Thursday, July 12, 2012
Terminal velocity [updated]
Inventory of condos and townhomes in Cocoa Beach and Cape Canaveral today, July 12, 2012, stands at 283 units or 73% off the high of 1049 units for sale in November 2006. There are 31 units asking less than $100,000. That's the same number of sub-$100K units that have closed in the last eight weeks. Distressed sales are at 13% of the current for sale inventory with about a third, eleven, of those in the Pier Resort. Asking prices in the five year old building are $188,000 for the 1900 square foot 3/3 units and $299,000 for the 3400 square foot 3/3s.
Activity on the ground hasn't changed much in the last month. I'm seeing lots of multiple offer situations when priced-right new listings appear. I'm also seeing a greater occurrence of failed offers than in the past as buyers expectations have lagged the market reality. Buyers of real estate in our small market, in most cases, are going to have to accept that the super low closed price of a comparable unit earlier this year or last year may not be repeated in this cycle. I said this before but it bears repeating. The bottom in most condo complexes will be represented by a single sale. Clinging to the hope of matching or bettering that $150,000 Mystic Vistas sale from two years ago has, so far, been fruitless. So has finding another 2/2 Sandcastles for $140,000. I'm confident in predicting that these sales will not be matched or bettered anytime in the near future. There are dozens of other complexes where, like these two, the bottom sale has probably already occurred. This is, of course, my opinion. I could be wrong. Be aware that if you are holding off on a purchase because you think prices are headed lower that you're going to have plenty of competition if that comes true.
[update] To expand on the reader's comment about the lack of detail in the tax record; The property appraiser does attempt to code and identify transactions that are not normal sales. There are over 40 codes for things from "atypical amount of personal property" to, as in the mentioned sale, "transaction between affiliated parties/family/corp." List of all disqualification codes here. For stats on this blog, unless I state otherwise, I use only MLS sales as there is more (still not 100%) transparency. Even with MLS sales, if a sale looks abnormally high or low, there is probably more to the story than the numbers reflect. We've seen developers record sales at numbers higher than the actual selling price by giving buyers a decorating credit at closing. We see other sales record at lower than actual selling price when personal property/furnishings get broken out of the contract and assigned an above market value on a bill of sale. That is one of the reasons that just one comp is not enough to establish fair value. Your single cherry-picked comp justifying your otherwise crazy asking or offering price means nothing to an informed party. If it doesn't look right, it probably isn't. [update]
Take-away: Be realistic about your expectations if seriously hoping to purchase in our market. Prices have not jumped significantly in most cases and, for someone who wants a Cocoa Beach getaway, purchasing slightly above the rock bottom will probably have little impact on the enjoyment of toes in the sand. I would also advise care in internet research. There is a lot of misinformation out there. Recorded sales prices don't always tell the whole story and claims on agent websites are sometimes misleading and always self-serving. The best deal in Florida real estate is free. It's a well-informed, experienced buyer's agent with no connection to the seller. Buyers of Florida real estate would be well-advised to find a buyer's agent they can trust and following his lead.
Today's buzz words; hydration, sunscreen and speed limits. Forget any of them at your own peril.
"I have made this letter longer than usual because I lack the time to make it shorter." ____Blaise Pascal