Supply and demand at work

Goodbye, Dad. I'm gonna miss the hot days picking vegetables with you in your garden. I won't forget about always doing the right thing.

Sorry for the gap between posts as I've been away from Cocoa Beach. Not surprisingly, not a lot has happened in the market in recent weeks. The slowing sales trend I noted in the last post has continued into August. The well-picked-over condo inventory is being reflected in the low sales numbers. Anecdotaly, the demand seems to still be there. As of this morning, only 15 MLS listed condos have closed in Cocoa Beach and Cape Canaveral in August. Prices have ranged from $50,000 for a non-waterfront, foreclosed Cape 2/2 condo to $245,000 for a five year old 3/2 Bayport villa with 2 car garage.

Other sales of note included a 7th floor Royale Towers "C" building, south ocean view 2/2 with garage that sold fully furnished for $216,000.

A furnished 2/2 townhouse-style Royal Mansion with a peek of the ocean closed for $180,000. Open parking and on-site management for short-term vacation rentals (40% fee). Note that condo fees for the 2/2 units here is $568 per month.

A direct river ground floor 2/2.5 in Waters Edge West in south Cocoa Beach closed for $166,500. This unit has a big private garage and a deeded boat slip.

A foreclosed, big (1350 sf) 2nd floor, 2/2 Fountain Cove direct river with garage sold for $138,000. This unit last sold in 2005 for $315,000.

Another lakefront Harbor Isles 2/2 has closed for $110,000. This one was 2nd floor with private garage. Only one unit sold for less in this complex in the last ten years. That was in 2001 for $106,000.

Two of the popular Diplomats 2/1 units have closed, one for $85,500 and one for $85,000. These numbers take us back to 2002 levels in this complex.

A cute 2nd floor 1/1 south ocean view Beach Villas in south Cocoa Beach sold for $92,500. Open parking and a big wide balcony with a good ocean view.

I expect the slow sales rate to continue indefinitely as a result of the low inventory. My take on price trends is split. There are at least two stories there. While prices have been holding steady in the older direct ocean units in that sweet $200,000 to mid-$300,000 range, prices in the luxury buildings in the upper range ($500,000+) have continued to erode and I expect that trend to continue.

"I hate to say it but you're so much more endearing with the sound turned off."
_______from "Talk Shows on Mute" by Incubus

July roundup

My expectation of sales slowing in the 2nd half of 2010 seems to have been confirmed by the July numbers as they stand today. After beating last year in all months but one this year so far, July came up short with only 28 sales compared to 41 last year. My take on this is the well-picked-over, smaller inventory is leaving a lot of prospective buyers off the playing field when they can't find a suitable listing in their target property type. I mentioned a couple of posts ago about direct ocean upper floor units in the mid $200 and $300,000 range dominating the condo sales. That trend continued through the end of July with the 9 highest dollar sales of the total 28 fitting that description.

The highest price condo sale of the month in Cocoa Beach and Cape Canaveral was $368,000 for a nicely remodeled, direct ocean, 4th floor northeast corner, 3 bedroom, 2 bath unit at Ocean Pines in downtown Cocoa Beach. Another nicely remodeled 3rd floor unit in the same building closed for $305,000 and a 5th floor, 3 bedroom, 2 bath next door at the 10 year old Palmas Majorca sold for $332,000.

The lowest price for a direct ocean unit in July was $191,500 for a 2nd floor, 2 bedroom, 2 bath foreclosure at Sun Club in south Cocoa Beach. It had no garage and needed work.

Now for a study in contrasts. Someone paid a surprising $295,000 for a 910 square foot, 2nd floor direct ocean, 2/2 with no garage at Chateau by the Sea. Three days later someone closed on a 1568 square foot, 5th floor 2/2 direct ocean Wavecrest with garage in south Cocoa Beach for $276,500. Both units were furnished. Imagine an astute buyer looking for comps to aid in formulating an offer on another unit and finding these two sales closing three days apart at prices of $176 per square foot and $324 per square foot. Which is relevant? Chateau is a weekly rental building which means income possibilities are much greater than Wavecrest. Wavecrest is 11 years newer and in much better condition. I think neither of these sales can be taken alone to form any conclusions about the market. I just mention them as an observation of extremes.

"A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain."______Robert Frost

Humphrey come home - He's on the way

Good news, bad news. Good news first. Humphrey has been located. Bad news; because he was found wandering late at night by a couple as they were leaving town for vacation, he is presently taking a vacation in North Carolina with two shelties but will be home soon. We are all very happy.

Captain Hiram's

Captain Hiram's on the mainland at Sebastian, a fun boat ride lunch destination from Cocoa Beach via the ocean or the river.

Three weeks into July and 19 MLS-listed condos and townhomes have closed in Cocoa Beach and Cape Canaveral. Prices have ranged from $28,000 for a 1/1 short sale in Cape Canaveral, three blocks from the beach to $305,000 for a remodeled partially furnished 3rd floor 2/2 direct ocean unit at Ocean Pines in Cocoa Beach.

An interesting observation about the sales so far is that the six highest prices were all direct ocean 2/2 units above the ground floor in older buildings and none were short sales or foreclosures. Prices ranged between $250,000 and $305,000. This type of unit is the bread and butter of our market. Anecdotally, there seems to be more demand for direct ocean 2/2 units than any other condo type in our market. While prices for this property type have eroded along with the general market, the degree of depreciation has been less than other property types that experienced overbuilding during the boom years. Consider the many Cape townhomes built in the last 6 years that are selling for a third of their new price, e.g. Portside, Perlas, Sea Spray, etc.

The direct ocean buildings built in the last ten years have not included any two bedroom units. The trend during the boom was to build bigger, more luxurious units with at least three bedrooms. The norm in the years before 2000 was to build a mix of mostly 2/2 units with a few 3/2 units. Those older units are filling the niche for buyers wanting direct ocean but unable or unwilling to pay $400,000 plus for a big newer unit. If this is your target property type be aware that other buyers are becoming comfortable with the current prices levels and are contracting and closing these units in this apparent sweet spot range of mid $200s to low $300s. Expect to pay slightly more for nicer units.

"I definitely don't think that I'm hot doo-doo. I don't."
_________Drew Barrymore

Lazy days of summer

I'm guessing that by now most of the stragglers have updated their listings. The number of Cocoa Beach and Cape Canaveral MLS-listed condos and townhomes closed in the month of June is at 44 units as of this morning. None of the late arrivals exceeded the high number for the month which was $430,000 for one of the bank sale Ocean Club units.

Sales are plugging along so far in July with several nice direct ocean units closing last week. These included an upgraded and fully furnished 3rd floor Ocean Pines 2 BR, 2 BA with garage that closed for $305,000. A top floor (7th) Windward East, Sand Dollar floor plan (wide living room with two sets of sliders) 2 BR, 2 BA with garage went for $299,000. A big 5th floor 2 BR, 2 BA unit with garage at Wavecrest in south Cocoa Beach sold fully furnished for a surprising $276,500. That qualifies for "smoking deal" status. In Cape Canaveral, a super nice, remodeled Canaveral Sands 2/2 with garage sold unfurnished for $260,000.

Off the ocean a short sale Portside Villas 3 BR, 2 BA has closed for $105,000. It sold new four years ago for $239,000.

As prices have retreated, I've been seeing first right of refusal being exercised more frequently. This process deserves to be misunderstood as it often is. What it usually means (in our area) is that a contract for sale of a unit is offered to all the current owners who have the right to match the contract and purchase the unit themselves under the exact same terms of the original contract. Some associations mail the contract to all owners and some simply post the contract in the lobby or common area. (Not optimal for out-of-town owners.) Time periods are typically in the 10 to 14 day period during which time an owner intending to exercise his right must declare his intentions and present a matching contract. Should more than one owner declare intention to exercise, the condo docs spell out the process for determining priority. Some associations use numerical proximity while others decide based on physical proximity of units. Others let the seller decide which contract to accept. The end result is that the original buyer is out. It's not fair but it is the way it is.

One unintended side effect of the process is that all owners are aware of a contract price even in the event of a failed sale. I can think of one unit in south Cocoa Beach that is on the market for $25,000 more than the posted contract that failed. All the owners in the building and clued-in agents who perused the bulletin board during the posting period are aware of what those sellers were willing to accept. They are understandably upset at the process.

We saw asking prices in another large complex domino down when a low-priced contract went out to the owners a couple of weeks ago. If you're offering on a unit in a first right complex be aware of the chance of losing your contract.

"You can have anything you want,
But you better not take it from me."
______Guns n Roses

June Numbers

Cocoa Beach from the east.

The real estate market in Cocoa Beach and Cape Canaveral is not typical. With condos and townhomes making up the majority of sales here, investment and 2nd home purchases dominate the activity. While other more typical markets benefitted from the first time homebuyer credit, we didn't get the boost that some may have expected. Our June sales were right in line with last year's numbers with 39 closed sales of MLS-listed condos and townhomes in the month in the two cities compared to 41 in 2009. That number will likely wind up equal to or higher than last year's as lazy listing agents and inefficient offices get around to updating listings in the MLS that actually closed in June.

In going through the numbers of closed sales and recent price reductions, I'm getting a sense of renewed downward pressure on prices in some market segments. The bank liquidation of the Ocean Club building will likely negatively impact the troubled high end market as eleven buyers in the luxury market are now out of the picture having purchased there. There is one unit left in that building now, $849,000 for a 4565 square foot penthouse, not a great deal for a unit with a big chunk of it's ocean view obscured by the Coral Seas building immediately east.

Eleven of the closed condo sales in June were for less than $100,000 and none exceeded $430,000. Eleven of the total were short sales and nine were bank owned. It doesn't take Miss Cleo to figure out that with that level of distressed sales happening, unrealistic sellers are not going to find a buyer. Sellers take note: you are competing with the banks for buyers and you must accept that aggressive pricing is paramount in selling your property. If you're looking to buy, as always, define your wants, line up your purchase money and be ready to move when a priced-right property matching your criteria becomes available. I'd also advise being aware of current closed prices for your property type. Throwing out unresearched lowball offers hoping for a miracle is not a purchasing strategy. If you can't substantiate your offer price, you are probably wasting your time. Focusing on getting a big discount to asking price rather than getting a good deal may cost you a deal on an aggressively-priced property. I've said this before but it bears repeating. A strategy of offering an arbitrary percentage of the asking price is stupid. Nothing matters but the final purchase price and some asking prices are more realistic than others.

"An investment in knowledge pays the best interest."
______Benjamin Franklin

Big changes for condos revisited

Father's Day 2010 just before sunrise, south Cocoa Beach.

A followup to the post about the new condo law going into effect July 1. I have been very involved over the years with sales in the few weekly rental complexes that exist in Cocoa Beach and Cape Canaveral. Unlike other coastal areas in Florida, most ocean condos in our two cities do not allow short-term rentals of units. This dearth of competition is great for the owners of the limited number of vacation rental condos. However, there have been attempts in recent years by groups of owner-residents and (rumored) the hotel/motel industry to limit or restrict weekly condo rentals in our area. Two issues in the new law are of particular interest to owners and prospective buyers of vacation rental condos.

I mentioned in the other post the sprinkler system retrofit rules. There has been some anxiousness among owners in these complexes as the cities and state began making noises about possibly requiring short-term rental buildings to be retrofitted with sprinkler systems. This really reached a feverish pitch when a small group of resident owners at Cocoa Beach Towers attempted to stop weekly rentals at their building just north of the Cocoa Beach Pier. The City of Cocoa Beach and the State of Florida became involved and the sprinkler system issue became a focus. It was eventually decided that the building could not be forced to retrofit under the existing law and the new law reiterates that fact.

Another reiteration in the new law concerns associations that try to change rental restrictions by a vote. The law states (paraphrasing here) that any amendment that prohibits renting or leasing of units, changes the permissible lease term or that specifies or limits the number of times a unit may be rented within a certain period will only apply to owners who consent to the amendment and owners who acquire title to their unit after the effective date of the amendment. This should alleviate concern for investor owners in buildings like Cocoa Beach Towers that have a large enough contingent of owner-residents to conceivably pass such an amendment.

To read a synopsis of the entire bill, go to Donna DiMaggio Bergers excellent condo law blog and scroll down to her June 10 post about the bill and link to the synopsis.

As always, I am not an attorney nor ever wanted to be. For legal advice, seek the advice of a lawyer rather than trusting my Barney Fife interpretations. If using me for the services for which I am trained, real estate, and the information I've freely disseminated here for the last five years, I appreciate your loyalty.

"You'll miss 100% of the shots you never take."____Wayne Gretzky

A day in June

Our depleted MLS inventory continues to drag on activity. We never saw the usual increase in new listings that we've come to expect every spring and it's making the search for good properties tougher than it's been in a long time. The good properties that do come on that are priced right are selling. If you're looking to purchase, it will pay to have your ducks lined up in advance and be ready to move when the opportunity presents itself. The competition is intense in desirable property types like weekly rental condos.

Twenty MLS-listed condos and townhomes have closed so far in June in Cocoa Beach and Cape Canaveral, none for more than $430,000. Sales of note include:

The highest price sale so far; a four year old, top floor (5th), 4 bedroom, 3.5 bath, direct ocean northeast corner at Almar in south Cocoa Beach. This unit has 2713 square feet and a private 2 car garage. Sold new in 2006 for $900,000 and closed this month as a short sale for $430,000.

A beautifully remodeled 5th floor southeast corner direct ocean at 2100 Towers in Cocoa Beach sold for $350,000. This over-sized (1600 square feet) 2 bedroom, 2 bath unit with a single garage sold fully furnished.

A super nice direct ocean 3 bedroom, 2.5 bath, 2 story unit at Cocoa Beach Club closed for $280,000. This unit had been over-the-top remodeled and was never rented even the Cocoa Beach Club allows weekly rentals. This was a deal.

Two Spanish Main units in the popular weekly rental building in downtown Cocoa Beach have closed. One, a furnished 3 bedroom, 2 bath, 2nd floor with a peek of the ocean from behind the pool with some remodeling sold as a short sale for $240,000. The other was a foreclosed 2 bedroom, 2 bath, 3rd floor in need of lots of work, also behind the pool. Sold for $214,000.

A cute but small direct ocean, 2 bedroom, 2 bath, 4th floor at Ambassador Shores in south Cocoa Beach sold fully furnished for $200,000. Even without a garage, that's a smoking deal.

A direct canal front, 1st floor, 2 bedroom, 2 bath in original condition with garage and boat slip at Beachwalk in Cocoa Beach sold for $169,000.

A 5th floor direct Banana River, 2 bedroom, 2 bath unit at Costa del Sol in Cape Canaveral closed for $145,900. It had a private garage and was in mainly original condition.

Two short sale Oak Park townhomes, both with 1855 square feet and 2 car garages have closed. One was a 4 bedroom, 3.5 bath that sold new in 2006 for $299,900. It closed last week for $135,900. The other was a 4 bedroom, 2.5 bath that sold new in 2006 for $318,000. It closed last week for $129,000.

A lakefront 3 bedroom, 2 bath ground floor at Harbor Isles in Cocoa Beach sold for $115,000. Needed work but had 2 private garages.

A foreclosed 2 bedroom, 1 bath at the Diplomat in Cocoa Beach sold for $107,000. Two week minimum rental at this very popular with snowbirds complex.

A small, furnished 1st floor 2 bedroom, 2 bath flat at Villages of Seaport in Cape Canaveral sold for $103,000.

And a short sale, 2nd floor condo conversion at Brisa del Mar on Ridgewood in north Cocoa Beach sold for $58,000. This same unit sold for what now seems insane, $178,000, when 1st converted in 2005.

Three single family homes have closed so far this month, only one worth noting. It was a short sale direct river pool home that had one of the nicest remodels that I've ever seen. It had 2730 square foot, 3 bedrooms, 3.5 baths in like brand new condition with top of the line everything and a beautiful view of the islands. Closed last week for $510,000.

"A ship is safe in harbor, but that's not what ships are for."_________William Shedd