2006 Real Estate Market in Review

Ah, that time of the year when the networks take a nostalgic look back and the smell of the traditional New Year's meal, black-eyed peas and collard greens, fills my house. Real estate activity has remained slow but steady through the end of the year. 2006 was a pivotal year for the real estate market in Cocoa Beach and Cape Canaveral. The slowdown that I began warning about in March of 2005 in this blog became a reality after the much-hoped-for spring rally of '06 never materialized. Florida Today reported this week that the actual market peak was in Aug. 2005. It just took a while for the reality to become obvious to market participants.

The activity in 2006 was mixed as some investors managed to hit homeruns with their pre-construction contracts at the same time that others were defaulting on contracts that they had hoped to flip. Several condo projects closed this year which contributed to the count of closed MLS units. In particular, Portside Villas, which is now closed out, had substantial numbers of flipped contracts. Michelina on the ocean also closed but did not contribute to the closed numbers of MLS-listed units. Major projects set to close in 2007 include Magnolia Bay, 3800 on the ocean, Villa Verde, Pier Resort and Ocean Club. These likely will not impact closed MLS numbers as there will be very few flipped contracts. The Cocoa Cabanas project on the ocean has yet to break ground and appears stalled while the 4th building at Magnolia Bay across the street has not materialized.

We began the year with a condo inventory hovering around 700 units with 30 year fixed-rate mortgages just above 6%. We are exiting 2006 with mortgage rates pretty much unchanged and condo inventory at 1024, up almost 50%. Single-family home inventory has seen a similar increase, from 102 on Jan. 12, 06 to 152 today.

In the upper end of the condo market we had 52 closed sales of $500,000+ units with current inventory of $500K+ units at 203, practically unchanged from year-ago levels. Of those 203 units for sale, 119 were built in 2005 or later. There were 476 total condo sales in all prices since Jan. 1 and 69 single-family home sales. Current inventory of single-family homes stands at 152. One interesting tidbit; only one MLS-listed condo sold in 2006 for over $1,000,000. That has to be of concern to the sellers of the 18 currently-offered units on the MLS, not to mention the developers sitting on unsold units in that price range.

Let's compare 2006 to 2005.

Closed MLS-listed condos
2005___807
2006___476

Closed MLS-listed single-family homes
2005___115
2006___69

As always, these numbers are not exact. The MLS data is only as accurate as those who input the data and we know who they are (R-word). The overall trend is clear, however. Sales of real estate in Cocoa Beach and Cape Canaveral in 2006 were at a pace about half that of 2005. There is no accurate way to extract average price movement data directly from the MLS, but, if you're willing to trust my anecdotal observations, price drops have been downward across the board, substantial in some individual cases. We saw 3 bedroom Portside units sell for $100,000 less than 2005 prices. A beautiful Harbor Isles 3 bedroom completely remodeled unit sold for less than $220,000 and a direct ocean Waters Edge condo went for $208 per square foot. There are still incredible deals out there but some are already disappearing. At Portside the sub-$200,000, 2 and 3 bedrooms are all gone. Lowest currently-offered 2 bedroom unit is $213,900 and lowest 3 bedroom is $224,900. Those buyers who were brave enough to pull the trigger during the last days of closings picked up 2 bedroom units as low as $178,000 and 3 bedroom units as low as $190,000. Lesson here is that some deals will not be repeated. As builders are warning now, after this shakeout plays out, new construction costs will force prices much higher than current levels.

I'm not calling a bottom here, nor even a leveling out. What I am saying is that for buyers looking to buy at any point in the future, the time to start looking is now. If you wanted a brand new 2 bedroom condo in Cape Canaveral for under $180,000, you have already missed your chance. If you wanted the nicest 3 bedroom unit in Harbor Isles for under $225,000, too late. If you want a brand new over $500,000 condo, wait a little longer. We'll see increasing pressure in that price range. If you'd like a nice existing condo, be looking now and be ready to pounce when that isolated, motivated seller drops his price to the can't-refuse level.

My next post will be from a brand new year. It's been a fun year for my crew and we're looking forward to more fun and games in 2007. I wish you all a happy and prosperous New Year.

Are We There Yet?

Can you see light at the end of the tunnel of declining prices? Depends on the source. The tunnel at the left is one of my favorite beach crossovers in south Cocoa Beach. About that other tunnel: In a remarkable article this week, Florida Today claimed that Brevard housing appreciated at a rate of 9.67% from the 3rd quarter of 2005 to the 3rd quarter of 2006. If they weren't hurting so much, most folks that purchased in the 4th quarter of last year would probably have snorted coffee out their noses. The author does offer that this data from the Office of Federal Housing Enterprise Oversight is at odds with the most recent report from the Florida Association of Realtors. At any rate, as I have cautioned in the past, treat all statistics with suspicion. I'm sure there are properties that have experienced even higher appreciation during the period for various reasons but I seriously doubt that the average existing property gained any value in the last 12 months. This brings up a good point. If one purchases far enough below market value, appreciation can be had even in a declining market. I continue to see deals happening at below current value.

Of the 28 condo sales in Cocoa Beach and Cape Canaveral reported as closed in the month of November 2006 by our MLS, the range of prices for direct oceanfront condos was from $263 to $335 per square foot. In non-waterfront units the prices ranged from a super low $100 per square foot to $259. I am happy to have put a buyer in a beautiful brand-new unit for a bottom-scraping $129 per square foot while a similar 20 year old unit nearby sold for $202/sq.ft.

CLOSED NOVEMBER 2006

single family homes_____4 (none over $400,000)
condos & townhomes___28 (four over $500,000)

ACTIVE FOR SALE

single family homes_____157
condos & townhomes___1032 (205 over $500,000)

Looking at currently active units, I find a 3 bedroom direct ocean corner unit in south Cocoa Beach listed for $224 per sq.ft. (2000 sq. ft. for $449,000). That's less than any closed direct ocean unit last month. The last same floorplan to sell in this building was 2 floors higher for $308/sq.ft. in May 2005 ($617,000). The lowest price per sq.ft. I can find for a non-waterfront unit in Cocoa Beach today is a 2/1 for $136/sq.ft.

What a wonderful weekend we had in Cocoa Beach. The weather was perfect. There were small, fun waves and the water was in the high 70s. Not many out-of-towners enjoyed it but I spotted quite a few locals headed to the beach for a fun session.

November Numbers

The numbers are in for the first half of November and there has been an uptick in activity and inventory.

MLS stats for Nov. 1 - 15, 2006 - Cocoa Beach & Cape Canaveral

CLOSED
single family homes_____4 (none over $400,000)
condos & townhomes___19 (four over $500,000)

ACTIVE FOR SALE
single family homes_____160
condos & townhomes___1049 (205 over $500,000)


The Beach Culture Surf Art Gallery pictured above has re-opened in the old Da Kine Diegos building in downtown Cocoa Beach. The mural on the front was painted years ago by Cocoa Beach artist, Rick Piper , and has, somehow, survived all the different business that passed through the North 1st Street location. As before, it is too cool for description. A little twist this time; in addition to the always strange and random hours and killer parties, they are doing art workshops ranging from airbrushing to sculpture. Check out their website and maybe sign up for a workshop. Definitely get on their party invite list. You can read about the opening party and see a few photos in this month's Beachside Resident . I'm off to enjoy the Space Coast Art Festival this weekend in downtown Cocoa Beach. Get out there if you read this in time.

AOL Strikes Again

Attention AOL users. Your mail system may be blocking mail that you want to receive. I continue to have my replies to readers' requests blocked by the AOL mail servers. Check your spam filters or your AOL mail settings. If you send me a mail and don't receive a response from me, it is probably your over-protective Big Brother tossing the baby out with the bath water. Feel free to call me at 321.917.5786 if you don't receive a reply to your mail. Sorry for the inconvenience.

Secret Agenda?

Looks like someone else has been investigating the whole buyer's agent compensation issue. The Wall Street Journal published an article this week by writers, James R. Hagerty and Ruth Simon, entitled "Do Real-Estate Agents Have a Secret Agenda?"

It was like deja vu all over again. If you've been reading this blog for a while, you may remember my post on Feb. 26 of this year entitled "Conflict of Interest". In it I raised the same concerns that these writers addressed in their piece, sellers trying to subvert the process by offering sweet temptations. Rather than rehash the whole issue, click the title to read my earlier piece. I'm not saying all bonuses are undeserved, but, I do think that buyers should be made aware of extra compensation intended to attract the buyer's agents. If your agent goes above and beyond the call of duty, she may deserve every penny being offered. If it was an easy deal for her, she may be happy to rebate that bonus to you. Knowledge is power.

The Big Chill

It's a chilly market out there, people. Motivated sellers have been progressively chopping prices as they probe for the magic number that will generate an offer but buyers, for the most part, have frozen in their tracks. We have reached a take it or leave it point for many sellers. Contrary to popular opinion, most sellers are not in trouble and many are quite willing to ride out the downturn. If you didn't catch my story on the "alternative universe" earlier this year take a moment to read it. It's about the underlying market chugging along while the speculator market grabs the headlines and gets the reality shows. As the chief economist of the National Association of Realtors, David Lereah, is fond of saying, there is no national housing market. Heck, there's not even a Cocoa Beach and Cape Canaveral housing market. For the record, I'm not impressed with Mr. Lereah's self-serving rhetoric but he is right on at least one point, that there are markets within markets that operate on their own and separate dynamics.

While there may be scores of pre-construction condo sellers who are in very real trouble, the same can't be said for the average seller of existing condos and single-family homes. There is a trickle-down pressure on all properties when one segment becomes sick, BUT, there are many sellers that can continue to enjoy their beach homes while waiting out the market. The ones who must sell are starting to price their properties aggressively and deals are being made. The bottom appears to have been passed at Portside as the last of the super deals have been scooped up and all offerings there at the moment are priced considerably above the recently contracted units. There are currently no 2 or 3 bedroom units offered under $200,000. Like the guest gurus on CNBC are fond of saying, "It's a stock picker's market." There will always be individual issues within a market that move in a direction opposite that of the market. Do your homework or talk to someone like me who does it for you.

MLS stats for October 2006 - Cocoa Beach & Cape Canaveral

CLOSED IN OCTOBER
single family homes____8
condos & townhomes___20

ACTIVE FOR SALE
single family homes____140
condos & townhomes___995

Cocoa Beach and Cape Canaveral are almost equally divided on condos sold or listed but Cocoa Beach has the majority of single-family home activity. Of the 20 closed condos, only 1 was for more than $500,000, and 12 were under $300,000.

In a bizarre move this week, the National Association of Realtors launched a 40 million dollar advertising campaign themed "Now is a Great Time to Buy or Sell a Home". Think about that for just a second. The body of the ad targets buyers only but, apparently, NAR didn't want to alienate sellers in the process, so, the "or sell" was added to the header as an afterthought. Beware statements from organizations and people that stand to benefit from your acceptance of their declarations. As I'm fond of saying, do your homework. Now might be a good time to buy or sell but it's not because someone spent $40,000,000 saying it. Personally, I think it's a better time to buy than sell and only for specific properties that are priced below recent sales.

Deal of the week; a 2 year-old, 3/2 townhome at Canaveral Woods with garage for $243,000. It's still active as of this writing.

Back to Basics

In our condo market, most activity has been bunched at the low end of the price scale. For the first 22 days of October, out of 10 closed condo sales on our MLS, only one was for more than $330,000. It closed at $490,000. There continue to be closings of brand-new high-end condos but they are not showing up in our MLS stats because only those that were flipped show in those numbers and flips have gone the way of the pterodactyl.

For the last 30 days, we have had 22 MLS-listed condos and townhomes close. Current total "for sale" inventory is 1014 units. My paper napkin math tells me that, at this rate, we have a 46 month supply. Digging a little deeper into the numbers we see 203 of those listed units over $500,000. There were 2 closings in that price range in the last 30 days, so, our activity is obviously lopsided. This snapshot absorption rate is somewhat misleading as September through December are historically our slowest sales months although it is not good news for sellers hoping to cash out before the end of the year. Until the bulk of our winter guests begin arriving in early 2007 expect to have major negotiating power as a buyer.


The cheapest oceanfront condo I can find today in our MLS is a 1 bedroom unit at the Saturn in Cocoa Beach with a side ocean view for $169,900. There are several dozen direct ocean units in the $300-$350,000 range including one 2nd-floor, 3 bedroom direct ocean unit in south Cocoa Beach for $349,000. I find 14 units listed for over $1 million with the peak represented by a 4617 sq.ft. unit in Cape Canaveral for $2,750,000.

I'm seeing more and more buyer's agent bonuses and higher commissions being offered out by sellers. Their intent is to somehow entice agents to favor their properties over others. Makes more sense to me to just lower the price, but, maybe a seller's pride can be left more intact by getting closer to their mental target price and paying higher costs. As a buyer, why not ask your agent for that bonus at the same time you're asking the seller for concessions. You are the one bringing the money after all, so, in effect, you have paid that bonus buried in the selling price even though your agent may not have disclosed to you up front that she was receiving a bonus. Our MLS, for some reason, hides the bonus amount on the customer printouts. Read my previous post on this subject here.

If you can, try making it to the beach soon. The water is still warm, the mullet run is still happening and the beaches are deserted most days this time of year.

Here's a snook from the surf on October 25.

Deal, no deal?

Depends on the deal. Brand-new, over $500,000 condo? The answer is, no deal. Existing, priced-right condo below $500,000? It appears that, for now, the answer is likely to be, we have a deal. As I mentioned in my last post, sales activity has picked up. Our office continues to be busy with sales of existing condos and single-family homes. New construction appears to be pretty much dead in the water, although a few units at drastically-reduced prices have moved recently. How about a brand new, 2500 sq.ft. never-lived-in, 4 bedroom 2.5 bath townhouse with 2 car garage in Cape Canaveral for $382,000? Sold in September. The direct ocean 3 bedroom, 1753 sq.ft. unit in south Cocoa Beach that I mentioned in an earlier post for $399,900 sold for $375,000. Portside prices have started creeping back up as almost all the units have closed. The cheapest recorded resales in September were $185,000 for a 2 bedroom and $214,000 for a 3 bedroom.

There have been some remarkable price reductions since October 1. Most notable has been the reduction of four unsold units at the not-yet-started Cocoa Cabanas condo. Two units have been dropped from $985,000 to $750,000 and 2 others from $985,000 to $775,000. A beautiful 2000 sq.ft. direct ocean corner unit at Wavecrest next door has been reduced from an original price of $630,000 to $489,000 this morning. One motivated investor across the street at Magnolia Bay is offering a new boat to buyers. He probably needs an edge with a total of 25 other investor-owned units in the complex offered on the MLS. These sellers can glimpse the likely future by looking down the street to the recently-completed Crescent Palms where 11 units are still active on the MLS out of a total of 15. A little pain is being felt there.

Magnolia Bay


I was reminded of a nasty little secret about pre-construction purchases yesterday by a local TV news story. Seems that some pre-construction buyers of homes in a new Orlando neighborhood are having trouble getting mortgages because the appraisals for their new homes are coming in below the purchase price. Usually in a Florida real estate deal with a FAR or FAR/BAR contract, a buyer getting a mortgage would make her purchase contingent on acquiring a mortgage. Should the property fail to appraise making the mortgage unobtainable, the buyer can cancel the contract and have her deposit returned. Alternatively, the seller can reduce the purchase price to the appraised value and the deal can proceed. Unfortunately for the Orlando buyers, they used a developer's contract, which is common in pre-construction, and they have no financing contingency. If they cannot close, the developer can keep their deposits. This was never an issue in the rapidly appreciating years of the recent past but it is now. What happens when that new condo that Investor X reserved for $600,000 appraises for $525,000? Does he walk from his $60,000 deposit or does he go ahead and close and take the $75,000 immediate paper loss? Not exactly a win/win offering. It's not even a good deal for the developer who pockets the deposit. He doesn't want to be left with a handful of forfeited deposits and unsold, under-appraised units.

Among the scores of offered properties, some good deals exist. Those of you looking to buy but afraid of further price erosion should approach your search with the intention of finding those properties that are already priced in anticipation of more depreciation. These properties exist. They're just buried among the hundreds of optimistically-priced units that are competing for attention.

Here are our current stats. Most of the closed sales of condos in September were older, existing units. The newer units listed on the MLS are, for the most part, assignment of contract sales by investors and very few of those are moving.

MLS stats from Cocoa Beach and Cape Canaveral

Active condos for sale, all prices________1029
___condos over $500,000_____________214

Single family homes, all prices__________145

Closed condos in Sept 2006_____________36
Closed single-family Sept________________8

Snook are being caught at the Port, the Inlet and the beaches when the surf is calm enough. I had a wonderful fillet last weekend that a friend was kind enough to share. If you get a chance, get out there and try for one of these tasty fish when the ocean permits.

A rose by any other name...

What a September it's been so far. We've had the best surf in recent memory and the hurricane cycle has returned to the big eastern loop producing clean swells with no local winds. Market activity has picked up considerably, at least from my personal observations. My office has had it's busiest 2 months of the year and conversations with other agents on the beach confirm the same trend. We still have high inventory levels but some prices have dropped to the magic point where buyers are comfortable participating. Existing homes and condos are moving when priced at 2003-2004 levels and there are sellers who realize this.

The next leg of this transition is starting to play out. Michelina on the beach has begun closings and Magnolia Bay on the river will soon begin closings. There is still a lot of pain yet to come in these and other high-end new condos. I am seeing lots of speculators trying to dump their investment pre-construction units with very little success. The difference in the price of a new unit and an existing unit is great enough that a willing buyer can purchase an existing unit in a good building and completely renovate and save six figures.

Here are the sales numbers from the MLS for the 1st through the 15th of September. The actual number may be higher as some sales may not have been posted yet by a tardy listing agent.

Closed condos___________20
Closed single-family________4

MLS stats, Cocoa Beach and Cape Canaveral - Sept. 24, 2006

Active condos for sale, all prices________1019
___condos over $500,000_____________216

Single family homes, all prices__________135


I'll leave you with a shot of last Wednesday's surf. My neighbor Gerry dropping in on a nice little right as the guys in the boat behind chase tarpon. September, truly a rose of a month in Cocoa Beach.

August numbers

The numbers are in for August and, as expected, sales were very slow. Condo inventory has reduced somewhat but, at the current sales rate, it will take more than 3 years to absorb. I have seen some significant price reductions, most notably this week, a canalfront home in Cocoa Beach lowered to $399,000. Buyers with the nerve to step up and play are walking away with prices not seen in several years.

MLS stats from Cocoa Beach and Cape Canaveral

Active condos for sale, all prices________991
___condos over $500,000______________210

Single family homes, all prices__________140

Closed condos in August 2006___________28
Closed single-family Aug________________10


Labor Day was a great, longboard day of surf in Cocoa Beach. Small, glassy and peeling for blocks. The mullet run has started and I've pulled 2 snook out of the surf in the last week. Hopefully, the tarpon will move within casting range any day now. Get out there and enjoy fall in Florida. The kids are back in school, the tourists have gone home and the weather is beautiful.

Beware the median

I caught an interview on CNBC's Squawk Box this morning with Tom Gallagher, Florida's Chief Financial Officer. The interview was supposed to be about the remaining cleanup from Hurricane Katrina's fly-by one year ago but Becky Quick moved on to the state of Florida's housing market. The otherwise candid Mr. Gallagher mentioned that building had slowed but that prices were still increasing, although at only 1% annually. Folks, that is what's known as spin. Although accurate in one sense, it does not represent the whole truth. What Mr. Gallagher was referring to was the median price, which in the most recently reported period had increased by 1%. The median is that magical halfway point in the graph where half of all sales are above and half below. This number is in no way related to the appreciation rate of individual properties.

As the media is reporting more and more on the housing slowdown, I'm seeing all kinds of commentary about the direction and extent of the event. The camps seem to be divided between the end-of-the-world predictions of the housing bubble bloggers and the outright denial of the National Association of Realtors. The former is fond of the term "crash" and the latter, the phrase "soft landing". As with most polarizing issues, the truth probably lies somewhere in the middle. Sellers who are unwilling to accept the reality of lower prices may not sell their properties and buyers who are waiting for the bottom may still be waiting after the bottom has passed. No one is going to wave a red flag and say, "This is it. The bottom is now."

I have already seen deals go down that are going to be hard to beat even if the downtrend continues for a while. Some sellers have completely capitulated and are dumping properties at bargain prices. My advice to sellers is to be bold and price aggressively if you must sell. You have lots of competition. My advice to buyers is get ready. The time to start looking is now. Be ready to pounce on that perfect property at a discount when it hits. If you're looking for a like-brand new 3/2, 1500 sq.ft. condo in a riverfront complex for $220,000, you've already missed a good one. How about a 1350 sq.ft., 2/2, 6th floor, direct ocean condo for $299,900? Sold last month. Photo below of this building.



Brand new 1/1.5, 908 sq.ft. condo with cathedral ceilings, short walk to the beach for $137,000. Again, sold last month. One more recent sale; a 1279 sq.ft. 2/2.5 townhouse with boat slip, 3 blocks from the beach for $205,000. There are others out there and more to come as the sellers come to terms with their competition and the reality of the market.

Freddie Mac reports that 30 year mortgage rates are at their lowest point since April 6 of this year. National average for a 30 year fixed is 6.48%, down for the 5th week in a row. Until next time, make sure your cast nets are in order and your snook fishing gear is ready. The mullet run is imminent and the big tarpon are already active off the beach. I can't wait.

Dog Days of Summer

A brief update from early August. Activity continues to be brisk at our office, although, the overall market is very slow. Inventory in Cocoa Beach and Cape Canaveral is holding steady in the 1100 to 1200 range and sales have slowed to just 33 total closed units (condos and single-family) in July. All units in Portside Villas should be closed in a few more weeks.

MLS stats from Cocoa Beach and Cape Canaveral

Active condos for sale, all prices_________1002
___condos over $500,000______________218

Single family homes, all prices___________144

Closed condos in July 2006______________28
Closed single-family July_________________5

The fall mullet run should be starting shortly with vast schools of mullet swimming south along our ocean shore coinciding with the reopening of snook season on September 1st. If you enjoy fishing, this is a great time to get to the beach and enjoy some fun fishing as the snook, mackeral, tarpon and other large fish move in close for an easy meal.

What's Dropping?

Prices aren't the only things dropping in Cocoa Beach. July is the month for juicy beach mangoes. The ones above came from a friend's tree a few blocks from my office.

MLS stats from Cocoa Beach and Cape Canaveral - July 25

Active condos for sale, all prices_________992
___condos over $500,000_______________211

Single family homes, all prices___________145


Condo inventory continues to slowly drop but I expect the numbers to creep up as the currently under-construction developments approach closing and more speculators list their units. Sales activity has been brisk this month in existing under-$400,000 condos, but, I'm still seeing the high-end units languish on the market without much interest. Speculators are feeling some pain in these luxury units.

For an interesting take on 100% mortgages, read Dan Green's recent post.

Thanks for all the emails and comments on the blog. I appreciate them all, even the occassional upturned nose from another realtor. As Elton John said, "Don't Shoot Me I'm Only the Piano Player". Keep those comments coming.

Cocoa Beach 2006 first half stats

The numbers are in for the first half of the year. These are MLS stats and don't include private sales but are reflective of our market as a whole.

Closed sales from Jan. 1 through June 30, 2006
in Cocoa Beach and Cape Canaveral

single-family homes______31
condominiums_________283

The results are not surprising although some activity is eye-opening. Out of the 283 condos sold, only 10 were over $600,000. That should concern the sellers of the 143 units that are currently listed for more than $600,000 and those expecting to list soon [holders of pre-construction contracts in this price range]. Below are the current numbers and closed sales for June. Inventory has stabilized since climbing through 1000 total units the end of May. Sales appear to be holding their own but after digging into the specifics it turns out that 24 of the 53 June condo sales were just-completed new units.

MLS stats from Cocoa Beach and Cape Canaveral

Active condos for sale, all prices_________1021
___condos over $500,000_______________228

Single family homes, all prices___________132

Closed condos in June 2006_______________53
Closed single-family June_________________10

Deals continue to surface as sellers capitulate. My current favorite is an 1800 sq.ft. updated home on a great canal for $499,000. It is on one of my favorite Cocoa Beach cul-de-sacs. My favorite in last week's post, the 3/2 condo at Harbor Isles, went under contract after being dropped to $220,000. If you have any questions or comments about the market, shoot me an email or give me a call at 321.917.5786.

More deals, stats and a shuttle launch

A few good deals crossed the wires this week.

1. A 2 bedroom, 2 bath townhome, 1279 sq.ft. with garage and deep-water boat slip, walking distance to the beach and downtown Cocoa Beach for $199,900. Lasted a mere 4 days on the market before contract.

2. Canal-front 3 bedroom, 2 bath single-family home, 1566 sq.ft., walking distance to the beach, sold for $405,000.

These deals continue to pop up but rarely last long when the prices are this attractive.

Condo inventory is starting to reduce as new projects cycle through closings with projects like Portside, Perlas, Puerto del Rio and Bayside contributing hundreds of units to the closing totals in Cape Canaveral. Expect the stats to show strong condo sales for the next few months as these projects close. Don't be deceived by the healthy-appearing numbers of sales as most of these were contracted a year or two ago. Current sales are still slow but activity has increased sharply from previous months. The stats from the county for all sales will show significantly higher numbers than mine which are for MLS-listed properties only.

MLS stats from Cocoa Beach and Cape Canaveral

Active condos for sale, all prices_________1038
___condos over $500,000______________234

Single family homes, all prices___________129

Closed condos in May 2006______________53
Closed single-family May_________________6



The launch of shuttle Discovery to the International Space Station is set for Saturday afternoon. This is the same spacecraft that delivered the Hubble telescope to it's orbit in 1990. Godspeed.

[edit-July 4th] Discovery is up and on her way. Pic from the beach a few minutes ago.

Random deals

I snapped the photo above of Harbor Isles in south Cocoa Beach from the river this past week as I cruised by. It's hard to believe that a 3 bedroom unit completely and tastefully remodeled in this complex is being offered for $240,000. This particular offering effectively renders all other non-direct river units in the complex dead in the water until it is sold. It is priced below 5 other smaller 2 bedroom units and all the other 3 bedroom active units in Harbor Isles and is $52,000 below what an identical floor plan sold for in March of this year.
___________________________________________________

How about the River Lakes complex next door in the photo below. A remodeled 2/2 unit in this building is being offered for $249,000. This compares to an identical floor plan that sold one year ago for $300,000. Not only can you get a $50,000 discount, but, boat slips are available for the asking, no charge.



Summer is here and life, as always, is good in Cocoa Beach. Email me with any thoughts, questions or observations about real estate, fishing or life in Cocoa Beach. I'll close with a Cocoa Beach sunflower.

Happy Memorial Day from Cocoa Beach

Happy Memorial Day. I have decided to begin posting MLS stats again even though the accuracy is still doubtful. Treat these numbers as a general view of our market and not as exact statistics. Our system is still being manipulated intentionally and accidentally. One other misleading factor in these numbers is the high number of Portside units being closed now as the buildings have finally begun closing after a long delay. Many of these sales were contracted a year ago or more and don't really reflect recent activity. They will continue to close at a more rapid rate in the next few months and will inflate the total of closed listings.

MLS-LISTED FOR SALE IN COCOA BEACH AND CAPE CANAVERAL

Total condos and townhouses___1047
Total single-family homes______138

Total closed in April_____53
Total closed in March____74
Total closed in February__43
Total closed in January___24

A few outstanding buys from this past week;

6th floor direct ocean, 2/2, 1350 sq.ft. for $299,900 This unit needed work but at this price, was still an incredible deal. It sold immediately.

Brand new, 2/2 upstairs Portside unit with vaulted ceilings $178,000

Brand new, 1/2 upstairs Portside unit with vaulted ceilings $137,000

Those of you hoping to pick up deals in this market can see from these examples that some sellers are starting to capitulate. Call me or email if you want to be on my alert list when these deals show up. Larry 321.917.5786

Cocoa Beach passionfruit bloom

Capitulation, my brother

Price drops this spring have been dizzying with Portside leading the race down. My most recent sales there have been at prices a third below the peak. While some sellers are still in la-la land, many have now come to terms with the new market. The harsh reality is that prices have retreated pretty much across the board as the herds of last year's buyers have evaporated. Some sellers cannot afford to ride out the downturn and have priced their properties to move. With 909 active condos in our MLS in Cocoa Beach and Cape Canaveral, motivated sellers must be aggressive with their pricing. By the way, of those 909 units, 236 are over $500,000.

I showed 26 different condos under $250,000 this past Sunday. Many were older 2 bedroom units around 1000 sq.ft. from $200K to $245K but smack in the middle of our list was a 1400 sq.ft. 3 bedroom unit with brand new cabinets, flooring, appliances and granite all tastefully done, offered for $250,000. This seller obviously has to sell and has priced accordingly.

Will prices drop further? Maybe. Will there be another unit in this condition in this same complex later? Who knows? If you're planning to buy in our great little town, now might be a good time to start looking. That special location or property that you're looking for may not be offered at exactly the market bottom, so, it might be prudent to be ready to move if your dream deal turns up. Good hunting.

Mortgage Shenanigans

Do you have a mortgage? Did you get the best deal possible? Ever hear of "yield spread premiums"? According to some sources as many as 85 to 90 percent of all transactions include YSPs. Remarkably, these kickbacks are buried off-column on the HUD settlement statement and are often completely overlooked by the borrower. The short story is that these YSPs are bonuses paid to your mortgage broker by the lender for charging you a higher rate than you qualify for. If you got your mortgage directly from the lender, the YSP doesn't even have to be disclosed on the HUD. Check your HUD around lines 809 to 811 and look for cryptic notes with numbers. Those numbers you find there are probably money you paid your mortgage broker that came unknowingly from your own pocket. In 2002 the average amount per transaction was around $1850.00 and is probably higher now. Here's a good read on yield spread premiums.

This is not the only shenanigan I've witnessed but it seems to be one of the most widespread and least understood. Your good faith estimate will probably not disclose this premium. Tell your broker that you will not accept any YSP on the HUD, UNLESS it is known by you and being used in lieu of other upfront mortgage costs to offset your total closing costs.

Here is the section of the HUD where you will find the hidden gems. Not in the "paid from borrower's funds at settlement" column, but off-column to the left.

800. ITEMS PAYABLE IN CONNECTION WITH LOAN
801. Loan Origination Fee %
802. Loan Discount %
803. Appraisal Fee to
804. Credit Report to
805. Lender’s Inspection Fee
806. Mortgage Insurance Application Fee to
807. Assumption Fee
808. Mortgage Broker Fee
809. -------------------somewhere
810. ------------------in this area is
811. ------------------where it will appear

-----------------------------
Knowledge is power.

Manipulation, my brother

OK, I've been asked yet again about the practice of withdrawing a listing and then relisting so that it shows on the MLS as a brand new listing with no price history. Unfortunately, this practice is entirely legal and is widespread, especially now that properties are lingering for much longer than in years past. It's legal, but, is it ethical? By my measure of ethical, no. The only reason for withdrawing and relisting a property is to mislead a prospective buyer. Like hidden agent bonuses, this is the sort of thing that undermines the public's perception of realtors. I did a quick search this morning of recent activity and found 2 nice examples.

Condo A - 255 days on market, original price $829,00 withdrawn and relisted same day by same agent for $759,000

Condo B - 105 days on market, original price $449,900 withdrawn and relisted same day by same agent for $409,999

A consumer or a lazy agent would never know that these weren't new listings. Shame on the National Association of Realtors for not taking a stance on this practice.

How was your Easter weekend? Mine was great. Fun waves and a pretty-much deserted beach. You've heard me talk about uncrowded beaches in south Cocoa Beach and here's the proof. While the area north of us was blanket to blanket, the photo at the top of this post is how our beach looked at midday Saturday, a beautiful beach day, the day before Easter.

And just beyond the water's edge, your's truly leans into a fun one.



I didn't have a thought about the market all day. Until next time, stay hydrated, use sunscreen and question everything.

Lies, damn lies and statistics

As requested, another photo from Cocoa Beach. Springtime means the oleanders at the Cocoa Beach golf course are blooming.



This post was going to be about manipulating statistics to serve a pre-determined purpose, but, in researching data for my examples I found so many errors from all my sources that the point seems moot. Here are the sales of residential properties in Cocoa Beach over the last 6 months according to Melissa Data. These are actual closed sales during each month and the average sales price. [note: the MLS reports 21 closed sales in March, not 18. Who are we supposed to trust?]

Month____transactions_____average price

03-2006_________18____________$434,000.00
02-2006 ________25____________$338,000.00
01-2006 ________28____________$443,000.00
12-2005 ________33____________$332,000.00
11-2005 ________49____________$406,000.00
10-2005 ________28____________$364,000.00

Differing agendas could claim a 28% rise in average selling price from February 2006 to March 2006 or a 24% decline from January to February. My point is that a reader should take all statistics relating to home prices and sales with a grain of salt and a little skepticism. And, as I have stated in the past, mistrust any numbers coming from the Brevard County MLS. I think I can now expand that to include all sources.

Now for a totally unscientific observation of our market; it's slow. With sellers clinging to last summer's prices and buyers looking for steals, finding an acceptable middle ground is difficult and often impossible. If you are selling, consider that your property may be worth less than you think. Buyers are scarce right now, so, consider every offer no matter how unattractive. Remember that an offer is an invitation to negotiate. If you are buying, don't become married to your lowball offer. It's not necessary to steal a property to make it worth owning. This is still the best little beach town in Florida and now is a great time to be a buyer.

March 2006 activity

The March numbers are in and we've had a nice little uptick in action. Total number of March 2006 closed MLS-listed residential and condo units in Cocoa Beach and Cape Canaveral was 67 according to the MLS. Digging into the numbers I see that 2 were errors and 8 others were pre-construction units that were contracted over 6 months ago, so, my adjusted total is 57, still a significant increase from February's adjusted total of 30. Of the 57 total sales, 34 were under $300,000. The hottest area of our market has been small condo conversions with units ranging from $134,900 to $200,000 in small buildings close to the beach. The high-end of the condo market continues to languish with only 6 sales over $500,000 in March with an inventory of 230. Some resales in Portside have started to move as additional buildings reach closing and investors lower their expectations and prices.

An especially busy segment of our market has been vacation rentals. I have had more requests for rentals this year than ever in the past. Last week alone, I had 24 requests for a rental condo. My unscientific observations of traffic and restaurant crowds tells me that this has been one of our busiest spring seasons. As the water temp has climbed over 70 degrees, giant manta rays have been cruising the surf and the cobia run has been as good as it gets. Massive schools of pogies are everywhere in nearshore waters and portend a great summer for fishing. We've had several days of fun small surf and the wetsuits are back in the closet until next winter. Cocoa Beach rocks.

I snapped the shrimp boat a few miles offshore last week.

Does size matter?

Our little real estate company has become a thorn in the side of one of the Exxon Valdez-sized brokerages in our area. Like the Exxon Valdez, this behemoth cannot quickly change the course that worked so well in the heyday market of the last 5 years. Our little company, on the other hand, relies on flexibility and nimble moves to keep one step ahead in our rapidly-changing market. In fact, we recognize that this very ability is what gives our clients an edge in this difficult market. Now to the point of this essay. The Valdez (I'll just refer to the other brokerage as the Valdez) apparently is feeling threatened by our little company and has been telling sellers of real estate that they will be less-served by a smaller company, us, because we are small. Talk about reframing a bad situation (also known as spin). If this weren't so incorrect and possibly damaging to sellers of real estate it would be knee-slapping funny. My opinion, coming from the front line, is that, in this new market, sellers who hope to be successful need help from an involved agent with a company that knows it's clients, not a behemoth with hundreds of agents, thousands of listings and a captain snoring in his cabin. What worked last year is not working this year. Not being bound by ingrained procedures and bureaucracy, small firms can quickly change tactics to get results for their sellers while the Valdezes of the real estate world are still drafting memos and planning committee meetings to figure out why sales are down while the sharp edge of the reef draws ever nearer.

Whether you're selling property in Cocoa Beach or Culver City, you need to think seriously about the size of your real estate company. Does size matter? You bet. Small and nimble beats big and slow every time. Think David and Goliath.

MLS statistics and inaccuracy

I had an unsettling experience this week with our MLS. I searched for all contingent and pending listings in Cocoa Beach and Cape Canaveral. I was shocked to see transactions from as long ago as June of 2003 still showing as not closed. One particular listing I knew had closed and sold again but was showing in the MLS as still pending. I reported this to the MLS and, Voila, it changed to closed that same day. Now anyone pulling stats from the system will have at least one sale in March 2006 that actually closed in April of 2005. Are there other inaccuracies in the system? Most certainly. Treat any numbers that are pulled from our local MLS as suspect. Having said that, here are some interesting numbers from our system. Accuracy should be questioned but the trend is clear, lots of new, high-end units and a tepid sales rate.

Cocoa Beach and Cape Canaveral Active Listings March 25, 2006

condos over $500,000________________233
condos all prices built in 2005 or later___250
closed since Jan. 1___________________84
total condos for sale_________________987


Note that 28 of those closed sales were of units that were contracted months ago in new complexes that are just now closing. There are also 75 other active condo units that show up in "residential" rather than "condo" that will bring the total number of active units for sale to 1062. Do some quick math and you get about a 20 month supply. That spring rebound that sellers and real estate people are hoping for had better hurry up. If you're waiting for the market to turn around, it would be prudent to prepare for a long wait. Sellers, if you can't afford to wait, it's time to get aggressive with your pricing. There are buyers out there and the successful sellers will be the ones who accept the changed market and price aggressively.

As always, there are exceptions, especially for sellers of special, one-of-a-kind properties. For everyone else, it's time to get real.

Alternative Universe

The real estate bubble is becoming America's most talked about impending disaster since Y2K. I suspect that the reality may be just as much of an anti-climax. I can't speak for other markets but I can speak with knowledge about the Cocoa Beach and Cape Canaveral market. Before the irrational exuberance of the recent condo boom, there was a normal market that consisted of primary residences and vacation homes. That market is still there and is much more healthy than the over-heated, investor-driven one that everyone is talking about. While pre-construction investors are sweating out the next drop in prices and losing sleep over impending closings, there are literally thousands of homeowners who are unconcerned with the short-term direction of property values. These are the ones who live here full time or those from out of town who use their beach places for vacations or get-aways. This is the alternative universe that is invisible to the bubble cult.

Are there problem areas in our market? Yes, most definitely. I've been cautioning about speculation in high-end condos for some time now. I suspect that there will be a lot of pain among the pre-construction investors in high-end condos this year. But at the same time, thousands of homeowners will be enjoying Cocoa Beach for it's beaches, surf, fishing, wildlife and all the other things that make this such a special place in the world. Will the speculators' departure affect this underlying market? Probably. All markets operate on supply and demand. A good analogy comes from Michael Kahn of Barron's. He said, "In the stock market, fuel is trading volume. Without volume, a price advance will soon slow down, if not stop and reverse. Momentum may keep trends going for a while, but sooner or later the market is going to require buyers to put real money where their collective mouths are and buy a lot of shares." This principle holds true in our real estate market. Fewer buyers means less or no price appreciation, at least until the current inventory is absorbed. I am already seeing drastic price reductions and expect more. During this changing time, there will be some outstanding deals to be had for those with the nerve to act.

While we wait out this next phase, I'll be enjoying all that Cocoa Beach has to offer. Hopefully, my next post will include a big fish or surf photo. Until then, as the t-shirt proclaims, "Life is good."

All work and no play....NOT

Well, all work and no play makes Larry a grumpy realtor. Managed to slip out offshore yesterday with a friend and chase the springtime cobia. This was our only fish but he was a bruiser. Cobia show up here every spring as they migrate northward. We zigzag around just off the beach looking for fish swimming on the surface or following manta rays. This was one of only 3 fish that we saw yesterday but luckily, he was hungry. The run will continue for a few weeks and then the nearshore action will slow down as the fish become scattered and congregate on offshore wrecks. Just another great benefit of living in Cocoa Beach.

Here is our dinner last night, grilled cobia steak and tiradito. I make the tiradito by slicing fresh, raw cobia or tripletail and arrange the slices on a serving dish. I then sprinkle with coarse sea salt, squeeze a lemon over all and top each slice with a cilantro leaf and a dot of hot sauce. Exquisite.




I'll return to our regularly scheduled real estate talk next time. In the meantime, get outside and enjoy this great spring weather.

South Cocoa Beach gets a low-rise

The graph above shows total monthly closed MLS residential listings since Jan. 2004 on the left side to Feb. 2006 on the right. This includes condos and single-family homes. The numbers from the county show a different trend. Their records reflect all sales not just MLS listed properties and those numbers show no slowdown at all. I believe that can be explained by the number of new condo units that continue to close but were actually contracted as long as 2 years ago. If I were so inclined, I could paint a rosy picture of our market by using all sales rather than MLS-listed properties but that would be cheating, wouldn't it? The activity in our market remains very slow. I'm seeing more and more price reductions and inventory remains at a very high level. Action at Portside Villas resembles a game of chicken. Yesterday one seller reduced a 2 bedroom unit to a remarkable $215,900 while someone else posted a new listing for an identical unit at $269,900. Either someone didn't do their homework or this is a bad case of denial. There is one 1 bedroom unit offered for $179,900. At this level I think these units are a buy. Not a lot of downside risk at that price in a brand new 908 sq.ft. condo a short stroll from the beach. The pressure these sellers are under will ease after they close and there will be less incentive to dump units at these prices.

On a positive note, at least one developer gets the changing trend of our market. While million dollar high-rises go up on both sides with varying degrees of sales success, Tracy Dix has released plans to build 26 Key West style units in south Cocoa Beach with prices ranging from $349,000 to $449,000. Sizes range from 1438 to 1860 sq.ft. and all have a garage. This project will be on the site of the old trailer park tucked between the beach and the Banana River right next to Magnolia Bay. There are no new units even remotely close to these prices in that part of the beach. If you'd like more info about this project give me a shout at 321.917.5786 or email me. Artist rendering of this project below.


Crescent Beach Landings

Agent bonus - Conflict of interest?

I've been thinking about agent bonuses and commissions for quite a while. As our market has slowed, we are seeing sellers offering higher commissions and bonuses, supposedly to get agents to push their properties. I received a postcard this week from a developer offering not only 3% commission but also a $1000 bonus to any agent bringing a performing buyer. This is troubling to me. It suggests to me that the seller offering the bonus thinks that I would steer my buyer to their property because I would make more money. Folks, if your agents are selecting properties to show you based on the amount of money that they will make, they need their butts kicked. This whole idea of paying a bonus to the selling agent seems to me to be a serious conflict of interest and an incentive to engage in unethical behavior. Without asking, a buyer may never know which properties are more lucrative for their agent, or, if they are even being shown all properties. As it stands, bonuses are legal and commonly offered. I'll go on record as saying the practice has a foul odor to me.

Activity has picked up somewhat with 28 total closed sales of MLS listings in Cocoa Beach and Cape Canaveral from Feb. 1 through Feb. 26. At that rate it's going to take quite a while to burn through the 1096 total listings showing on the MLS. Actual total is probably under 1000 because of dupes but in round numbers we are looking at a 3 year supply.

Portside Villas has begun closing the 3rd and 4th buildings and sellers are getting serious with prices hoping to finally cash in on the deposits they put down two years ago. Expect some great deals to be had in the next few months there. Call me at 321.917.5786 or email if you'd like to take a stab at a brand new condo, walking distance to the beach and Port for under $200,000.

Zillow, more or less

The buzz surrounding the launch last week of Zillow.com was thick. This handy online tool aspires to be a user-friendly, automated property valuation machine but falls short, at least in my opinion. At this point Zillow is best approached as entertainment, but it is likely to be embraced by those whose unrealistic price expectations are confirmed by Zillow's faulty estimates. In my experiments with Zillow, I found quite a few errors and some valuations were off by hundreds of thousands of dollars. I suspect that both sellers and buyers with unrealistic expectations of property value who get a confirmation from Zillow may be even less flexible when faced with market realities.

Imagine that your real estate agent suggests a selling price of $500,000 for your condo based on research and adjusted comps. Being an astute, computer-savvy person, and having heard of Zillow, you run an estimate and Zillow returns a market value of $650,000 for your condo. Do you suspect that the agent is trying to get you to under price your property so she can make a quick easy commission? Sure you do. You immediately find another agent who will list your condo for the Zillow estimate of $650,000 and congratulate yourself on your wisdom, at least for the first few months.

Now imagine in another scenario that Zillow returned an estimate of $420,000 for that same property but you trusted your agent's suggested price and listed for $500,000. You can expect that any buyer who runs an estimate on Zillow will be very reluctant to offer close to your asking price even though it is backed up by adjusted comps.

Go to Zillow.com and do your own research, but, if you're buying or selling, don't trust these valuations to be anything other than broad estimates.

No snow in Florida

It's been a busy beginning to the year for me, but, my activity is not representative of our market as a whole. Our MLS backs this up, with closed sales continuing to slow even from the tepid pace in January. As I've been saying, our new MLS is still unreliable for statistics other than actual closed listings, so, I will continue to limit my stats to that number. For the first 14 days of February, 2006 we have had the following closed sales of MLS-listed properties in Cocoa Beach and Cape Canaveral.

Single-family___4
Condominiums__3

The MLS shows 1079 active residential and condo listings but the actual number is probably 20% less than that due to duplicates and incorrect-status listings. Even with extremely slow real estate sales, Cocoa Beach is experiencing a busy snowbird season. Today is Tuesday and, according to the starter at the Cocoa Beach Country Club this morning, the first available tee time is next Monday. Go figure. With a forecast of mid-70s for tomorrow, I'll settle for a round on the mainland at the beautiful Viera East course.

Half full / half empty

Before I begin with this update, I'd like to share a photo I took at the Cocoa Beach golf course yesterday. Notice the ball under the back leg. Makes for an interesting golf shot. Now back to your regularly scheduled program.
_______________________________________________

The housing market has become as discussed as America's foreign policy and, like that touchy subject, is home for many differing opinions. The following are news stories from the last week about Florida's housing market. Even though some writers are bold enough to express reservations about the continued upward trend, the tone of most Florida newspapers is still optimistic. That is understandable considering the amount of advertising revenue that the real estate industry generates for them. Of importance when reading these stories is the fact that the new condo markets and the single-family home markets are distinctly different. The level of investor involvement in the condo market has contributed to a disconnect from fundamentals. Personally, since the first of the year, I have seen greatly reduced investor interest but strong end-user buying activity. Investors may stop speculating, but those who want a place in Cocoa Beach for the weather, the ocean and river and the un-hurried lifestyle continue to buy.


from the Palm Beach Post "Some froth, no bubble"
Sarasota's Herald Tribune, "Real estate market is steady"
South Florida Business Journal, "Broward home prices continue rise"
Miami Herald "High home prices settle down"
Reuters "Florida median home prices dipped in December"
Commercial Property News "'Soft Landing' for Condo Investments"
Tampa Tribune "Anybody Home?"
Tallahassee Democrat "The forecast: sunny and stable"
WESH2 News "Florida's Real Estate Market Gets Cooler"

Our new MLS is still unreliable for statistics other than actual closed listings, so, I will limit my stats to that number. For the month of January 2006 we had the following closed sales of MLS-listed properties in Cocoa Beach and Cape Canaveral.

Single-family____4
Condominiums__29

If you want a place on the beach or near it, there have been some excellent buys recently. How about this one, a 3 bedroom, 2 bath direct ocean unit at Royale Towers that sold Jan. 10 for an incredible $325,000, or $225 per sq.ft. Still active is a 3 bedroom, 3 bath direct river unit at River Lakes, 2 blocks from the beach with a boat slip available for $299,000. No matter what happens to the investor-dominated new high-end condo market, properties like these represent great value and an opportunity to own in desirable locations in our great little beach town. Email me if you'd like a list of my favorite current listings.

Crunch time for new projects

In lieu of accurate MLS stats, here are housing start stats as reported by Florida Today this week. Click here for the whole article.

Single-family home permits in Brevard County in 2005:
7,273 compared to 6,180 in 2004

Median sale price of an existing home in Brevard:
$234,400 in December, up 25 percent from a year earlier.

Although this was a record for single-family home starts in Brevard County, a slowdown was obvious by December when the monthly number dropped to 551, less than the 2003 and 2004 December totals.

In other real estate news beachside, several new condo projects are approaching completion and other new projects are just breaking ground. Equipment has been moved onto the site of the old Cocoa Cabanas in South Cocoa Beach and the small condo project to be built there is offering pre-construction units starting just under $1 million. Across the street on the river, the first building of the 77 unit, Magnolia Bay project has topped out at the fourth floor with the construction crews making fast time. Investors who bought units there at pre-construction prices starting at $549,900 will soon be marketing their units as closing approaches. If any of them have researched nearby activity on the MLS, they must be nervous. In the Crescent Palms, a new 15 unit building just south of this project, 14 of the 15 units are on the market with, so far, no takers.

Crescent Palms


Those investors will soon be closing on their luxury riverfront units and making mortgage payments and paying taxes on their investments. Hopefully, everyone made plans for the possibility of not being able to flip their contracts.

I've been talking about the risks of pre-construction for a year now and the reality of over-supply and optimistic pricing that concerned me last year is in full bloom. If you are holding a pre-construction contract for investment purposes, you need to make some contingency plans. You may be forced to close unless you are willing to drop your price to a point at which the unit will sell. Many of the current group of investors are unwilling to accept that the profit they expected is not going to happen. Many of them will be closing and carrying debt hoping to sell at some point in the future when the market has digested the current crop of new units. Selling now for break-even may be more prudent for some of them.

If you're looking for a second home or vacation condo, this same scenario is to your advantage. Stay tuned and contact me if you'd like a list of soon-to-close projects.

Bottom Fishing for Bargains

Things have picked up considerably since the first of the year. I have written offers for 4 different buyers in the last 2 weeks with 3 of those buyers getting accepted contracts. I am seeing sellers more willing to respond to low offers than last season but I haven't found any seller yet willing to sell for under market value. Two bits of advice if you're making a lowball offer; first, don't expect a warm reception from the seller. Second, if you're offering considerably lower than asking price, the terms of your offer better be attractive to be considered. A seller will be more tempted to respond to a low, cash offer with a quick close than an offer contingent on a high loan-to-value mortgage or other troubling contingencies such as the sale of another property or a delayed close. If you plan to do some bottom fishing, get pre-approved for a mortgage, make your offers as clean as possible and be prepared to lose out on a few.

Our inventory is still climbing with each week seeing a new record high number of listings. Here are our current stats for Cocoa Beach and Cape Canaveral. One caveat; there are many duplicate listings as agents learn our new MLS, so, the actual number of listings is less than the numbers below. Even adjusting for the errors we are still at record high inventory.

MLS listed properties, Jan. 19, 2006

condos all prices__815
_over $500,000___206

homes all prices__117
_over $500,000__58

New condo listings since Jan. 1 - 182
New single family listings since Jan. 1 - 34

Sellers get aggressive with pricing

I'm still not convinced of the accuracy of our new MLS but I will report the stats as they are showing in the system.

I have seen a burst of activity in the last four weeks with serious buyers out and making offers. There is a disconnect at the moment with both buyers and sellers seemingly on different pages. Buyers are somewhat over-confident in their power to make low-ball offers and many sellers are still clinging to the idea that each new sale must be higher than the last. That is the reality in many of the scenarios that I directly observe. Of significance at the moment are those motivated sellers who have priced their properties to sell. I showed several condos yesterday and two of them are priced well under the market. One is a 3 bedroom, 3 bath, 1574 sq.ft. ground floor unit at River Lakes in Cocoa Beach that was just reduced to $299,000. That is a lot of direct waterfront condo in a great complex with boat slips for $299K. The other priced-to-sell unit was a direct ocean, 3 bedroom, 2 bath, 1753 sq.ft. unit at Waters Edge in south Cocoa Beach for $459,900. That is $263 per sq.ft., a rate we haven't seen for oceanfront in quite some time.

Whatever you believe about the future of the real estate market in Florida, if you want to own a waterfront condo, now is the time to get out and start looking. Although I believe that the high-end condo market will see even more downward pressure on prices because of too much investor involvement and increased supply, I think that quality units in existing complexes that are primarily resident-owned represent a great opportunity at these prices, at least the ones that are aggressively priced like my 2 examples above. You can choose between a brand new riverfront condo at $402/sq.ft. or a nice older unit on the same shoreline for $189/sq.ft. The difference leaves a lot of money for upgrades.

Here are our stats for today. Remember that our new MLS lists properties somewhat differently than the old one so some of these numbers will appear to have changed dramatically from my last stats reporting in December. For instance, some townhomes now appear under single-family homes. The important number here is the combined number of all listings. It is at an all-time high at 887 total listings in Cocoa Beach and Cape Canaveral.


MLS listed properties, Jan. 12, 2006

condos all prices__785
_over $500,000__196

homes all prices__102
_over $500,000__53



Another significant number is the 57 price reductions in the last 7 days. Don't think that you can get a great deal on most of the listed properties because of our high inventory levels. A large number of sellers are willing to wait as long as it takes to sell their properties or even not sell at all. Others don't have that luxury and may have to sell because of a relocation or simply because they are over-extended. These are the ones you want to buy from. They're there and I'll be glad to help you sniff them out. I can be reached by email at larry@southcocoabeach.com or at my new office, Walker Bagwell Properties in downtown cocoa Beach at 321.868.3151.