Wednesday, November 16, 2022
Wednesday, October 19, 2022
There were sixty closed sales of condos and townhomes in our two cities in the month of September. Prices ranged from $1,585,000 for a remodeled 22 year old oceanfront corner 3/3 at Solana Shores to $129,400 for a 64 year old, 338 square foot 1/1 a block from the ocean in south Cocoa Beach. Median selling price for condos was $385,000 with a median dollar per square foot of $333. Three years ago only the nicest, remodeled direct ocean units with garages were bringing over $300/sf. In September there were 17 sales of condos for more than $400/sf.
There were 14 closed sales of single family homes in September. Prices ranged from $2 MM for an oceanfront Cocoa Beach home on a double lot to $415,00 for a small, fixer-upper in north Cocoa Beach probably destined to join the swelling ranks of AirBnB properties locally. If the conversion of single family homes to vacation rentals continues much longer Cocoa Beach schools are going to be without a source of students. This is a growing problem without an obvious solution. Municipalities in Florida are prohibited from banning vacation rentals. The City of Cocoa Beach has been discussing strategies for dealing with the issue but there doesn't seen to be an easy fix.
I have recently heard a couple of stories of new homeowners being surprised that their property tax bill was significantly higher than the previous owner's. They had expected, because the seller was homesteaded at a low rate, that they could homestead and continue to enjoy that artificially low rate. That's not how it works. Once a homesteaded property is sold, the taxable value is increased to current levels and taxed accordingly. When the new homeowner homesteads that property they get a reduction in taxes from that new, higher level and, more importantly, a cap on the annual increase in taxable value. Do not expect to pay the same low property taxes as the long-time, homesteaded seller even if homesteaded again post sale.
"It's hard to accept the truth when the lies were exactly what you wanted to hear." _unknown
Saturday, September 24, 2022
Anyone who has a closing on a Florida property next week is probably going to be delayed unless they can close with no insurance. Citizens and most other Florida property insurers will not bind a new policy when a named storm is within "the box" which is approximately the entire area shown above or when we have a tropical storm watch or warning. The box is simply a huge area of the map in which no named storm can exist at the time of binding a new policy. As of this morning, we have a storm, Ian, in the central Caribbean and as of this writing is just south of the box but will be in it momentarily. The map displayed is not exact but a close approximation of the "box". Any Florida closing scheduled for next week that involves a new policy for property insurance is likely not going to happen even if the storm is hitting Louisiana and not directly impacting or threatening us. Make plans accordingly.
"Why take by force what the gullible and guileless will volunteer?" _Sal Bayat
Saturday, September 03, 2022
In the month of August 63 MLS-listed condo and townhome units closed with a median selling price of just over $400,000. Over half of the sold units commanded over $300 per square foot. A couple of years ago only the very nicest direct ocean units were selling for more than $300/sf. In August ten units in buildings not even on the ocean and without garages closed for more than $300/sf. Over half of the condo sales were cash deals and weekly rental units were still closing at the top of the $/sf range. Twenty five units sold in seven days or less with six of them selling before hitting the market. Highest price sale of the month was $1,200,000 for a 4th floor, 15 year old 3/2 beauty at The Meridian in north Cocoa Beach. Lowest price was $165,000 for a clean little, 56 year old, 2nd floor 1/1 in Cape Canaveral a couple of blocks from the ocean.
There were 15 single family homes closed in Cocoa Beach in August and two in Cape Canaveral. Five of the sold houses closed at prices above one million. The starting price for a fixer-upper, non-waterfront house is now about $500,000 thanks to AirBnB mania. The idea of making big money renting to vacationers is fueling demand for the 50+ year old houses close to the beach and is causing problems in our once-peaceful neighborhoods. The City of Cocoa Beach has been discussing new fees and penalties for noise complaints from the growing number of single family vacation rentals. They are a little tardy on taking action but the measures they are discussing will hopefully help preserve the family nature of our neighborhoods.
Hopefully we'll get to see the Artemis mission fly today after many delays and issues with the vehicle. Labor Day weekend is traditionally one of the busiest weekends of the year here but today will probably break all previous records with hundreds of thousands of people coming to see the launch added to the NKF surf contest crowd and passengers coming and going from four cruise ships in port. Yours truly will be hunkered down for the duration. Enjoy the beautiful weather and expect mind-numbing traffic.
"Consider the example of the monkey -- who, the higher he climbs, the more he shows his behind." _St. Bonaventure, the 13th-century Franciscan philosopher speaking about power and wealth
Sunday, August 14, 2022
Condo owners take notice. The first deadline required by the new Florida condo legislation is less than five months away on Jan. 1, 2023. Condo associations with buildings of three stories or more must file a report with the State by the end of this year. This new mandatory report is simple and can be done online. The registration form can be found here. The required information on the form is listed below.
718.501(3)(a), F.S./Senate Bill SB4D requires all condominium and cooperative associations with buildings 3 stories or higher to report the following information to the Division of Florida Condominium, Timeshares and Mobile Homes on or before January 1, 2023.
- The number of buildings on the condominium property that are three (3) stories or higher in height.
- The total number of units in all such buildings
- The addresses of all such buildings.
- The counties in which all such buildings are located.
Sunday, July 24, 2022
Residential inventory is exploding in Cocoa Beach and Cape Canaveral. The number of existing condos for sale is up 50% since mid-May while the number of single-family homes on offer has more than doubled during the same period. As recently as April there were only 43 condo units and 12 single family homes for sale. The numbers this morning are 101 MLS-listed, existing condo units and 27 single family homes.
Thirty units have closed in the two cities since July 1 at prices between $2 MM and $125,000. Another 46 have accepted an offer since the month began. I would expect the inventory to continue growing as sales activity typically begins to slow as we approach the start of the new school year. Sellers are still pricing optimistically but I am seeing more price reductions as some of them respond to the reality check of an apathetic market. Over 40% of the existing listings have reduced their original asking price. Just a few months ago most new listings were enjoying multiple offers with many selling over asking price. Of the thirty closed units so far this month nineteen of the thirty sold for less than asking price. Sellers, take note; the market is different than it was two months ago and the new reality is more competition, fewer buyers and tighter conditions for condo loans. With the busy months of hurricane season fast approaching, the time to play chicken with the market is behind us. Anyone hoping to sell a residential property here would be well-advised to accept the market changes and make a plan to sell that works with the new reality. The strategy that worked well earlier this year when there was less inventory, lower interest rates and a less-stringent condo mortgage questionnaire is not the best plan moving forward.
Buyers, enjoy your new status in the buy and sell dynamic. Those planning to get a mortgage need to understand what will make a condo complex fail the new mortgage condo questionnaire before they offer on a unit. If the complex is older with obvious deferred maintenance or it is primarily vacation rental units, a mortgage may be impossible. An experienced buyer's agent will have a good idea which ones those are.
"Bad artists always admire each other's work..."--Oscar Wilde
Sunday, July 17, 2022
Condominium buildings 3 or more stories will now be required to have a “Milestone Inspection” within 30 years from date of occupancy, or, if the building is within 3 miles of the coastline (this covers all of Cocoa Beach), the inspection must occur within 25 years, and afterwards every 10 years. Existing condominiums built before July 1, 1992, will need to complete the initial milestone inspection by December 31, 2024
Phase 1 inspection requires the architect or engineer to perform a visual inspection of the properly and make an assessment of the building’s condition. If the phase 1 inspection reveals no signs of structural deterioration, then a phase 2 inspection is not required. A phase 2 inspection is required if structural deterioration is noted, the phase 2 inspection may require destructive testing.
In addition to the association, the inspector's report must also be delivered to the local building official. The association must distribute a copy of the inspector-prepared summary to each unit owner regardless of the findings or recommendations in the report. Any repairs for structural deterioration must be commenced within 365 days after receiving such report or earlier as required by local authorities.
The required “Structural integrity reserve study” is the fly in the ointment for condo fees. For some well-maintained and newer buildings it will have little effect on fees but for buildings with deferred concrete repairs, the requirement to begin funding reserves immediately (or by December 31, 2024 )for a project in the near term will blow up monthly fees.
Associations have a little breathing room before December 31, 2024 but if they anticipate that the structural integrity report is going to find needed expensive concrete repairs it would be prudent to go ahead and boost fees by an arbitrary amount immediately to get a head start. I would expect some Boards to wait until the last minute to give some owners time to bail before fees go up.
Interesting fact: the concrete used in older buildings is not the same as modern concrete. I have learned that concrete formulations began evolving rapidly in the 80s and continue to do so today. Newer buildings in almost all cases were constructed with better concrete than our older buildings especially those built before the 80s. Another issue to consider when looking to purchase a beach condo. Knowledge is power.
Friday, July 08, 2022
Seven single family homes closed in the month of June at prices between $1,750,000 and $370,000, only one unit for less than $650,000. During the month 58 condos and townhomes closed at prices between $1,217,000 and $128,500 with a median selling price of $330,000.
New contract activity has slowed with only 40 condo units contracted in the last four weeks, over half in the first three weeks on the market. Nine single family homes have found a buyer during the same four week period. One notable statistic has been a shift in activity to lower priced units. Thirty of the 37 units contracted in the period were asking less than the current median asking price of $460,000. That illustrates a pretty wide gap between what's for sale and what's selling. Another shift is the number of buyers using a mortgage to purchase. Historically over half of our condo sales have been for cash. Since June 1, only 40% of condo sales were cash deals. That's surprising considering the rapid increase in mortgage rates this year. We had a welcome pull-back in rates this week with the average 30 yr fixed rate mortgage at 5.672% as of yesterday's survey.
My takeaway and observation is that there is a widening separation between buyers and sellers. Sellers in the higher price range above the median are enjoying less buyer interest except in the case of unique properties. Buyers getting a mortgage are looking at a monthly payment that is about 40% higher today than it would have been last year even after the big pull-back this week. Add in higher prices, condo fees and insurance and the climate for continued appreciation is not favorable. Those who are selling and not getting any activity need to ask themselves if this is a typical pause in a hot market or if something has changed and respond accordingly. What the neighbor got for their property in April may not be a realistic benchmark in a changing market. Buyers may still find themselves in multiple offer scenarios for desirable properties but now have the backstop of increasing inventory and cooling demand. The pressure to pay whatever it takes to win is not as applicable as it was two months ago. Best of luck to those looking to participate. Do your homework, know what's happening now with prices and inventory and adjust your strategy and expectations if the current conditions differ with your earlier expectations.
Told you so - from a post I did in December 2014:
The Cocoa Beach Pier was sold to Westgate Resorts of Orlando who have begun total renovation of the 52 year old landmark. I expect big things and probably a challenge of the height and density limits for a new structure on the parking lot. That will be highly contentious if it happens.
And just reported:
Cocoa Beach commissioners voted 4-1 Thursday to allow Westgate Resorts to build a six-story resort at Cocoa Beach Pier (above the maximum permitted building height of 45 feet) paving the way for the resort and parking garage off Meade Avenue.