I’d love to hear readers’ opinions and thoughts on the effects of a severely wounded stock market and the likelihood of a recession in the US (60% according to JP Morgan unless tariffs are ended) on our real estate market. Comment to this post with any thoughts or opinions. What does this mean for sellers and buyers of real estate?
Since January 1st, 82 of the 126 condos closed in Cocoa Beach and Cape Canaveral were purchased with cash. That’s 65% of the transactions. Single family homes were bought with cash at a lower rate than condos but still over 50% with 11 of the 21 closed homes paid for with cash. The majority of homes are purchased as a primary residence so they have always been financed at a higher proportion than condos of which a large majority are intended to be used as second homes or investments. Condos that are not primary residences and bought with mortgages typically require down payments of around 25% so a substantial amount of cash is required even when using a mortgage.
Where does the cash to purchase a condo or make the large down payment usually come from? In my over two decades of selling condos here, my clients have most often liquidated investments to fund the purchase. Will the double digit percentage decline in the total US stock market in just two days deter prospective condo purchasers? Are there any who have lost so much already that a purchase is no longer possible? On the other hand, will the prospect of a prolonged declining stock market and recession encourage people to seek investment in real estate as an alternative to stocks? Can Florida real estate be expected to appreciate in the same economic environment that is cratering stock valuations? Before “Liberation Day” our real estate market was already in a precarious position with the highest inventory level in fifteen years and rising and with a sales rate that’s been declining for the last three years.
Maybe the tariffs will be quickly rescinded or modified and the market and economy will reverse course. Or maybe the tariffs will turn out to be good for the economy, an outcome that seems so farfetched at this point that I feel foolish including it as a possibility. I am not an economist but I suspect that the pool of prospective buyers for real estate in Cocoa Beach, especially for condos, has taken a major hit that is likely to impact the number of sales and selling prices moving forward. We were not trending positively before and it seems almost certain that this week’s events will not have a positive effect. Somebody please convince me that my suspicions are unfounded. I encourage your comments.
On a positive note, as is always the case this time of year, traffic has lightened up and there aren’t as many people in restaurants, at the grocery store or on the golf course. The majority of our snowbirds and spring breakers have left for home and we will continue to see fewer visitors until the end of the school year when families begin taking their summer vacations in June. May is my second favorite month in Cocoa Beach behind October. Both are uncrowded months and both enjoy good weather (barring a hurricane in October) and for the few visitors who are in the know, some of the cheapest lodging rates of the year.
Related and interesting trivia: the number of cruise passengers who embarked on their five ships yesterday in Port Canaveral was about one and a half times the population of Cocoa Beach. The Royal Caribbean ship, Utopia of the Seas, that departed yesterday for Nassau has a capacity of 5668 passengers, almost half the entire population of Cocoa Beach. Thankfully very few of those passengers find themselves driving through Cocoa Beach.
Please let me know your thoughts about your expectations of our market going forward. I suspect I may be too close to this to have considered every angle and my mind’s music is forever stuck in a minor key. If you are uncomfortable commenting publicly feel free to contact me directly.
“The human mind is like a parachute. It has to be open to work.”
