Friday, January 04, 2019
New Year, Same As The Old Year
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