Shrinkage

Will our incredible shrinking inventory reach some stable level soon? Who knows? The condo and townhouse inventory in Cocoa Beach and Cape Canaveral, after steadily declining for the last five years, lost another 20% in the first five months of 2011. At the same time, sales are at their highest level since 2006. That dynamic is unsustainable. We must either get a fresh supply of units or sales will have to fall off. We are sitting on an 8.5 month supply in all price ranges at the current sales rate.

The rate of distressed sales (foreclosures and short sales) peaked in 2010 at 58% of all condo sales and still made up 50% of all condo sales as recently as January this year. By April 2011 distressed sales were down to just 28% of closed sales and holding at that rate so far this month. In 2007 there wasn't a single distressed sale in our market and 85% of all sales involved a mortgage. By 2009 cash sales represented more than half of all condo sales and one year later in 2010, 65% of all condo sales were cash transactions. That number was up to 75% last month.

Conclusions: except for special situation buildings and complexes, the trends seem to suggest that prices are close to stabilization. That doesn't mean that the overpriced condo that Grumpy has had listed for years is going to be worth anything near his crazy asking price just that the pace of his paper losses may begin to abate. The reduced supply of distressed sales should also contribute to stabilization. The high rate of cash sales would seem to imply that higher mortgage rates, if they ever happen, will have minimal effect. National average 30 year fixed rate is at 4.6% this week although for many condominiums, no lender is willing to write a mortgage. As always, my take on the implications of the numbers could be totally wrong. I welcome any alternative readings of my tea leaves.

I had a jaw-dropper experience with a slacker listing agent this week. It was shocking enough that it deserves it's own post upon conclusion of the almost-torpedoed deal. As Steve R. is fond of saying, "The body always surfaces." In this case it surfaced in grand fashion. Stay tuned for the whole story.

Love bugs have disappeared, school's out, water's warm, dolphin are biting and the golf course is uncrowded. And on this Memorial Day weekend, many thanks and respect for all our service men and women and especially for those who made the greatest sacrifice. Salute.


"If some chart appears to have some “cycle” the question becomes is it “real” or just something your mind is overlaying on top of randomness. Only God knows for sure, but either you’ll make money, lose money, or watch from the sidelines." ___ Mike C

To see the summer sky

As we approach June, condo sales are ticking right along with 40 closed MLS-listed condos and townhomes so far in May in our two cities of Cocoa Beach and Cape Canaveral. So far, no sale has exceeded $365,000 (top floor SE corner Crescent Beach Club) but the previous concentration of activity in the sub-$100,000 range appears to be fizzling out as inventory in that price range is drying up. Of the forty closed sales so far, three were foreclosures and eight were short sales. Just under half of the sales were in oceanfront complexes. Average discount off the most recent asking price was 9%.

Single family home sales have been robust as well with nine closed so far, all in Cocoa Beach, none in Cape Canaveral. One was a short sale and two were foreclosures. Prices ranged from $417,500 for a 4/2 on a big canalfront lot on Country Club to $92,500 for a small fixer-upper in Cocoa Isles.

There are 110 units that have been contracted in 2011 that have not closed yet, 54 of those short sales. Condo and townhome inventory stands at 393 total units this morning, 44 of those asking over $500,000, all but one of those 44 units less than 11 years old. There are 70 units actively for sale asking less than $100,000 only five of which are less than 22 years old. There are 12 foreclosures in all price ranges and 53 short sales.

The super boat races were a big hit this past weekend with boats skipping along at 165 MPH just off the beach. While the water was being churned up nearshore, the dolphins were playing alongside fishermen several miles further east. The dolphin above was one of several who came to play surfing the bow wave of our boat on Saturday.

"I may not have the answer but I think I've got a plan." ___Jackson Browne (who played a great one-man show Sunday night in Melbourne)

The final frontier

Endeavour on the pad and ready to fly.



[update] In the air (above) as seen from south Cocoa Beach May 16, 2011.

Space Shuttle Endeavour is scheduled to blast off tomorrow morning on it's last mission and will be followed by the Shuttle Atlantis in early July which will mark the last flight ever for the 30 year old shuttle program. I thought I'd reopen the topic of the impact of that ending as the Blogger outage last week interrupted the discussion happening in the comments to the last post.

I'm asked all the time how I think the end of the shuttle program and the loss of jobs will affect our real estate market, specifically Cocoa Beach. Predicting that impact is not as straightforward as first glance would suggest. President Bush made the news official six years ago when he announced that the program would end in 2010, so, it's not like thousands of rocket scientists will suddenly learn of their layoff the day of the last launch and will put their houses on the market driving prices down in whatever area they happen to live. The first pink slips were issued last summer and plenty of former shuttle workers are already gone or still here looking for or working another job. I think the moving parts we need to consider to speculate on the impact or lack thereof include the following:

1. How many of the yet to be laid-off workers live specifically in Cocoa Beach and Cape Canaveral?
2. How many of those will stay put either retiring or seeking another job locally?
3. How many of those will sell their homes and move from the area seeking employment elsewhere?
4. How many of those have already sold their homes in the six years they've known it was coming?
5. How much of the last few years' significant drop in property prices is due to fear of the impending end of the shuttle program, in other words, how much price drop is already "baked in"?
6. Do enough shuttle workers own beachfront condos to have any effect on that particular market?
7. For a buyer looking for a Florida beach getaway or investment condo (and undecided about the exact community) is the local employment picture a factor or is it all about what X dollars will buy?
8. How much of our market is 2nd home and investment property compared to primary residence?

These are certainly not all the questions we need to be asking to make an informed prediction, just the ones that stand out in my mind. I do know the impact on some businesses in some areas of Brevard County will be and already has been significant and I sympathize with those affected. I welcome comments and speculation on the specific issue of the impact on the Cocoa Beach real estate market in the comments below.

30 year fixed rate mortgages are at an average 4.63% this week as reported by Freddie Mac . Even so, 75% of our condo and townhome sales in April were cash deals. Total MLS condo inventory in Cocoa Beach and Cape Canaveral stands at 397 units this morning.

That's why the most respected greybeards often aren't the guys pounding liquor under the pier every day or quitting multiple jobs to chase swells. They are the ones making short term sacrifices that guarantee they'll paddle out the next day and the day after. ___Matt Walker Surfer Magazine

Barreling ahead

Unknown surfer shacked up out behind Taco City.

MLS listed sales for April in Cocoa Beach and Cape Canaveral included 53 condo and townhouse units and eleven single family homes. All but three of the home sales were between $220,000 and $290,000. The highest sale was a gorgeous 4/3 waterfront beauty with pool on Andros in Cocoa Beach that closed for $502,500. Three of the home sales were short sales and one was a foreclosure, a Bay Shore home in need of extensive repairs on a beautiful south-facing lot on Edwards Bay that closed for $290,000.

Of the 53 closed condo sales, seven were foreclosures. The highest price paid for a foreclosure was $245,000 for a direct Banana River six year old Crescent Palms 2nd floor 3/2 in south Cocoa Beach that sold new in 2005 for $515,000. The other foreclosures included units at Portside Villas, River Lakes, Bayport, Riverview Manor and Roosevelt Gardens. You can email me for details about any of those.

There were seven closed short sales out of the 53 total condos sold. Highest price was a shocking $165,000 for a five year old, top floor 2348 square foot Puerto del Rio 3/2. Others included a 3rd floor Cape Winds 1/2 weekly rental for $130,000 and an Oak Park townhouse that closed for $129,900 just five years after selling new for $319,500.

The list of non-distressed condo sales in April was topped by a 2 year old, 5th floor, 3 bedroom, 3.5 bath direct ocean Ocean Cove in south Cocoa Beach that went for $865,000. This unit has 2758 square feet, a 2 car garage and a boat slip on the river across the street. Sold new 2 years ago for $1,050,000. This complex had substantial price reductions on all unsold units this week.

Other sales of note included:

A sixth floor, direct ocean southeast corner at Xanadu of Cocoa Beach. This 3/3.5 unit has 2343 square feet and three garage spots and sold for $500,000.

A sixth floor south ocean view Michelina of Cocoa Beach sold for $440,000. This 5 year old 3/3 unit had 2412 square feet and a one car garage.

A top floor south facing C building Mystic Vistas closed for $313,000. This 3/2 unit had all the upgrades and was sold tastefully furnished.

A fourth floor southwest corner Sandcastles weekly rental 2/2 closed for $230,000. Two balconies on these corner units but only a peek of the ocean. This nicely remodeled 1286 square foot unit came with a one car garage.

A seventh floor southwest corner at Royale Towers C building closed for $265,000. This 1860 square foot 3/2 unit sold furnished and has a garage. Like the Sandcastles unit above, just a peek of the ocean.

An upgraded 4th floor direct ocean Wellington in downtown Cocoa Beach sold for $225,000. This two bedroom, two bath, 1049 square foot unit has no garage and was sold furnished.

An oversized 2/2 Shorewood F building closed for $210,000. This south facing 1663 square foot unit has a one car garage and a slight peek of the ocean.

A furnished, ground floor direct ocean Ambassador Shores in south Cocoa Beach sold for $195,000. Was nicely remodeled. No garage, 1217 square feet with two bedrooms and two baths.

Unit 308 at 2100 Towers finally closed after a total of 1778 days on the market. This south facing 2/2 unit was first listed in 2006 for a somewhat optimistic $529,900. Price has drifted down over the years until last asking price which was $199,900. It closed for $190,000.

Two more units sold at River Lakes in south Cocoa Beach in April. A very nice 3/2 ground floor closed for $139,900 and a two-story 2/2.5 unit closed for $152,500. Both had garages.

A 3 bedroom 2.5 bath River Gardens in Cape Canaveral with 2 car garage that sold new in 2005 for $349,900 closed last week for $170,000.

One of the newer Villages of Seaport 2/2.5 townhouses with 1310 square feet closed for $139,600. Had some nice upgrades.

The balance of sales not detailed above were primarily concentrated in older Cape Canaveral non-waterfront buildings with unit sales in the sub-$100,000 range. Looking at all sales in April the average selling price was 92% of the last asking price with seven going for full asking price. Keep that in mind when your brother in law tells you that you should be able to get 25% off asking price for any Florida property. It's not about the discount from asking. It's about the final price.

"Everyone has a plan until they get punched in the mouth." ______Mike Tyson