Friday, June 20, 2008

Everything is fine, ...really

The market has bottomed, inventory has dried up and prices are expected to skyrocket next year. Buy now or be priced out forever, historically low mortgage rates, population explosion, baby boomers, European buyers, median price up, year-over-year sales up, blah, blah, blah.

Let me translate the above Realtor-speak; "I will tell you anything in hopes of generating a commission check." Folks, some segments of this market are still dangerous and it would be prudent to be cautious with your real estate search. If your agent is saying any of the above phrases while waving his Time2Buy button before your eyes, put your hand on your checkbook, yell "watch out for the squirrel" and roll out of his Lexus onto the pavement. The damage to your body will probably be cheaper than the damage to your finances that was about to happen. This is historically the busiest time of the year for sales in our market and it would be easy for me to tell you that the recent activity in our market is evidence of the end of the troubled times, but, it just ain't so. There are scattered super deals to be had but they do not represent the bulk of the available listings and, if you aren't on top of recent activity, you won't be able to recognize the deals when you see them. The vast majority of current listings are over-priced. You need to be able to determine current value and negotiate a price below that number. If you can't, move on. The patient buyers are being rewarded.

There is a special danger in the high-end condo market as developers are sitting on dozens of units that they cannot move. Most of this inventory is not on the MLS so the reality of this segment of our market is hidden from examination but my observations tell me we are approaching a tipping point. No one knows how this will play out in individual complexes but the recent auction by the developer at Mystic Vistas likely sent a chill down the spine of every owner in that complex, especially when the record low prices became known. Owners in other not-sold-out new buildings and complexes should be similarly concerned. When a developer decides to unload his remaining inventory, all other units' values will be affected. If you're looking to buy in a new building, ask how many units are still unsold, find out how many (if any) owners are delinquent on their monthly fees and, most of all, be prepared to wait a long time for any appreciation. No rational person can look at the level of inventory and the rate of sales in the high-end condo market and expect things to turn around anytime soon. That doesn't mean there are no good reasons to own a condo in our great community. If you can strike a great deal and don't mind the possibility of no appreciation for a while, the best little beach town in Florida is waiting for you. The market decline so far does not appear to have affected the beach, the surf or the fishing. The market's direction was the last thing on my mind this morning as I stalked tarpon in the surf before coming to the office.

My intent from the day of my first post here in 2005 was to give you readers timely, accurate and honest information about the Cocoa Beach and Cape Canaveral real estate market. From the hundreds of emails I've received over the years, I know that many of you have profited from knowledge gained here. There is wheat and there is chaff. If you're buying or selling real estate in our market, you better know how to separate it.

'When the tide goes out, you can see who isn't wearing shorts.'
________________Warren Buffett