Sunday, September 02, 2012

Moving targets

A shift is underway in our local market. As the distressed inventory has disappeared many sellers' willingness to deal is lessening. Buyers using the recent comps for offer substantiation are not being well received by sellers who have seen recent prices edging upwards. Expecting to buy for the same or less than the recent comps isn't unreasonable in a down-trending market but we are no longer in a downtrend. In a stabilized market, like ours currently, a non-distressed seller has little incentive to match the recent low comps. Inventory is low and there are lots of active buyers. Considering our current conditions, serious buyers should be open to the idea of paying more than the comps suggest. It may not be necessary but flexibility might be rewarded. From 2008, the first year we saw a short sale, until last year, the idea of paying over the recent comps was insanity. Mid-2012, not so crazy. Our  inventory of distressed properties for sale in Cocoa Beach and Cape Canaveral was around 120 in 2008 and 77 of those closed that year. The history of distressed property sales in Cocoa Beach and Cape Canaveral looks like this.

Closed distressed sales
  • 2008 -   77
  • 2009 - 137
  • 2010 - 233
  • 2011 - 219
  • 2012 - 118 through August 31

There are 74 contracted distressed sales yet to close in the two cities and a mere 43 actively for sale. For buyers hoping to steal a distressed direct ocean condo the list is short. There are two. After burning through 784 short sales and foreclosures in Cocoa Beach and Cape Canaveral since 2008, that chapter of our market story is coming to an end. Total condo inventory is at an all-time low of 275 units. Our total residential inventory this morning including condos and single family homes is 329. Of those 43 are either short sales or foreclosures.  

Take-away: we have transitioned from a declining market dominated by distressed sales to a market state of near-normalcy. It surely took long enough. Biggest issue at this point is the scarcity of desirable listings. A lot of the new inventory that would be coming on the market now got flushed out prematurely by declining prices. Buyers and sellers of real estate, adjust your expectations and strategies accordingly. Good luck in your quest. Surfers, a new swell should start showing by Tuesday with waves expected to peak at about head high on September 5 courtesy of Tropical Storm Leslie. See you in the water.

" using a strategy of averaging down, you are guaranteeing that your biggest positions will be in your worst trades." - Zikomo