Friday, October 23, 2020

Slim Pickings


The last week of October 2020 and the Cocoa Beach real estate market is struggling to function with an eroding just-in-time inventory resupply. Our years-long, persistently declining inventory is approaching a critical level. We began the year 2020 with 185 existing condo and townhome units listed for sale in Cocoa Beach and Cape Canaveral. That was already down sharply from the 265 units that we began 2019 with. Fast forward to October 2020 and we are looking at 118 total units for sale. For perspective, that is less than the total number of units at Sandcastles in Cocoa Beach. About half that number of units (57) has gone under contract in just the first three weeks of October. New inventory has been appearing at a slightly slower rate than the sales so, unless something changes, we could begin 2021 with less than a hundred available units. I would have called that prediction insane had it been suggested as recently as a year ago. Refer to our history of over 1000 units for sale at the peak of the mid-2000s bubble. Any talk of a current bubble conveniently ignores the inventory elephant. Markets respond to supply and demand imbalances and ours is skewed heavily to demand. Pricing tends to favor demand so those hoping to buy should expect continued upward pressure on prices and structure their strategy accordingly. If I don't buy the slightly over-priced unit I want today, what can I expect to pay for a comparable unit next year if I can find one? 

The high end of our condo market has been particularly active with eleven units from $499,000 to $969,900 finding buyers so far in October. Over 20% of the current inventory has been on the market for six months or longer, a strong hint of over-pricing. That means the actual, close to fairly priced inventory is already below 100 units. Buyers, don't be shy with your offers if you can find anything you like.

Things are much the same with single family homes. We are sitting today with only enough homes to accommodate 29 families. Only three of those are asking less than a half million dollars. I'm reminded of the Tribe Called Quest lyrics; "All you poor folks, you must go."

The developer of the new Surf of Cocoa Beach luxury oceanfront condo is expecting to break ground in the very near future. Nothing physical has happened yet with the Yen Yens property across the street nor the Bernard's property but I am optimistic that after the Surf begins construction we may see some activity. We'll probably get all that shiny new construction completed at about the time we are forced to put up a "No Vacancy" sign at the Cocoa Beach city limits.

"Tell people what they want to hear and you can be wrong indefinitely without penalty." _____Morgan Housel

Monday, October 12, 2020

How Far We've Come


How has the market in Cocoa Beach and Cape Canaveral changed in ten years? In 2010 we were into our third year of collapsing prices and 56% of the sales that year were either short sales or foreclosures. Two thirds of the sales in our two-city market in 2010 were cash deals. Lenders, having been wiped out in the bust, were still figuring out effective risk management in the new landscape and were erring to the side of caution. Prices had retreated to pre-2000 numbers for existing properties and new construction condos were selling at less than half the cost to build them. MLS inventory had dropped from a peak of 1200 condo units in mid-2006 to around 500. Buyers with the cash and courage to purchase picked up condo units that have tripled in value in some complexes. In October 2010, five year old, still-unsold developer units at Mystic Vistas in Cape Canaveral were sold by the bank as low as $130,000 for a 2nd floor 3/2 in the B building and two 4th floor 3/2 units in the A and B buildings closed for $150,000.

The same month, small condo conversion 1/1 units in Cape Canaveral closed as low as $13,500 at Beach Club and $18,500 at Jeannie by the Sea. A 2nd floor, four year old Portside Villas 2/2 sold for $89,000. In south Cocoa Beach, a 2nd floor Beach Villas ocean view 1/1 sold for $81,500 and a 2/2 Sutton Place on the ocean closed for $85,000. Diplomat 2/1 units closed as low as $64,000 the same month.

How about a Harbor Isles of Cocoa Beach lakefront 2/2 for $120,000? Or a 2nd floor direct ocean Royale Towers 1/1 with a garage for $150,000? A four year old Perlas del Mar 3 bedroom 2.5 bath with a two car garage and 2424 square feet closed for $161,000. A Cocoa Beach single family waterfont home sold for $210,000.

Jump to the present, October 2020, and there are 108 existing condo and townhome units for sale in our two cities. Add 34 single family homes and there are 142 total existing residential properties for sale in Cocoa Beach and Cape Canaveral. So far in 2020, 708 properties have closed, of those five were foreclosures and one was a short sale. Three hundred of the total closed for cash. 

Interesting tidbit: There were 362 different listing agents for the 708 properties sold so far in 2020. Only 98 of those agents have an active listing in the market at the present. I'm thinking someone's going to go hungry moving forward considering the inventory. To paraphrase Chuck D, "If you're a gunslinger, you can't start crying about getting shot."

Buyers, keep this low inventory in mind as you look. You will probably not have a lot of choices in any certain property type and being too specific with must-haves will reduce your choices. There are plenty of others looking for the same property that you are. Good luck in your search. It isn't impossible if the criteria aren't too limiting but it may require patience to find your place in Cocoa Beach. 

"It makes sense to dance while the music is playing." __Maynard G. Krebs