Saturday, October 15, 2016

After the Storm

One week ago we were breathing a sigh of relief having just side-stepped Hurricane Matthew's rush northward. Our northern neighbors were not so lucky but for the most part Cocoa Beach and Cape Canaveral suffered minimal damage. The main impact here was widespread landscape damage, scattered roof damage primarily on older buildings, blown down signs, toppled fences and downed power lines. West facing shorelines on the open Banana River took a hard hit from the west winds on the back side of the storm with some severe dock damage in south Cocoa Beach. Some sections of Cocoa Beach were without power for as much as five days but most had power restored within the first couple of days post Matthew. In south Cocoa Beach most buildings never did lose power. Beach erosion was very minimal although we've had some impact from the hard onshores and high surf of the week following the storm. All in all, another blustery week at the beach. The plastic yardbirds above successfully rode out the storm hunkered down behind the Spanish bayonets and dune vegetation which didn't fare as well.

Real estate sales last month were strong coming one unit shy (65 closed units) of setting a record as the busiest September ever recorded in Cocoa Beach and Cape Canaveral for condo sales. Six oceanfront units commanded selling prices over $300 per square foot. All of those were either new or completed remodeled and several included furnishings at that price. The lowest price per square foot paid for a direct ocean unit above the ground floor was $247/sf for a 3rd floor mildly updated 1/1 Royale Towers with a garage. In a departure from the recent trend towards more buyers using mortgages, two thirds of the condo sales in September were cash deals.

Another trend I'm seeing is overpricing at initial listing. It makes sense for a seller who is in no hurry to take a chance at landing a lottery winner or frustrated buyer willing to pay more than fair current value. There are two sides to this. In a rising market a reasonable premium to current value will be overtaken with time. However, unless the unit is a unique floor plan or rarely offered type, a buyer can just wait for another acceptable unit at a better price. For a one-of-a-kind or hard to find floor plan, it may make sense to pay a reasonable premium. By the time another unit is offered, prices may have overtaken what the premium would have been. As always, homework pays off.

Knowing that this dynamic is in play makes it more prudent than ever for buyers to know exactly what property criteria matter to them AND how to approximate current value. Just hoping to get X% off asking price is not a good plan. When looking at comps be aware that the sales prices that are reported in the MLS and the Property Appraiser's site don't always include all sales details. Be especially doubtful of too-good-to-be-true prices of non-MLS sales prices at the PA's site. It is not uncommon for private parties to exchange a portion of the sales price off the record to reduce tax implications. One or two sales whether MLS or not do not reveal enough information to accurately value a comparable property unless one can be certain that all the details of the sales are known. For instance; the listing agent often doesn't indicate when closing a listing whether or not the furnishings were included in the sales price or that the seller was granted a free three month stay next snowbird season.

Our takeaway: putting an exact current market value on a property is not possible. We can only approximate. Knowing what I want in a property may be just as important as nailing down exact current value. If the perfect unit becomes available I need to be able to recognize that and make an informed decision about what I'm willing to pay to get that unit. At least some of those 65 people who closed in September went through this process successfully.

Good hunting out there. Those looking for a condo or townhome in our two cites have 207 existing units to choose from today. Less than half of those are in oceanfront buildings. Many are way overpriced. You'll increase your odds if you do your homework and find an agent you can trust who knows this market.

"Fear of the storm is usually worse than the storm itself."  ___Gail Lynne Goodwin