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