Sunday, March 18, 2018
Listings with easier access are selling fast. Since March 1, fifty-five condo units have gone under contract, twenty-five in a week or less on the market, ten of them asking $499,000 or more. All price ranges are active right now with waterfront, both ocean and river, especially strong.
There are currently 155 existing waterfront units for sale in Cocoa Beach and Cape Canaveral with another 12 to-be-built units offered. Asking prices range from $74,900 to $1.13 MM. For those looking there are possibilities. As always the ability to know what price is fair is paramount.
The old Cocoa Beach Public that was torn down and currently being rebuilt is taking shape and we just heard that the newly remodeled Cocoa Beach Winn Dixie will not be among the 37 WD stores slated for closure in Florida. The Cocoa Beach City Commission has been discussing and taking public comment about relaxing the 45' height restriction and whether to allow dogs on the beach. Opinions on both sides of both issues are heated. Change is afoot.
"I overthink your punctuation use. " __Lorde
Monday, March 05, 2018
If the meager for sale inventory in Cocoa Beach and Cape Canaveral were magically repriced overnight to within 5% of fair market value, I suspect over half would sell in two weeks. The demand for property remains high but the supply of fairly priced listings is not enough to satisfy that demand. I'm amazed that so many sellers insist on crazy high prices and that agents are willing to take on those listings. Some agents do it knowing there's a good chance the owners will drop the price later when the market doesn't deliver a buyer. Others will take a listing that will never sell knowing it will garner inquiries from prospective buyers. When those buyers realize they can't negotiate a fair price on the over-priced listing they'll move on to something else. Agent finds them something else at a fair price, gets paid and the over-priced bait continues to attract fresh prospects. Rinse, repeat. For an agent willing to put in the time and with the skills to work this angle efficiently, the results can be worth it. The over-priced sellers can continue to hope for a miracle. In this rising market, appreciation will eventually catch up to all but the most optimistic fantasy prices. Other than opportunity costs and mortgage payments, our recent rate of appreciation has been enough to cover condo fees and property taxes for most properties. However, considering a boring S&P index fund returned over 20% in 2017, the opportunity cost was significant for those who rode the year out clinging to an unrealistic price.
The evidence for overpricing is overwhelming. Exactly three condos have sold in our two cities in 2018 for more than $300 per square foot. Two were beautiful units in newer buildings and the other was a beautifully remodeled corner on a high floor. All three were direct ocean, third floor or higher. There are units that are worth $300 a foot and higher but they must be special. Any unit in the Meridian or a new oceanfront building will bring over $300/sf but in the older buildings a unit must be in exceptional condition to cross that threshold. Example: I saw a new listing in Emerald Seas last week asking $327 a square foot that was worth every penny of that, in my opinion, due to an exceptional total remodel and tasteful included furnishings. Congrats to the buyer that contracted that one. It's a beauty.
Looking at the inventory of condo and townhouse units for sale this morning I find 44 asking over $300 per square foot, 15 of them over $350/sf. Only a handful of these 44 are worth within 10% of their asking price. Not surprisingly, well over half have been on the market for over a year. Many of those have had their days on market manipulated to appear to be new listings. Some change their asking prices frequently to trigger inclusion on lists of price-changed listings. All it takes is a change of $1 lower or higher to trigger that inclusion. It will, however, take more than cute MLS tricks, marketing in Dubai, or the most beautiful agent in Florida to sell a property for 25% more than it's worth. I'm guessing the buyer of that funky unit close to the Pier asking $396/sf is not going to be willing to pony up that number no matter the "$80,000 native coral wall framing the ocean view".
It's exciting to get an email like the one below from the City. This was the warning last Friday.
And this below is the reality this morning, Monday, 10.8' with a 16 second period.
The forecast was spot on. The swell was showing already Friday and was filling in nicely by Saturday evening. It's off it's face this morning with double-overhead freight train lefts breaking well offshore. The angle of the swell is hard out of the north so those beaches north of downtown will be significantly smaller than the south beaches not shadowed by the Cape. Streets north of the Pier to the Port will be best for those wanting a more manageable size. Breaking waves should be significantly larger than the open ocean measure of 10.8' at locations south of downtown Cocoa Beach all the way to south Florida. The Reef Road break in front of Mar a Lago in Palm Beach should be one of the best and biggest. Be safe out there. We look to have a few days of epic conditions after the wind switches offshore tonight or tomorrow.
"The problem of the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." __Bertrand Russell
Wednesday, February 21, 2018
Sales activity in Cocoa Beach and Cape Canaveral has been brisk as is normal this time of year. In the first three weeks of February, 58 condos and townhomes have gone under contract. Twenty two of those were in oceanfront buildings and eight were in canal or riverfront buildings. The majority of the activity was in units asking less than $200,000 when contracted. The over $400,000 bracket was strong with eight sellers finding buyers in that range.
Over half of the contracted units were on the market less than 14 days continuing the trend of fast sales for properly priced units. Not surprisingly, about a quarter of the still available inventory has been for sale for over six months, during which time, over 300 units have closed. The reason is obvious.
Inventory remains tight with only 221 existing condo and townhome units for sale in our two cities. There are an additional 21 yet-to-be-built units available for reservation. The lowest priced currently available direct oceanfront unit with at least two bedrooms is a ground floor 2/2 with garage at The Windjammer in Cape Canaveral asking $295,000. Those with a sub-$300,000 budget but willing to accept a side view of the ocean in an older building have 10 units to consider.
If we bump the budget to $400,000 for direct ocean with a view and garage, the short list begins with a gutted 3rd floor unit with 1344 square feet in south Cocoa Beach asking $310,000. For move-in ready with the same criteria there are only four, two in Cocoa Beach and two in Cape Canaveral, all asking $399,000. Raising the budget to $500,000 adds another seven to our list of possibilities, several of those over-priced. I wasn't kidding when I said tight.
The phone is already ringing with snowbirds looking for accommodations for the 2019 season. Those who haven't reserved for next year need to be making inquires now if they don't want to be stuck with leftovers.
It's time for the annual cobia run northward up the coast. Usually when we've had a sufficiently long period of cold weather, the fish will have been pushed south of here and will be congregated waiting to move north as water temps warm back up into the 70 degree range. After particularly cold winters the leading edge of the run can be thick with fish. Some are starting to show up but so far just in small numbers. The water may have warmed back up too quickly to keep them concentrated. Consequently, it's been hit or miss so far. Good luck if you're out there and feel free to drop off a slab at my office, skin-on preferably. Makes grilling much easier.
"I would like to die on Mars, just not on impact." __Elon Musk
Sunday, February 11, 2018
Condo inventory in Cocoa Beach and Cape Canaveral has increased a smidgen since my last post while single-family home listings have receded to their lowest level ever. There are currently 219 existing condo and townhome units and a mere 46 single-family homes currently for sale on the Cocoa Beach MLS. That's less than a four month supply of both at current sales levels. I received three inquiries in less than an hour of entering a listing in the MLS this week.
Prices remain strong and continued upward with overpriced listings predominating the landscape. Sellers who are renting their properties to snowbirds can be more stubborn with their opinion of value during the season while they're collecting inflated rents. It can be difficult to negotiate a fair price early in the year from a seller who may be looking at collecting 5% of the asking price in rent in the next few months. Their high ground starts receding at the end of March when the annual northerly migration begins. This is especially true in the complexes with longer than one month minimum rental restrictions. Finding a renter willing to sign a lease for at least three months after March and vacate by New Years can be a difficult task.
Those looking to purchase a condo here who hope to mix personal use with rental income are well advised to be aware of rental restrictions and their implications. Anything longer than one month minimum will be an obstacle. Some years it may work out, others not.
Shower thought of the day: I wonder what new owners in the condominium across the street from my house think when they realize that Waste Management empties their dumpsters two or three times a week between 6 and 6:30 AM. There are units on the second floor whose master bedroom sliders are level with the dumpster being slammed against the truck. It's loud at my house. It must sound like encore at a Motorhead concert in those units.
Three bedroom waterfront unit, $369,000.
Monthly fees: $435
Buyer's agent's local knowledge: Priceless
I had no idea when I quoted Ursala K. Le Guin (pictured above) in my last post that she had passed away the day before. Many thanks to her for the stories that inspired this young boy to imagine worlds far different than the one he found himself living in.
"If you don't stick to your values when they're being tested they're not values. They're hobbies." ________Jon Stewart
Tuesday, January 23, 2018
No, your computer problems weren't caused by Russian hackers and the listing agent did not lie about another offer to trick you into paying more with a bogus call for best and highest. With the critically low inventory it is safe to expect any desirable property priced within the ballpark of fair value to receive multiple offers. It is also safe to assume that another buyer faced with the same tiny inventory might consider paying over what you think is fair current value. What you should consider paying is up to you. Whether negotiating as the only buyer or making your best and highest in a multiple offer situation, it is a worthwhile exercise to estimate what the cost of buying later might be.
Example: A nice unit at Harbor Isles in Cocoa Beach is listed for $300,000. Comps suggest that $280 to $295 is probably in the range of fair current value. The unit satisfies all my criteria. It is the only unit in Cocoa Beach currently for sale that does satisfy my criteria. I prepare an offer and am told by the listing agent that there is another offer and both buyers' agents are asked to bring their best and highest offer. I had already decided that I would be willing to go as high as $295,000 to get this unit. Based on that, I submit my best and highest offer of $295,000 only to miss out to the other buyer who offered $300,000. I continue looking for another suitable unit but with the very skinny inventory am unable to find something that appeals to me. Finally, months later, an almost identical unit is listed in the adjacent building asking $320,000. We now have the previous unit as the best comp at $300,000.
Takeaway for prospective buyers: Make an effort to know the range of fair value for the properties you're interested in and be realistic with the offers you make knowing that the low inventory is always looming. Holding out for a "deal" may leave your search open-ended.
Three weeks into the new year and the 2018 snowbird season is throttling up with a vengeance. Probably due in part to the fact that everything north of the Florida line has been frozen tundra since December. New listing activity has been strong with 80 new units listed this month so far. Sales activity has been brisk as well with 48 units going under contract since January 1, seventeen of those just listed since New Years Day. That leaves us with a total of 194 existing condo and townhouse units available in Cocoa Beach and Cape Canaveral this morning. How is our bread and butter oceanfront inventory? Looking for a direct ocean unit with at least two bedrooms and two baths asking less than $400,000? There are six. Don't want ground floor? Now there are four. Must have a garage? We have a grand total of three units. It'll be a short day.
I'm happy to help those who are hoping to purchase in our area. If you'd like the benefit of my experience and knowledge of this market, shoot me an email or call. I'll do my best to help you find the perfect beach place at the best possible price.
"The direction of escape is toward freedom. So what is ‘escapism’ an accusation of?" ________Ursula Le Guin
Wednesday, January 03, 2018
[update Jan. 8] Three tardy listing agents have gotten around to closing additional December sales bringing the year's total of condo sales to 699.
Prices continued to drift higher through the year, not a surprise considering the persistent low inventory and strong demand. I see no evidence to suggest that that trend will change barring some black swan macro event. We enter the new year with the lowest condo inventory in recorded history with just 173 total existing condo and townhouse units offered for sale on the MLS, less than a three month supply at 2017's sales rate. If you're looking, be flexible and don't expect anyone to sell their unit to you for last year's price. Today's fair value will be last year's attractive price in due time.
Good news, bad news. Good news: Cocoa Beach City Hall reopened today and 2018 parking stickers are available. The 2017 stickers are good through the end of this month. Bad news: The Cocoa Beach city pool is closed due to this unseasonably cold weather. It was snowing in north Florida a few hours ago. We are expected to hit mid 30s tonight and tomorrow night but then back into more normal January weather, daytime temps in the 70s, next week.
The first launch ever of a SpaceX Falcon Heavy rocket is scheduled for this month. This beast has a orbital delivery capacity of 119,000 pounds, twice that of the Delta IV heavy. The three booster configuration has 27 Merlin rocket engines. Should be quite a spectacular launch topped off with simultaneous landings of the side boosters back at the Cape and minutes later landing of the main on the spaceport drone ship, Of Course I Still Love You, offshore. There is a higher than usual chance of failure in a first-time launch of any rocket vehicle. Don't be fooled by the multiple sonic booms as the rockets return after separation. This is the configuration that will likely be used in upcoming Mars missions.
I hope everyone's new year is off to a good start. See y'all around town.
"A president's hardest task is not to do what is right, but to know what is right." __Lyndon B. Johnson