Memorial Day Report - HOT!

What a beach day it was yesterday. Light offshore winds and family picnics up and down the beach. Did I say HOT? It was hot. Certain areas of our market continue to be red hot, as well.

I can't seem to turn on the news or pick up a magazine without being confronted with the phrase "real estate bubble". For an investor in a hot market such as Florida, that phrase is sure to increase the heart rate. I just purchased another waterfront property myself this month. Am I crazy? Perhaps. I'm a little different from most of the profiled flippers in the money magazines in that I live and work in my market as an active real estate agent and know from first hand experience the trends of supply and demand in my market. I have access to statistics and I deal with buyers and sellers every single day. I think I have mitigated my risks by identifying the areas of my market that are most likely to give me a good return with the least risk. All property types in my market are not equal in their risk and likely return. Having said that, I could be wrong.

Mortgage rates took another drop this week and the national average is now at 5.65% for a 30 year fixed rate as reported by Freddie Mac. That's lower than the point at which we began the year. The predicted rise in mortgage rates is taking it's sweet time to happen.

MLS statistics this Memorial Day in Cocoa Beach and Cape Canaveral.

Active listings:

Condominiums______422
__over $500,000____112

Single family homes___54
__over $500,000______35

Contracts in the last 14 days

__condominiums_____43
__over $500,000______3

Single family homes___9
__over $500,000______3

I don't want to keep repeating the same message in every update but the statistics keep pointing to the same thing; the under $500,000 range is where the action is right now in our market. We have a supply of 147 properties over $500,000 and had 6 sales in that range in the last 2 weeks. At that rate it will take almost a year to sell our current supply. Contrast that to our supply of 329 properties under $500,000 selling at a current rate of 23 per week and you see that we have less than a 15 week supply. If you're on top of numbers like this, it's easy to make decisions about where to invest your money here. You can still purchase very nice direct river condos with beautiful views of the islands like this for just over $300,000.



I could be wrong, but, I believe that condos in this price range in good locations are your best bet for continuing returns on your investment. If you'd like to know what's available out there, shoot me an email at larry@southcocoabeach.com I promise to freely share my knowledge and perceptions of our market with you as my buyer in a completely unbiased manner. Cocoa Beach is small enough that, if you buy here, I'll probably be bumping into you in the grocery store, so, I want you to be happy to see me. Enjoy the holiday and don't forget the sunscreen.

Incidentally, updating an ongoing story, there are 35 MLS-listed, assignment-of-contract units active in Portside Villas today. Prices continue to rise at the same time that supply is increasing. This anomaly can be explained by the unprecedented under-pricing of these units at last years pre-construction prices and the ongoing optimism of the investors. Those who have already flipped have made incredible returns on their investments but the remaining sellers continue to increase asking prices. Is $262,500 too much for a brand new 1168 sq. ft. 2 bedroom condo walking distance to the beach and the Port? I'll keep you posted as this story unwinds through the end of the year.

May 10 update - Cocoa Beach

May 10, 2005

Even though mortgage rates continue to drop, the supply of homes and condos in Cocoa Beach and Cape Canaveral, according to MLS records, has changed little in the last 14 days. New projects are adding supply at an even pace to units sold. We have had 42 condos go under contract in the last 14 days; 3 over $500,000. Stats as of this morning, May 10 are as follows:

Active condominiums_______ 433
over $500,000____________ 134
built 2004 or later__________163

Active single-family homes____ 60
over $500,000______________ 38

Contingent last 14
single family homes________3
condos_________________42
over $500K______________3

Construction of new condos is continuing at a strong pace, especially in the extreme southern end of Cocoa Beach where the island is at it’s most narrow part. This is where I live and is my favorite part of Cocoa Beach. We have the Banana River on the west side of A1A and the Atlantic Ocean on the east. The low population density here keeps the beach uncrowded. There are currently over 200 condos under construction or planned in this 3/4 mile stretch. Considering how many high-end condos sit empty for out-of-town owners, I suspect I'll still be able to stroll an uncrowded beach even after the build-out is complete. I foresee a short-term crunch in the sales of new condos here with all the new supply, but, long term, this area will always be special. This is the time to be aggressive with offers as sellers severely outnumber buyers in this predominantly over-$500K market.

If you’d like a list of current projects, email me or give me a call at 321.917.5786.

As always, these opinions are mine alone.

Real estate boom: Will a bust follow? - May. 4, 2005

Real estate boom: Will a bust follow? - May. 4, 2005: "NEW YORK (CNN/Money) - The number of U.S. metropolitan areas experiencing booms in real estate prices spiked 72 percent in 2004, according to a report from the Federal Deposit Insurance Corporation (FDIC).

Still, that represented just 15 percent -- a total of 55 -- of the country's 362 metro areas, leading some to question whether the reports of a real estate bubble have been greatly exaggerated."

Real Estate Weekly - U.S. mortgage rates edge lower

Real Estate Weekly: Real Estate Weekly -- April 29 - General News - Personal Finance: "U.S. mortgage rates creep lower

U.S. mortgage rates edged lower in the week ending Thursday, marking the fourth straight week of declines, Freddie Mac said."

Pre-Construction Sampler

I'm deviating a little from my normal general take on the market with today's post. I get so many inquiries about pre-construction that I thought I'd present a sampling of what's out there in Cocoa Beach and Cape Canaveral. From low to high, here are a few. Only one of these is my own listing. Most of these can be held for 10% of purchase price until building is completed. Some will probably not be completed until late in 2006.

Portside Villas - 3 BR/2 BA - 1523 sq.ft. $289,900


Maddison Caye 3 BR/2.5 BA - 1618 sq.ft. $449,000


Ocean Waves 2 BR/3 BA - 3000 sq.ft. $595,000


Mystic Vistas 3 BR/2 BA - 1994 sq.ft. $629,000


Un-named 4 BR/3.5 BA - 3610 sq.ft. $895,000


Almar 4 BR/3.5 BA - 2713 sq.ft. $800,000


3800 Ocean Beach 3 BR/2.5 BA - 2433 sq.ft. $975,000


Crescent Palms 3 BR/3BA - 2293 sq.ft. $649,900


Ocean Club 4 BR/3.5 BA - 3904 sq.ft. $1,279,900


This is only a sampling of what's out there. If you'd like a more complete list or info on specific projects email me or call me at 321.917.5786

April 22 Market Update - Cocoa Beach

April 22, 2005

Tax filing day has passed and the season has perceptibly changed in Cocoa Beach. The snowbirds have departed, traffic has eased, the grocery stores are peaceful and golfers can once again play a round of golf at the beautiful Cocoa Beach Country Club without an advance tee time.



We are anxiously preparing for next month's launch of the Space Shuttle. There is no other place in Florida where you can stand on your balcony and look over the ocean to a spacecraft leaving Earth. Check out this view of a night launch from the balcony of the 2100 Towers northeast penthouse.



For more photos of this incredible condo, click here.

Freddie Mac reports a continuing drop in mortgage rates with the 30 year fixed nationwide average at 5.80% this week, the third weekly drop in a row. Florida Today newspaper reports that median home prices in Brevard County are at $192,500, a whopping 106.5% increase in 5 years.

Market activity has continued it’s trend of increasing supply according to MLS records. We have had 32 condos go under contract in the last 14 days; 5 over $500,000 and 27 under $500,000. We have seen 121 new or changed listings during the same period. 37 of the changes were price reductions and 6 were price increases. Single family home sales have been brisk with 8 contracts (4 over $500,000) during the period from a supply of 54 active listings. Here's one example; a direct river home on Danube River Dr. overlooking the Thousand Islands. Listed for $749,900. This is the view.



Stats as of this morning, April 22 are as follows:

Active condominiums_______ 459
over $500,000_____________ 132
built 2004 or later__________170

Active single-family homes___ 54
over $500,000______________ 32

There has been some activity off the MLS record that is significant. A new development in Cocoa Beach between 4th and 3rd streets south has been announced. The entire block is being developed into luxury single family homes with prices beginning at $965,000. I have been told by the listing office that 17 of these are already reserved. This is remarkable in that the MLS reports only 5 properties (both condos and single-family) going under contract in the last 120 days over $900,000. Other off-the-record activity are two reported sales at Portside Villas of 2 bedroom units for $247,000 and $252,000. If these reports are accurate this represents a nice jump from the previous $230,000 range. There is still considerable inventory of re-sale units at Portside and I continue to think these represent good value as the lowest-priced new construction on the beach.



According to the developer, the first buildings should close in August or September.

There has been very little movement of investor re-sale units in new condo projects. The supply of investor-owned units represents, I believe, a good buying opportunity for informed buyers. There are many beautiful, brand-new units available at very attractive prices from investors who never planned to live in the units. As prices continue to soar towards and beyond the $1 million mark in new buildings, the current supply of under-$500,000 new units are worth a look. Here's an example; a southwest corner unit in Majestic Bay for $458,900. Building will be completed in May and this unit will immediately be increased in price if seller has to close. Check out the view.



If you’d like a list of current supply of units that I like, email me or give me a call at 321.917.5786. You can see selected listings here.

As always, these opinions are mine alone. I could be wrong about my projections and assumptions but I am on the front line and I do know my stuff, so, chances are, I’m closer to right than wrong.

Rates Drop Again This Week

Freddie Mac's Primary Market Mortgage Survey: "
LONG-TERM MORTGAGE RATES TAKE A DIP

One-Year Arm Rises, While Five-Year ARM Eases Slightly

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 5.91 percent, with an average 0.7 points, for the week ending April 14, 2005, down from last week when it averaged 5.93 percent. Last year at this time, the 30-year FRM averaged 5.89 percent."

April 9 Update

Good news this week as mortgage rates dropped slightly. Freddie Mac’s Thursday survey reports a national average of 5.93% for 30 year fixed rate and 5.48% for 15 year fixed. Activity in the Cocoa Beach and Cape Canaveral market continues to be dominated by increasing inventory and slowing sales. According to our MLS, there were 135 new condo listings in the last 14 days with 36 units contracted in the same time period. There were 21 new single-family home listings with 6 contracts in the period.

ACTIVE LISTINGS TODAY

Condos all prices_____428
-Over $500,000______135

Single family homes___57
-Over $500,000_______34

The obvious trend in these numbers is increasing supply. If you’re purchasing, you have more power to negotiate than you did a few months ago. I expect this trend to continue as pre-construction speculators are forced to close on contracts that they had hoped to flip. The upside is that there are bargains to be had now and in the months to come. If you want to receive alerts of new properties as they are listed, email me at larry@southcocoabeach.com