Market Follow-up

I thought I'd follow up the previous post with a little more detail about the current state of the Cocoa Beach housing market including details about the year to date stats. As of this morning, October 28, 2013, a total of 577 condos and townhomes have closed in Cocoa Beach and Cape Canaveral year to date according to our MLS. As always, because we enjoy the company of a good number of slack listing agents, the actual number is almost certainly higher. Of those sales reported, 59% or 343 units, closed for cash. That trend remains in place so far in October. Of the closed sales so far in 2013, 23% were either short sales or foreclosures. That ratio has been steadily dropping since we peaked in 2010 with over half of all sales that year distressed. Current inventory is only 9% distressed.

The for sale inventory is not exactly what it seems at first glance. The number of units for sale has increased to 275 but that includes 24 units not yet built. Those unbuilt include 16 in a proposed Puerto del Rio building on the river in Cape Canaveral ($299K to $399K) and 8 at Cocoa Cabanas ($699K to $899K) on the ocean in south Cocoa Beach. The market may have recovered enough to get one or both of these buildings out of the ground. Of the inventory in existing units, 97 have been for sale for over 6 months with no takers. That suggests unrealistic price expectations. Exclude those over-priced units and the units not yet built and we're left with 154 total units that are available for a buyer looking in our two cities. Filter that small number with individual buyer criteria and the task of finding a suitable unit becomes daunting.

In a purely anecdotal observation, we feel to have returned to our seasonal cycle (slow fall, busy spring) that was upended during the crash and years following. If that is the case, we should expect to see a decent number of new listings after the holidays. I certainly hope so. In the meantime, air temps this week have been in the 70s and 80s with clear blue skies and the surf temp is holding right at 80 degrees. Spanish mackerel are abundant in the surf blasting the billions of glass minnows. Tie on a small diamond jig or similar small lure and a surf fisherman can catch as many as his heart desires. See you on the beach.

"You know, music really isn't supposed to be perfect."  ___Tom Petty

State of the Market Oct 2013

As we approach the end of another record setting year for property sales in Cocoa Beach and Cape Canaveral we find ourselves at an interesting point in the recovery. At the peak of the boom in 2005, 805 condos closed in our two cities. Just three years later the number of property sales bottomed with only 371 condo sales that year. Prices continued to decline through 2009 and 2010 for most market segments and neighborhoods even as the number of sales was increasing. We saw 612 condos close last year and are already at 561 so far in 2013.

The price decline began slowing around 2011 for most properties and prices have been steadily inching upwards since. This is due in large part to the steadily decreasing number of available foreclosures and short sales. Of the 612 closed condos last year just over a quarter were either foreclosures or short sales. Compare that to the 25 total foreclosures and short sales available this morning in Cocoa Beach and Cape Canaveral.

Our condo inventory for sale has been hovering between 250 to 270 units since the middle of the summer. That's half what we had as recently as 2010. This hyper-low inventory means that there are not enough priced-right listings for the interested buyers. A big part of this is the large percentage of the properties for sale that are wildly overpriced. Many of the new listings are sellers who were waiting for the market to turn around before putting theirs up for sale. The market has definitely turned and is heading up but not nearly at a rate to justify the prices I'm seeing. The current scenario is unlikely to give many of these sellers their dream  prices.

For those of you looking to buy, now more than ever, you need to know what represents a fair price for the property you're looking for. Accept that you are not going to be able to purchase for last year's prices in most cases but be informed enough to be able to recognize the crazy over-priced listings. No need to get angry at the sellers who have unrealistic expectations. They are not trying to rip you off. They are just misinformed and in need of a reality check. Sellers, please have your agent do a current comparative market analysis for your property and price it accordingly IF you really want to sell. We expect you to price it above what you're hoping to get because you know that the buyer is going to expect to get it for less than asking. That's all part of the game. Buyers, forget the average selling price to last asking price ratio. Just because the average sold condo in September sold for 92% of last asking price doesn't mean that the one you want should sell for that price. You're not buying an average. You are buying one property and you should know what it's worth and what you are willing to pay to own it. Knowledge, it's not just for nerds

Cipolla's second fundamental law of stupidity:
2. The probability that a certain person (will) be stupid is independent of any other characteristic of that person..

October So Far

I had to repost the pic of the flowering Spanish Bayonet in my backyard. The speed at which the flower spike is growing is incredible. It's averaging around a foot a day.

The number of property sales in September in Cocoa Beach and Cape Canaveral was less than in any of the summer months but still exceeded any September since 2005. There were 49 closed condos and 6 single family homes. October has begun slower yet with only 13 closed condos and townhomes recorded as of this morning. Sales have ranged from $240,000 for a top floor south ocean view Sandcastles furnished 2/2 with garage to $66,000 for a small Cape Canaveral townhome. Listing inventory remains at a severely depleted level and decent properties that are priced right are scarce. Buyers in this environment must be patient and expect competition for the good new listings.

As usual in October, our streets and restaurants are pleasantly uncrowded and the air temps have cooled below the 90s. The water temp in the surf is still in the low 80s and we've enjoyed a persistent small swell for weeks. A few advance scouts for the gathering hoards of snowbirds north of the Mason-Dixon have been spotted although the full invasion is still a couple months off. It's a good time to be in Cocoa Beach.

"Non-stupid people always underestimate the damaging power of stupid individuals." ____Carlo Cipolla

Closing Costs Myths & Realities

Closing costs. Who pays what? Can a seller have the buyer pay some of their closings costs? Vice versa? Closing costs may be divided differently in other states so I am addressing typical divisions in Florida only.  Most costs can be shifted from one party to the other through contract agreement as long as the lender will allow it. Lenders usually will not allow buyer costs like pre-paids and escrows to be paid by the seller. Writing it into the contract will not change this. Lenders need to be consulted before adding seller paid costs to a contract. If the Realtor agrees to pay something, it will not show up on the settlement statement.

In a typical Florida residential sale for cash, the seller will pay the following:

• Owner's title policy
• Doc stamps on the deed ($7 per $1000 of sales price)
• Courier fees if a mail-away to the seller
• Settlement fee of around $300 to closing agent (usually the title company)
• Real estate commission for both seller's and buyer's broker *more on this below
• Taxes prorated to day of closing
• And, of course, payoff of existing mortgages.

The buyer will be responsible for the following:

• Recording fees for deed, usually around $10
• Transfer fees to homeowner's or condominium association (usually $50 to $100)

The buyer will also have already paid for inspections and insurance but these aren't closing costs. Cash buyers don't usually pay a settlement fee but a few title companies and attorney's offices try to slip in a $200 to $300 fee in hopes it won't be questioned. It will usually disappear if contested by the buyer or his agent prior to closing.

If the buyer is financing the sale with a mortgage there are a few other costs. Those include:

• Recording fees for mortgage, around $50
• Doc stamps on mortgage ($3.50 per $1000 of mortgage amount)
• Intangible tax on mortgage ($2 per $1000 of mortgage amount)
• Prepaid insurance for a year and some prepaid taxes (if included in payments)
• Lender fees (usually 1% to 3%)
• Settlement fee to title company (usually around $200 to $300)

It is not customary for the principals to use attorneys in our state although they may if they are so inclined. The title company typically handles all aspects of the closing after the contract is executed. In a foreclosure sale, the bank may require the buyer to pay the doc stamps and/or the owner's title policy. Be sure to factor this in (if it applies) if offering on a foreclosure.

*About the seller paying both brokers. People often assume that both brokers are working for the seller since the seller is paying both. That is not true. The seller pays their listing broker who then offers a split to the buyer's broker. The buyer's broker is working for their client who pays them nothing directly unless by prior arrangement. Sometimes with unlisted properties, the buyer may agree to pay their broker. This brings up another misunderstanding. Buyers often assume that a FSBO can be purchased for less than a listed property since no commission is being paid. Often, the exact opposite is true. Sellers go "for sale by owner" for one reason; to net more money. They usually overprice their property and they plan for that saved commission to go into their pocket, not the buyer's. A seller's motivation to go it alone never involves a thought of giving the buyer a better deal.

"You are not entitled to your opinion. You are entitled to your informed opinion. No one is entitled to be ignorant."  _____________Harlan Ellison