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
I really hope your tea leaves are correct and my crystal ball is--lets say--dim at best. I see a price that will continue to drop. Through the dim light I see 5-25% in most metro or adjacent area's. As of today the home price index has sunk to 1999 levels. Yes prices did ride the high tide last summer---but---that was all tax credit induced.Since then prices have reached their lowest level since 2006. The glut of foreclosures is the problem. That number will swell to new highs.You will have new highs of inventory that will not abate any time soon.I see through the haze a high end of a 20% + drop in price. Foreclosures,lack of job's and the less than stellar "come on down for a loan" head the long list of decline for the real estate market. I might add the newest wrinkle---People see a home as a liability rather than asset---WOW--has the time's changed. Let me add a ray of positive reinforcement---my crystal ball has short circuited before.
ReplyDeleteI have to add a couple other thoughts-----I have noticed that HOA fee's have gone up--pray-tell why---------------
ReplyDeleteas you know this is kind of my pet peeve------I find it outrageous.
I also must add:You have a web site that is very informative and enjoyable to follow. Thanks for your in-site.It has helped one's ability to make a educated decision on your area's property.
to follow up on Snowman's comment, one has to wonder how much the moratorium on foreclosures has had on inventory levels and the number of distressed sales recently. I don't know if there's a source for the info but it would be very interesting to see how many properties are currently in the foreclosure pipeline in the area.
ReplyDeleteValues still seem to be drifting lower, although at a much slower pace (purely personal observation, no empirical data to back it up). It will be interesting to see if there is any impact from the shuttle program terminating. Logic dictates that it should. Even if the houses the workers are in aren't beach front condos, they offer alternatives to buyers looking. Buyers are only willing to pay so much of a premium to live on the beach before they'll settle for a house nearby instead and use the savings to buy a boat.
Always interesting.
I believe you are interested in Shadow inventory numbers.The Florida number is Hugh.Florida ranks #1 in the nation with 441,500 shadow homes statewide.Sooooooooooo you can figure the home price will slowly fall until the glut of Shadow properties not yet on the market get purchased by you and me as well as speculators and investors.
ReplyDeleteThanks for that, but I was more interested in the Cocoa Beach/Cape Canaveral statistics. I don't think the Florida number, which is heavily skewed by Miami, is a good indication of what's going on in the local market.
ReplyDeleteOK----Larry could probably answer that question.
ReplyDeleteI don't think there's a snowball's chance that we will see inventory swell to new highs. It would require a 50% increase in current inventory to take us to just half the peak inventory number. The Cocoa Beach market did not mirror the Florida or nationwide markets during the boom years and it is not mirroring them now. Mangoes and pineapples. I can't comment on Bakersfield, Reno, Pt. St. Lucie or even Palm Bay in our county. I don't know if their inventory is as depleted as ours right now. My predictions and observations, as always, are strictly about Cocoa Beach and Cape Canaveral and are based on some pretty intense personal study and crunching of the local stats. I reckon nationwide housing statistics are perfect for nationwide housing predictions.
ReplyDeleteSomeone forgot to tell the lenders that there is a moratorium. I see 60 properties scheduled for foreclosure auction at the county courthouse next Wednesday and 63 the following Wednesday. Every major and most minor lenders are represented on the list. FYI: Cocoa Beach and Cape Canaveral make up 4% of the total county population.
Condo fees will stand a chance of coming down when insurance and maintenance costs come down (fat chance) or when associations decide to stop funding reserves which some already have. I'm not holding my breath.
Tommyfudster says....
ReplyDeleteCondo fees are not out of line in comparison to single family barrier island homes which will cost you $300 month for home insurance, $120-150 month for yard care, $60 month for cable TV, $30 month for pest control, $50 month for water, garbage and sewer, $100 for pool maintenance and anywhere from $200-6000 month for maintenance.
Do the math and you might even admit condo fees are a bargain.
Larry, I take it from your response that there wasn't a slow down in foreclosure activity late last year/early this year in the Cocoa Beach Cape Canaveral area like there was in most of the rest of the country. Correct?
ReplyDeleteIn Cocoa Beach and Cape Canaveral there were 60 closed MLS foreclosures in the first half of 2010 and 64 in the second half. We've had 46 in the first five months of 2011, so, the pace appears to be about the same. There are only 15 current foreclosure listings. Looking at the upcoming foreclosure auction list at the courthouse, there does not appear to be any major mortgage lenders not processing foreclosures. I obviously do not have access to all the data but what's available to me does not suggest a big shadow inventory of impending foreclosures in CB and CC.
ReplyDeleteLike I said above----my crystal ball could be out of whack or I'm out of whack "whatever"----BUT--I to have looked at a countless streams of numbers-----I have to park my butt on the half empty rather than half full assessment. I hope I'm wrong but--I see inventories skyrocketing.Then again my numbers tell me the economy is going to unravel more than before.I love your area and I hope the glass runneth over. As far as HOA fee's as a bargain--I think not...I've checked the numbers as well--no way the costs are the same or lower-for the same type of property in the same locale. It's a big ripp----------
ReplyDeleteLarry
ReplyDeleteAre the auction announcements and results available to us? What is the impact on comps?
Announcements of upcoming auctions are public information but I'm not aware of a place to get the results post-sale. This is the link to the upcoming actions.
ReplyDeleteForeclosure list