Wednesday, September 24, 2008

Failure to Grok

N_A = (6.022 \, 141 \, 79\pm 0.000 \, 000 \, 30)\,\times\,10^{23} \mbox{ mol}^{-1} \,
Financial system rescue. On the one hand we have Treasure Secretary Hank Paulson telling us that quick action is imperative to avert imminent disaster while others are expressing skepticism about the immediacy of the problem and the cost-effectiveness of the plan considering the scale of the taxpayers' commitment. And of course we have those who are politicizing this issue, either criticizing or cheerleading the plan, depending on their own agendas. From the caliber of questions I saw being asked yesterday in the Congressional hearings, the average Congressman has as firm a grasp on the issue as a caveman has on Avagodro's constant (top of page). Thanks to Steve H. for bringing up this number. Don't ask.

How will a bailout or lack of a bailout affect the Cocoa Beach and Cape Canaveral real estate market? To be honest, I'm having trouble sorting out the possible impact. I've listened to the brain trust on CNBC parsing the plan and I've read as many commentaries as I could cram in between taking care of everyday business and I'm stumped. I want to believe that the smart guys in control will fix everything but then I remember that it was the smart guys who got us in this mess. Meanwhile, in Cocoa Beach and Cape Canaveral, MLS activity is steady but slow despite the doomsday rhetoric on the tube with 27 closed residential sales so far in September. While I continue to absorb info and postpone opinion, I think I'll walk over to Coconuts on the ocean for a seared tuna sandwich and watch the waves. Armegeddon can wait.

The drop below 6% for mortgage rates didn't last very long and the nationwide average is well off it's brief low of last week.

There are no new listings or price drops in the past week that I think worth mentioning other than a direct ocean 2/2, 2nd floor unit with a wide-open view in south Cocoa Beach for $282,500. The 2nd floor direct ocean 2/2 at Waters Edge is, remarkably, still available at an asking price of $219,000. Someone picked off a 2nd floor, 2/2 south view at River Lakes for a shocking $162,500 and a top floor A building Mystic Vistas unit is under contract for less than some of the auction prices back in May in the C and D buildings.

"The sad truth is that opportunity doesn't knock twice. You can put things off until tomorrow but tomorrow may never come. Where will you be a few years down the line. Will it be everything you dreamed of? We seal our fate with the choices we take, but don't give a second thought to the chances we take.
__Gloria Estefan

Monday, September 22, 2008

First Day of Autumn in Cocoa Beach

Sales activity continues it's seasonal slowdown as we officially ease into autumn today. There was a slight feeling of fall in the 80 degree air at sunrise this morning and the mullet are showing up in decent numbers in the surf as their annual run begins to pick up steam.

As of this morning, September 22, sixteen MLS-listed condos have closed in the Cocoa Beach and Cape Canaveral market in the month of September for prices ranging from $75,000 for a foreclosed 2/2 at Banyan Cove in Cape Canaveral to $742,000 for a big, 3rd floor direct ocean corner 3/3 in south Cocoa Beach. Some remarkable deals are happening for those buyers brave enough to make a move to pick off a weak straggler from the fringes of the nervous sellers' herd.

MLS inventory Sept 22, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____725
over $500,000_________82 - 28 sold since New Year's Day
Single family homes___116
over $500,000_________41

My favorite quote of the financial crisis so far comes from Mike (Mish) Shedlock's "open letter to Congress on the $700 billion bailout plan" this morning. Definitely worth a read if you want a perspective from the doubtful side of the aisle.

"If printing money was the solution to all problems, Zimbabwe would be the most prosperous country on Earth."

Mike Shedlock

Saturday, September 20, 2008

Heaven in a Small Dish

South Cocoa Beach delivered a knockout last night. It began with a simple spinach salad and lobster bisque followed by fresh grilled local grouper perched atop layered vegetables. All were excellent and I would normally have ended my meal at that, quite satisfied, but, since it was my birthday, I decided to go for a dessert. Holy cow! As a redneck gourmand my descriptive skills are somewhat lacking but I'll try. What appeared to be a straightforward crème brûlée revealed a few seconds into the first bite subtle flavors of peach that shifted into airy traces of lavender mixed with the toasted caramelized sugar that was last to dissolve on the tongue. This is only the second time that I've ordered dessert here, not being a fan of sweets. Both times, though, I've experienced such complex layers of flavors that I find myself slowing my eating to a crawl trying to discern each flavor shift. Last time was a similar dish, a crème brûlée but with flavors of bourbon and pepper drifting in and out of the background. All this gushing from a not-into-sweets guy. Thank you to The Fat Snook for once again delivering an eating experience that I'll be daydreaming about for days to come. I'll be back.

"One of the very nicest things about life is the way we must regularly stop whatever it is we are doing and devote our attention to eating."
~Luciano Pavarotti

Tuesday, September 16, 2008

There is a Silver Lining After All

Tiiiiiiimberrrrrrrr. Mortgage rates fall off the cliff.

Chart courtesy of

Buried beneath the onslaught of bad news in the financial sector recently is a snippet of good news for buyers of real estate. Regular readers of this blog know that I lean towards the pessimistic and am anything but a cheerleader for the housing market and the economy in general, so, pointing out good news may have you questioning my sobriety. Worry not, I retain my cautious outlook for our market in general and suggest continued patience if you are looking to purchase. My advice remains "don't compromise on the property you're looking for and drive a hard bargain when you do find it". Now on to the good news. An unintended side effect of the bailout of Fannie Mae and Freddie Mac last week was an immediate and dramatic drop in mortgage rates. Even as taxpayers will be shouldering a staggering amount of debt, those buyers taking on new mortgages will be getting rates lower by more than 1/2 of a point than in late August. For a purchaser of a $250,000 Cocoa Beach condo with an 80% - 30 year mortgage that reduction will amount to about $70 per month lower payment or the equivalent of about a $12,000 reduction in price. Not shabby.

With the failure this past weekend of Lehman Brothers, the buyout of Merrill and the future of AIG and Washington Mututal in question, the interest rate trend remains on the downslope with the yield on the 10-year bond hitting a 5 year low this morning, Tuesday Sept. 16. No one knows where this will all end or where rates will be in the near future but, for now, buying power is stronger for those financing their property purchases.

Serendipity is looking in a haystack for a needle and discovering a farmer’s daughter.
- Julius Comroe Jr.

Friday, September 12, 2008

Ahhhh, September in Cocoa Beach

Osprey riding the updraft over ocean condos this morning.

Welcome to the best time of year in Cocoa Beach. Summer is over on the calendar but the only indication on the ground here is the lack of traffic and small number of people on the beach. The summer tourists are gone, the kids are back in school and the snowbirds are months away from their annual influx. The weather is balmy and the water is warm and should stay that way through November.

A positive development this week is the dramatic decline in long-term mortgage rates following the Fed's bailout of Fannie Mae and Freddie Mac. 30 year fixed rates are once again below 6%. Real estate sales on the beach are slowing as they do every year this time. We fell back below last year's sales numbers in July and August and should follow the seasonal trend of declining total sales through November. That is positive for buyers and negative for sellers. Some of the more notable sales so far this month include;

5th floor direct ocean 2/2 Windjammer for $275,000
2/2 Beachwalk corner with boat slip and garage for $154,000
3 yr.-old, 3/2.5 River Gardens townhome w/2 car garage $175,000

One note about the inventory numbers below; there is a shadow inventory of luxury condos held by the developers that isn't included in the MLS numbers. By my unscientific count there are in excess of 100 additional over-$500,000 condos available for purchase in Cocoa Beach and Cape Canaveral that are not included in the MLS inventory of 78. If you're thinking of dipping your toes into this dangerous market segment, you need to understand the implications of this inventory and more specifically the implications of a high number of unsold units within a complex. You also need to thoroughly investigate the condo association's financials and budget. If the condo fees seem too low they probably are and will almost certainly be raised to adequately insure and maintain the complex. It's not uncommon for developers to keep fees low until a project is sold out. The owners at Crescent Palms can speak to this; the previous $300 a month has been increased to $505. Also, if buying in an older building, ask about upcoming concrete projects. Even if a seller is willing to pay the assessments for you, do you want to buy into a building just embarking on a project that could take two years to complete? Jackhammers and construction crews can make your beach experience less than idyllic. Grill your buyer's agent for all details about your target buildings.

MLS inventory Sept 12, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____733
over $500,000________78 - 28 sold since New Year's Day
Single family homes___118
over $500,000_________42

My favorite, attractively-priced listings in the MLS right now include;

9-yr old, 4/2 half duplex steps from the beach for $210,000
Big, 3/2 canal-front condo with boat slip for $235,000
Big, 4-yr old, 4th floor, 2/2 direct river w/expansive views for $266,900
Big, 8-yr old side ocean view 3/3 for $299,900 (sold in '06 for $600,000)

If you have questions about our market or you'd like to know more about these or any other listings, please email me.

One last note about my earlier report on the Mystic Vistas auction in May; I incorrectly reported that 12 units had closed from the auction. The actual number of closed sales (as recorded on the tax appraiser's site through Aug.20) is only 11, less than half the number widely rumored to have been sold at the auction. It is entirely possible that the developer is giving buyers longer than the stated 30 days to close but, at this point, we're past 90 days and counting, so, it seems likely that 11 is the real number. If that changes, I'll update in a later post.

"Fast is fine but accuracy is everything." Xenophon

Friday, September 05, 2008

TS Hanna Sept. 5, 2008

A couple of frame grabs below from the Cocoa Beach Pier cam at high tide, 1 PM today, Sept. 5, 2008. Tropical storm Hanna is about 100 miles due east. Wind is 25 mph out of the WNW and air temp is 77 degrees. No rain at the moment but small showers earlier this morning. The 20 mile buoy is reading 17.7 foot swells with 12 second periods. Surf is bigger south but cleaner at the pier and north into Cape Canaveral.

A stoked individual drops in on a big left out in front of the pier.

Also the occasional right peels through. No takers for this one.

Surfing can only be peripherally explained and described. It is far too complex and much too internalized to approach in any other way.
__________________Steffen Mackert