Friday, July 29, 2005

Oceanfront Pick of the Week

I'm getting tired of all the talk of impending doom and the collapse of the real estate market, so, instead of repeating my somewhat tired commentary on the "bubble", I'm going to pick out my favorite property this week and explain my reasons for picking it. First, a little background that supports my pick. Most investors' favorite target in real estate these days is pre-construction. Today I have 2 closings in a new riverfront condo project in Cape Canaveral. One of the closings is in danger of failure because the investor who purchased the unit is having trouble getting financing and may not be able to close by today's deadline. If that happens, he loses his deposit. Developers are far less flexible when it comes to extending closings for strapped buyers. For that reason, and the fact that developers' contracts usually contain no financing contingency, pre-construction carries considerably more risk than normal purchases. If you can't close, for whatever reason, your deposit is at risk.

Considering that risk, I think that carefully selected existing properties may be more suited to the average person wanting to invest in beachside real estate. We are seeing continued strong appreciation in waterfront properties with increasing demand in the lower price ranges. With that in mind, my pick this week is a cute little one bedroom condo in an oceanfront building in my favorite part of the beach, Crescent Beach. This unit has been completely redone with new tile, new kitchen and bathroom and has an excellent ocean view from a large balcony for $285,000. It's small, 750 sq. ft., and has no garage, BUT, it's under $300,000 and it's on the beach. This is not my listing, so, this is not a self-serving selection, just an honest opinion. Others may disagree. Here is the view from the balcony.

There are others that I like but if I have to pick one, this is it this week.

Interest rates continued their upward crawl this week according to Freddie Mac. If you're investing in this market, I can't stress enough the importance of knowledge and due diligence. If you don't know the market, find an informed agent who knows what's going on and let them guide you to the perfect property for you. There are dangerous investments right now and there are excellent ones. The difference is often not obvious. As always, use sunscreen, drink plenty of water if you're spending any time outdoors and be loyal to your hard-working agent.

Tuesday, July 26, 2005

Discovery is up

Proud Cocoa Beach residents watch Discovery leave Earth while surfers enjoy the surprise north swell and beautiful conditions. All work in Cocoa Beach ground to a halt as everyone turned their eyes skyward.

Monday, July 25, 2005

Space Shuttle Set To Go

The shuttle is poised for a second try at launch tomorrow. It's been a while since we've seen a shuttle flight and Cocoa Beach is excited. Our real estate market is less than excited and seems to be in a slow simmer at the moment. Over half of all condo sales in the last 14 days were under $400,000. The upper range continues to languish and we're seeing properties in all price ranges sit longer than they did earlier this year. Summer is historically slower, so, I'm unwilling to call this anything but a seasonal slowdown.

An interesting footnote is the fact that no Portside Villas units have gone under contract in the last 14 days. That's with 26 units actively for sale on the MLS. Word is that the first 2 buildings will close in August or September.

MLS Stats for July 25, 2005

contracts last 14 days

condos over $500,000___ 3
condo under $500,000__ 32

homes over $500,000____ 2
homes under $500,000___ 4

active listings

condos all prices______420
condos over $500,000__ 126

homes all prices______ 59
homes over $500,000__ 36

Sunday, July 17, 2005

Waiting on the Space Shuttle

It has been an intense week here on the Space Coast with the impending launch of the Space Shuttle Discovery and the return to space for the U.S. manned space program.

Residents of our area are very proud of our astronauts and engineers and all those who contribute to this incredibly complicated and dangerous endeavor. If things go as planned, we should see a second try at a launch the end of this week. So far we are enjoying the flood of journalists and film crews from all over the world. In the absence of launch news they have been scrambling for stories since the first launch delay. There was even a film crew in my favorite sushi bar, Yen Yen, last week.

Our market continues at a somewhat subdued pace as is normal for this time of year. Inventory is almost unchanged and the pace of sales is holding steady. I had to adjust my MLS stats this week as we had a group of 39 developer contracts go contingent or pending all at once. I subtracted these numbers from the totals because they are not accurately portraying actual sales during the period. Investor demand for pre-construction remains high with not enough first-round, pre-construction units available to fill that demand. There is continuing resistance from buyers in the high-end resale units. If you're playing with pre-sales in the high end, you better be prepared to close. At the other end of the range, sales are robust. Portside Villas is maintaining brisk resale activity, I believe, because the current prices still represent good value and they are in a very sweet spot of the market, under $300,000. We will probably never again see new construction beachside for under $300,000.

You may want to read an interesting article in today's Florida Today about condo conversion This is a trend we've been seeing in our area that we can probably expect to continue. With property values soaring and rents flat, it is inevitable that this happens. Take a recent conversion, Brisas del Mar in Cape Canaveral.

This 14 unit apartment building represented some of the developer units I factored out of my stats this week. This property as rentals was probably generating around $100,000 a year in gross rents. Converting to condos yielded around $2.6 million before costs. With numbers like these, we can expect this trend to continue. There are still quite a few rental properties in Cocoa Beach and Cape Canaveral that are suited to conversion.

Other developments locally are the ground-breaking of the 77 unit Magnolia Bay complex on the river in south Cocoa Beach and the tear-downs of 2 more houses on the west side of S. Atlantic Ave. This is a trend I see continuing. There are quite a few old houses across the street from the ocean that are candidates for tear down and replacement. We saw a tear-down condition home built in the 1920s sell recently for $649,000. It commanded that price because it sits on a lot large enough to build 3 units. Expect to see luxury townhomes or condos there soon.

Here are the numbers for July 17, 2005.

contracts last 14 days

condos over $500,000___ 6
condo under $500,000__ 31

homes over $500,000____ 3
homes under $500,000___ 3

active listings

condos all prices______417
condos over $500,000__ 126

homes all prices______ 55
homes over $500,000__ 32

Do your homework, get pre-approved before you start your search for property and keep your procrastination in check. It can cost you a fortune.

Monday, July 04, 2005

Happy Independence Day

Happy Independence Day - Yesterday, as I cruised down the Banana River from Cocoa Beach to Port Canaveral and the ocean, I considered the recent changes in our river shoreline. Beginning in south Cocoa Beach on the river we passed five condo developments under construction and 3 others yet to break ground. As we headed north we saw to the west on the eastern shore of Newfound Harbor in Merritt Island, dozens of large new homes and one new, 3-building condo project. Under the 520 bridge and north to the Port, we saw 4 new developments on the shoreline in Cape Canaveral. There are over 600 new units in just these existing riverfront projects in Cocoa Beach and Cape Canaveral. Add the planned projects, unfinished new oceanfront and non-waterfront developments and the supply of new units beachside is well over 1000. That's a lot of supply for a market that recorded 39 units sold in the last 2 weeks. Where is the disconnect? There are two distinct sides to the new supply market. One is the pre-construction market which is dominated by investors who rarely plan to live in the units. These sales most often don't show up in our MLS. The secondary market, on the other hand, are the buyers who are purchasing for residences or for second homes. These sales do show up in the MLS and are reflected in the numbers I report here. Draw your own conclusions. Noteworthy this week; sales in the over $500,000 range have ticked upward significantly. Also of note is the fact that mortgage rates continued their fall. Here are the numbers for July 4, 2005.

contracts last 14 days

condos over $500,000___ 8
condo under $500,000__ 31

homes over $500,000____ 5
homes under $500,000___ 3

active listings

condos all prices______417
condos over $500,000__ 124

homes all prices______ 53
homes over $500,000__ 31

Have a safe 4th, use sunscreen and drink plenty of fluids. It's hot out there. Remember, it's a $200 fine for possessing fireworks in Cocoa Beach.