Friday, January 28, 2022

Waiting in Vain

After trending up for a few months the inventory of residential properties for sale in Cocoa Beach and Cape Canaveral is shrinking again. There are only 60 individual residential properties for sale this morning in our two cities, 47 condos and townhomes and 13 single family homes. In addition, there are another seven unbuilt luxury homes offered by reservation in the much-delayed planned community on the river in south Cocoa Beach. 

Activity has been non-stop with 68 condos receiving an accepted contract since the beginning of the year. If the sales rate continues at this pace, the entire existing inventory of condos will have sold by Valentine's Day. Resistance to crazy high prices has all but evaporated and frustrated buyers have been paying prices that can't be justified by earlier sales. In the last two months seven oceanfront condos have sold for more than $400 a square foot, four of them without a garage. These prices put us in unexplored territory. Can prices continue to go up? Sure. Can they reverse course? Same answer. Buyers looking for return on investment can easily calculate whether current prices work with expected rents and occupancy. Those looking for a beach get-away for their family or for a primary residence should be more concerned with the property itself than with where prices are at the moment. I've watched careful buyers wait years because they thought prices were too high and would be correcting. For the last fifteen years or so those buyers either had to reframe their expectations or they never bought. Waiting for a correction that is slow in coming might mean not making memories at the beach during years when it would mean the most. Everyone has to decide for themselves. Paying 10% more than one thinks a unit is worth today will probably be inconsequential years down the road, especially if those years have been spent enjoying the family beach place that Mom and Dad overpaid for. Bob Marley may have been talking about this when he sang, "'summer is here, I'm still waiting there." 

"Let me be clear about this. I don't have a drug problem. I have a police problem." __Keith Richards

Monday, January 03, 2022

Against All Odds

Another year done and one in which we were still dealing with a disrupted economy. Despite the pandemic and related issues in the economy, 2021 was a multiple record setting year for Cocoa Beach and Cape Canaveral real estate. The number of residential properties sold in our two cities was the highest in history. Our average inventory was the lowest of all time and selling prices for many properties (not all) were at the highest levels ever.

Two years ago, January 2020, we began the year with 108 condos and townhomes and 21 single family homes for sale in the two cities. Inventory during 2021 averaged a little over half that in both property types. Despite the drastically low inventory we closed the most units ever, 863 condo and townhome units and 168 single-family homes. There are currently 14 single family homes and 57 condos for sale in the two cities. Anyone looking for a single-family home in Cocoa Beach for less than $625,000 has only one listing to consider. A buyer looking for an oceanfront weekly rental condo unit is completely out of luck with zero units offered on the MLS this January morning.

Vacation rentals were one of the story property types of 2021 when we saw an explosion of vacation rentals in buildings off the beach. That was fueled in part by the City of Cocoa Beach relaxing its opposition and enforcement of vacation rentals in previously prohibited off-the-beach areas. Prices being paid for those properties and for the few condos that allow weekly rentals skyrocketed. 

Vacation rentals weren't the only property type to see record high selling prices. Sellers of oceanfront units happily accepted over $300 per square foot for 43 different units during the year compared to just six the previous year and zero in 2019. That upward movement in prices continues with little resistance. Those hoping to purchase this year need to understand the dynamics at play and construct their offers accordingly. There will be competition for any desirable property and it is likely to include buyers who are willing to knowingly overpay. Buyers paid over asking price for 155 condos in 2021 and the majority of the remainder sold at or within 2% of asking price. Slightly more than half of all sales during the year were cash deals. Cash buyers always have an advantage over a buyer using a mortgage but that advantage has increased clout with these market conditions. With the current optimistic pricing, appraisals become an issue and the uncertainty that comes with that becomes a liability for a mortgage-seeking buyer. It is not uncommon for a seller to accept a lower cash offer over a mortgaged offer for just that reason. Don't lose that dream condo over a few thousand dollars if it's checking all the boxes. Pinch your nose, pay up, and enjoy the beach while market momentum closes the price gap after closing.

Welcome to all our new neighbors who bought in 2021. I hope Cocoa Beach turns out to be exactly the laid-back, friendly little beach town you were looking for.

"Wow. That's my husband. It's freaking Nazaré and I'm pretty sure he has a soft top with him." __Jordan Gravy