Parsing May

A reminder from 2004 hurricane season

The numbers are in and May was another record setting month for residential sales in Cocoa Beach and Cape Canaveral. According to the Cocoa Beach MLS there were 14 single family home sales in the month, all but two in Cocoa Beach. The highest priced Cape Canaveral sale was a small 3/2 in decent condition a few blocks from the beach that sold for $172,000. Prices ranged from $130,000 for  a small 3/2 fixer-upper on West Volusia to $1.25 MM for a direct ocean 5/4 beauty with 3800 square feet in south Cocoa Beach. Eight of the fourteen closed for cash.

There have been only two months in which 60 or more MLS listed condos closed in our two cities since June of 2006, first in August 2011 and again in May of 2012. There have been 61 unit sales recorded as of this morning. As always, that number will likely increase as snoozing listing agents get off their behinds and close their listings. Twenty of the sales were for less than $100,000 and only six for $300,000 or more. The only condo to sell for more than $360,000 was the entire 4th floor Riomar in south Cocoa Beach. This 3008 square foot unit recorded for $675,000 but there were non-cash concessions that indicated the actual selling price as over $700,000.

Bayport in Cape Canaveral contributed four of the sales at blowout prices as low as $73 per square foot for a six year old 3/2 unit.

Magnolia Bay sold two more 2nd floor luxury units at very aggressive prices. Remaining inventory there is getting slim.

A Perlas del Mar luxury townhome in Cape Canaveral that sold new in 2007 for $450,000 closed as a short sale for exactly one third the original price. Stupid cheap at $64 per square foot. Try building one for that.

The last of the developer foreclosures at Mystic Vistas closed for $195,000. There are currently only three listings in the complex, lowest asking price $299,900.

Of the 61 closed sales in May, five were short sales and eight were foreclosures. Two thirds sold for cash. One by-product of the robust sales is a rapidly declining inventory. There are but 49 single family home listings in the two cities this morning. One is a short sale and there are zero foreclosures.

There are 289 active condo and townhome listings. Twenty are short sales and twenty are foreclosures. Of these forty distressed listings only one is direct ocean, a ground floor 3/2 in Cape Canaveral asking $249,900. Pickings are slim.

“How did you go bankrupt?
Two ways. Gradually, then suddenly.”
_______Ernest Hemingway

5000 words - click to enlarge

Canadian dollar to US dollar May 2012

Ding dong

Sweet Cushman scooter in front of The Surfinista

I know I've said before that no one would be ringing a bell at the bottom of the price decline but I changed my mind and just rang it. Readers know that I often mention that there is no "market" that one buys, only properties. The "market" bottom will not coincide in most cases with the bottom in specific property types, neighborhoods or condo complexes.  There are different dynamics at play in each category. This bottoming began over a year ago in troubled complexes like Mystic Vistas which was ahead of the curve because of the high number of developer foreclosures. We have already seen enough closed sales there at prices 20% to 25% above the lowest prices to safely say that it's unlikely we'll see any reason for prices to drift back to that range from two years ago when units sold for $150,000. The last of the developer foreclosures have closed.

The bell will be ringing later for a few other complexes like The Pier Resort which still has eleven active foreclosure listings, half of all foreclosures currently for sale in Cocoa Beach and Cape Canaveral. We could very well see prices drift lower there before the remaining units are sold. In general, the mountain of short sales and foreclosures have been absorbed. Those sellers who hung on through the downturn now have some negotiation strength selling into a skinny inventory without competition from loads of distressed properties.

Out of 362 total residential properties for sale in the two cities, 12% are either short sales or foreclosures, 3% of the total at the Pier Resort. Four new short sales units that hit this week in south Cocoa Beach have multiple bids and will be under contract shortly. Absent those and the Pier Resort units we are at 8% distressed. Compare that to 56% of condo sales distressed in 2010.

In 2010 the tide of distressed deals peaked. As of  May 2012 that spring tide of supply has receded. This morning we have less total condos for sale than we had distressed listings two years ago. Instead of a choice of 300 plus short sales and foreclosures in spring 2010, this morning buyers have 44 distressed sales from which to choose with eleven of those in one complex. For a buyer serious about getting a property here at a significant discount to recent prices, the quest to get the lowest price in the complex will more often than not be unfulfilled. Those waiting for another $150,000 Mystic Vistas since 2010 are still waiting and watching prices notch steadily higher.

Draw your own conclusions. If I were personally looking to purchase a residential property in Cocoa Beach or Cape Canaveral, at this point I'd be less concerned with getting the lowest price in the neighborhood than in getting exactly the best-suited property for me. Prices are still very discounted (in most cases) from the peak six years ago and the inventory continues to shrink. I'd love to have been the guy who bought a Mystic unit for $150,000, but, in the grand scheme of things, $200,000 ain't such a stinking deal, ego aside.

Enjoy your Memorial Day weekend. As I type this, the Dragon spacecraft is docking with the International Space Station. Right on, private industry.

"As Coroner I must aver, I thoroughly examined her.
And she's not only merely dead,
she's really most sincerely dead.
Ding dong, the witch is dead."
_____from the Wizard of Oz

May - so far

This needs to be repeated: All the research in the world and the most persuasive argument for a well-substantiated price is meaningless to a buyer or seller who refuses to accept it.

I can show a seller of real estate that the market price for her property is between X and Y dollars based on recent sales of similar properties. If she thinks prices are headed up and is unwilling to accept an offer between $X and $Y a sale isn't going to happen unless a buyer wants the property enough to pay more. Conversely, a buyer who believes prices are going lower and will only pay less than fair market value, may not find a seller willing to play. Despite the high incidence of unrealistic participants in our market we continue to see about ten pairs of buyers and sellers of residential properties finding the middle ground and closing every week in Cocoa Beach and Cape Canaveral.

As of this morning, May 18, 2012, there have been six closed sales of MLS-listed single family homes in the two cities. None were short sales or foreclosures. Of the 58 homes currently for sale there is but one short sale and no foreclosures. Of the six sales so far this month the highest price paid was $575,000 for a 5 year old, 4454 square foot, non-waterfront townhome in south Cocoa Beach. This half duplex has never been lived in and has been on the market since May of 2008 when it was offered for $1,395,000.

A waterfront Snug Harbor 4 BR, 2.5 BA on the secret pond on West Bay closed for $260,000. It had 2294 square feet and was on a big .48 acre lot.

A non-waterfront 4/3 with 2441 square feet on Greenwood in Cocoa Beach sold for $301,000.

A nicely remodeled 3/2 with 1329 square feet two blocks from the beach in Cape Canaveral sold for $172,000.

Condo sales are chugging along with 25 units closed so far. Two were short sales and two were foreclosures. Highest sale so far was $675,000 for the entire 4th floor at Riomar. A total of 3008 square feet with 4 bedrooms and 3.5 baths. Super luxuriously remodeled. There were some off-the-record concessions which made the actual price paid over $700,000.

A top floor SW corner with side ocean views at Majestic Seas sold for $360,000. It had 3 bedrooms, 2.5 baths, 2100 square feet and a two car garage. It was first listed less than a year ago for $669,900. That's a remarkably fast turnaround for an unrealistic seller.

Two more Magnolia Bay units have closed, both second floor. One with 2455 square feet sold for $340,000 and one with 2183 square feet sold for $300,000. The pre-construction asking price for the 2183 square foot units in 2006 was $549,900. Now that the complex has stabilized and is around three quarters sold, I think these units are excellent value at these prices. All have 10' ceilings and two car garages and the quality of construction is tops.

A 2nd floor, 3/2 direct ocean SE corner with 1625 square feet at Las Palmas on the ocean in north Cocoa Beach closed for $285,000. It was partially remodeled, fully furnished and had a one car garage.

A top floor corner Solana Lake 3/2 with 1956 square feet closed as a short sale for $230,000. It sold five years ago for $400,000.

One of the bank-owned Pier Resort units with 3 bedrooms, 3 baths and 3400 square feet sold for $265,000. A slight peek of the ocean across the Pier parking lot. They were asking $450,000 for these in 2006.

One of the big rambling corner 3/2 units at Shorewood sold for $210,000. It had 2104 square feet, a one car garage and the tiniest peek of the ocean if you squinted your eyes or used a Realtor mirror.

A south facing Royale Towers C building 7th floor 2/2 sold for $190,000. Had a one car and 1256 square feet.

A north facing Windrush 2/2 on the 5th floor with 1271 square feet closed for $199,500.

A top floor (7th) direct ocean Windward East 1/1 with garage sold for $175,000. 902 square feet.

A Stonewood D building ground floor remodeled 2/2 sold for a shocking $140,000 with the owner holding a mortgage.

Profitable flip: A nicely remodeled, second floor Royale Mansion 1/1 with a peek of the ocean closed for $130,000. We've seen prices for these units move up considerably from last year's sub-$100K closing prices. This particular unit was one of those, selling last August as a foreclosure for $90,500.

A very nice Captain's Cove canal-front 3/2 in Cocoa Beach sold for $129,900. This is smoking deal territory with 1841 square feet, garage AND a boat slip.

We set another MLS record this week with total condos and townhomes for sale in Cocoa Beach and Cape Canaveral dipping below 300 units for the first time. We stand at 294 total units this morning. Of those, 14 are short sales and 20 are foreclosures or 12% total distressed, also a record, the lowest level since 2007 when there were no distressed sales.

I had another crazy Realtor encounter this week, this one with a 20 plus year veteran who apparently is just learning about short sales. I'll spare you the details but trust me when I say that you can't depend on someone's years in the business to be an indicator of their competence. Choose your agent carefully and please ask a few questions of them to determine if there is any gray matter lurking behind the over-sized sunglasses. Sellers would be well-advised to check the MLS listing of their property. I'm sure many would be shocked at the photos or lack thereof and the chimpanzee narratives.

The lingering small swell is still here with favorable light winds most days and the recent rains have turned plant growth on high. Sea turtle nesting activity is strong with several new nests every night on the beach down my way. It's another beautiful spring in Cocoa Beach.

"I'm surrounded by water and I'm not going back again." __Zac Brown

Wearing the greed blazer

Calm day fishing offshore Cocoa Beach.

Had an interesting couple of conversations last week. It began with an email two weeks ago from a real estate company in New York telling me that if I would sign the attached form agreeing to pay them a 25% referral, they would hook me up with one of their clients that was interested in purchasing property in our area. This was my first contact with this company.

It's not uncommon for agents to receive referral solicitations via email although, in my experience, the legitimate ones are typically preceded by a phone call or email from the referring agent with details about the client, specifics of the referral, type of desired property, etc. If I was hungry at the time and wouldn't get the buyer otherwise, I might consider the referral arrangement. I responded with the following; "Are you willing to modify the agreement to reduce the referral percentage if the buyer's broker commission offered is less than 3%? If I wind up selling your client something under $150K that only pays me 2.5 or, Heaven forbid, 2% or less, then giving you 25% of that small amount leaves very little left for me. I'm fair if you are." No response and I forgot about it.

Late last week I received a call from the brother of a client who purchased a condo recently. He said that he would like to work with me as his sister had highly recommended me. We discussed what he was looking for and we talked at length about recent sales, inventory and likely targets for him. After discussing the market and property specifics, he nervously mentioned that he had a "situation". The "situation" turned out to be that he needed to work something out to get his Realtor girlfriend paid a referral. Translation: He needed me to pay her a chunk of my paycheck for doing nothing other than inserting herself between him and the agent he already wanted to work with, me. His understanding was that it would be less than 10% of my pay. I told him that I'd be fair and hoped we could work something out.

Upon further discussion it turns out that she was the source of the email from two weeks earlier who never responded to my questions. About an hour after my conversation with him my phone rings and, Voila, it's the girlfriend who couldn't be troubled to call me the first time to introduce herself. She told me if I wanted to work with him that I was going to have to give her 25% of my commission. A demand like this would normally end the conversation for me but in the interest of helping my client's brother I was willing to pay the extortion if she would be somewhat reasonable. I asked if she was willing to be flexible with the amount of the referral depending on the situation we ultimately found ourselves in, a possible low commission deal or a situation where I might need to concede some of my pay to get the deal done, etc. Her response, "No compromise. If you won't agree to 25% regardless of circumstances I have another agent standing by willing to play by my rules." I told her that, unfortunately, her boyfriend would have to work with the other agent, not the one his sister recommended and with whom he wanted to work.  [A little background: Not all listings pay the same rate of commission. I have been paid as little as zero and as much  as 4%. In the case of a zero commission deal, 25% isn't going to matter but if a listing only pays 2% or less, her demand for 25% will likely whittle my pay into the not-worth-the-trouble range, hence my question about her flexibility depending on circumstances.]

After we hung up I imagine she got busy selling her boyfriend on what a jerk I was and that she's found another wonderful agent to help him. I wish him the best in his search and hope she got lucky and found a decent agent to help him but the chances are that an agent hungry enough to go along with her uncompromising demands is not one of the better choices for him. Think his new agent will be showing him low commission listings or be willing to concede any commission to get a tight deal done knowing that the remainder will be taxed at an onerous 25% before their broker takes his split? Not. To be fair to the pushy girlfriend, many brokers especially those affiliated with national franchises play the heavy hand to get their agents to aggressively pursue referrals. I've worked for a broker like that but never played along because the whole practice of referrals always smelled wrong. It's one of the many reasons why I work from my own brokerage now.

I hired an agent to sell my mother's house in another state last month. I can't imagine any scenario where it would have been fair to expect this hard-working agent to give me part of his check just because I have a license in Florida. His job was no easier because I'm licensed. It's like my niece expecting the The Fat Snook to give her a cut of my tab because she works at a restaurant in Clearwater. Agents out there, listen up. Stop being greedy and potentially damaging your clients by demanding part of some hard-working agent's pay. Just because this stinking practice has been tolerated for years doesn't mean it's right.

I'm left with a bitter taste in  my mouth about my chosen profession and reminded how much greed drives many of those who wear the blazer. It just makes me more determined to be as different from them as I can possibly be. I have never and will never request a referral from another agent because, no matter the situation, it just might, as in this case, negatively impact the client.

Yours truly, The Anti-Realtor

“The first time someone shows you who they are, believe them.” __Maya Angelou

April activity in Cocoa Beach

Sales in the month of April continued at the brisk pace of recent months with 51 condo sales in Cocoa Beach and Cape Canaveral as reported by the MLS. The number will creep upward as slacker listing agents update their sold listings.

There were 12 single family homes closed in the month with all but one in Cocoa Beach. Only one of the twelve was distressed, a foreclosed nine-year old, 4 bedroom, 3 bath with 1900 square feet and a 2 car garage 2 blocks from the beach close to downtown Cocoa Beach. It sold for $240,000.

The highest priced home sale was a Cocoa Beach beauty on .83 acres of direct ocean with 5518 square feet, 6 bedrooms, 5 baths and 2 half-baths thrown in for good measure. Closed for $1,095,000 cash.

Other waterfront homes ranged from a well-cared-for, small canal-front 3/2 on DeLeon that sold for $230,000 to a 3926 square foot 3/3/2 on Danube with pool and 150 feet of open waterfront that sold for $500,000. A small older 3/2 on the open river in south Cocoa Beach closed for $333,000.

Of the 51 sold condos, thirteen sold for less than $100,000. Lowest price was a 513 square foot Essex House in Cocoa Beach that sold for $35,000. The other sub-$100K sales were in Morgan Manor, Canaveral Breakers, Atlantic Gardens, Highland House, The Oaks, Twin Towers, Villages of Seaport and the Saturn.

There were nine direct river units closed in the month, all but one in Cocoa Beach. Lowest price paid was $117,500 for a nicely remodeled, fully furnished, third floor 2/2 with 1200 square feet at Treasure Island Club in Cape Canaveral.

Others included; a ground floor 2/2 Sunset Harbor with 1323 square feet and garage that sold for $141,000.

A top (5th) floor Seminole Landings 2/2 with 1080 square feet and garage for $145,000.

A 1st floor Banana Bay 2/2 with 1344 square feet and garage for $158,000.

A foreclosed 8 year old, 2nd floor Solana on the River 2/2 with 2055 square feet and garage for $169,900.

A new 3/3 West End unit (behind Sunset Cafe) with 2084 square feet and garage for $285,000.

A 2nd floor Magnolia Bay 3/3 with 2108 square feet and a 2-car for $320,000.

AND...two more Villa Verde super luxury 3/3.5 square foot corner units closed for $345,000 and $399,000. Note that there may have been buyer rebates. That makes seven of the eight available units closed. One left unless the top floor comes available.

Sales of note in oceanfront buildings included; a 5th floor side view 2/2 Driftwood Villas on Ocean Beach Blvd. with 1101 square feet and open parking that sold for  $165,000.

A partially remodeled ground floor 3/2 La Mer corner that sold for $175,000. Had 1616 square feet and garage. The identical floor plan on the 3rd floor also closed for $226,500.

A 3rd floor north view Windrush 2/2 with garage and 1256 square feet closed for $190,000.

A sparsely furnished and partially remodeled  2nd floor south view Canaveral Towers 2/2 with carport sold for $205,000. Weekly rentals allowed.

A 3rd floor south view Cape Winds 2/2 with the wide balcony and open parking sold for a surprising $225,000. That pushes the comps at Cape Winds back up. Weekly rentals allowed.

A 10th floor Stonewood 2/2 with 1317 square feet and garage closed for $225,000.

A nice north side 2nd floor Sandcastles 2/2 with 1286 square feet and garage closed for $235,000. That has to make the last two purchasers of other same floor plan units there very happy. I represented both. One was a ground floor that sold in March for $140,000 and the other was right next door to the recent sale except that it closed for $70,000 less just a few months ago. The comps are bumped considerably upward at Sandcastles with this closing. Weekly rentals allowed.

A direct ocean 2nd floor Shorewood 2/2 with 1663 square feet and garage closed for $285,000.

An 8th floor Constellation in south Cocoa Beach with 2126 square feet and garage closed for $350,000. Was in mostly original condition. A 5th floor same size foreclosed unit closed for $315,000.

AND...the high ocean condo sale of the month was a 2nd floor Meridian 3/2 with 2072 square feet and garage that closed for $539,000 cash after just seven days on the market.

As of this morning there are 308 total condo and townhome listings in Cocoa Beach and Cape Canaveral. Of those, 21 are short sales and 23 are foreclosures (11 in the Pier Resort alone). Distressed sales now make up just 14% of the condo market. There are 61 MLS-listed single family homes for sale this morning. Five are short sales and there are no foreclosures. That's 8% of the single family home market distressed.

If you're looking to buy, the current trend is obvious. Could that change? Absolutely. Can anyone accurately predict where prices are headed? Yes, but only in the absence of a black swan event. With no tidal wave of foreclosures or other economic Armageddon our prices should continue to stabilize. They have already begun to turn upwards in some complexes. Don't forget that all complexes are not in the same health as evidenced by the foreclosure listings. The Pier Resort is still under the weather while other condos like Mystic and Magnolia Bay have recovered from their flu and are breathing easier. Do your homework and beware your own confirmation bias. If you're expecting the world to end, you tend to look for evidence to support that.

Teach the children quietly for some day sons and daughters.
Will rise up and fight where we stood still.

_____Mike and the Mechanics

Clarification, my brother

Some interesting points and opinions were expressed in the comments to the last two posts. First one was the definition of "distressed sale". When I report stats relating to distressed sales, I'm talking about short sales and foreclosures only. The broad definition of "distressed sale" usually means an urgent sale of assets due to a negative situation. There is no box for listing agents to check for "negative situation" so I use the  metrics that are available to me, short sales and foreclosures which, according to MLS rules, must be indicated in a listing. There probably have been many hundreds of sales in the last few years that involved a negative situation on the part of the seller but if it wasn't a short sale or foreclosure it hasn't been included in my "distressed sale" stats.

Another much-discussed subject is that of a predicted tidal wave of soon-to-arrive inventory. I can't comment on any bank's backlog of to-be-foreclosed loans as I don't have access to that info if they haven't filed a lis pendens. As Local Appraiser mentioned we can get a feel for the number of troubled owners in a complex who may be in trouble by searching for HOA liens which, in most complexes, will be recorded before a lender gets around to filing a lis pendens. Looking at one large 8 year old complex that we have discussed often we find that the association filed it's first lien for unpaid association dues in 2007. The history of this association's liens and MLS foreclosure sales is charted below. The correlation between HOA liens and foreclosure sales is obvious. There are three foreclosed units under contract at the moment with no others actively for sale. There are less than five unsatisfied liens besides the three foreclosed units under contract. Interestingly, this particular complex had it's own little mini-flood of foreclosures dumped on the market in two separate groups. The last group sold for about 20% more than the first group. As always, draw your own conclusions.

One reader is concerned that millions of new foreclosures flooding onto the market will move prices in Cocoa Beach and Cape Canaveral drastically lower. Do I think we'll see millions more foreclosures in the United States? Entirely possible. Trouble in faraway markets always has some trickle down effect in retirement and vacation home destinations like Cocoa Beach and Cape Canaveral. Potential buyers' ability and willingness to purchase here is affected by events in their home markets. Will we see a flood of foreclosures in Cocoa Beach and Cape Canaveral? I don't think so. As always, I could be wrong. Local Appraiser was kind enough to share the findings from a random sample of 30 mid to high end condo complexes. There were 38 units in some stage of foreclosure, slightly more than one unit per complex. Three times that number dumped on the market today would get our inventory back to where it was one year ago.

This brings up another point, the idea of a "market" that behaves in sync. Ours does not. The dynamics are entirely different in a complex that was completed at the peak of prices. Example: Mystic Vistas, Portside Villas, Sea Spray Townhomes, Meridian, Oak Park, etc. Because these units closed when prices were highest, every owner found themselves with a unit worth less than their purchase price within a year or two of purchase. By 2009 those who bought with a low down payment mortgage found themselves owing more than their units would sell for. Their options were; keep making payments on a depreciating property, short sale,default or sell for a loss and write a check for the difference. The ones who paid cash had the bitter luxury of being able to wait for a rebound or selling for a loss and moving on.

In complexes that were completed before the run-up of prices in the mid-2000s the dynamic was, and is, far different. Except for units that turned over during the peak years or were refinanced, the pressure to sell didn't exist. Prices did retreat in these complexes as the market cooled but at a far lower rate than the new complexes. We saw prices retreat by over 70% in some of the new buildings while some older complexes had declines of less than 30%. These older buildings are likely to have far fewer foreclosures going forward and consequently less downward pressure on prices. My point is that a flood of foreclosures, should it come, will not be equally spread among complexes and will not have equal effect. The "average" would be affected but no one buys or sells the "average".

For the record, I maintain my opinion that we will not see a flood of new foreclosures in Cocoa Beach and Cape Canaveral. The declining incidence of HOA liens seems to support the fact that there isn't a massive group of troubled owners that are freeloading on the bank's dime. Maybe there are hundreds of condo owners in default who are current on their HOA fees. I tend to agree with Local Appraiser that, whatever the number of properties that will be foreclosed, they will be not be dumped on the market at once. The banks find themselves in a good position of very low supply and can use that just like they did at Mystic Vistas to get higher prices. I could be wrong but I'll be happily wrong at the beach with my toes in the sand. Thanks to all those who commented (especially Snowy and Local A) for the spirited discussion. I gladly entertain dissenting opinions and other's research.

"Nothing in life is quite so exhilarating as to be shot at without results." ____________Winston Churchill

Uncontrolled descent

The incredible shrinking condo inventory made another big move this week with 30 units going under contract since last Friday. That brings our total condos for sale inventory in Cocoa Beach and Cape Canaveral down to just 325 units this morning, April 20, 2012. That's a reduction of 28% since March 2011. Distressed sales make up 14% of the total with 24 short sales and 23 foreclosures. That's the lowest level of distressed properties since 2008, the year the first short sale was seen in our market when 15% of condo sales were distressed. (Click on either chart for a larger version.)

Single family home inventory is in a similar shrinking trend with a total inventory in the two cities of 65 homes for sale. Only 6% are distressed, four short sales and no foreclosures. Buyers with specific criteria have a very small basket of matching properties from which to choose. One consequence is an increase in the frequency of multiple offer situations. A note to buyers here; if your buyer's agent tells you that there are other offers on a property you want, don't assume the listing agent is playing games. If you want the property, stay engaged. Withdrawing or not offering because you distrust the Realtors involved doesn't accomplish anything other than eliminating a property from your list. With the abundance of lowball offers floating around, the fact that there are multiple offers may have no impact on your eventual purchase price. One of my clients was the winning offer this week at 83% of asking price in a three offer situation. Keep in mind.that, while distrust of real estate agents is a healthy thing, some of us can be trusted. Blanket distrust can be counter-productive to your goal. As I've said before, if you don't trust your agent, get another one.

"Weaseling out of things is important to learn; it's what separates us from the animals...except the weasel." ___Unknown