Wednesday, January 11, 2012

Crunch time

Sunrise on the 11th at 11th Street.

At the risk of sounding like a broken record, the inventory situation in Cocoa Beach and Cape Canaveral is critically low. There are 372 total condos and townhomes on the Cocoa Beach MLS this morning in the two cities. Of those, 54 are asking less than $100,000 and 54 are asking more than $400,000. In 2011 there were 27 sales for over $400,000 and 189 for less than $100,000. You can easily see the implications for sales in 2012. Without more supply the downward pressure on prices is disappearing.

The depletion of supply is due to the fact that the normal supply of new properties for sale was interrupted during the recent troubled years. Some units that may have appeared on the market in 2011 and 2012 were pushed on the market earlier as owners who bought or refinanced near the top were forced into short sales or foreclosure as prices tumbled after 2007. This unnatural bump in supply in recent years is the reason for the record number of sales we've seen and the reason we're not seeing the normal number of new listings. The chart below shows the dynamic at play since 2006, the peak year for inventory and prices.

In 2011 there were 100 short sales of condos and 83 foreclosures. This morning, January 11, 2012, there are 29 total condo foreclosures on the market and 28 short sales. In single family homes, there are 4  foreclosures available and 5 short sales. The time of abundant distressed deals is coming to an end.

I can't remember there ever being a time when there were just two units for sale at Xanadu in Cocoa Beach. At Ocean Pines, Crescent Beach Club and several other big oceanfront buildings there are zero units for sale. Looking for one of the 2/1 Diplomat units? None offered for sale at the moment. Ocean Paradise or Solana Shores? One unit in each complex for sale. How about Harbor Isles? In this large multiple building complex there only 3 units for sale, two 2/2 units and a lone direct river 3/2. The 3/2 is probably the nicest one in the complex and has a breathtaking view over the islands and is your only choice if you want a 3/2. If you were waiting for a lakefront 3/2, there are none available at any price.

Our take-way from these facts? Be aware of the fact that there is less supply than demand at the moment. If you're looking to buy and find something you want, don't spend too much time contemplating your offer. You can be certain there are other prospective purchasers looking at anything that is desirable and priced right. Make sure your buyer's agent has you protected in the contract language and have your finances in order. If hoping to get a mortgage, go ahead and talk to your lender first and let her know that you are looking at Florida condos. Knowledgeable and/or well-advised sellers of condos will want to see a pre-approval letter specifically mentioning a Florida condo accompanying your offer. If you plan to pay cash, have proof of funds like account statements or a bank letter ready to submit with your offer. Good hunting and don't shoot your fellow hunters.

"If you do the job badly enough, sometimes you don't get asked to do it again." Calvin