Sunday, January 01, 2017

Realistic Expectations

9:30 AM, New Year's Day 2017 and the sky in Cocoa Beach is cloudless, there is no breeze with a temp of 70 degrees and an expected high of 77. According to the Cocoa Beach MLS there are 198 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning. This is an all-time low. In addition, as I mentioned in my previous post, probably well over half of this tiny handful are over-priced by at least 10%. This makes for a frustrating search for the many prospective buyers hoping to buy in our town.

Condo sales for the year ended at 691 units, just a few less than last year's decade high with 31 units closed in 2016 that brought over $300 per square foot compared to just four in 2015. Prices continue their steady upward direction and I see no fundamental issues to change that trend. Mortgage rates are inching upwards but the Cocoa Beach condo market is not particularly sensitive to mortgage rates with over half of condo sales in 2016 paid for with cash, a trend that's been in place since 2008. Distressed sales have all but disappeared with just 5% of total sales in 2016 bank-owned or short sales.

Those of you looking for property here will be well-served by being aware of the low inventory situation and the price trend. If you're looking for a deal, you'll probably be disappointed, but if you can find a property close to current value, you'll probably be pleased with the value a year from now. We'd all like to purchase a beautiful beach property for less than it's current value. The big problem with that is that unless a seller is distressed she has absolutely no motivation to sell for a discount. In fact, with her property steadily appreciating, time is on her side. It only takes a few percent annual appreciation to cover the carrying cost of most properties. Why sell for for less than she wants if appreciation will pay the costs of not selling?  I've written dozens of posts about valuation and the dangers of becoming married to an estimation of value. A buyer whose search is focused on buying below his opinion of value better have an extremely accurate method for estimating value, a lot of patience and be prepared to possibly never buy. One of the dangers in the "must be a deal" mentality is that, in an appreciating market, values continue to move upwards while the search for  the "deal" drags on. Looking at sold properties in the last several years, even the highest dollar per square foot sales, the  buyers were rewarded with the passage of time.Your mileage may vary but it's probably worth keeping the historical trend in mind.

If anyone reading this lives at Ambassador Shores would you please have the maintenance guy put your navigational lights at the driveway entrance in the correct configuration of "red, right, returning" before a distracted guest takes out the bus stop some foggy night. And a big thanks to the person who took care of the crazy traffic light cycle on Atlantic Ave. at both Minutemen and Holiday Lane. My early morning drives through town are safer and faster. Happy New Year all and I hope the coming year proves to be prosperous and fulfilling. I'll continue my commentary on the market and the players in 2017. I appreciate all the encouraging words.

“My party has gone batshit crazy.” __Senator Lindsey Graham, Feb. 2016