Tuesday, December 31, 2013

In the Rearview

It's the last day of 2013 and the time when we look back at the significant events of the year. For the Cocoa Beach real estate market it was a year of continued recovery with one massive unexpected event. Our big event was the change of MLS providers in July that destroyed the Melbourne Association of Realtors. Without going into detail, their leadership went all-in on an MLS bluff that was called by the membership. Brevard County will have one united Realtor association in 2014 as a result. Democracy won the day. I suspect my suggestion of a new name, Florida United Brevard Area Realtors, will be rejected because of the unfortunate acronym. Whatever.

As was evident much earlier in the year, 2013 finished as another record-breaking year in numbers of sold properties in Cocoa Beach and Cape Canaveral. The MLS this morning is showing 659 sold condos and townhomes in the year in our two cities and 121 single family and half-duplex homes. We have to go all the way back to 2005 to find another year that exceeds those numbers. Active for sale inventory stands at about half the sold numbers for the year. Subtract the yet-to-be-built (and unlikely to be built soon) properties and pickings are slim.

The lowest priced single family home to sell in the year was a 1000 square foot 3/1 in need of a lot of work in Cape Canaveral close to the beach that closed for $85,000. Highest price paid in the year was $1,430,000 for a furnished seven year old 4/3.5 with 3379 square feet on 50' of ocean in south Cocoa Beach. Just over half of all single family homes sold were waterfront.

Eight small (+-400sf) condos sold at prices between $20,000 and $30,000. A total of 165 sold for less than $100,000. In the half million dollars and up range, there were 23 sales with the highest at $750,000 for a penthouse 4th floor 4/4 corner on the river at West End Rd. behind Florida Seafood. It was furnished, had 10' ceilings, 4299 square feet and came with 2 garage spots. Eight of the $500,000+ sales were at the Meridian.

23% (149 units) of the closed condos were either short sales or foreclosures. There are 32 total short sales and foreclosures currently for sale out of 312 total.

2014 promises to be interesting and different than 2013. Sellers can reasonably expect to get more than they may have gotten this year. Whether they get enough to make up for the cost of waiting remains to be seen. I expect the number of sales to be less in the coming year even as prices are higher and I expect the decline in distressed sales to continue as well. To those involved in our market I wish you a prosperous new year. Snowbirds, stop by my office while you're in town and say Hello. Don't forget to make some room at the free coffee station at Publix for your fellow birds. Happy New Year, all.

For the loser now
Will be later to win
For the times they are a-changin'.
_____Bob Dylan

Tuesday, December 17, 2013

Blast From the Past

Another One Bites the Dust (originally posted October 4, 2007)  In 2013 we saw almost all the remaining Magnolia Bay units finally sell. It's been a long hard road. I thought the readers who may not remember the drama of 2007 during the construction might appreciate this look back at the time of construction and some of the unintended consequences. There is a new store in the old Express Grocer spot now and they seem to be doing OK. The site of the old trailer park is occupied on one half by a self-storage facility and the other half by nothing. I have no idea where Sam and Gary are these days.

Oct. 4, 2007 - This unwinding of the housing bubble has touched many lives. Besides the flippers who were too late to the party and people who bought more home than they could afford with exotic mortgages, some innocent victims have been dragged down, too. A deadbeat homeowner in my building has decided to walk away from her mortgage and will be leaving the remaining owners with thousands in unpaid assessments. My life will go on even though it riles me to have to pay for someone else's bad choices. It may hurt more for my retired neighbors. More heartbreaking is the impact on the decent people who run the small grocery store close to my home. They didn't speculate on pre-construction condos or try to flip houses and yet their lives have been changed forever.

It all began when construction began on the big empty parcel of land that was to become Magnolia Bay. Business picked up as workers walked over for lunch, snacks, cigarettes and so forth and the promise of all the new families that would be moving in made the future look bright. Shortly thereafter, the trailer park next door that housed the biggest part of our grocer's customers was purchased. With plans to build townhomes on the site, the trailers were progressively moved out or torn down until the property was empty. Things were still looking good even with the loss of the regulars. With 77 new half million dollar plus Magnolia Bay units and 18 new townhomes right next door, the customer base was growing and being upgraded and the construction workers were providing business in the interim. Life was good.

Then, Magnolia Bay sales slowed and the planned 4 buildings got scaled back to 3. Scheduled closings failed to happen and the construction workers finished their work and moved on. Today, the grand buildings at Magnolia Bay are mostly empty and dust blows in the sea breeze on the site of the old trailer park. The only townhomes there today are in the picture on the "coming soon" sign. Business at the grocer who stocked my favorite beer in a corner of the walk-in cooler at my request dried up to a trickle and, this week, he told me that this is his last month there. He can't make it any longer.

There are multiple losers in this story; the developers of Magnolia Bay, the trailer park residents, some of whom had lived there for decades, the owners of the trailer park property, the customers of Express Grocer including me and, most of all, Sam, the grocer and his family, and Gary, his long-time employee, who has been known to extend credit to a down-on-his-luck customer or two. Sam, your family, and Gary, you will be missed by many. You are good people.

My favorite Express Grocer memory will always be the sign that appeared on the door one day. It read:

Do not ask Gary for credit. He is not allowed to give it anymore. Sam

Wednesday, December 11, 2013

Optimistic Bankers

US temps 12-11-2103
I made a quick mention in the last post about the trend in asking prices for foreclosures. The recent trend has been towards higher and less aggressive asking prices. In the not too distant past, most foreclosures in the Cocoa Beach and Cape Canaveral market would have multiple offers within the first few days after hitting the MLS and would usually sell for full or above asking price. That is no longer true. The buyers have given a collective Ho Hum to the banks' recent optimistic prices and many attractive foreclosure properties are not getting quick offers. Of the 23 bank-owned condos on the MLS this morning, 11 have been listed for longer than a month and 9 have reduced the original asking price, one by 24%, still without a sale. Five of the 7 short sales currently active have reduced their original price.

Our takeaway: just because it's a distressed sale doesn't mean the asking price is a deal. Know the current value and offer accordingly. As always, knowledge is power.

""If you can't fix it with a hammer, you've got an electrical problem." ___unknown

Thursday, December 05, 2013

Where Are We Right Now?

It seems just yesterday that I was writing the year-end wrap up for 2012 in Cocoa Beach and Cape Canaveral and commenting on the record-breaking number of sales. We still have the month of December to go and we've already exceeded 2012's numbers with 623 MLS-listed condos and 116 single family homes closed so far. Inventory numbers have increased recently but after we remove the noise of the pre-construction listings and the way-overpriced, been-on-the-market-forever listings we have about a five month supply of properties for sale at the current sales rate. The MLS shows 310 condos and townhomes for sale this morning with 55 of those having been listed for over a year. Most everything that's been for sale for over a year qualifies for my "not really for sale" designation for obvious reasons. There are 31 short sales and foreclosures among the 310 units for sale including a 4th floor Meridian asking $649,900. The banks' asking prices for foreclosures have crept up into the meh range and many of the foreclosures are languishing on the market as a result. There are only a few of the 31 distressed sales that I would consider a "great" deal.

Here's an excerpt from a post exactly one year ago. The sentiment expressed persists.

"I had an interesting conversation with a prospective buyer last week. Among his criteria was "being able to take advantage of the poor market conditions in the area in terms of significant below market pricing and leveraging the fact that he'd be paying cash". "Poor market conditions"? The current market would be better described as en fuego (see the previous post). "Significant below market pricing"? I'm not aware of any sales happening at significantly-below market prices. Buyers are standing by ready to purchase good properties when they're priced at current levels with over half of them paying cash. I suspect this particular buyer is going to be looking for a very long time unless he modifies his expectations."

The song remains the same. Buyers with specific criteria are having to search for months in many cases for the right property. Those with popular criteria like direct ocean condo above the ground floor sub-$300K (5 available today) or canalfront home under $350K (3 available today) can expect competition when a good unit hits the market. Buyers, be patient and ready to move quickly when a desirable property surfaces. Even though we have moved off the bottom, prices have not run away. Deals exist for the persistent. Those seeking a mortgage would be advised to start the process before starting the search. A note about  search criteria. Don't trust descriptions in the MLS to be accurate. I searched for oceanfront condos above the ground floor with a front door facing west asking less than $300,000. The results included two Conquistador units in the building across the street from the ocean and seven others with balconies facing either north or south. Some actually had doors facing west with balconies facing south but some others were just incorrectly described. Maybe inadvertently. Maybe not. The internet is great for buyers doing their own searches from afar but nothing beats boots on the ground here and local knowledge. If you need those boots and knowledge, contact me. My motto; No BS.

Denver this morning is at zero degrees with an expected high of 16. We are forecast to reach 77 under clear blue skies with a light SE breeze. Offshore fishermen are catching sailfish in decent numbers and some pompano are being caught in the surf. Conditions are ideal for both at the moment.

The photos are of  Tuesday's launch of the Space X Falcon 9 in it's first mission to deliver a commercial satellite to geostationary orbit. The new kid in town makes a big statement with this mission.

"I always tell people, the first $500,000 is the easy part of the deal. The deal will come apart over nickels and dimes." ____Mike Jaquish