in 2006 (1049 units) and 33% less than in March 2010. At the current sales rate we have less than an eight month supply (in all prices). If we look at the most active part of our market, units selling for less than $100,000, the current supply will be exhausted in less than five months. The supply is greater as the prices move up. For units selling between $100,000 and $300,000 we have a seven month supply. In the $300,000 to $500,000 range the current supply will last 13 months. Once we pass the half million dollar mark we have enough units for sale today to last for 28 months at the current sales rate. These numbers are for MLS-listed units only.

Sales have remained strong so far through April and we should finish the month with around 50 closed units. Of the 41 sales closed so far, five were short sales and five were foreclosures, only one of the ten was for more than $150,000. My next post will detail the sales of note for the month of April.

Single family home inventory is in a similar precarious position with less than a ten month supply at current levels and sales rate. Ten homes have closed so far this month, the bulk at prices between $200,000 and $300,000.

For anyone looking for a weekly rental oceanfront condo, I have several nice units available directly from the owners at very good prices. These are not on the MLS and prices range from low $100s to mid $200s.

"Honk if you're paying your mortgage" ___bumper sticker I saw yesterday

new look

I have finally upgraded this blog from the old Blogger style. I was hesitant because I was afraid that I might lose some or all of the over six years of posts in the upgrade. After hearing from a reader last week that the blue and green dots made him physically ill when reading a post I finally got the courage to commit to the upgrade. Appreciate the push, Steve. Thankfully no content was lost in the transition. This new look will likely change occasionally depending on my whims.

I have added links to some of the old posts containing useful info about rental restrictions, cash flow, agent issues, etc. at the right. If you are new to this blog and are considering purchasing or selling property in Cocoa Beach you may find some of those posts helpful. Now, back to your regularly scheduled programming.

Money for nothing

A few weeks ago my friend suggested to his friends who are moving to Cocoa Beach that they contact me to help them with their search for a property. A couple of days later I got an email from a Realtor in another Florida city asking if I would be interested in paying her a referral if she sent her clients my way. She mentioned as an aside that I had already been recommended to her clients by my friend. I responded that I would be happy to help her clients and asked for details on what they were looking for, what involvement she intended to have in the process and what sort of cut was she hoping for. No response and three days later a couple shows up at my office unannounced ready to look at houses. They seemed confused that I wasn't present with a list of properties for them to see. They thought their agent had actually done something to assist. I'm not sure what she told them about how the process works or if she actually told them anything. She is likely hoping for a 15 to 25% slice of my eventual commission check just for inserting herself into the process and doing nothing but screwing up first contact. It has now been weeks and the agent has not followed up and I haven't seen her "clients" again.

This whole referral thing is common in the real estate world. In the most innocuous referral situation your friend or relative who has a real estate license in another city hears you mention that you plan to buy a property in Cocoa Beach. She tells you to let her find you a good agent to help you in Cocoa Beach. She may actually be intending to look out for your best interest by reviewing offers and contracts, offering advice, etc. History tells me, however, that her definition of "good agent" is likely to be the agent who is willing to pay her the biggest cut, not necessarily the agent who will do the best job. The other end of the referral spectrum includes situations where an agent is blindsided by a previously unmentioned relative expecting a cut after the property search has been concluded and a contract accepted. The smelly end also includes many of the big franchise real estate companies who parcel out website inquiries and other sources of leads to their agents after slicing off a healthy chunk of the agent's pay. I have seen situations where more than 75% of the commission paid was siphoned off before getting to the actual buyer's agent, the bulk having gone to the money-sucking machines above her.

This post is not intended to bash the referral process, just to inform readers of the abuses of it like those mentioned above. I have good relationships with other agents who send me referrals and have accepted dozens of referrals over the years that were completely fair and mutually beneficial. I have declined just as many because they were impractical or unfair. The first couple mentioned probably thought their agent would be helping out in their search here. Surprise.

Conclusion: Aunt Hilda, loving though she may be, may not be doing you a favor inserting herself into your search for a property in a distant city. Will including her benefit you? Knowledge is power.

"When the facts change, I change my mind. What do you do sir?"
_________ John Maynard Keynes

Red sky in morning

Sailor take warning? I don't think so. Dust off the log.

My predicted slowdown in sales because of shrinking inventory has yet to materialize. March saw 54 MLS-listed condo sales in Cocoa Beach and Cape Canaveral and eleven single-family home sales. The number of sales in the first quarter is 18% ahead of last year's number. Condo activity was spread almost equally between the two cities while all but one of the single family homes sales were in Cocoa Beach. A third of the condo sales were under $100,000, a third between $100,000 and $200,000 and a third closed for more than $200,000. Luxury condos were active with four sales closing over the $500,000 mark, one over a million. Seven of the condo sales were foreclosures, none over $135,000. Six were short sales with only one over $140,000. Those distressed sales (foreclosures and short sales) represented only 25% of the activity.

Inventory of condos continues to shrink with only 424 total units actively for sale this morning in Cocoa Beach and Cape Canaveral, a 25% reduction in available units since April 2010 and less than half the inventory just three years ago. The percentage of distressed sales also continues to shrink, down to 17% of the total, 10 foreclosures and 60 short sales.

For anyone looking for a short term rental oceanfront condo, I currently have four units in desirable buildings available directly from the owners at prices from $130,000 to $275,000.

"It could be romantic comedies, it could be Oreo cookies. If they're all liking it together, I want that broken up."___Boston Rob

Scott Free - Not Quite

Rocky shore at low tide in Satellite Beach.

Actually the phrase is "scot free". In modern usage it means getting away with something without penalty. If you sold a property last year as a short sale and didn't get a judgement from the lender nor a 1099 for the deficiency you may be thinking you got away scot free. Not so fast. As they say, there is no free lunch and, in the case of forgiven debt, there are only a few instances of "scot free" in the United States. The IRS considers forgiven debt to be income and as such it must be reported even if the lender did not issue you a 1099. The Mortgage Debt Relief Act of 2007 added exemptions for primary residences in tax years 2007 through 2012. Other exemptions are allowed for debt forgiven in the case of bankruptcy or insolvency, some farm debt and non-recourse loans. The majority of short sales I see in our market are likely not to qualify for forgiveness. So, this is a cheery April reminder that you need to consult with your tax professional before filing your tax return for 2010 if you had forgiven debt in the year even though you may not have received a 1099. Don't shoot the messenger.

[update] As pointed out by a reader (thanks, PR), the fact that a seller didn't receive a 1099 from a short sale may point to the fact that the debt was not forgiven. If that's the case the short seller can expect someone, the bank or the entity that bought the debt, to pursue collection. They may wait a few years until the borrower is back on their financial feet. Read and understand those approval letters, people.

"It hardly matters if you're the smartest guy in the room when you're the most well informed" anon