When the Math Ain't Mathing

The westernmost point of Cocoa Beach looking across the Banana River towards Newfound Harbor, Merritt Island.

I thought I’d take a deep dive into the current affordability of a typical oceanfront condo. Our bread and butter property type in Cocoa Beach and Cape Canaveral is a moderately updated 2/2 unit in an older oceanfront complex with a view of the ocean. Unremarkable units of this type have recently been closing on both sides of $500,000 so I’ll use that selling price in our example. I’ll compare with sales of similar units from four years ago.

In the spring of 2021, 30 year fixed rate condo mortgages were available for around 3% interest with a 20% down payment. Prices were a little lower than the present with typical units like our subject closing in the low to mid $400s. Our example unit that closed for $430,000 in April 2021 would have had a combined monthly mortgage payment, taxes, insurance and condo fee of about $2470 after a down payment of $86,000.

A buyer paying $500,000 for that unit today with a down payment of $100,000 would be looking at a monthly cost before utilities of around $4330. In addition to doubled interest rates, most condo fees have seen a similar increase while both taxes and insurance have enjoyed their own not-insignificant inflation. In just four years the annual core costs for a new buyer of a modest 2/2 oceanfront unit has increased from around $30,000 to over $51,000. That goes a long way towards explaining the lack of enthusiasm for those properties in our current market. Absent any control over these runaway costs, sellers have but one tool with which to attract buyers and that’s price. Most have not not gotten the message and our inventory remains bloated with egregiously overpriced listings languishing on the market for months with no interest.

Even if a beaten-down seller was willing to accept $430,000 today for this unit, the same price he bought it for in 2021, the annual costs for the new owner would still be a staggering $47,000, an increase of over $17,000 a year for the privilege of owning a modest oceanfront condo in a declining market. No one would describe that math as attractive. The reality for many sellers who purchased in the last four to five years is that selling for more than they paid might be unrealistic today. Some of those with mortgages might be unable to close without bringing money to the closing table. Should they wait to sell hoping for more favorable conditions? I’m reminded of what Inspector Callahan, Dirty Harry, said to the punk about whether he had fired five or six shots.

The sellers that are pricing way above the recent similar sales “just in case” are playing an unwinnable game. As I noted in a recent post, new listings that are priced aggressively from the beginning are picking off the active buyers while the “just in case” crew stick to their high prices watching the trickle of buyers part around them to pursue other, more realistically priced properties. It’s a costly delusion. For what it’s worth, in May 2021 there were 74 closed condo sales while in our much more sedate 2025 market with eight times the inventory there were just 42 closed sales in May. Sellers, pay attention, it’s a competitive market and not everyone is going to find a buyer. Join the winners or watch them from the sidelines or, as Blue Oyster Cult put it more simply, on your feet or on your knees.

“Better a cruel truth than a comfortable delusion.” _Edward Abbey

Here It Comes

This post was first published at larrystake.substack.com on June 3.

In March we have a crescendo of converging human seasons when the peak of snowbird season overlaps with the annual gathering of school baseball teams for spring practice combined with a sprinkling of spring breakers, day-tripping bikers and NASCAR fans. It’s our busiest month here. Almost all of them are gone by middle of April.

In May, after a few weeks of very few visitors, we begin concurrent natural seasons that don’t involve large numbers of people, the Great Southern White butterflies (pictured above) return, the love bugs who have been hatching in small numbers sporadically all spring begin hatching en masse and the sea turtles return to our beaches again to lay their eggs. Mangoes are just starting to ripen and the one season we could all do without officially begins on June 1. I’m talking about the season that comes packaged with heightened background stress that’s part of every Floridian’s existence for several months every summer and fall. Between occasional shared glances at the sky we pretend a kind of peace until the wind rises and we find ourselves in line again, buying bottled water and toilet paper in ridiculous quantities. The anxiety becomes unavoidable by early August and, as last season demonstrated to the gulf coast, those west-facing beaches have to worry about potentially devastating storm surge from storms that don’t even make landfall nearby. Here on the east coast, our dunes are higher, our odds of surge less, but anxiety doesn’t respect geography.

Our inventory, to my surprise, continues to shrink after peaking at just over 400 condo units in March. There are 356 condo and townhouse units for sale this morning in Cocoa Beach and Cape Canaveral with a median time on market of 90 days. The reduction is not from a frenzy of sales, but from a growing pessimism: fewer new listings, more quiet withdrawals. There were only forty units closed in the month of May which makes it the second slowest May in eighteen years. Only May 2020 during the Covid shutdown saw fewer closed sales in the month.

The common thread? Concession. Not a single one of those forty homes sold for its original asking price. The median sale closed at 87% of initial hopes, with eight sellers settling for less than 80%. Only five homes sold within a month, and those were the ones priced to move, selling, unsurprisingly, for an average of 94% of their asking price. There’s a lesson in there if one chooses to hear it: price realistically, or wait and bleed.

Just over half of all condos sales were cash deals and the median selling price of all sold units was $300,000. The highest price paid was $1,075,000 for a top floor 3/2 Meridian with the seven lowest sales, all non-waterfront units, going for $200,000 or less.

As summer stretches ahead, I honestly don’t know what to expect. Sales are slow, inventory is shrinking, and sellers are squinting from somewhere back in 2023. Maybe it’s economic uncertainty, or maybe it’s just the natural rhythm of a second home market that has seen its share of market tides. But at the moment, the power belongs to the buyer. And their greatest challenge may not be in finding the right place, but in finding a seller living in the present. Asking price is a good indicator of which sellers those might be.

About turtle nesting season: remember to keep no lights visible from the beach at night that might distract nesting turtles. They have a hard enough time dealing with the folks who feel a need to get up-close selfies with them.

Koko Japanese Pub downtown continues to fill up their limited seating. Their success is well-deserved and I highly recommend a visit. Looks like the food court, Destination Station, on the site of the old Yen Yen’s Chinese is ready to open. Downtown Cocoa Beach has changed quite a bit in the last couple of years, for the better in my opinion. That big generous lawn in front of the new City Hall has become a kind of commons for music, frolic and gathering. Whoever fought for that patch of grass deserves a quiet toast.

How about that rain? After months of very little rain, our yards and fruit trees are drinking it up and just in time for mango season. Let the summer begin. Cheers.

“When the facts change, I change my mind.” _John Maynard Keynes