It IS Different Here! [blast from the past]

[This post was originally published on Halloween Day 2008. It is still relevant and true so I thought, partly motivated by laziness (if that isn't a contradiction), that I'd repost for the newer readers enjoyment.]

There is a long list of thought-terminating real estate clichés that are to the truth as fingernails are to a blackboard. Among the nominees for the best is the title of this post. Other self-serving RE industry creations are "Now's a great time to buy", "Real estate only goes up", "Interest rates are at historical lows", "Buy now or be priced out forever" and on and on. In spite of the transparent purpose of these phrases when used by Realtors about the real estate market, I will venture that "it is different here" has some compelling resonance when said about Cocoa Beach as a community. I'm not speaking as a Realtor, rather, as a resident. Our market is subject to the same influences as other markets across the state of Florida, but, it only takes a drive down A1A through the four or so blocks of "downtown" or a stroll along the uncrowded beach on a beautiful day to realize that the absence of crowds and the small-town sense of community here is a rare commodity to be treasured. I am guilty of taking what we have here for granted but it only takes a moment mired in traffic in any another coastal community in our state to remind me how good we have it. Name one other coastal Florida town that has a "Walk your child to school day" or that has a maximum speed limit of 35 MPH or whose population has not increased in the last 20 years. That is Cocoa Beach. It IS different here. If you're looking to purchase here, do your homework, know what represents good value and bargain hard. Remarkable deals continue to happen in the best little beach town in Florida.

Mosquitoes can be a problem in many areas of Florida but the constant sea breeze keeps the ocean side of the road pretty much free of them and other flying insects. On those few days that the wind shifts around from the west, mosquitoes and other small insects get blown over A1A to the ocean side and tuck into the lee of oceanfront buildings. When this happens, the dragonflies come out en masse to take advantage of the easy meal. The photo at the top is of one of these other-worldly creatures that share our airspace on offshore days like we've had recently.

"We don't see things as they are, we see things as we are."
______Anais Nin

Random September stats

In Cocoa Beach and Cape Canaveral, as of September 20, 2012, more MLS listed properties have closed in the January through September period than in any year since 2005. The trends of recent months continue. The major current dynamics include a declining number of cash purchases, although cash sales still represent the majority at 59% of the total. We are also seeing a much shorter days on market as the inventory contracts. The median so far in September is 44 days on the market with 40% of all sales selling in 14 days or less.

The average selling price of the 35 closed sales was 96% of asking price with six properties selling for full or greater than asking. Only six of the total sold for less than 91% of asking. Keep this in mind when preparing your offers but don't neglect to do your homework and know what a property is worth TODAY before deciding what to offer. Many of the current active listings are unsold because they are overpriced.

Distressed sales continue to be a high percentage (34%) of closed sales, not because there are a lot of distressed listings, but because of the backlog of short sales that contracted earlier this year and last that are just now coming to the closing table. I received notice of approval of two short sales this week, one of them from the first week of March. Only 12% of the current residential inventory in  Cocoa Beach and Cape Canaveral is distressed, either short sales or foreclosures.

Our condo inventory has bumped back up from the recent all-time low of 266 units to 283 this morning. That increase is due almost entirely to 16 new listings in a yet-to-be-built Puerto del Rio building. This building, if they're able to sell any pre-construction units, will be direct Banana River with the larger floor plan 2436 square foot 3/2 units. Asking prices are between $299,000 and $399,000. Of the total condo inventory, 21 of the listings are in not-yet-in-existence buildings.

The mullet run is in full force with millions of finger mullet running south down the beach with plenty of big predators taking advantage of the easy meal. The surf has finally calmed down enough to make surf fishing not quite so challenging as recently. Fishermen using live mullet or mullet-looking artificials in the surf will be rewarded, hopefully with a legal snook. To keep a snook, fishermen must have a snook stamp and the fish must be between 28 and 32 inches nose to pinched tail. Daily bag limit is one fish per person. Good luck and good eating.

"Bigger is not necessarily better but better is always better."  __Jason Goldberg

August breakdown

One of the smaller waves on Sept. 8, 2012 in south Cocoa Beach

A total of 54 MLS listed condos and townhomes closed in the month of August in Cocoa Beach and Cape Canaveral. Prices ranged from a high of $800,000 for a huge top floor Ocean Club 4 bedroom 4.5 bath beauty with 20' ceilings and 4565 square feet to $25,500 for a 1 bedroom, 1 bath Jeannie by the Sea with 396 square feet. Fifteen units sold for $100,000 or less and five closed for $300,000 or greater. Fourteen of the condos were direct ocean and sold in a range of $140 to $278 per square foot. Those who use dollars per square foot to justify offers or asking prices take note. Comps need to be very similar in size and condition to have any validity when the market has this kind of range of selling ratios.

Of the 54 sold units, 16 were distressed, five foreclosures and eleven short sales. That's a higher percentage than exists in the "for sale" inventory because of the number of previously contracted units. The current level of distressed condo inventory in the two cities is at 14%. Without the nine bank-owned units at the Pier Resort the ratio is 10%. There are a total of 272 condo and townhome units for sale this morning, right at the record low number reached a few months ago. The same sparse conditions exist in the single family home market with a measly 49 actively for sale on the Cocoa Beach and Cape Canaveral MLS. Only one of those is distressed, a nine year old 4 bedroom, 3 bath home on the water in Cocoa Beach with a suggested price of $419,900.

This has been a week of excellent surf. We got our first pulse from Tropical Storm Leslie last weekend and it built through the week with some help from Hurricane Michael until the crescendo yesterday when waves were double-overhead plus in south Cocoa Beach with perfect conditions. It's still there as I write this, although smaller, and expected to be fun for a few more days. There are a lot of happy, tired residents today in this lucky little beach town.

"You'd be surprised how little you can live off if you're willing to sacrifice anything that makes life enjoyable." ___Unknown

Moving targets

A shift is underway in our local market. As the distressed inventory has disappeared many sellers' willingness to deal is lessening. Buyers using the recent comps for offer substantiation are not being well received by sellers who have seen recent prices edging upwards. Expecting to buy for the same or less than the recent comps isn't unreasonable in a down-trending market but we are no longer in a downtrend. In a stabilized market, like ours currently, a non-distressed seller has little incentive to match the recent low comps. Inventory is low and there are lots of active buyers. Considering our current conditions, serious buyers should be open to the idea of paying more than the comps suggest. It may not be necessary but flexibility might be rewarded. From 2008, the first year we saw a short sale, until last year, the idea of paying over the recent comps was insanity. Mid-2012, not so crazy. Our  inventory of distressed properties for sale in Cocoa Beach and Cape Canaveral was around 120 in 2008 and 77 of those closed that year. The history of distressed property sales in Cocoa Beach and Cape Canaveral looks like this.

Closed distressed sales

• 2008 -   77
• 2009 - 137
• 2010 - 233
• 2011 - 219
• 2012 - 118 through August 31

There are 74 contracted distressed sales yet to close in the two cities and a mere 43 actively for sale. For buyers hoping to steal a distressed direct ocean condo the list is short. There are two. After burning through 784 short sales and foreclosures in Cocoa Beach and Cape Canaveral since 2008, that chapter of our market story is coming to an end. Total condo inventory is at an all-time low of 275 units. Our total residential inventory this morning including condos and single family homes is 329. Of those 43 are either short sales or foreclosures.  

Take-away: we have transitioned from a declining market dominated by distressed sales to a market state of near-normalcy. It surely took long enough. Biggest issue at this point is the scarcity of desirable listings. A lot of the new inventory that would be coming on the market now got flushed out prematurely by declining prices. Buyers and sellers of real estate, adjust your expectations and strategies accordingly. Good luck in your quest. Surfers, a new swell should start showing by Tuesday with waves expected to peak at about head high on September 5 courtesy of Tropical Storm Leslie. See you in the water.

"...by using a strategy of averaging down, you are guaranteeing that your biggest positions will be in your worst trades." - Zikomo