Sunday, December 28, 2008

Cocoa Beach 2008 Year in Review

A Cocoa Beach kid scratches out the last sand message of 2008 on a warm and beautiful December 31, 2008.

The year 2008 began on a gloomy but hopeful note as sellers of real estate in Cocoa Beach and Cape Canaveral were reeling from the price drops of 2007, but, just like the two previous years, were hanging their hats on the spring "selling season". The season brought increased sales but, just like the two previous years, more downward pressure on prices. There was a big increase in waterfront single-family home sales in 2008 with a total of 45 MLS-listed homes selling compared to only 28 in 2007. I think this can be attributed to the reduced expectations of sellers as they finally began accepting the new reality and reduced their prices to a point attractive enough to generate offers. In 2008 there were 10 MLS sales of canal homes in Cocoa Beach for $300,000 or less with the lowest going for $200,000 compared to only two going for under $300,000 in 2007. No MLS sales of single-family homes exceeded $1 million in 2008 unlike 2007 when four sales surpassed the million dollar mark.

The condo market was similar with not a single sale over the magic million dollar mark in 2008 compared to five closed MLS sales exceeding $1 million in 2007. Over half of all condo sales in 2008 in Cocoa Beach and Cape Canaveral were for less than $200,000. For developers, 2008 was a particularly dismal year with sales practically at a standstill for the luxury buildings with one shining exception, The Meridian. Of only 20 MLS sales of condos over $500,000 in 2008, eleven were at the Meridian. While units were selling there the other new luxury buildings were virtual ghost towns except for lonely Maytag repairman/realtors sitting in the models waiting for the buyer who never showed. I expect some sort of watershed event in 2009 with the empty new buildings. Whether financed with OPP or self-funded, these multi-million dollar projects that aren't selling represent a lot of dead and decaying money that at some point will become too stinky to hang onto. It will likely take substantial price reductions to move the 100+ new, luxury units that are still available this last day of 2008.

At least one new complex reached the breaking point this year. At this four-building Cape Canaveral oceanfront complex, 2008 began with multiple unsold units, 39 of which were put up for auction in May. Eleven of the units sold at the auction, several under $200,000, less than half the recent asking price. Since then at least one non-developer unit has closed for below $200,000 and the developer has been served notice of foreclosure on 16 of the remaining unsold units. Values of all units here, distressed or not, are affected. The lowest MLS selling price in this complex in 2007 was $280,000. It hit $196,000 in 2008.

While the macro-economic outlook remains uncertain, mortgage rates are at obscenely low levels and sellers, for the most part, have become more realistic in their expectations. If you didn't have the bulk of your assets parked with Bernie Madoff or invested in Citi, Lehman, General Motors or any of the other thousands of dogs this year and are still looking for your special beach place, 2009 might just be the year for you. Considering the huge amount of retracement in prices that has already taken place and the changed seller sentiment, I think that 2009 will be a bargain hunter's delight. Many prices are now below replacement cost and sellers and lenders are very motivated to move properties. If you have the nerve, now's the time to be cautiously looking. More than a few buyers were able to hammer out attractive deals this past year. Below is a handful of some of the more outstanding deals of 2008. There were others but these stood out.

A sampling of the best deals of 2008

Puerto del Rio 2348 sq.ft. top floor, 1 yr old $215,000
Constellation 6th floor direct ocean, 2484 sq.ft. $400,000
River Bend top floor side view, 2292 sq.ft. $265,000
Solana River 2nd floor direct river, 1918 sq.ft. $174,300
Windrush (ocean) 1st floor no view, 1517 sq.ft. $157,500
Sutton Place on the Ocean 2nd floor, 691 sq.ft. $110,000
The Sands 4th floor direct ocean, 1334 sq.ft. $265,000
Harbor Isles top floor direct river, 1308 sq.ft. $210,000
Cocoa Beach 3/2 canal home, needed work $200,000

And my pick for Deal of the Year

A 1938 sq.ft. 3/2 beautifully-remodeled home with 135' on the open river in south Cocoa Beach (beach is right across the road here) on 5 lots (two zoned commercial on A1A) that closed in July for $670,000 Was listed for $1.9 million just 11 months earlier. That, ladies and gentlemen, is a major change in seller expectations and the smoking deal of 2008.

I hope the new year brings you happiness and reward. Whatever it brings, I will be happy to experience it in Cocoa Beach, my favorite town on Earth.

"And the tide rises, the tide falls."
Henry Wadsworth Longfellow

Saturday, December 27, 2008

$40,000 Christmas present for all

Those of you tracking property prices with intentions of possibly purchasing should also be looking at the impact of interest rates if you're planning to finance your purchase. Freddie Mac's December 24th survey finds the national average of 30 year fixed rate mortgages at 5.19%, their lowest point of the year and a full point and a quarter below the rate just seven weeks earlier. The payment on a $300,000 mortgage has dropped by $252 per month in just seven weeks, the equivalent of a $40,000 price cut. Definitely not insignificant.

The weather in Cocoa Beach continues to hover in the mid-70s as we approach 2009. I'm seeing winter on the TV but it just hasn't touched us here, yet. My best wishes to all of you for a prosperous New Year. I will do my year-end wrap-up next week with my picks for deals of the year with a few dubious distinctions for flavor. Should be interesting. Peace out.

"I can breathe in a small town."
_________John Mellencamp

Saturday, December 20, 2008

Morning Glory

Sunrise at 12th St. South, December 18, 2008

What a week of beautiful weather we've had in Cocoa Beach. While the Weather Channel has focused on the winter storms in other areas of the country, we've been in the 70s every day with little or no wind and a persistent, clean, head-high swell to keep the surfers occupied. The great beach weather has made procrastinating about holiday shopping justifiable, at least in my mind.

As is normal for this time of year, with time off for the holidays, buyers are out in force and we will likely see quite a few properties go under contract before the first of the year. Among the likely targets are the recently reduced direct ocean 2/2 at Waters Edge in south Cocoa Beach. This unit is now offered as a short sale with a suggested price of $179,000, the lowest priced direct ocean 2/2 by a mile. It's view is obstructed by the dune vegetation but it is now priced as if it were smaller, crummier and blocks from the beach. Another favorite of mine is a big (1447 sq. ft.) 3rd floor, 2/2 south view at the 11 year-old Sand Dunes building in Cape Canaveral just reduced to $299,000. Offered fully furnished. The 3000 sq. ft. penthouse direct river unit at Crescent Palms that I mentioned in an earlier post that was offered as a short sale for $399,000 is under contract. None of the units mentioned here are listed by my firm.

Hope you all have a happy and safe holiday season and that the new year brings you prosperity and fulfillment. If you need to contact me before December 26, forget the email and please call my cell, 321.917.5786. I'll be back in the office on December 27. I'll leave you with a shot of a secret holiday pool somewhere in south Cocoa Beach.

"Look at the stars and how they shine for you, and all the things that you do."
______Chris Martin - Coldplay

Monday, December 15, 2008


The shuttle Endeavour catches a ride back home on a 747 last Friday after initially landing in California due to bad weather at the Cape. The pilots usually cruise low and slow down the beach when returning for all to see. I've seen proud locals spontaneously stand from their beach towels and applaud the safe return of our spacecraft as it cruises by. It's a goose bump moment the first time you see this public display of patriotism and local pride.

Sales and listing activity has been slow as everyone's focus has shifted into holiday/year-end mode. There have been three closed sales of condos so far this month in Cocoa Beach and Cape Canaveral with 20 new contracts executed in the same period. Hopefully we will see a spike in new listings after New Years for those of you still waiting for that perfect unit at the right price.

Among the attractively priced oceanfront units currently offered is a new short sale listing at Park Place in downtown Cocoa Beach; a 2nd floor, 2/2 direct ocean unit being offered for $270,000. There is also a top floor, direct ocean 2/2 at Spanish Main being offered for $299,900. Spanish Main is one of the small handful of buildings that allow weekly rentals. These units rent for between $800 and $1200 per week for most of the year. This is the view.

MLS inventory Dec 15, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____738
over $500,000_________98 - 28 sold since New Year's Day
Single family homes___116
over $500,000_________35

"You'll shoot your eye out, kid."
______Santa Claus to Ralphie

Thursday, December 04, 2008

System of a Down

Delta rocket vapor trail over Cocoa Beach

Today we get another case history of a bad selling strategy. This is the price history of a 3rd floor original condition, side view condo in an older oceanfront building that has been on the market for 687 days.

Jan. 17 2007 - first listed for $499,000
Jan. 13, 2008 - price drop to $349,900
May 10, 2008 -- 2nd drop to $324,900
June 12, 2008 -- 3rd drop to $319,900
Aug 08, 2008 --- 4th drop to $315,900
Sept 08, 2008 ---5th drop to $310,900
Oct 09, 2008 ----6th drop to $305,900
Nov 08, 2008 --- 7th drop to $300,900
Dec 04, 2008 --- 8th drop to $299,900

After 687 days on the market this seller has shaved 40% off his asking price. During the time since first listing there have been sales of five units in the building, two for $330,000 and three for less than the current asking price. Several were in better shape than the subject unit. Today after eight price drops he is still asking more than two other currently-listed units in the building. My suspicion is that the price drops are not over if he seriously wants to sell. Since the day this unit was first listed, 181 oceanfront condos with at least 2 bedrooms and 2 baths have closed in Cocoa Beach and Cape Canaveral for less than the original asking price of this unit. Sellers take note. This is not the way to sell your unit.

"You say it best when you say nothing at all."
_______Paul Overstreet and Don Schlitz