Friday, May 25, 2012

Ding dong

Sweet Cushman scooter in front of The Surfinista
I know I've said before that no one would be ringing a bell at the bottom of the price decline but I changed my mind and just rang it. Readers know that I often mention that there is no "market" that one buys, only properties. The "market" bottom will not coincide in most cases with the bottom in specific property types, neighborhoods or condo complexes.  There are different dynamics at play in each category. This bottoming began over a year ago in troubled complexes like Mystic Vistas which was ahead of the curve because of the high number of developer foreclosures. We have already seen enough closed sales there at prices 20% to 25% above the lowest prices to safely say that it's unlikely we'll see any reason for prices to drift back to that range from two years ago when units sold for $150,000. The last of the developer foreclosures have closed.

The bell will be ringing later for a few other complexes like The Pier Resort which still has eleven active foreclosure listings, half of all foreclosures currently for sale in Cocoa Beach and Cape Canaveral. We could very well see prices drift lower there before the remaining units are sold. In general, the mountain of short sales and foreclosures have been absorbed. Those sellers who hung on through the downturn now have some negotiation strength selling into a skinny inventory without competition from loads of distressed properties.

Out of 362 total residential properties for sale in the two cities, 12% are either short sales or foreclosures, 3% of the total at the Pier Resort. Four new short sales units that hit this week in south Cocoa Beach have multiple bids and will be under contract shortly. Absent those and the Pier Resort units we are at 8% distressed. Compare that to 56% of condo sales distressed in 2010.

In 2010 the tide of distressed deals peaked. As of  May 2012 that spring tide of supply has receded. This morning we have less total condos for sale than we had distressed listings two years ago. Instead of a choice of 300 plus short sales and foreclosures in spring 2010, this morning buyers have 44 distressed sales from which to choose with eleven of those in one complex. For a buyer serious about getting a property here at a significant discount to recent prices, the quest to get the lowest price in the complex will more often than not be unfulfilled. Those waiting for another $150,000 Mystic Vistas since 2010 are still waiting and watching prices notch steadily higher.

Draw your own conclusions. If I were personally looking to purchase a residential property in Cocoa Beach or Cape Canaveral, at this point I'd be less concerned with getting the lowest price in the neighborhood than in getting exactly the best-suited property for me. Prices are still very discounted (in most cases) from the peak six years ago and the inventory continues to shrink. I'd love to have been the guy who bought a Mystic unit for $150,000, but, in the grand scheme of things, $200,000 ain't such a stinking deal, ego aside.

Enjoy your Memorial Day weekend. As I type this, the Dragon spacecraft is docking with the International Space Station. Right on, private industry.

"As Coroner I must aver, I thoroughly examined her.
And she's not only merely dead,
she's really most sincerely dead.
Ding dong, the witch is dead."
_____from the Wizard of Oz