Sunday, November 27, 2011

Waiting on a foreclosure

In response to a request for comments on the state of the distressed market:

So far in the month of November there have been 31 closed residential properties in Cocoa Beach and Cape Canaveral as reported by the Cocoa Beach MLS, 25 condos and 6 single family homes. Of those, 5 condos were short sales and one single family home was a foreclosure making distressed sales 14% of the total residential market in November (so far). Our inventory as it stands this morning November 27, has exactly the same proportion of distressed offerings. Out of a total 445 properties (369 condos and 76 homes), 41 are short sales and 21 are foreclosures, 14% of the total, well off the numbers of the recent past. Of the total sales so far in 2011, 31% have been distressed.

Just one year ago, November 2010, a whopping 41% of all residential sales were distressed, 22 out of 54 total MLS-listed residential properties closed in the two cities. The second overwhelming wave of foreclosures being predicted by the "experts" for well over a year has yet to materialize in our market.

Downtown Cocoa Beach is hopping today with thousands of visitors here for the Art Festival which was serendipitously kicked off at 10 AM yesterday morning with NASA's launch of the Mars rover aboard an Atlas rocket. Only in Cocoa Beach.

"You can't find nothing at all, if there was nothing there all along." ---Ben Gibbard

Saturday, November 19, 2011

Approaching Thanksgiving

It's the week before the Space Coast Art Festival in downtown Cocoa Beach and historically a slow time for property sales. Not so this year as sales are maintaining the brisk pace of the record-setting October. So far this month, twenty MLS-listed condos and five single-family homes have closed in Cocoa Beach and Cape Canaveral. Only four of the condo sales were for less than $100,000 as inventory in that segment of the market continues to shrink. Magnolia Bay units continue to move with two closed so far in the month for $340,000 and $365,000. Direct ocean units above the ground floor in older buildings with garages are selling in the $163 to $193 per square foot range. 

Prices at the uber-luxury Villa Verde building on the Banana River in south Cocoa Beach have been slashed to almost a third of their original asking prices. This 2007 project was a victim of bad timing and no units sold until last month. Prices for the 2875 square foot 3/3 units now start at $345,000 or $120/square foot. In my opinion, an incredible price for this level of construction and amenities.

The bank is selling the last of the developer units at 5 year old Mystic Vistas in Cape Canaveral at prices below $200,000. For a 5 year old luxury 3/2 condo with a peek of the ocean this is quite an aggressive price  (under $113 per square foot). There are five left as of this morning.

A very fortunate buyer was able to get a 3rd floor Cape Winds 1/2 foreclosure for $90,000 before it ever hit the MLS. These units rent for as much as $900 a week. The math is quite attractive at a $90K purchase price.

Other notable sales included;

A third floor Constellation 3/2 in south Cocoa Beach that closed for $348,000.

A side view 2nd floor Solana Shores 3/2 with 2095 square feet for $277,500. 

A nicely remodeled 4th floor direct ocean Waters Edge 2/2 in south Cocoa Beach for $260,000.

A 4th floor direct ocean Ocean Pines 2/2 short sale for $230,000.

A 4th floor direct ocean Canaveral sands 2/2 for $220,000.

A 1650 square foot 2nd floor 3/2 canalfront Captain's Cove in Cocoa Beach with a deeded boat slip and lift sold for $175,000.

There are quite a few interesting deals under contract that haven't closed yet that I'll detail in a later post. Be sure to try to make it to the Art Festival in downtown Cocoa Beach Thanksgiving weekend. If it's like years gone by, a good time will be had by all.

Husband points are like Frequent Flier Miles. You can earn a bazillion of them but there is always a blackout period when you really need to use them. ___Dr. Guano

Monday, November 07, 2011

October in the rearview

An enthusiastic canine criminal enjoying the cop-free zone south of the city limits.

After a lukewarm September of 32 condo sales in Cocoa Beach and Cape Canaveral, October roared back with an all-time record of 53 MLS-listed condos and townhomes closed in the two cities. That is more than any October on record including the boom years of the mid-2000s. That's as of this morning's reporting so the final number could be even higher. (One tardy listing agent finally marked a listing as closed yesterday that actually closed in June. This is the kind of stuff I have to deal which is why I always add the caveat that the numbers may change.) Sales ranged from a high of $590,000 to a low of $29,900. The median sale was $114,000. 28% of all sales were distressed, six foreclosures and nine short sales. A Mystic Vistas foreclosure that closed for $217,000 was the highest price of the 15 distressed sales .

66% of the sales closed for cash. The average sold for 93% of the last asking price. Weekly rental ocean buildings, of which there are about a dozen total in Cocoa Beach and Cape Canaveral, accounted for six of the sales with three of those in Canaveral Towers and one each in Sandcastles, the Marlin and Spanish Main. The Spanish Main unit was the top floor northeast corner and had been nicely remodeled. It had a full price contract within four days which was subsequently taken out by another owner in the first right of refusal process. Don't get me started. I know it's not fair but it exists. Buyers who negotiate good prices on good units often lose them to other owners who have the right to take over the contract at the same terms.

Two never lived in Magnolia Bay units closed at prices just slightly more than half the original offering price five years ago when they were being built. Both with developer financing and jacked-up commission to the buyers' agents. In another case of developer denial, the 4th floor northeast corner Ocean Paradise closed for $590,000 after sitting for years at an asking price that began right around a million bucks.

Someone stole a four year old, 2348 square foot Puerto del Rio 3rd floor 3/2 with massive wrap balcony for $163,950 in a short sale. It sold new in 2007 for $410,300.

A very nice, nine year old Cape Gardens 2/2.5 townhome with 1527 square feet and garage closed for $111,000.

A 2/2 Oceana in Cocoa Beach one block from the ocean with a garage closed for $78,000 as a short sale. Sold for $160,000 in 2004.

A Marlin ground floor 1/1, south facing, weekly rental unit sold for $76,000.

Condo and townhome inventory this morning stands at 369 units, the same level it's been since June. This is after having 500 plus units for sale for most of 2010. There are 59 units asking less than $100,000. That's the same number of units that have closed for less than $100,000 since early August, just three months to burn through today's total inventory. There are 37 units asking more than $500,000. It's taken since October 2009, two years, for that many half-million dollar units to close.

There were eight single family home sales in the month, all in Cocoa Beach, none in Cape Canaveral. All but two of those were canal homes and four of those sold for less than $300,000. Canal homes are the hottest segment of our market right now, especially in the areas closest to downtown. The lowest selling price waterfront was $214,000 for a small foreclosed 4/2 on De Leon with a pool. High price was $427,000 for a Mac Daddy 4548 square foot, 5 bedroom 4 bath, 2 story pool home on Yawl with a tiny bit of waterfront. Exactly half closed for cash. Only one sale was north of Laurie Wilson Park.

At the end of the day, the power in any relationship lies with the individual who cares the least. __Anonymous

Friday, November 04, 2011

Mixed signals

The voters of Cocoa Beach will be voting on November 8 to express their opinion on whether to allow a zoning change in a small section of downtown to allow mixed residential and commercial. This sort of change requires a unanimous vote of the Commission and the one dissenting member forced this referendum to measure the voters' opinions. The exact language on the ballot is below.

Shall the City of Cocoa Beach adopt mixed use for downtown/Community Redevelopment Agency (CRA)?

The downtown/CRA vision plan developed over the last three years includes mixed use as a method to revive our local economic conditions and improve the downtown environment. Do you approve of allowing an additional mix of retail and residential uses downtown as long as it does not exceed the city-wide density caps as set in the City Charter?

[ ] Yes, to approve

[ ] No, to reject

Seems pretty straightforward at first glance (overlooking the words "revive" and "improve") yet there are some opponents to the change. Ostensibly, this will allow residential and business to occupy the same building. Proponents of the change have printed posters showing hip downtown areas in other cities with cafes and shops at street level and apartments above as the example of what one's "yes" vote will yield. I like it. But there is some confusion. I have been told by one downtown business owner that, if the vote is not yes, he will be closing his business because he wants to build, not residential, but more commercial above the existing business. Huh? I questioned his understanding of the vote but he is convinced that he can't build commercial on top of commercial without a yes vote. I hope someone more informed than me can help me out here. Does current zoning in the affected area prevent commercial on top of commercial? Is this business owner misinformed?

It seems doubtful that in the current economy one could sell new housing downtown for more than the cost to build. Same cost/returns math goes for rental units. Given that, what is the reason for the strong push to relax restrictions now? Greater possible uses of a property make that property potentially more valuable. It's a no-brainer for owners of the property affected. Even if current economic conditions don't support immediate change it still makes sense. Get it locked in while you can. Build or sell later when the economic climate will support the mixed use. This is where we get to the opposition's main point.

Even though most think nothing is going to change now, even with a yes vote, the idea that the door has been opened for changes in building restrictions causes concern for the opponents. The question in the referendum includes the language "as long as it does not exceed the city-wide density caps as set in the city charter". It does not say "height and density limits will never be allowed to exceed current levels". It stands to reason that a property whose value would increase with mixed use would also be worth more with greater allowed height and/or density. If a downtown building is worth $X under today's restrictions and is potentially worth $1.5X with mixed use, what would it be worth with doubled height and/or density limits? $2X, $3X...$5X? Pandora's box? Can we trust that height and density limits will never be relaxed? Just asking.

Living in Cocoa Beach just outside the city limits, I can't vote. Even if I could, I do not know today how I would vote. I like the way our downtown is especially with the recent changes (above; paver sidewalks, landscaping, etc.) and I want the businesses downtown to thrive. I also think it would be cool to have a downtown as pictured on the "Vote Yes" posters. I just don't know if that is what will materialize. Could there be "unintended consequences"? I'd appreciate any discussion and clarification. Repeating; I am neither for nor against.