Mixed Expectations = Mixed Results

The expected slowdown in real estate sales in Cocoa Beach and Cape Canaveral has failed to materialize. In fact activity has picked up and inventory has pulled back. That is not unusual in our market in the spring months but is a little surprising considering the steadily slowing sales and growing inventory since last summer. 

Inventory of condo and townhome units peaked at 148 units a few weeks ago and stands at 135 units for sale this morning in our two cities. A total of 110 units have gone under contract since January 1 so we're moving at a pace of two sold units a day at which our current inventory will last 67 days. 

Sixty one units have closed since the beginning of the year, 64% of them for cash. As mortgage rates have gone up so have the number of cash sales. With the national average 30 year fixed rate mortgage at 6.77% it's a prudent decision for some buyers with savings to use those savings for their purchase. When rates were less than half that it made sense for many to just borrow the cheap money for the purchase. Our percentage of cash sales dropped to just above 50% during those 3% mortgage days.

Of our 61 sold units over half sold in less than a month, 16 of them in a week or less. Median days on market was 21. Twelve units sold at or above original asking price, none of them lasting more than nine days on the market. Of the 23 units that took longer than a month to sell, all but four reduced their price before finding a buyer. Out of the 14 that took over two months to sell, all had reduced their original price and sold for an average discount of 12% to their original asking price.

Fifty of the current 135 units for sale have been for sale for longer than two months, twelve of them without price reductions and three with increased prices. Hope springs eternal but the stats in the previous paragraph would suggest that these sellers will not be finding buyers without coming to terms with their overpricing. A fair number of listings on the market for less than two months are similarly overpriced but haven't been for sale long enough for the market's indifference to sink in. 

There are 24 single family homes for sale in our two cities, a third of them for sale less than a month and a third on market for over six months. The single family home market is more sensitive to mortgage rates than the condo market so I'm guessing the higher rates are responsible for some of this. Only 10 homes have closed since New Years Day with a median selling price of $588,000.

Good luck to those who are hoping to purchase. Know that there are a lot of sellers with unrealistic expectations and try to spend your efforts on those who are priced fairly. There continues to be competition for desirable and fairly-priced properties and multiple offers are still part of the landscape for those properties. Make your offers as clean as possible and know when to walk away. Except for unique properties, there will always be another one.

“If I knew that I was going to live this long, I would have taken worse care of myself.” __John Daly

Optimism vs Reality

There were 33 condos and townhouse that closed in the month of January 2023 in Cocoa Beach and Cape Canaveral. Highest price paid was $760,000 for a 16 year old 3rd floor corner in south Cocoa Beach at Garden by the Sea. It was direct open Banana River and had 2405 square feet with two garage units. At the other end of the scale were eight much older, smaller units that closed below $200,000, all but one of them in Cape Canaveral. 

I don't remember ever having a month in which there were no direct ocean, east-facing units sold. Direct ocean units are the bread and butter of our market and it's surprising to see them missing from the sold list. Highest price per square foot paid were two small units with peeks of the ocean in oceanfront buildings that allow weekly rentals, Royal Mansion and Cape Winds. Both units sold furnished and brought over $500 per sq.ft. Meanwhile, seven of the remaining twelve weekly rental units currently on the market have been for sale for more than 100 days without selling. Only two of them have lowered their price during that time in response to the market's indifference. There is a shared reason for their stubborn optimism.

That reason is the handful of jaw-dropping, high selling prices last year among the weekly rental buildings. Every one of those high sales was a unit with a strong rental history and a stream of future bookings already in place. The new owners closed and assumed the income stream if they stayed with the same management. The stubbornly optimistic weekly units languishing on the market are shooting for similar prices but they lack the rental histories to justify their asking prices. While any comparable unit with similar views and amenities has the same potential for income, buyers are resistant to high asking prices without a solid track record. A unit with $40,000 of rental income last year shouldn't expect to command the same selling price as a similar unit that brought in $100,000. We have not seen this disparity among selling prices of non-rental units in other buildings.

Inventory has increased to 143 units for sale in our two cities. The highest four asking prices per square foot are in weekly rental buildings, all asking over $600 per sq,ft, but only one with a rental history that would justify the price. There are 45 other units asking over $400 per square foot only a few of which I would consider fairly priced at their asking price. Cash sales represented 79% of January's sales. Those who are currently looking to purchase in our market may have a little more leverage than they had last year, at least with the older listings that are over-priced. Note that there are still quite a few sellers who are expecting to get what their neighbor sold their unit for last year even though those prices may not be realistic in February 2023.

Downtown Cocoa Beach has transformed over the last few years with a new fire station, new police station, parking garage and now demolition of City Hall. Around the corner the luxury condos at The Surf on the ocean are approaching completion while next door and across the street existing buildings have been demolished to make way for new structures. There is a new building well underway on the site of the old Barrier Jacks and demolition on the International Palms (the old CB Holiday Inn) has begun. It's a time of change for our little beach town. Oh yeah, the snowbirds are here with all that entails. Welcome back and enjoy.

"When you’re accustomed to privilege, equality feels like oppression."