When's It Gonna Pick Up?

I hear it from waiters, snowbirds, random golf partners, neighbors, past clients, the guy dipping bait at the marina. They all ask the same question; "When's the market gonna pick up?" The accurate short answer to the question is "six years ago".

In Cocoa Beach and Cape Canaveral the number of sales bottomed in 2008 and that number has increased every year since. I have to go back 118 months to June of 2005 to find a month in which more condos closed in our two cities than in March of 2015. I think it's bound to slow down soon because of the record low inventory but so far my prediction of that happening has been premature.

If the question was "When are prices gonna get back to the highs?", my answer would have to be "Almost certainly not for a long, long time." Example: a two bedroom, two bath riverfront Cocoa Beach condo that closed two weeks ago for $170,000 sold in March 2005 for $292,500. That's a lot of appreciation to get that one back to it's high. Another direct ocean 2/2 unit that closed last month for $360,000 last sold in March 2006 for $545,000. Those two are fairly representative of the price recovery progress of most condos. Anecdotally, the rapid rise in prices that we've been seeing for the last few years seems to be slowing down. We actually had a couple of closed condos in March that were at prices below what they sold for in 2011 and 2013. The slowdown is a healthy development although probably not welcome to sellers who have been holding out for higher prices. Those sellers playing the waiting game should make themselves familiar with their real cost of waiting and what amount of appreciation it takes to make waiting profitable and how likely that is to happen.

I got a little ahead of myself talking about the end of snowbird season. There appear to be larger numbers than usual who have extended their stays past Easter. Traffic has lightened considerably since Easter but is still heavier than normal for this month. Local golfers,  the business league at the Cocoa Beach Country Club resumes for 2015 next Tuesday, April 14. Join us. Tee off anytime between noon and dark. Everyone is encouraged to participate and to occasionally look over their shoulders at the group following. You know what they say, "While we're young."

I dipped a few gallons of the Oak Hill reds in the photo one night this week. Fun to catch and fun to eat.

“The best minds of my generation are thinking about how to make people click ads”
___Jeff Hammerbacher

Beneath the Surface

Icebergs and alligators; the greater danger is usually hidden beneath the surface.

And just like that, the season is over. Easter Sunday began early with crowds on the beach in several places for sunrise services. The weather cooperated with perfect conditions as the sun rose into a clear 71 degree sky as the full moon set over the Banana River.

March 2015 in the Cocoa Beach real estate market was, without exaggeration, gangbusters. There were 73 closed condos and townhomes in Cocoa Beach and Cape Canaveral and 15 single family homes. Eleven of those were distressed, short sales or bank-owned. Another 96 properties that haven't closed yet have gone under contract since March 1, twelve of those distressed. For sale inventory this morning is scary low in condos with only 236 condos and townhomes left for sale in the two cities. Single family home numbers are a little better at 72 listings. Only 7% of the total for sale listings are distressed.

On a side note; many of the current listings are way over-priced. This is more true with oceanfront condos than any other property type. To the 18 aspiring record setters out there priced above the highest recent $/sf sale, consider that only two units have closed in the last six months for more than $300 per square foot and both of them were super-nice units in luxury, newer buildings. All 18 of the units priced above the highest one are beautiful and desirable but all 18 of the sellers are going to have to modify their expectations if they really want to sell. Those dreaming of over $400 per square foot will have to be content with dreaming. I guess you can't win the lottery without buying a ticket. Asking $400 per square foot for any oceanfront condo in Cocoa Beach in 2015 has about the same chances of success as buying a Powerball ticket. Not impossible but pretty close to it. Fully a third of these pie-in-the-sky sellers are in the same building. They are apparently reinforcing one another's impossible dreams. Talk around the pool must be interesting;

"Any nibbles on your unit?" 
"No written offers but several showings and feedback has been good. You?" 
"Same. We might raise the price after Easter. Larry says market is on fire."
"Yeah. Us, too. Did you see what Remrem is asking for his? We might be too low."

I get asked why an agent would take an impossibly over-priced listing. Sometimes, it worth having a too-high listing at a busy spot just for the sign exposure. In 2015 there are even better reasons not to decline an over-priced listing. With the recent evolution of online real estate, every listing an agent has generates traffic and inquiries from several dozen real estate websites. It can be good for a listing agent to have over-priced listings if she can sell other fairly priced listings to the inquiries she gets from Zillow et al for the too-high ones. Don't count on a listing agent to refuse a listing because it's too high. It's still good for business. Sellers who want to sell need to know what the market has recently been paying for comparable properties. If they price accordingly they can expect to pick up a check in a reasonably short time. If they ignore the comps and list for a crazy over-the-market number, at the very least they get to enjoy the fantasy of their unit being worth $too-much (around the pool). A check, however, will not be forthcoming.

Whether you're buying or selling, if you'd like an idea what a property is worth right now, I'm happy to give you my opinion. I'm not an appraiser but I am an involved market participant and a committed statistician who has been studying, slicing and dicing our small market for many years. I know this market like very few.

While I wasn't paying attention this blog had it's tenth birthday last month. Since March 2005 I've published 509 posts (and written a few dozen others that didn't make the cut for whatever reason or controversy) and we've had 293,211 visits to the blog, half of those in the last three years. The Cheerleaders and Bad Haircuts post warning about NARs ill-timed, self-serving Time2Buy campaign in 2007 has been read 1434 times making it the most read post of all. Thank you to all who've read, commented and/or emailed over the years. I've enjoyed it all. Plenty more to come. It's probably time to ruffle some feathers again.

"Remrem is a fine soldier and a gentleman but a cubit of his company can stretch a league."  ___Wilbur Smith from Desert God. [Apparently chatterboxes are not a modern phenomenon.]

Contraction, My Brother

My old companion, the corn plant (Dracaen fragrens) bloomed again this year for the third time in the last four years. This hardy plant has been with me for over 20 years. It is apparently rare for an indoor specimen to bloom. According to Wikipedia this African native helps remove indoor air pollutants and is very tolerant of neglect. For the week or so that it blooms, my house smells like the Chanel facory.

Inventory of condos and townhomes is down to 240 units in Cocoa Beach and Cape Canaveral. Over half have been on the market since last year, many for years. Two thirds of the single family homes in the two cities have been for sale since last year or before. The new listings that are priced anywhere near fair market value are selling immediately. The overpriced ones stagnate and contribute to making the inventory numbers far less dire than the reality. The reality is there are very, very few properties that are attractively priced. Buyers need to accept that they may need to be patient and, at the same time, ready to move when a good target has been acquired.

Of the 64 single family homes for sale, a third of the offerings are above $500,000 and a third are asking less than $385,000. About half are waterfront. There have been four new listings since March 1. During the same time seven have gone under contract. Both definitions of contraction are at play here.

There have been 26 new condo listings since March 1 and 55 closed sales. In the same time there were 37 newly accepted contracts. Of the accepted contracts a third contracted within four weeks of listing. There are only thirteen foreclosed and five short sale units on the market today. The distressed property dynamic is all but finished in our market.

There were a few interesting, attractively-priced  new listings this week. They included:

• A 14 year old 3 BR, 2.5 BA townhome on the Cocoa Beach Golf Course with a two car garage asking $235,000. 
• A cute, remodeled and fully furnished one bedroom unit in an oceanfront building asking $135,000.
• A ten year old 3 BR, 2.5 BA Majestic Bay townhome with 2307 square feet and a two car garage for $225,000.

Weather has been wonderful this month as we are winding down to the end of snowbird season. The first and largest wave of the northward migration begins Tuesday as those with leases ending March 31 hit the dusty trail for home. Spring break is finished for the majority of schools but we'll continue to see a few stragglers and a handful of lingering snowbirds through the middle of April. It will soon be possible to shop at Publix without protective pads and a drive to the Port for lunch won't take half a day (unless, of course, one wants it to).

Potential buyers, Drop the mouse! Do not click on the "More Information" button next to the listing on Zillow, Trulia, Homes or Realtor.com or any other real estate website. Your info is going to be sent to as many as four self-proclaimed "expert agents" or, even worse for you, the listing agent. Some sites will send your info to an agent who has agreed to pay a huge chunk of the eventual commission to the company operating the website as a referral. That much reduced paycheck in no way is good for you.

You do NOT want the listing agent or one of her staff  writing an offer for you. You'd be better off with some dufus who paid Zillow for your info representing you than the listing agent or another agent from her office. They are prohibited from advocating for you in the deal. That dufus (or me) can battle for the best deal for you with no regard to what is best for the seller. Dufus might not have the experience or skills to do the best job but the law doesn't stop him (unlike the listing agent) from trying. A buyer's strongest play is to have a buyer's agent who is representing only them. We are not hard to find but Zillow or the others are not the place to look.

"A man who doesn't care about what he looks like, he's applauded. We say, 'Oh, he's not superficial.' I, myself, am deeply superficial."  __Fran Lebowitz

Don't Say That. Really.

For most people that I encounter in real estate transactions, buyers and sellers alike, removing emotion from the process is difficult. It's easy enough to intellectualize that emotion shouldn't be a factor but it manages to intrude in a large number of negotiations. An irrational, emotional response from the other party can often drag an otherwise rational person straight into the mud and reduce or kill chances of success.

There are an number of self-defeating trigger phrases that can get that response. I've seen the phrases below derail many negotiations over the years that otherwise stood a good chance of reaching agreement. A person hoping to buy or sell property (or most any other thing) would be wise to resist uttering these phrases or adopting these mindsets. At the end of the day, the buyer and the seller decide what they are willing to accept or pay.

"I will not play games." - I hear buyers say this often, especially in multiple offer situations. Guess what? Negotiating is a game. You can't win without playing. Offer what you're willing to pay and take into consideration everything that the other party is telling you. Withdrawing because you "won't play games" only guarantees that you won't get that property. Your initial offer may very well be enough.

"I'm not going to give it away." - Consider that your idea of "giving it away" might be at exact market value. Our robust market is more than willing to give you market value or above. That is never "giving it away" even though it might be less than you paid at the market peak.

"The offer is too low. I'm not going to respond." - Unless you are firm at your asking price, always respond to an offer. Most buyers can't help themselves from making a first stab at trying to get the property for less than market value, sometimes with a stupid low offer. I've seen crazy low initial offers work their way up to a number that was acceptable to a seller. Respond to lowballs as if they were good offers. You decide how much to counter. Keep the buyer in the game until they have demonstrated that they won't get near your number. The initial offer is an invitation to begin the negotiations.

"I will not pay full price." - I've been asked many times what percentage of asking price the first offer should be. There is no magic percentage. As I've related before, full price at Target may equal exactly the final price at Macy's after the sticker markdown and additional discount at the register. Know what any property is worth before you offer. Full price can be a good and fair price. While you're screwing around offering a set percentage off asking price, another buyer may have recognized that it's priced right and offered the fair full asking price.

"If they won't include the (fill in the blank) the deal is off." - If the Sonos sound system wasn't included in the listing don't include it in the offer. I've seen buyers walk away from a fair price on a property because the seller wouldn't include furniture that was never intended to be included. Keep your eye on the ball and don't complicate your offer. You can always get a sofa.

"Not a penny more." - Really? So if the seller's mental walk-away number happens to be $100 above your "not a penny more" number, you don't want this house that is exactly what you're looking for (your words). This phrase tells the seller to not even try to compromise somewhere between his last number and your take-it-or-leave-it number. Not a smart strategy. Stay in the game until it works or it doesn't.

"Not a penny less." - Same as above. It's a dare that pride will not let many people accept. You can just as easily make your counter without adding the end-of-negotiations phrase.

"I would have paid that." - This is a good one. You couldn't have paid that without even offering. This is usually in response to a property going for well less than asking. The seller's agent probably already told them that their asking was too high but they didn't listen and clung to the too-high asking price. When the fair offer came in, probably with justifying comps, they accepted reality and the offer. This goes back to knowing what a property is worth. Your buyer's agent can include comps with your offer to demonstrate to hard-headed sellers that your offer is on the money. Solid comps from the buyer's agent with the offer will often swing the tide. Note: If there aren't comps to justify a lowball, don't try to manufacture a justification with irrelevant comps or the Property Appraiser's or Zillow's idea of value. Knowledge and negotiating skills, have them and use them.

How 'bout this weather. Summer came early this year. Back up to 85 again today with light west winds and continued clear blue skies. This has been the busiest March in Cocoa Beach in my memory. I suppose cold weather in the north and low gas prices have contributed. This past weekend, in addition to the usual venues, there was live music in the Juice and Java parking lot and the Mai Tiki complex. The stray spring breakers wandering around downtown Cocoa Beach must have thought they'd found Florida's Bourbon Street, with live music in over a half dozen places in a one block radius. Monday morning, the streets and parking lots (ours included) downtown looked like there had been a heavy snowfall of trash. We had it all cleaned up and ready for the next onslaught by noon. Three more weeks.

"This land is your land and this land is my land, sure, but the world is run by those who never listen to music anyway."  ___Bob Dylan

This Week's Best New Listings

These are the best or most compelling (in my opinion) new listings in Cocoa Beach in the last seven days. None of these are my listings but I'm happy to show any of them. Contacting a listing agent directly on any listing will have you unrepresented and possibly at risk in the transaction. A buyer's agent, whether me or someone else, will not cost you anything except in very rare circumstances agreed to in advance and you will have full representation (unless the buyer's agent is also from the listing agent's brokerage). There were no new listings in Cape Canaveral that I thought deserved mentioning.

• Big 1st floor bank-owned 2/2 condo, 1432 sf, east of A1A but not direct oceanfront. Asking $147,900.
• Fully furnished 2nd floor 2 bedroom, 1 bath, one block from beach, low monthlies. Asking $129,900.
• Updated 2nd floor 2 bedroom, 1 bath in oceanfront complex that allows short term rentals. Asking $143,500.
• Totally and nicely remodeled 2nd floor, 2 bedroom, 2 bath in oceanfront building with ocean view. Asking $224,900.
• 1st floor 2 bedroom, 2 bath Sand Dollar floor plan, garage, Stonewood D bldg. Asking $259,000.
• Totally remodeled single family 2 blocks from beach 3 BR, 1.5 BA, 1545 sf, tropical landscaping. Asking $225,000.
• Updated Cocoa Isles single family 3 BR, 2 BA, 1240 sf, 2 car. Asking $239,000.
• Single family 3/2 pool home five blocks to beach, 1280 sf, 2 car. Asking $289,000.
• 14 yr. old South Cocoa Beach 2nd floor 3/2 corner in Banana River building with ocean and river views, garage, 2364 sf. Asking $289,900.
• 7 yr. old luxury 4 bedroom, 3 bath canal home, 3025 sf, pool, dock, boat lift, 3 car. Asking $799,900.
• 8 yr. old 5 bedroom, 3 bath single family across the street from the beach 3555 sf, pool, 2 car. Asking $729,000.

It's the perfect storm for traffic right now. Peak snowbird population, spring break, Bike Week in Daytona and cold weather up north. Be careful on the roads and expect to move more slowly than usual. Have patience. It will all be over in a few weeks.

The cobia are running a little late this year but are starting to show up in small numbers. Meanwhile the tasty tripletail are here en masse for the spring spawn. Look for them close to shore under seaweed or floating debris and present a live or artificial shrimp on their nose. This week I saw leatherback turtles, loggerheads, manta rays and a rare ocean sunfish in addition to cobia and tripletail. I also heard reports of a couple of great whites being spotted. For anyone wanting to fish, now is a great time to book a nearshore charter. The catch of a lifetime might be waiting. Worse case scenario, a great day on the water in the real Sea World.

"I have exactly as much rhythm as you think I have."  ___John Oliver

Lost an Hour

Good morning Daylight Savings Time. More daylight at the end of the day makes most Cocoa Beach folks happy although the later sunrise means before work/school surf sessions are abbreviated if not impossible. Nothing is without its cost.

Thinking about the time change this morning I went back and read a post I did the morning after the time change in 2012. Let's compare Cocoa Beach market conditions then and now. At that time we had bounced off the bottom in prices but distressed sales were still a large part of the activity in residential real estate sales. We were still doing the time change at the end of March back then so I've compared activity from January 1 to March 8 in 2012 and 2015.

These stats are for the period from January 1 through March 8.

Asking price <$100,000
2012 - 19 sold, 42% of them distressed - inventory 53 units, 36% distressed
2015 - 25 sold, 24% of them distressed - inventory 26 units, 19% distressed

Asking price >$400,000
2012 - 7 sold with 0 distressed - inventory 44 units, 0 units distressed
2015 - 8 sold with 0 distressed - inventory 55 units, 1 unit distressed (short sale) 

Sold units in all price ranges
2012, _90 units, 29% of them distressed.
2015, 109 units, 17% of them distressed.

For sale inventory
2012 - 350 units, 16% distressed
2105 - 259 units, _7% distressed

The condo inventory has hovered in the 250 unit range for a couple of years now. It peaked at just under 1200 units in 2006 and stayed at abnormally high levels during the crash years fueled by the high numbers of distressed sales. With the bulk of the troubled properties already flushed through the system, I don't think there is any reason to expect inventory to get much above the current number in the near future. I think we'll continue to see the number of distressed sales shrink as the banks dispose of their last remaining beachside properties. Single family home trends are closely mirroring condo trends.

I was fortunate to attend a get-together with my Mom of three lovely members of the 2nd grade class of 1933 this week. Inventory that year of Cocoa Beach condos was holding steady at zero where it would remain for decades. We wouldn't see a short sale for the next 74 years.

A strange thing happened in Cocoa Beach last week. A Waylon Jennings song was performed live at a local venue. The young country band Radio Romance from Nashville slipped it into their lineup of mainly originals at Juice and Java downtown. They wowed the unsuspecting, raised-on Buffet and Zepplin crowd. They'll be back for a repeat on March 20. I recommend trying to catch them, no matter your musical comfort zone.

"Is Neil Young the greatest singer in the world? No, he's not, but he's Neil Young, ain't he? And I've heard a billion covers of "Like a Rolling Stone," and they're all shit. You want to know why? Because Bob Dylan ain't singing it." __Noel Gallagher

Notice: The Rules Have Changed

Dear owners, 

In light of recent events, the Board of Directors has amended the rules and regulations and added the new rules listed below. Please be advised that we will be enforcing the new rules strictly and violations will be subject to a $100 fine per occurrence after notice of first violation. These rules are added for the benefit of all and are intended to make our life here at Cocoa Beach Cosmopolitan more harmonious. Thank you for your cooperation.

Board of Directors
Cocoa Beach Cosmopolitan Condo Association

• Renters and guests are not allowed to have pets on the premises.
• Pets must weigh less than 20 pounds.
• No more than one pet per unit.
• Maximum four occupants in any unit.
• No unit may be rented more than two times per year.
• Minimum rental period is one month.
• Clubhouse may not be used for children's birthday parties.
• The south pool is limited to persons age 21 and over.
• No one person may own more than 3 units.
• Owners renting their unit must use on-site management.

Is this legal? Can the Board make new rules restricting my use of my unit without a vote of the association? Luckily, no. They cannot. That fact does not stop many from doing so, however. I have seen several of the rules above adopted by misguided Boards under the assumption that they have the authority to change or restrict owners' use rights by merely changing or adding rules with a vote of the Directors. The law is very specific about this. If your Association has adopted new rules that change the original use restrictions in the Declaration without a vote of the association, they have probably violated their duty and the changes are not valid. They do have the authority to adopt new rules for things other than use restrictions.  For more info on this read this excellent post by attorney, Jean Winters. 

Ultimately, if people lose their willingness to recognize that there are times in our history when legality becomes distinct from morality, we aren’t just ceding control of our rights to government, but our agency in determining our futures. ___Edward Snowden

Under the Hood February 2015

How's the market doing? I get this question almost daily. I don't have to look at MLS stats to know that it is on fire. We continue to have more demand than supply and the cold, snowy winter up north is fanning the demand flames.

Since the first of February, 59 units have gone under contract in Cocoa Beach and Cape Canaveral. Total MLS for sale inventory of condos and townhomes in the two cities is 261 units this morning. Considering the current rate of 2.5 units a day going under contract, the supply is likely to remain low.

The Cocoa Beach MLS is showing 69 closed condos and townhomes since January 1 in our two cities and 13 single family homes. Of the 69 sold units, 49 sold without ever dropping the asking price. They closed for an average of 94% of asking and 30 of them sold in a month or less on the market. Compare this to the average 149 days on market for the twenty units that had to reduce their asking price to sell.

An interesting side note is that only one of the six bank-owned units closed at or above asking price. This is reflective of the banks' recent too-optimistic pricing.

Cash accounted for 72% of all condo purchases so far this year. This trend is likely to persist as underwriting has gotten even more strict for condos with many underwriters now requiring forms of insurance that were rarely mentioned in the past and that many associations do not have. Buyers using a mortgage would be prudent to get the condo questionnaire from their lender to the Board of the condo as early in the process as possible in case the association's insurance is not up to snuff.

Take-away for buyers: Identify your property type and either search the MLS daily or have your agent set up an email auto-alert directly from the MLS. You are likely not the only one looking for the same type of property. The stats above tell us that the priced-right units will be gone in less than a month. The 94% of asking average also tells us that a lowball offer is not likely to work. If you will be getting a mortgage please consider using a local lender. Your internet loan officer or cousin at First National back home will tell you they can close on a Florida condo but history tells us that they fail to close far more often than the local lenders.

Take-away for sellers: Price it right to start with and it will sell quickly. It is very easy to know what your unit is likely to bring by looking at recently sold comparable properties and adjusting accordingly for condition and other details. What you would like to get is probably more than what the market is willing to deliver. Be realistic. If you don't trust your agent, get a different one.

The weather the last two days has been wonderful, temps in the 70s with very light winds. The forecast high in Cocoa Beach today is 78 with slightly cloudy skies and a westerly breeze of less than 10 MPH.

I see skies of blue and clouds of white
The bright blessed the day, the dark sacred night
And I think to myself what a wonderful world.
_____________________Louis Armstrong