Someone asked about inventory levels. Inventory shrinkage continues fueled by the high number of sales and the lower than usual number of new listings. MLS condo and townhome inventory this morning in Cocoa Beach and Cape Canaveral is at 452 units, it's lowest point since I began tracking this number in May of 2006. That translates to just slightly more than a 10 month supply at current sales levels (most recent 4 month average). Is that a big deal? You decide.
One year ago, March 2010, using the same formula (inventory over average sales rate) we had a twenty month supply. One year earlier, in March 2009, we had a whopping 35 month supply of condo inventory. Our supply has been cut by two thirds in two years. The effects are being felt.
As has been the case for the last several years the inventory over burn rate number is higher for luxury units, more than double using the same formula as above but realistically even higher than that because of erratic closings and unlisted but available units in troubled complexes. With those fundamentals I think it's safe to expect to continue to see price erosion in the luxury segment. Lower supply and higher demand would seem to predict another scenario in the mid and lower price ranges.
"I have an existential map. It has 'You are here.' written all over it."___Steven Wright
I'm sure your facts and figures are correct. You always seem to do a thorough study before your comments come to print. The only problem I have with the latest comments on supply and demand would be that a projected two and a half million properties are projected to go into foreclosure this year. That's up from the original projection of one and a half million units.(Case/Shiller) Realistically the price should reflect the oncoming glut of all price range property. Though I would agree that the pricier units will be hit hardest--The overall value will fall another 15-20% in all price ranges.
ReplyDeleteI would welcome some new inventory. Foreclosures make up only 3% of our current total residential inventory in Cocoa Beach and Cape Canaveral. I wonder what Case/Shiller would have to say about our tiny market and its correlation with or divergence from the national.
ReplyDeleteAs the saying goes---Big is not always better.
ReplyDeleteYour posts are very informative.
ReplyDelete"..I wonder what Case/Shiller would have to say about our tiny market and its correlation with or divergence from the national..." Easy explanation for the divergence. Bernanke's cheap dollar has increased Canadian tourism and real estate purchases for beachside second homes in Florida. Gotta love that exchange rate.
ReplyDeleteA little clarification on my last post, the Canadian dollar had a nice bump last year from April through Aug 2010, prime time for tourism and real estate sales (this CAD bump correlates with the nice bump in the chart above). The CAD has declined since then, if the CAD remains low, while Brevard unemployment and gas prices remain high, I wouldn't expect the same bump this year for the same time period. Here is a CAD/USD chart I just pulled from the net:
ReplyDeletehttp://www.advfn.com/p.php?pid=qkchart&symbol=FX^USDCAD
IMO, not a big deal in scheme of things.
ReplyDelete1) Shadow inventory; 2) Slow down in Foreclosures Filings and halt on repos due to robo-signing. These will eventually ramp back up; 3)Haven’t seen bulk of KSC lay-offs yet; 4)HUGE volume of available rentals in CoBch/Cape for under $700 that have sat for months = No Need for even more inventory in the condos & townhome segment.
-Local Appraiser
Lets add a #5---In June the gov. will stop buying back Treasuries---Whoa mommaaaaaaaaaa the house of cards will crumble like the roads in New York. Chickens come home to roost rings a bell.
ReplyDeleteNumber of MLS rentals for $700 or less in Cocoa Beach this morning, 14 total.
ReplyDeleteTo clarify, the additional inventory I would welcome is "for sale" inventory. Pickings are slim for prospective purchasers right now. The current MLS inventory of condos and homes resembles a dish of mixed nuts at the end of the party, most of the tastier cashews and pecans having been picked out leaving mainly broken peanuts. The hostess needs to refill the bowl.
Rentals. Add Cape Canaveral & you get 58 just on MLS. Add Craiglist & road signs, it’s likely near 100.
ReplyDeleteThough I understand you are talking for sale inventory (a lot of these also for sale) occupancy rate IS an important market indicator - especially for the investor-buyer.
-Local Appraiser
We have rented both in Cocoa Beach and Cape Canaveral. I have found plenty to choose from--only problem is the owners think this is 2006 and want rents that do not reflect the times. This is the first year in many that we decided to stay put in New York. Price wise we did the correct thing. Weather wise--we messed up. Today with the high winds it is 10 degrees out and snowing. I guess we should have paid the ransom.
ReplyDelete