To see the summer sky

As we approach June, condo sales are ticking right along with 40 closed MLS-listed condos and townhomes so far in May in our two cities of Cocoa Beach and Cape Canaveral. So far, no sale has exceeded $365,000 (top floor SE corner Crescent Beach Club) but the previous concentration of activity in the sub-$100,000 range appears to be fizzling out as inventory in that price range is drying up. Of the forty closed sales so far, three were foreclosures and eight were short sales. Just under half of the sales were in oceanfront complexes. Average discount off the most recent asking price was 9%.

Single family home sales have been robust as well with nine closed so far, all in Cocoa Beach, none in Cape Canaveral. One was a short sale and two were foreclosures. Prices ranged from $417,500 for a 4/2 on a big canalfront lot on Country Club to $92,500 for a small fixer-upper in Cocoa Isles.

There are 110 units that have been contracted in 2011 that have not closed yet, 54 of those short sales. Condo and townhome inventory stands at 393 total units this morning, 44 of those asking over $500,000, all but one of those 44 units less than 11 years old. There are 70 units actively for sale asking less than $100,000 only five of which are less than 22 years old. There are 12 foreclosures in all price ranges and 53 short sales.

The super boat races were a big hit this past weekend with boats skipping along at 165 MPH just off the beach. While the water was being churned up nearshore, the dolphins were playing alongside fishermen several miles further east. The dolphin above was one of several who came to play surfing the bow wave of our boat on Saturday.

"I may not have the answer but I think I've got a plan." ___Jackson Browne (who played a great one-man show Sunday night in Melbourne)

The final frontier

Endeavour on the pad and ready to fly.



[update] In the air (above) as seen from south Cocoa Beach May 16, 2011.

Space Shuttle Endeavour is scheduled to blast off tomorrow morning on it's last mission and will be followed by the Shuttle Atlantis in early July which will mark the last flight ever for the 30 year old shuttle program. I thought I'd reopen the topic of the impact of that ending as the Blogger outage last week interrupted the discussion happening in the comments to the last post.

I'm asked all the time how I think the end of the shuttle program and the loss of jobs will affect our real estate market, specifically Cocoa Beach. Predicting that impact is not as straightforward as first glance would suggest. President Bush made the news official six years ago when he announced that the program would end in 2010, so, it's not like thousands of rocket scientists will suddenly learn of their layoff the day of the last launch and will put their houses on the market driving prices down in whatever area they happen to live. The first pink slips were issued last summer and plenty of former shuttle workers are already gone or still here looking for or working another job. I think the moving parts we need to consider to speculate on the impact or lack thereof include the following:

1. How many of the yet to be laid-off workers live specifically in Cocoa Beach and Cape Canaveral?
2. How many of those will stay put either retiring or seeking another job locally?
3. How many of those will sell their homes and move from the area seeking employment elsewhere?
4. How many of those have already sold their homes in the six years they've known it was coming?
5. How much of the last few years' significant drop in property prices is due to fear of the impending end of the shuttle program, in other words, how much price drop is already "baked in"?
6. Do enough shuttle workers own beachfront condos to have any effect on that particular market?
7. For a buyer looking for a Florida beach getaway or investment condo (and undecided about the exact community) is the local employment picture a factor or is it all about what X dollars will buy?
8. How much of our market is 2nd home and investment property compared to primary residence?

These are certainly not all the questions we need to be asking to make an informed prediction, just the ones that stand out in my mind. I do know the impact on some businesses in some areas of Brevard County will be and already has been significant and I sympathize with those affected. I welcome comments and speculation on the specific issue of the impact on the Cocoa Beach real estate market in the comments below.

30 year fixed rate mortgages are at an average 4.63% this week as reported by Freddie Mac . Even so, 75% of our condo and townhome sales in April were cash deals. Total MLS condo inventory in Cocoa Beach and Cape Canaveral stands at 397 units this morning.

That's why the most respected greybeards often aren't the guys pounding liquor under the pier every day or quitting multiple jobs to chase swells. They are the ones making short term sacrifices that guarantee they'll paddle out the next day and the day after. ___Matt Walker Surfer Magazine

Barreling ahead

Unknown surfer shacked up out behind Taco City.

MLS listed sales for April in Cocoa Beach and Cape Canaveral included 53 condo and townhouse units and eleven single family homes. All but three of the home sales were between $220,000 and $290,000. The highest sale was a gorgeous 4/3 waterfront beauty with pool on Andros in Cocoa Beach that closed for $502,500. Three of the home sales were short sales and one was a foreclosure, a Bay Shore home in need of extensive repairs on a beautiful south-facing lot on Edwards Bay that closed for $290,000.

Of the 53 closed condo sales, seven were foreclosures. The highest price paid for a foreclosure was $245,000 for a direct Banana River six year old Crescent Palms 2nd floor 3/2 in south Cocoa Beach that sold new in 2005 for $515,000. The other foreclosures included units at Portside Villas, River Lakes, Bayport, Riverview Manor and Roosevelt Gardens. You can email me for details about any of those.

There were seven closed short sales out of the 53 total condos sold. Highest price was a shocking $165,000 for a five year old, top floor 2348 square foot Puerto del Rio 3/2. Others included a 3rd floor Cape Winds 1/2 weekly rental for $130,000 and an Oak Park townhouse that closed for $129,900 just five years after selling new for $319,500.

The list of non-distressed condo sales in April was topped by a 2 year old, 5th floor, 3 bedroom, 3.5 bath direct ocean Ocean Cove in south Cocoa Beach that went for $865,000. This unit has 2758 square feet, a 2 car garage and a boat slip on the river across the street. Sold new 2 years ago for $1,050,000. This complex had substantial price reductions on all unsold units this week.

Other sales of note included:

A sixth floor, direct ocean southeast corner at Xanadu of Cocoa Beach. This 3/3.5 unit has 2343 square feet and three garage spots and sold for $500,000.

A sixth floor south ocean view Michelina of Cocoa Beach sold for $440,000. This 5 year old 3/3 unit had 2412 square feet and a one car garage.

A top floor south facing C building Mystic Vistas closed for $313,000. This 3/2 unit had all the upgrades and was sold tastefully furnished.

A fourth floor southwest corner Sandcastles weekly rental 2/2 closed for $230,000. Two balconies on these corner units but only a peek of the ocean. This nicely remodeled 1286 square foot unit came with a one car garage.

A seventh floor southwest corner at Royale Towers C building closed for $265,000. This 1860 square foot 3/2 unit sold furnished and has a garage. Like the Sandcastles unit above, just a peek of the ocean.

An upgraded 4th floor direct ocean Wellington in downtown Cocoa Beach sold for $225,000. This two bedroom, two bath, 1049 square foot unit has no garage and was sold furnished.

An oversized 2/2 Shorewood F building closed for $210,000. This south facing 1663 square foot unit has a one car garage and a slight peek of the ocean.

A furnished, ground floor direct ocean Ambassador Shores in south Cocoa Beach sold for $195,000. Was nicely remodeled. No garage, 1217 square feet with two bedrooms and two baths.

Unit 308 at 2100 Towers finally closed after a total of 1778 days on the market. This south facing 2/2 unit was first listed in 2006 for a somewhat optimistic $529,900. Price has drifted down over the years until last asking price which was $199,900. It closed for $190,000.

Two more units sold at River Lakes in south Cocoa Beach in April. A very nice 3/2 ground floor closed for $139,900 and a two-story 2/2.5 unit closed for $152,500. Both had garages.

A 3 bedroom 2.5 bath River Gardens in Cape Canaveral with 2 car garage that sold new in 2005 for $349,900 closed last week for $170,000.

One of the newer Villages of Seaport 2/2.5 townhouses with 1310 square feet closed for $139,600. Had some nice upgrades.

The balance of sales not detailed above were primarily concentrated in older Cape Canaveral non-waterfront buildings with unit sales in the sub-$100,000 range. Looking at all sales in April the average selling price was 92% of the last asking price with seven going for full asking price. Keep that in mind when your brother in law tells you that you should be able to get 25% off asking price for any Florida property. It's not about the discount from asking. It's about the final price.

"Everyone has a plan until they get punched in the mouth." ______Mike Tyson

Honey, I shrunk the inventory

The shot above is of shuttle Discovery a few years ago as seen
from south Cocoa Beach. Endeavour is set for launch this
afternoon for it's last mission.
[update: Launch rescheduled again. No sooner than May 16.]
Discovery's next mission, which will be the last ever shuttle
launch, is scheduled for June 28.

The rapidly shrinking MLS inventory of condos and townhomes in Cocoa Beach and Cape Canaveral sits at 392 this morning, a record low. For perspective that is 63% less units for sale than at the peak in 2006 (1049 units) and 33% less than in March 2010. At the current sales rate we have less than an eight month supply (in all prices). If we look at the most active part of our market, units selling for less than $100,000, the current supply will be exhausted in less than five months. The supply is greater as the prices move up. For units selling between $100,000 and $300,000 we have a seven month supply. In the $300,000 to $500,000 range the current supply will last 13 months. Once we pass the half million dollar mark we have enough units for sale today to last for 28 months at the current sales rate. These numbers are for MLS-listed units only.

Sales have remained strong so far through April and we should finish the month with around 50 closed units. Of the 41 sales closed so far, five were short sales and five were foreclosures, only one of the ten was for more than $150,000. My next post will detail the sales of note for the month of April.

Single family home inventory is in a similar precarious position with less than a ten month supply at current levels and sales rate. Ten homes have closed so far this month, the bulk at prices between $200,000 and $300,000.

For anyone looking for a weekly rental oceanfront condo, I have several nice units available directly from the owners at very good prices. These are not on the MLS and prices range from low $100s to mid $200s.

"Honk if you're paying your mortgage" ___bumper sticker I saw yesterday

new look

I have finally upgraded this blog from the old Blogger style. I was hesitant because I was afraid that I might lose some or all of the over six years of posts in the upgrade. After hearing from a reader last week that the blue and green dots made him physically ill when reading a post I finally got the courage to commit to the upgrade. Appreciate the push, Steve. Thankfully no content was lost in the transition. This new look will likely change occasionally depending on my whims.

I have added links to some of the old posts containing useful info about rental restrictions, cash flow, agent issues, etc. at the right. If you are new to this blog and are considering purchasing or selling property in Cocoa Beach you may find some of those posts helpful. Now, back to your regularly scheduled programming.

Money for nothing

A few weeks ago my friend suggested to his friends who are moving to Cocoa Beach that they contact me to help them with their search for a property. A couple of days later I got an email from a Realtor in another Florida city asking if I would be interested in paying her a referral if she sent her clients my way. She mentioned as an aside that I had already been recommended to her clients by my friend. I responded that I would be happy to help her clients and asked for details on what they were looking for, what involvement she intended to have in the process and what sort of cut was she hoping for. No response and three days later a couple shows up at my office unannounced ready to look at houses. They seemed confused that I wasn't present with a list of properties for them to see. They thought their agent had actually done something to assist. I'm not sure what she told them about how the process works or if she actually told them anything. She is likely hoping for a 15 to 25% slice of my eventual commission check just for inserting herself into the process and doing nothing but screwing up first contact. It has now been weeks and the agent has not followed up and I haven't seen her "clients" again.

This whole referral thing is common in the real estate world. In the most innocuous referral situation your friend or relative who has a real estate license in another city hears you mention that you plan to buy a property in Cocoa Beach. She tells you to let her find you a good agent to help you in Cocoa Beach. She may actually be intending to look out for your best interest by reviewing offers and contracts, offering advice, etc. History tells me, however, that her definition of "good agent" is likely to be the agent who is willing to pay her the biggest cut, not necessarily the agent who will do the best job. The other end of the referral spectrum includes situations where an agent is blindsided by a previously unmentioned relative expecting a cut after the property search has been concluded and a contract accepted. The smelly end also includes many of the big franchise real estate companies who parcel out website inquiries and other sources of leads to their agents after slicing off a healthy chunk of the agent's pay. I have seen situations where more than 75% of the commission paid was siphoned off before getting to the actual buyer's agent, the bulk having gone to the money-sucking machines above her.

This post is not intended to bash the referral process, just to inform readers of the abuses of it like those mentioned above. I have good relationships with other agents who send me referrals and have accepted dozens of referrals over the years that were completely fair and mutually beneficial. I have declined just as many because they were impractical or unfair. The first couple mentioned probably thought their agent would be helping out in their search here. Surprise.

Conclusion: Aunt Hilda, loving though she may be, may not be doing you a favor inserting herself into your search for a property in a distant city. Will including her benefit you? Knowledge is power.

"When the facts change, I change my mind. What do you do sir?"
_________ John Maynard Keynes

Red sky in morning

Sailor take warning? I don't think so. Dust off the log.

My predicted slowdown in sales because of shrinking inventory has yet to materialize. March saw 54 MLS-listed condo sales in Cocoa Beach and Cape Canaveral and eleven single-family home sales. The number of sales in the first quarter is 18% ahead of last year's number. Condo activity was spread almost equally between the two cities while all but one of the single family homes sales were in Cocoa Beach. A third of the condo sales were under $100,000, a third between $100,000 and $200,000 and a third closed for more than $200,000. Luxury condos were active with four sales closing over the $500,000 mark, one over a million. Seven of the condo sales were foreclosures, none over $135,000. Six were short sales with only one over $140,000. Those distressed sales (foreclosures and short sales) represented only 25% of the activity.

Inventory of condos continues to shrink with only 424 total units actively for sale this morning in Cocoa Beach and Cape Canaveral, a 25% reduction in available units since April 2010 and less than half the inventory just three years ago. The percentage of distressed sales also continues to shrink, down to 17% of the total, 10 foreclosures and 60 short sales.

For anyone looking for a short term rental oceanfront condo, I currently have four units in desirable buildings available directly from the owners at prices from $130,000 to $275,000.

"It could be romantic comedies, it could be Oreo cookies. If they're all liking it together, I want that broken up."___Boston Rob

Scott Free - Not Quite

Rocky shore at low tide in Satellite Beach.

Actually the phrase is "scot free". In modern usage it means getting away with something without penalty. If you sold a property last year as a short sale and didn't get a judgement from the lender nor a 1099 for the deficiency you may be thinking you got away scot free. Not so fast. As they say, there is no free lunch and, in the case of forgiven debt, there are only a few instances of "scot free" in the United States. The IRS considers forgiven debt to be income and as such it must be reported even if the lender did not issue you a 1099. The Mortgage Debt Relief Act of 2007 added exemptions for primary residences in tax years 2007 through 2012. Other exemptions are allowed for debt forgiven in the case of bankruptcy or insolvency, some farm debt and non-recourse loans. The majority of short sales I see in our market are likely not to qualify for forgiveness. So, this is a cheery April reminder that you need to consult with your tax professional before filing your tax return for 2010 if you had forgiven debt in the year even though you may not have received a 1099. Don't shoot the messenger.

[update] As pointed out by a reader (thanks, PR), the fact that a seller didn't receive a 1099 from a short sale may point to the fact that the debt was not forgiven. If that's the case the short seller can expect someone, the bank or the entity that bought the debt, to pursue collection. They may wait a few years until the borrower is back on their financial feet. Read and understand those approval letters, people.

"It hardly matters if you're the smartest guy in the room when you're the most well informed" anon