Thursday, October 17, 2019

Coasting

Buyers continue to write offers at a reasonably fast pace for what is usually our slowest season of the year. There have been 58 successful offers written on condos and townhomes in Cocoa Beach and Cape Canaveral in the last 30 days. The activity is divided into fairly equal quarters by asking price; less than $200,000, $200,000 to $300,000, $300,000 to $400,000, and over $400,000. This activity is a representative mirror of the existing inventory of 180 units for sale. We have closed 544 units in all price ranges so far in 2019 so the existing inventory represents about a 14 week supply.

Half of the condos sold so far this year have closed for cash, no mortgage. Over half sold in less than two months on the market and a quarter of all sales sold in the first two weeks. That's an impressive number considering the tendency of sellers and agents to start new listings at optimistic asking prices.

Single family homes have been equally busy with 133 closed so far in 2019. A third of the buyers paid cash and a third sold in the first month on the market. There are 53 homes for sale this morning in our two cities, two thirds of them asking over a half million.

Daytime temps have settled into the 80s most days and hurricane season is almost finished with but one near miss for Cocoa Beach this year. The mullet run turned out to be a complete miss this time for surf fishermen because of the incredibly rough surf during the run but there were good catches of snook inside the Port for those with boats.
Thanksgiving is late this year, Nov. 28. Those of you who plan to be here for the Cocoa Beach Art Show probably need to be making accommodation arrangements now if you haven't already. At least one of the popular vacation rental condos close to downtown is undergoing concrete restoration so downtown units will be in short supply. Hope to see many of you that week.

"Talk low, talk slow and don't talk too much." __John Wayne

Sunday, October 06, 2019

Same As It Ever Was

Cocoa Beach and Cape Canaveral listing inventory has continued to erode through the summer to our current level of 197 existing condo and townhouse units for sale. Add the fifty single family homes for sale in the two cities and you've got 247 total residential properties for sale in a market that has seen 645 properties sell so far this year. That's a classic seller's market.

We've been in this particular dynamic for well over five years now. Buyers should keep this fact front of mind when making offers. The chance of buying a property below fair market value is practically zero and even finding a seller willing to accept fair market value is not a slam dunk. With the majority of listings asking delusional prices fair offers are often rejected. Here's an excerpt from an older post about offering strategies:

I've prepared and received many hundreds of offers over the years and I've seen quite a few that never stood a chance of success, a large number recently. Beginning negotiations on a positive note helps, and price and terms of the very first offer set the tone. Regardless of commentary to the contrary, emotions are a real part of most real estate transactions. We have humans on both sides so it's reasonable to expect human reactions and emotions. Assuming a property is priced within the range of what the data suggest is fair market value, an offer reasonably near that range will usually be received by a seller as a constructive beginning. An offer way below that fair range is usually received with negativity and little to no optimism that a deal will be possible. Constructive optimism or adversarial negativity. That first offer determines the tone of the negotiations and often has an impact on final terms. Anyone making a crazy low offer should be prepared to have to start over at a higher number when they receive no counter from a discouraged seller. Another thing; I have presented enough low offers to know that if one part of an offer is unattractive the other parts better be compelling if there is to be hope for a deal. An offer far below asking might be considered if it's cash, with a quick close. Might. An offer with a close more than 45 days in the future, contingent upon a mortgage or even worse, the sale of another property, better be close to the seller's wished-for selling price to stand a chance of consideration. Buyers who are compelled to offer low should consider the attractiveness of the terms and make them as shiny as possible if they hope to have any chance of success. New, overpriced listing might need a little seasoning time on the market before an unrealistic seller will consider reasonable offers.

I'm waiting for someone to consolidate the largest concrete restoration companies in the state and put together an IPO. It could be huge with demand for contractors off the chart. Condo associations contemplating concrete projects are finding that wait times can run into years if their project isn't a particularly enticing one. Owners in buildings that have been putting off addressing concrete repairs are in for a shock when they begin requesting quotes. If your building is showing cracked balconies or walkways and your Board is not discussing this, it might be prudent to push for what's only going to become worse and more expensive. [Translation: a large and growing special assessment] Procrastination can be very expensive.

My hope that the ocean would calm down enough during the annual mullet run to allow for some relatively peaceful surf fishing has not been realized. The ocean remains disturbed and the running mullet are safe from my cast net as are the snook that those mullet may have fetched for me. Oh, well. There's always next year.

I thought Twitter was driving us apart, but I’m slowly starting to think half of you always hated the other half but never knew it until Twitter.” __Michael Arrington

Tuesday, September 17, 2019

How Much Is My Condo Worth?


It's that time of year again, the mullet run is on and big fish are in the surf. Now if the wind and waves would calm down enough to take advantage of it I'd enjoy catching a few rod-benders and maybe get a snook for dinner.

What can I expect to get for my condo if I list it for sale next year? Barring some unknown influencing factor you can probably expect more than if you sell it today. Notice the qualifiers? So many things can happen to change the value that it is fruitless to estimate future value. Changes in taxation or ordinances, economic and natural disasters; none of these can be predicted and can drastically change a property's value overnight. On the other hand, estimating current value is a relatively straightforward process. We can usually find recently sold similar properties that we can use to determine approximate value of the subject property. The question then becomes; can we trust the comps?

Specifics of listed properties are sometimes inaccurately stated on MLS listings. Using a sold property as a comp and not catching an inaccuracy makes for a flawed comp and flawed projection of value on the subject property. Sometimes honest mistakes, other times, intentional. Square footage is one of the more common mistakes. I've never seen a property that claimed to be smaller than it actually was which makes me think this one is almost always intentionally overstated. When in doubt, go bigger. When every unit in the building is and always has been 1315 square feet, claiming 1711 on the MLS is likely to be picked up by agents familiar with the building. Others might not catch the error and use it as a comp to suggest/justify fair value of a different property.

Terms of sale: Beneficial financing terms might explain an unusually high price. Included furniture or lawn equipment will certainly push the final number up as will a post-closing occupancy by the seller. Paying for furniture off the closing statement will reduce the closed price but the listing agent is probably not going to change the "full" furnishings notation in the MLS when she closes the listing. Listing agents don't always rarely note these details in the closed listing. Unusually high or low sold prices might indicate unknown terms and should be weighted accordingly in their use as comparable sales.

Condition and quality of updates: A remodeled condo unit is worth more than an identical unit in original condition. How much more is the big question. The cost to remodel a 2/2 condo can vary by $50,000 depending on the extent of the remodel and the grade of fixtures and finishes used. Most sellers are firmly convinced that their remodel job increased the value more than it did. My job is to use reasonably similar sold comps to illustrate how their conviction is misguided.

Sellers and their agents are often guilty of confirmation bias and naturally select the comps that seem to justify the price that they want. As a buyer's agent I am constantly pointing out flawed assumptions and bad comps. All buyers would be well-served to understand the nature of determining fair value and the ways bad comps can justify a wrong valuation. I may be able to show a seller that his asking price is too high and my offer price is fair but that means nothing if there is competition for that particular property. There are cases where participation may include knowingly overpaying. Knowingly overpaying can sometimes make sense, knowingly being the key word. The buyer that overpays also establishes the newest comp completing the circle of price justification. I was reminded in a recent episode of Million Dollar Listing New York that the newest comp thing can work in reverse for sellers. Holding out for an unjustified high price can backfire if a new comp records at a lower price.

New York agent Steve had a client interested in two similar units in the same building. The two units were similar enough to expect to sell for about the same price. Asking prices were $7.5 and $7.6 million, both well above market value. The buyer offered $6.5 MM on Frederick's lower priced listing. Frederick advised the seller that $7.5 was optimistic when he took the listing but went ahead and took it at that price hoping she'd be realistic when an offer came. She wasn't and countered at $7.4 MM. When delivering that counter, Frederick insisted to Steve that, to be successful, an offer number had to be in the sevens. Rather than counter at 7-something, the buyer decided to offer $6.75 on the other listing. Steve presented the offer and told the listing agent that they had offered and were negotiating at the same time on the other unit. That seller with that knowledge decided to accept the $6.75 MM offer with no counter. With a new comp of $6.75 established in the building the first seller realized she wouldn't be getting 7-something and wound up accepting a $6.6 MM offer. Had she countered more realistically to her first offer, there is a good chance she could have gotten at least what the buyer paid for the other unit, $6.75 MM. Her inflexibility cost her at least $150,000. Reality sucks at times but it can be expensive to ignore.

Buyers and sellers both need to stay aware of other sales and competition of similar properties and to use those as guidance for pricing. Values are not static especially in an active market. If a new comp changes the landscape it's productive to change one's expectations with it. That goes equally for buyers and sellers. For a better score, do your homework.

Thanks to all of you who have contributed to the various relief funds for the people of hurricane-ravaged Abaco. It's going to be a long, long time for Abaco and its people to get back on their feet. In addition to their homes and belongings most have lost their jobs as well. If you haven't contributed but would like to help some particular and especially hard hit people consider giving to the staff at Cruise Abaco in Marsh Harbour. These are personal friends and are all good and currently needy people. This money goes only to the staff. These guys are surviving on donations at the moment and crammed into crowded shelters. Most can't consider coming to the US in the interim because of our immigration policy. If you want to help the Bahamas in general, there are many worthy charities found with a quick search. If you'd like to help Shorty, Luke, Joe, Aaron, Ray and all the other Cruise Abaco staff and their families, you can contribute directly through Mark and Patti's GoFundMe here and see updates on how your money made a difference. Everything is appreciated and not a penny will be wasted.

This is Shorty and his kids who have lost everything and are currently living in horrid conditions at an overcrowded shelter in Nassau. Shorty said the men take turns sleeping standing up supported by each other and the women and the kids get the bare floor.



“The simplest acts of kindness are far more powerful than a thousand heads bowing in prayer.”  _____Mahatma Gandhi

Sunday, September 01, 2019

The Death of the MLS

South Cocoa Beach the Saturday before Dorian. 

Waiting on a hurricane. As of Wednesday last week the prediction was for Hurricane Dorian to roar ashore in Cocoa Beach as a Category 2 storm during the night tonight and tomorrow morning. As of this morning, Sunday, the latest prediction is for the storm to pass close offshore as a Category 3 Wednesday morning. This after sitting over my beloved Abaco as a Category 5 for two days. The impact there is sure to be extensive and heartbreaking. My heart is with the Bahamians even as I breathe a sign of relief at the possibility of not taking a direct hit here. There have been no casual conversations with anyone around here for the last week that was not hurricane related. Cocoa Beach this Sunday morning appears to be well-shuttered and ready as best we can be for what comes our way. Best wishes for everyone.

Our inventory is almost back at the 2015 record lows with only 187 existing condo and townhome units for sale in Cocoa Beach and Cape Canaveral. Single home inventory is equally sparse with but 43 existing single family homes for sale in our two cities. That is the lowest number in the last 15 years, possibly ever. The developer of the old Joyce's Trailer Park property in south Cocoa Beach has once again changed development plans, this time shifting from riverfront condo towers to a small neighborhood of single family homes offered at prices from $895,000 to $1,395,000. They of course come with promises of dockage and an over-the-water clubhouse that will sound familiar to the buyers of several oceanfront condos in south Cocoa Beach.

Sales of single family homes in August were tepid with thirteen homes closed in our two cities at prices between $314,900 for a fixer-upper in north Cocoa Beach to $1,995,000 for a brand new, two story, direct ocean home just south of downtown. That beauty has five bedrooms, 5.5 baths, two garages (3 spaces), 4275 square feet and a pool. Median price was over a half million with three of the closed houses over a million.

Condo sales were strong with 64 units closed, more than the same month last year. Median price was $250,000 with seven closed over a half million and highest, a 2nd floor Meridian at $765,000. There appears to remain strong demand for ocean facing units with prices steadily rising. Three units at Boardwalk downtown went under contract in one week all reportedly over $400,000. Royale Towers in Cocoa Beach has likewise been busy with multiple sales in the month.

I wonder how big a commission discount it would take for a typical seller to risk not listing on the MLS if they could reasonably expect their listing agent  to produce a buyer willing to pay their price? If the agent is already attracting a steady flow of both listings and buyers he has the means to accomplish some sales at fair market price without the MLS. I see a potential new business model for some agents that doesn't include the MLS or other brokers and agents. Sellers should already expect a discount should their agent or his team bring the buyer but I can see that discount becoming much larger without the MLS listing. You heard it here first.

My lifetime of religiously recycling has been undone by a single pre-hurricane day's sales of bottled water at the Cocoa Beach Publix alone. An approaching hurricane is not a good reason to buy four cases of individual size water bottles in my humble opinion. Extra water on hand? Sure, just not dozens of small ones. 

"If everything in your portfolio is doing well at the same time, it is a good indication that you are not diversified." __Ned

Sunday, August 04, 2019

Retraction, My Brother

It's early on a Sunday morning in early August. The 94% humidity is making the 80 degree air temp feel more like 90 something. With the ocean temperature in the low to mid 80s a dip in the water serves less as a cool-off than as a reapplication of salt. All is not bleak though as we can reasonably expect an afternoon thunderstorm to cool things off. The forecast gives us at least a 40% chance of that happening every day for the next ten.

Residential inventory in Cocoa Beach and Cape Canaveral has been slowly retracting for several months and currently stands at 203 existing condo units for sale in the two cities, approaching the all-time lows of 2015. There were 63 units sold in the month of July according to the Cocoa Beach MLS. Over half of those sold within six weeks of listing, For the first time in many moons, more than half of the condo buyers used a mortgage for their purchase. With rates for a 30 year mortgage well below 4% even those with the cash to purchase see little reason not to take advantage.

The bulk of the activity was in the lower price ranges with 70% of the closed units selling at prices below $300,000. The highest priced unit to sell in the month was a furnished 3008 square foot four bedroom, 3.5 bath beauty covering the entire 5th floor at Riomar on the ocean in south Cocoa Beach. At the other end of the scale there were four units in oceanfront buildings that closed for less than $250,000. The standout was a remodeled and fully furnished 6th floor direct ocean Windrush Cocoa Beach 1/1 that sold for $245,000.

There were ten single family homes closed in the month, two of them over a million dollars, one on the ocean and the other on the open river at the Cocoa Beach Country Club. Inventory of single family homes has plunged to just 45 listings in both cities, only two of those asking less than $300,000. The median asking price of the 45 single family homes for sale in Cocoa Beach and Cape Canaveral has risen to a shocking $599,000 with the highest current listing at $4.5 million for an oceanfront monster in south Cocoa Beach. Have no fear if your budget is south of that range. An updated, non-waterfront 4/2 Cocoa Beach home with a pool closed for $343,000 in July. Nice houses at a reasonable price are out there, there just aren't a lot of them.

Good hunting to those of you looking to purchase here. Feel free to contact me if you need help finding your spot at the beach or if you have questions about our little slice of tropical Florida.

“You said I’m full of diseases / Your eyes were full of regret / And then you took a picture of your salad and put it on the Internet.” Matty Healy

Tuesday, July 30, 2019

Sorry, Can't Find Your Listing

Many prospective buyers in our market are looking for a specific property type. It can be a single family home in a certain part of town, a direct ocean condo above the third floor in a building that allows large dogs or it can just be a unit in a specific condo complex. If someone likes the wide floor plans at Ocean Pines or Constellation, it's going to be difficult for them to ever be satisfied with a shotgun layout that is so common in many of our buildings. If that hypothetical buyer has decided that it's Ocean Pines or Constellation only, I'll set up a search in the MLS that will email them when a new listing hits or an existing listing changes its price  in either building. That buyer will miss a listing that doesn't have the building specified in the MLS info. It's a rookie mistake to overlook the condo building field when entering a listing but somehow, thirteen agents did just that when entering their current condo listing in Cocoa Beach and Cape Canaveral. If I was looking for a unit at The Landings, The Diplomat, Beach Winds or ten other complexes, I'd miss properties because the listing agents failed to enter the complex name in the MLS.

Sellers, it would be prudent to check your listing for accuracy and omissions even if your agent is an old seasoned pro. Their assistant may be the one entering your listing and she may have made mistakes. Missing condo name is not the only error that I see but it is one of the more egregious. I'm assuming the several listings offering less than one percent commission to the buyer's agent are just decimal point errors but how am I to know?

"I believe we are on an irreversible trend toward more freedom and democracy, but that could change." __Dan Quayle

Thursday, July 18, 2019

Contingent Upon the Sale of...

About 148 miles southeast of Cocoa Beach begins a huge and wonderful tropical playground of mostly uninhabited islands in crystal clear waters.

It's relatively common for a buyer to write an offer on a property with the offer contingent upon the sale of their current home. The offer will typically have a provision that allows them an escape should their current home fail to close within a specified period. It introduces unwanted uncertainty to the transaction for the seller but, if all are acting in good faith and the seller's agent protects her client effectively and stays in contact with the buyer's agent about the other sale, the uncertainty can be reduced.

The best scenario for a contract with this contingency is with a buyer whose house is already under contract, past the inspection period and with mortgage commitment. That is rare. It's much more common for the buyer's house to be listed for sale but without an accepted contract. In this scenario it is prudent for the seller's agent to determine whether the buyer's house is correctly priced and can reasonably be expected to sell quickly. In most cases I would advise a seller not to accept an offer contingent upon the sale of another property unless the other property was already under contract and reasonably certain to close or that I could confirm was priced to sell quickly. In the absence of reassuring circumstances I always advise against accepting this contingency with a house that isn't already listed for sale.

Regardless of circumstances I advise sellers to keep their property listed for sale as "accepting backup offers". When a property is marked "Contingent" in the MLS it disappears from searches for properties for sale. Our MLS and many others have a category called "Backups" which keeps the listing in the actively for sale category even though it has an accepted contract. It might be advisable to immediately reduce the asking price if the accepted contract is below the asking price to increase the chances of getting a backup. My opinion on backup contracts is well known to readers of this blog. For the seller, having a backup contract in hand effectively removes the uncertainties related to the other property closing and puts the seller in a postion to deny any requests for concessions or changes to the contract. In the event the other property doesn't close by the contract date, the seller can cancel and proceed towards closing with the backup contract. A contract without this contingency is obviously more desirable but these contracts, in my experience, do have a good record of closing.

Takeaways for sellers who might find themselves considering this scenario:
  • If the first property is not already under contract have your agent confirm that it is priced correctly and likely to contract quickly. Consider contract language about price reductions if not under contract within X days.
  • Insist that your agent stays in contact with the buyer's agent about progress of the sale/listing. Lack of communication from the buyer's agent is usually a bad sign.
  • Keep your house listed for sale as "Backups" and aggressively seek a backup contract.
  • Have a plan for failure of the contract and, in the absence of a backup, be realistic about requests for extension of closing date from the buyer.

I hope everyone has appreciated the significant difference in temperature here on the beach during this incredibly hot July. We have consistently been 5 to 10 degrees cooler than just a few miles inland thanks to the reliable, cooling sea breeze which begins midday most days. Orlando? Forget about it. As I write this, it's 7 degrees hotter there.

"Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule." __Friedrich Nietzsche

Sunday, June 30, 2019

Some Like It Hot

Last day of June 2019 and the Cocoa Beach and Cape Canaveral MLS is showing 56 condo and townhome units as closed in June in the two cities. As always we'll get a few more reported in the coming days. It's a healthy number, but shows an imbalance between demand and supply. With 232 units for sale this morning that works out to a four month supply.

The price range of sold units is closer to our usual range after the multiple high dollar closings at the new Flores de la Costa last month. Median price for condo units closed in June was $280,000. Six units in the month sold for more than $300 a foot, all but one of them direct ocean, new or furnished with garages. The one outlier was a small, 1st floor Spanish Main weekly rental 2/2 that commanded a remarkable $380,000. Oceanfront units sold as cheaply as $220 per foot but the majority clustered in the $250 to $300 per foot range. Those at the high end of the range were usually remodeled and with garages, often sold furnished. Exactly half of the sold condos sold for cash, no mortgage. Almost a third sold in the first week on the market.

Fourteen single family homes closed in the month, all but one in Cocoa Beach. Prices ranged from $775,000 for a nicely remodeled two story, five bedroom Cocoa Beach pool home on a wide canal intersection with a dock and lift to $274,900 for a small 3/2 south of downtown Cocoa Beach a block from the ocean.

Man, it's been hot. It's hard to enjoy the cheap summer green fees at the Cocoa Beach Country Club when all you can think about is avoiding heat stroke. Then there's the lightning. As I mentioned last post, be aware of approaching thunderstorms. They move in quickly this time of year, usually in late afternoon and are almost always accompanied by a lot of lightning. Get off the beach before the storm arrives. If you leave any gear on the beach be prepared for the winds to have rearranged or removed it. 

Pros of being a young, single male veterinarian: Lots of female attention
Cons of being a young, single male veterinarian: Most of that attention comes from women very, very high up on the Cat Lady Scale seeking a medical sugar daddy for their cat harem. __Bill W

Saturday, June 15, 2019

Sweetened or not?

The photo is of a mark left on a green a couple of weeks ago at the Cocoa Beach Country Club when lightning struck the flag stick. Please take lightning seriously, folks. Our afternoon thunderstorms can move in quickly and the lightning strikes often occur far away from the clouds. Don't take chances.

One of my relatives asked for a contract review on the sale of their home in another city. Imagine my surprise at seeing "$395 transaction fee to be paid by the seller" written into the contract by the buyer's agent. Aren't they being paid commission already? Yes, in this case the buyer's broker was being paid $14,000, but the agent felt compelled to try and squeeze an extra $395 on top of that. She should be ashamed. "But, wait" I can hear her saying. "We have to pay our transaction coordinator and provide her office space." I get it. However, $14,000 will easily pay expenses and leave a healthy chunk to be split between the broker and the agent. "But", she says, "my broker charges me a transaction fee of $395." OK. Maybe that's why they offered you a more attractive commission split when you joined their office. Do the right thing, pay the $395 out of the commission and stop trying to rob people. I was faced with this exact scenario when my previous brokerage was bought and the new brokers mandated a transaction fee. Many agents, myself included, refused to pass that fee on to our clients but, disturbingly, many others thought it perfectly acceptable to have their clients pay it. That particular broker cleverly called the junk fee a "Regulatory Compliance Fee" which they hoped would eliminate client protests. A transaction fee charged by the broker to the agent can be an entirely legitimate fee TO. THE. AGENT. There are very few circumstances that would justify passing that fee along to a client. Unless there are unusual circumstances justifying the fee, I would encourage anyone whose agent has tried to charge them a transaction fee to immediately find a new agent. Asking for a transaction fee is all the evidence necessary (in most transactions) to demonstrate that the agent is not working in their client's best interest. This stuff really bothers me.

For those that haven't read any of my blathering about brokers stealing from their clients, here's a good one from five years ago, Robberies Update

"Profit is sweet even if it comes from deception."  __Sophocles

Wednesday, June 05, 2019

Blastoff

First off let me apologize for the infrequency of posts recently. Those of you with elderly parents and caregiving responsibilities can understand the demands we are often faced with. Sometimes jobs and careers are forced to a back burner. Both of us are back in Cocoa Beach full time now and I am able to return to regular posting. Feel free to contact me with any Cocoa Beach area real estate questions or comments.

The statue of the spaceman surfer is by Henry Lund and is installed at the new downtown Cocoa Beach parking garage. It's a timely departure from the abundant, well-worn t-shirt images we're used to seeing with a shuttle blasting off in the background while surfers and pelicans glide across waves in the foreground.

Our inventory has contracted a bit with 252 existing condo and townhome units and 60 single family homes for sale this morning in Cocoa Beach and Cape Canaveral. The Cocoa Beach MLS is showing 24 homes closed in the month of May at prices between $192,500 for a 1000 foot fixer-upper to $825,000 for an 18 year old direct river 4/4 beauty in Sunset Cove.

There were 62 condo units closed in the month. Sales spanned a range from $90,000 for a tiny 1/1 in Cape Canaveral to $955,000 for a brand-new top floor(5th) SE corner direct ocean Flores de la Costa in north Cocoa Beach. That particular new building, the only new oceanfront construction in Cocoa Beach in quite some time, began closing pre-construction contracts this month after getting their CO. Side view 2/2 units in the building closed for as little as $350,000. The building has a two week minimum rental period so rental potential there is high especially as it's the only new vacation rental in the city. There are a few units still available if anyone would like info.

Love bugs are finished (hopefully) until the next hatching in August and the heat has settled in. Those of us on the coast have been enjoying the sea breeze which has kept us about ten degrees cooler than Orlando and the interior most afternoons. That's one of the reasons we live here, right?

If anyone needs a tough, experienced buyer's agent in the Cocoa Beach area, now that  I'm back full time, I am able to take on a few new clients. Those of you who were looking at properties back during snowbird season without finding anything may want to consider resuming the search during the summer season when you'll have less competition.

When you're in Cocoa Beach this summer, enjoy yourselves and remember, sunscreen and hydration. The 4th Street Filling Station is a must visit for good food and a crazy beer selection. Outdoor dining under the old oak trees and very kid-friendly.

"Good decisions come from experience...and experience mostly comes from from bad decisions." _(From restroom stall at "Airport Diner")

Monday, May 13, 2019

The Comps Lie


Welcome to lovebug month. May is usually the first big hatch of the year here and it hasn't disappointed. We had almost daily minor hatches for weeks until our first big one last week. The good news for Cocoa Beachlings is that our 35 MPH speed limit is just below the threshold for crushing the little critters, sparing our cars the gooey mess that faster speeds produce. While we were dealing with lovebugs, Denver was dealing with late season snow on the tulips.

Residential real estate activity in Cocoa Beach and Cape Canaveral has been brisk with 70 condo and townhome units and 13 single-family homes closed in the month of April. Condo sales were fairly evenly spread across all price ranges with a median selling price of $250,000. Sixteen units sold for more than $400,000. Sold direct oceanfront units closed in a range of $250 to $354 per square foot with only completely remodeled or new units with garages commanding over $300 per foot. For perspective, there are currently 34 optimistic sellers asking over $300 per foot for their units, the majority of which are certain not to receive anything close to their crazy asking prices. The intense competition for listings continues to nudge asking prices further into the silly realm. A listing agent  willing to list a property for considerably more than the comps can justify is not doing her client a favor although by accepting the overpriced listing she is keeping it out of the competition's hands. Keeping the listings and sales numbers high on Zillow is imperative for the high volume agents and teams. The same statistic-driven marketing encourages listing agents to cancel and relist properties in order to keep their average days on market artificially low. Many MLS statistics have become so massaged that they can no longer be trusted. Selling price as a percentage of asking price, days on market, concessions and who actually sold or listed the property are routinely misrepresented. When pulling comps, I must research the listing history and sometimes call the agent in order to determine the actual facts of a sale.

Example: Condos are often sold furnished. The MLS offers a listing agent a choice of "full", "partial" or "optional/negotiable" as regards furniture and furnishings. I have yet to see a listing agent specify in the concession comments of a closed sale whether the "optional/negotiable" furnishings were included or not. Several tens of thousands of dollars worth of furnishings that were included in the final sale but not noted on the closed listing makes that sale a misleading comp. Similarly, paying for the furniture outside the contract makes the recorded sales price misleading if the original listing noted furnishings as "full". If either or both of the agents involved in the deal accept less than the posted commission amount the comp is likewise tainted. I am aware of a sale in which the seller received a free two week stay in the unit every year after closing for life. That certainly makes the selling price unreliable as a comp.

Buyers and sellers of real estate need to keep in mind that the details on the comps they and their agents are using are very often incomplete and sometimes deliberately inaccurate. Appraisers know this and often call participating agents asking for details about closed transactions. Similar calls from agents are practically nonexistent. I assume most are taking the comps at face value. I know better.

What is going on with the traffic light at Brevard and Minutemen Cswy? Anyone?

Golfers, do not take the lightning threat lightly. Last week lightning struck the flag stick on number six on the River course and printed a beautiful big image of lightning into the grass of the green. It could have been on of us.

"I’m doing this intermittent fasting thing where I don’t eat for 45 minutes after each meal." ______Josh Brown

Tuesday, April 23, 2019

Between Snowbirds and Summer

Crowds in south Cocoa Beach watching the SpaceX Falcon Heavy launch a couple of weeks ago. All three boosters successfully landed back on Earth, two on land and one on the drone ship offshore. The rocket on the drone ship was subsequently lost when it toppled overboard in high seas on the return to Port Canaveral. This was my first time seeing the returning rockets as they made their high altitude burns setting up for vertical landings side by side at the Cape. Both rockets were safely on the ground before the twin sonic booms arrived. This whole rocket business never gets old.

Easter 2019 is behind us as we slide into the brief slow season between the snowbirds and summer vacationers. Our supply of condo units for sale stands at 276 units this morning in Cocoa Beach and Cape Canaveral. Sales have been brisk so far in April with 56 units reported as closed so far in the month. We ended March with 71 units closed so, at our current burn rate, we have about a 14 week supply of condo units in our two cities. That helps explain the frequent incidence of multiple offers we're seeing. Demand still exceeds supply.

Single home inventory stands at 62 currently for sale with 27 sold since March 1 so a similar demand/supply imbalance exists there as well. It is imperative that buyers, whether they are looking at condos or single-family homes, talk to their lenders before they start looking at properties. A short delay getting a pre-approval letter could mean losing a desirable property to a more well-prepared buyer. Cash buyers are obviously in a stronger position.

Sellers, please check your MLS listing for inaccuracies and omissions. The condo listings in the MLS without the condo name entered are probably missing showings. It doesn't matter whether the listing agent made a mistake or doesn't know how to enter that info. A missed showing is a potential missed sale. Also, those who elected to go with a MLS entry-only listing to save money may want to reconsider whether the language in the agent remarks stating that "the buyer or buyer's agent will pay a $XXX fee to listing broker at closing" is an enticement or a hindrance. My vote is hindrance.

The ocean water in Cocoa Beach has been Caribbean clear for the last two weeks and is as beautiful as it gets. The Banana River is clear as well after a prolonged period of turbid water. Traffic is noticeably lighter now that Easter has passed and the business golf league has started back up for the year at the Cocoa Beach Country Club. Everyone is invited to join us as we play nine holes every Tuesday, tee times anytime between 12 noon and dark. Skins and closest to the hole prizes for those that want to participate. Join us.

I'm gonna soak up the sun, While it's still free, I'm gonna soak up the sun, Before it goes out on me.” ___Sheryl Crow

Monday, April 01, 2019

Into the Serengeti

It's that time again. Unlike the wildebeest waiting for the first rains, our mass migration starts on the same day every year, April Fools Day. The first and largest group staged during the night and with loaded SUVs began the river crossings on their northward migration early this morning. Stragglers will follow over the next few weeks but the herd's first big push is always on this day, April 1, when a large number of winter leases expire. With a late Easter this year, we can expect a few more weeks of medium activity with a crescendo the weekend of the Easter Surf Festival and then, crickets until school lets out for the year. It's a bittersweet time. I've said goodbye again to friends that I won't see until next winter. While we all look forward to greatly reduced traffic, restaurants and bars will see less revenue and many condo owners, especially those in buildings with three month or longer rental minimums, won't be receiving any rent checks possibly until next season. The Cocoa Beach golf course will become less crowded, the pace of play will speed up and summer prices will take effect. Those who can should consider visiting Cocoa Beach in May. It's one of the least crowded times of the year and rental prices are less (for most places).

Real estate sales activity isn't as affected and usually stays steady through the end of summer even though there are less people around between now and June. Our sales in March picked up considerably after a slow start to the year and we had a total of 68 condo units and 17 single family homes closed during the month, exceeding last March by a good margin.

Inventory continues to creep upward. We have 272 condo and townhome units and 69 single family homes for sale today in Cocoa Beach and Cape Canaveral. Even with the increased supply, supply is still tight for certain property types. Those looking for a direct ocean unit above the ground floor with at least two bedrooms for less than $350,000 have two possibilities. Need three bedrooms with same criteria? There are none unless we increase the budget to $400,000 in which case we have six. As always, it pays to have reasonable expectations and to know "about" what your target property should be worth. Know that most everything is overpriced.

Confused love bugs have been hatching every day for the last week but I've not seen any hooking up. I don't know if this means we can expect a record hatch in May or if the early hatches will short circuit the May hatch. Time will tell.

"It makes sense to dance while the music is playing." __G. Maynard Krebs

Sunday, March 17, 2019

Watch Your Step

Here we are in the busiest month of the year for the Cocoa Beach area; the most traffic, most visitors and, usually, the busiest time for real estate sales. As I mentioned a few weeks ago, sales have been slower than what we usually experience during snowbird season. That trend continues. There appears to be no one reason for the slowdown other than somewhat optimistic pricing for residential property. It's certainly not for lack of real estate agents. I don't remember any other time when there were more agents working this small market, not even during the money-on-trees years of the mid-2000s. Visitors would be well advised to lower their voices when discussing a property search in public lest they be tackled by multiple nearby agents which will probably include their server and bartender. I'm starting to think that Uber requires a real estate license to become a driver given the number of real estate business cards I've been given during a ride.

The February numbers are in and it was a decent month despite being slower than last year. There were 43 total condo and townhome units closed in the month in Cocoa Beach and Cape Canaveral. Direct ocean units sold ranged from $239 per square foot for a nicely updated 2nd floor Majestic Seas 2/2 to $337 per square foot for a 2nd floor 3/2 Artesia in Cape Canaveral. Median price paid for direct ocean in February was $294 per square foot. Note that the price per square foot is an inaccurate gauge and is useful only as a starting point for comparison. Those units that can command selling prices over $290 per square foot are usually remodeled and/or newer with garages and furnished.

There were 12 single family homes closed in the month, all in Cocoa Beach. Prices ranged form $1.26 MM for a direct ocean Cocoa Beach 4/3 to $315,000 for an updated 1763 sq ft 4/2 a few blocks from the beach. A three quarters of the home purchasers used mortgages while half the condos were purchased for cash.

Inventory is better than just a few months ago with 266 existing condos and 72 single family homes available this morning in our two cities. A third of the homes and 20% of the condos have been for sale for six months or longer. We know what that likely means, overpriced.

There are several new restaurants in downtown Cocoa Beach since my last list that I've not had the opportunity to visit. The 4th Street Filling Station is getting good reviews as is Luna. I'll try to do an updated list as soon as the snow has melted. Stay tuned.

"Only put off until tomorrow what you are willing to die having left undone." __Pablo Picasso

Monday, February 25, 2019

What Happened?

From January 1 through February 25 last year, a total of 98 condo and townhome units were closed in Cocoa Beach and Cape Canaveral. In the same period this year, we have closed 67. That's a surprising  slowdown considering that we began 2018 with an inventory of just 173 existing condo units for sale in our two cities but are sitting on 263 units for sale this morning, an increase of more than 50% in a year's time. 

What happened? My best guess is that sellers' expectations have gotten ahead of buyers' appetites. I've commented often in the last few years about the prevalence of overpriced listings and it appears that trend is dampening sales. Over a quarter of the current inventory has been for sale for over 180 days, many of them cancelled and relisted multiple times to appear fresh. If a listing agent is doing this, there's a good chance the property is overpriced. In fact, it's probably prudent for buyers to approach all listings as likely to be overpriced. 

At the risk of sounding like a broken record, buyers need to know the range of fair value of the properties that they are targeting for purchase. Neither the Zillow Zestimate nor the Property Appraiser's "market value" can be trusted to be close to accurate. Only a comparison of recent sales of comparable properties, adjusted for differences can be trusted to indicate the neighborhood of current value. As a side note, there is no trustworthy way to determine exact value, only a range. Any good buyer's agent can determine the fair range. If you can't trust your agent's opinion of fair value, you have the wrong agent.

Hope everyone has been enjoying the early summer weather while most of the nation has been experiencing crazy low temps and heavy snowfalls. Our trees and flowers like the hibiscus pictured have begun blooming early in response to the early warming. Some trees are sprouting new leaves even as last years old leaves continue to fall. No complaints here.

During the same time that sales were lagging here on the Space Coast, the little engine that could, the Mars Opportunity rover, received its last command from Earth. It was launched from Cape Canaveral Air Force Station in 2003. NASA engineers had sent over 1000 commands trying to reestablish contact after a major Martian sandstorm broke Earth contact with Opportunity last June. Designed to last just 90 Martian days and travel 1,100 yards (1,000 meters), Opportunity vastly surpassed all expectations in its endurance, scientific value and longevity. In addition to exceeding its life expectancy by 60 times, the rover traveled more than 28 miles (45 kilometers) by the time it reached its most appropriate final resting spot on Mars – Perseverance Valley.

"My battery is low and it's getting dark." __last message received from Opportunity as the sandstorm moved in and covered the solar panels

Thursday, January 31, 2019

It's Local and It's Different

Someone questioned why the statistics I reported in the previous post were so different than what they'd read elsewhere. The stats and trends presented on this blog are and always have been Cocoa Beach and Cape Canaveral specific and are almost always at odds with overall Brevard County stats. We've seen in the past that a housing crisis in Palm Bay may not even be felt in Cocoa Beach. Numbers reported by our MLS and repeated by news media and other real estate sites are for the county as a whole and don't present a clear picture of the individual markets within the county. The disparity was especially true during the Great Money Evaporation event of 2008-2009 and the subsequent recovery years. The trends and statistics of real estate activity in Cocoa Beach and Cape Canaveral will never mirror Brevard County as a whole.

In Cocoa Beach and Cape Canaveral there are four times as many condo and townhome units for sale as single family homes. In the county as a whole that proportion is reversed with three times as many homes as condos for sale. That difference makes the county statistics misleading for those only interested in the beach market. Readers can continue to expect only the Cocoa Beach and Cape Canaveral market conditions here.

Inventory has ticked up through the month of January. There are currently 265 existing condo and townhome units and 64 single family homes for sale as reported by the Cocoa Beach MLS. Note that my inventory number doesn't include units in proposed projects offered as pre-construction reservations of which there are thirteen today.

Random observations at the end of the first month of the new year;
Initial asking prices are becoming more ludicrous. Sellers have always had optimistic opinions on the value of their properties but that optimism has reached new heights in our market. A listing agent who wants to sell a property knows that accurate pricing is paramount but with the crazy increase in number of agents pursuing listings in our market most have adopted the strategy of taking a listing at whatever price the seller wants in order to get the listing. They know there's a good chance the seller will moderate their expectations after the market has failed to deliver a buyer in a reasonable time and may eventually lower the price enough to close a deal. Even if they don't it is another page on Zillow that will draw inquiries that can then be sold something else that is priced fairly.

A quarter of the units closed in the last 60 days sold in the first week on the market. Obviously they were priced right. Another quarter of those closed sales took from five to fourteen months to sell, all but one with multiple price changes along the way. Obviously overpriced. Buyers, you better have an agent who can recognize which properties are priced fairly and which are not. A buyer who chooses to deal directly with the listing agent needs to have the skills necessary to determine the fair number or odds are good that they will overpay for one of the majority of listings that are way over-priced. A 10% discount isn't a good deal on a property that is 25% over-priced.

The competition to stand out on Zillow has become fierce as have the tactics by agents to boost their numbers there. The transaction numbers, reviews and ratings can't be trusted and it's gotten worse. A seller might contact Josh Altman to list their property because his transaction numbers are so high but find themselves stuck with Mikey because Josh can't possibly handle fifty listings and, frankly, has other more important listings that deserve his direct involvement. The good news is that Josh will agree to the seller's crazy high asking price because it will give him another listing on Zillow to attract more inquiries. When Mikey closes your sale there's a good chance that Josh will get the credit which will help him boost his numbers and chances of getting the next inquiry. It keeps Mikey busy and Josh in Maseratis.

As I write this there is a 77 degree difference in the temp in Cocoa Beach and Chicago. 63 here, -14 there. It's not just the fishing and beaches that have made Florida so crowded. I'm thinking it might get worse.

I have squandered my resistance
For a pocket full of mumbles, such are promises
All lies and jests
Still a man hears what he wants to hear
And disregards the rest

__________________________Paul Simon

Friday, January 04, 2019

New Year, Same As The Old Year

This beautiful orchid decided to bloom again for Christmas and New Years. It's more beautiful than the picture reveals and its two neighboring orchids are about to follow.

We begin a new year in Cocoa Beach with about the same residential inventory and rate of sales we began last year with. The same supply/demand imbalance persists as well. It seems reasonable to expect most trends that we saw in 2018 to continue.

We began 2019 with 238 existing units for sale in our two cities. That's after a year in which we closed over 734 units. That's a 17 week supply at the average sales rate of the last twelve months. We would run out of supply by Easter without new listings. In addition, a large portion of the current inventory is overpriced, evidenced in part by the large number of listings on the market longer than six months and the high number of listings whose agents are repeatedly cancelling and relisting trying to trick the MLS days-on-market clock. It's still amazing to me that agents think that deceiving buyers with artificially low days on market will somehow sell an overpriced listing. If it ain't selling, it's the price, people.

While we're on the subject of prices let me share some observations about offers. I've prepared and received many hundreds of offers over the years and I've seen quite a few that never stood a chance of success, a large number recently. Beginning negotiations on a positive note helps and price and terms of the very first offer set the tone. Regardless of commentary to the contrary, emotions are a real part of most real estate transactions. We have humans on both sides so it's reasonable to expect human reactions and emotions. Assuming a property is priced within the range of what the data suggest is fair market value, an offer reasonably near that range will usually be received by a seller as a constructive beginning. An offer way below that fair range is usually received with negativity and little to no optimism that a deal will be possible. Constructive optimism or adversarial negativity. That first offer determines the tone of the negotiations and often has an impact on final terms. Anyone making a crazy low offer should be prepared to have to start over at a higher number when they receive no counter from a discouraged seller. Another thing; I have presented enough low offers to know that if one part of an offer is unattractive the other parts better be compelling if there is to be hope for a deal. An offer far below asking might be considered if it's cash, with a quick close. Might. An offer with a close more than 45 days in the future, contingent upon a mortgage or even worse, the sale of another property, better be close to the seller's wished-for selling price to stand a chance of consideration. Buyers who are compelled to offer low should consider the attractiveness of the terms and make them as shiny as possible if they hope to have any chance of success. New, overpriced listing might need a little seasoning time on the market before an unrealistic seller will consider reasonable offers.

Fifty two percent of MLS-listed condos and townhomes sold for cash in 2018 in Cocoa Beach and Cape Canaveral. Remember that when the next expert predicts that rising interest rates will kill the real estate market. Interest rates were not a consideration for over half of condo purchasers in our market last year.

Those of you hoping to purchase in Cocoa Beach or Cape Canaveral in 2019 should be aware of the low inventory and the preponderance of overpriced listings. It will help to have a good idea what type of property you want (and whether it is even reasonable in this market) and be able to act quickly when something matching that idea appears. You and your agent need the ability to estimate current fair value and you need the resolve to resist your urge to make a lowball offer "just in case". With our supply/demand imbalance no seller needs to sell below market value. The fact that an offer is cash is unlikely to entice a seller to sell cheap when over half of all buyers are paying cash. Despite everything, barring some outside force or event, we can reasonably expect the current sales rate of over 14 condo units and 3 houses per week in our two cities to continue. Good luck out there and feel free to contact me if you have any real estate related questions. Happy and rewarding New Year.

"She says, like, literally, music is the air she breathes...
I wonder if she even knows what that word means,
well, it's literally not that." __Josh Tillman