Brave New World

 

Anyone hoping for more residential inventory in Cocoa Beach or Cape Canaveral is advised not to hold their breath. Numbers have declined again after a brief spurt of increased supply last month. There are a total of 50 residential properties of all types listed for sale on our MLS this morning. There are another nine proposed properties looking for reservations. In the last thirty days 79 properties have closed. At that same rate, our 50 currently available properties will be gone in 19 days. I believe that may be the lowest our supply has ever been although I don't track that particular metric.

Of the 79 sold properties, over half sold for at least full asking price.

• 27 sold for more than asking price.
• 45 sold for cash.
• 11 sold first day on market.
• 48 sold in seven days or less.

With the high level of competition buyers have become creative and, in some cases, careless with offers. Some of the strategies I've seen are waiving inspections, waiving appraisal or agreeing to make up all or part of the difference in the event of a low appraisal, escalation clauses, fast closings, rent-backs to sellers and in one bizarre instance, discussion of a bribe.

Buyers looking for a single family home in Cocoa Beach have ten existing houses to choose from, none of them asking under a half million. There is only one single family listing in Cape Canaveral, a 69 year old 3/2 on almost two acres of beautiful Banana River frontage asking $1,650,000.

Advice for Prospective Buyers

I would advise all prospective buyers to deal with the reality that you will almost certainly be competing with other buyers and to have a strategy in mind before you make an offer. Do not expect to find a deal. They do not exist. Do not withdraw an offer because you suspect the listing agent is lying about multiple offers. Do not think you'll be able to whittle the price down after inspections. There are buyers standing by who will be more than willing to take your place without a credit for repairs. Speaking of taking your place; if you lose out in a multiple offer scenario, write a backup offer and get it signed by the seller if they're accepting backups. I'm seeing many failed contracts presumably because sellers are refusing concessions post inspection and others because of low appraisals. It's tough to be a buyer now but somehow, 79 determined buyers closed on what they were looking for in the last 30 days.

I noticed while researching these numbers that there are seven condo listings with missing condo names. An agent or consumer who searches for a unit by condo name in one of those seven buildings will not find those listing. Prospective buyers whose agent set up an auto-alert in the MLS for a unit in one of those buildings will not get a notice of those listings. In this market, they will sell anyway but may not bring what they might have if all interested buyers were included. I'd advise sellers to review their listings carefully as soon as they come active looking for errors or omissions. Our non-intuitive MLS listing entry process makes for easy omissions so even experienced agents can miss something but those that care will catch it in their last review before taking the listing live. There is zero excuse for a missing condo name on an active listing. 

The new luxury condo, The Surf, in downtown Cocoa Beach has topped out. There is one last unsold unit being offered for $1,999,000. The long-delayed development of million dollar single family homes on the riverfront site of the old Joyce's Trailer Park in south Cocoa Beach is finally in high gear. I will be interested to see if the developer makes good on his promise of restoring and opening the clubhouse over the river in the old Fisherman's Wharf restaurant building. It was promised to buyers of units in the developer's other condos in south Cocoa Beach in addition to the buyers of the new houses. Some of those condo buyers have been waiting for their clubhouse for over five years.

"The early advocates of universal literacy and a free press...did not foresee...the development of a mass communications industry, concerned in the main neither with the true nor the false, but with the unreal...In a word, they failed to take into account man's almost infinite appetite for distractions." __Aldous Huxley, Brave New World Revisited (1958)

Legislature Decides Condos Are Safe Enough Despite Surfside Collapse

I wrote about the special task force that was established following the Surfside condo collapse last year. The task force came up with a list of recommendations that would enhance safety of condo buildings and hopefully prevent a similar tragedy from happening again. That list included items like requiring regular structural inspections and removing limitations to Boards' ability to assess owners to perform needed repairs. It also recommended establishing a source for long-term loans for owners unable to afford a high special assessment all at once.

Despite the task force's recommendations, one member demanded that the bill include a requirement for associations to fund reserves. He would not compromise and as a result, the bill failed to pass. As it stands now, Florida condo associations can  fund reserves completely, partially or not at all. Those with partial or no reserves must levy special assessments when funds are needed for repairs. The resistance to a large special assessment is what led to the delay and subsequent collapse of the Surfside building. 

Most associations fund reserves for big ticket items like the roof, pool, parking lot and painting. Until now, concrete repairs have rarely been specifically included as an item in condo reserves. If associations were required to fully fund reserves and include concrete repair in them it is conceivable that some associations would have to raise their monthly fees into the thousands of dollars per unit. It is a tough situation and whether law or not, condo boards are still faced with the challenge of maintaining their buildings and raising the money necessary from owners. There is always resistance to assessments or increased fees and as a result expensive repairs are often pushed off into the future. There are buildings in our area that have serious concrete issues that should have been taken care of long ago. Anyone hoping to buy a condo unit on the ocean should pay close attention to the appearance and integrity of the buildings they're interested in and to also examine the financials to determine the ability of the association to fund repairs. Low monthly fees for an oceanfront building, while attractive, are a red light for prospective buyers. Do your homework. Whatever the monthly fee is today, it is going up. 

''Most of us did not think these kinds of things could happen in our country. The veneer of civilization is very thin." __Margaret Thatcher

Sky's the Limit

In a post from this same weekend in 2018, I commented that pricing was getting ahead of itself with 44 units asking over $300 per square foot while only three condos had closed so far that year in that range. Jump to March 2022 and, as of this morning, 46 units have closed for more than $300/sq ft, with eighteen of those fetching over $400/sf. Sales of units commanding top dollar are no longer restricted to a specific property type and/or condition but are spread across multiple complexes with $400+/sf sales happening at Ocean Oaks, Stonewood, Xanadu, Canaveral Towers, Las Palmas, 2100 Towers, Park Place, Royal Mansion, Spanish Main, Royale Towers, Ocean Pines, Sandcastles and Riomar among others. Not all of these oceanfront units had garages.

MLS inventory of existing condo units in Cocoa Beach and Cape Canaveral the last few weeks has bounced around between 35 and 45 units while single-family home inventory has stayed between 13 and 19 for sale at any moment. Since Feb. 1 a total of 76 condo units have closed along with 13 single-family homes. Thirty of those closed sales since Feb. 1 were at least $500,000 with five of those over a million dollars. 

Most fairly priced new listings are getting multiple offers quickly and buyers are getting aggressive with their numbers and terms. It's not uncommon to see inspections and appraisals waived and many buyers are offering on properties sight-unseen. With so much competition, sellers are becoming more discerning with the offers they will entertain. They are wisely expressing concern with offers well above asking if they don't waive appraisal. Likewise, sign-unseen offers may be perceived as too risky. Buyers need to discuss all angles with their agent to figure out how to craft an offer than can compete. The less uncertainty an offer carries, the more well-received it will be. Expect the others to be offering cash with no contingencies and be prepared to lose to a crazy high offer. One last thought about multiple offers; a buyer who loses a unit to a higher offer will now be using that selling price as the new comp when they make their next offer. It's become a pay now or pay later dynamic.

Best of luck to buyers who are in the hunt. Be smart and quick with your offers and have an agent who knows the market and understands the competitive environment. Every edge matters and having a slow agent who doesn't understand our market dynamics or how to write a competitive offer will hurt you. Keep the offers as clean as possible, be prepared to pay more than you think it's worth (right now) and don't be slow to make an offer on a good property.

"Ever thine. Ever mine. Ever ours." __Ludwig van Beethoven