Saturday, December 23, 2023

Winding Down 2023

Shuttle Atlantis cooling down on the runway after it's return from ISS twelve years ago.

It's been a busy year for residential real estate in Cocoa Beach and Cape Canaveral although total closed sales are lagging 2022's numbers. Last year we had a total of 684 closed condo units. As of this morning, two days before Christmas 2023, there have been 541 closed condo and townhome sales in the two cities so far in 2023. Inventory stands at 244 units for sale. Median closed price was $370,000 and 61% of the sales were cash deals and 23% of closed units sold in the first 7 days on the market. Median days on market for the current inventory is 70 days.

Single family home sales were robust in the year with 122 homes closed so far. Median sold price was $744,000 and cash buyers represented 40% of the closed sales with 23% sold in the first 7 days on market. Median days on market for the sold properties was 35 days and is 67 days for the current inventory of 29 homes and two pre-construction offerings. Median asking price of the current inventory is $1,2000,000.

Highest price condo to sell this year was a stunning 45 year old, 8th floor direct ocean penthouse at Beach Winds downtown Cocoa Beach that closed for $2 MM. The completely and tastefully remodeled unit had 4560 square feet, 5 bedrooms, 4.5 baths and two garages. Twelve units closed for a million dollars or more in ten different buildings, all but one of them in Cocoa Beach.

Highest selling price for a single family home was $4.2 MM for a two story, six year old, direct ocean home in downtown Cocoa Beach. This 5 bedroom, 4.5 bath beauty sold just three years ago for $2.3 MM. Thirty four homes closed during the year for a million dollars or more with five of those selling for over $2 million. Of the 34, all but two were in Cocoa Beach.

Mortgage rates declined again this week and we are currently over a point lower on the 30 year fixed rate than we were in October. Average national rate for a 30 year fixed this week is 7.06%. Whether this pullback in rates is enough to get undecided buyers off the fence is anyone's guess. Selling prices in several condos have retreated from the peaks earlier this year but a lot of current listings are still asking close to those peak prices with indifference from the market so far. We'll get a sense of what the new year might bring by mid-February when the snowbird season will have cranked up in earnest. The effect on buyers of recent and pending substantial increases in condo fees has yet to be revealed. I will be reporting and commenting on this as those effects become apparent next year.

Best wishes to all for the coming year and hopes for a hearty, happy and drama-free holiday season. Don't forget the Surfing Santas Christmas Eve morning behind Coconuts at the end of Minutemen Cswy. Activities begin at 7:30 and the Santas hit the water en masse at 10. Be there or be square. elDubya out for 2023.

"It appears my hypocrisy knows no bounds." _Val Kilmer in Tombstone

Saturday, December 09, 2023

A Deep Dive On Condo Fees

 After blathering on for over a year now about coming condo fee increases I see that we've had enough movement among  the Cocoa Beach and Cape Canaveral condo complexes to have a look at some actual numbers and see where we stand in the condo fee inflation story. Note that the majority of these increases do not yet reflect funding for the newly required structural reserve fund. Condos have until the end of 2024 to come into compliance so there will be a lot more fee increases throughout next year as associations get their milestone inspections and reserve studies completed. Many of the recent fee increases we've seen were triggered by radically increased insurance costs alone.

I pulled these numbers from currently for sale MLS-listed units that had changed hands in recent years and with recent fee increases. This is but a small, random sampling among the 241 current condo listings.  There are plenty of others with similar increases that don't happen to have a unit currently for sale in the complex. The data I'm quoting came from agent input so, as always, I'm at the mercy of the accuracy of that input. Some of these complexes like Villages of Seaport have different fees for different sized units so I'm quoting the fee history for a specific unit that is currently listed for sale. There might be some errors but I believe we can trust the overall trend. All these numbers are publicly available.

  • Cocoa Beach Club - 2022 fees - $525/month * 2023 fees $860/month
  • Royal Mansion - 2019 - $355/month * 2023 fees - $594/month
  • Xanadu - 2021 fees - $575/month * 2022 fees - $675 * 2023 fees - $950/month
  • Canaveral Towers - 2021 fees - $550/month * 2022 - $650 * 2023 - $1085/month
  • Windward East - 2018 fees - $415/month * 2023 - $638/month
  • Windrush - 2021 fees - $470/month * 2023- $665/month
  • Villages of Seaport - 2019 fees - $360/month * 2023 fees - $760/month
  • Emerald Seas - 2016 fees - $470/month * 2022 - $640/month * 2023 - $940/month

Owners in several of the complexes listed above had the additional burden of special assessments during the period when the fees were climbing. Many of these and others not listed will be forced to raise fees again when the results of their structural reserve studies are completed. 

2024 looks to be a year of reckoning for our condo market. So far, prices have not really reacted in a meaningful or measurable way to this year's fee increases but there have been no sales in several of the of the affected complexes since the last fee increase. Is it the typical year-end slow market or is the market waiting on sellers to compensate for the new, higher fees with new, lower asking prices? Perhaps buyers will shrug off higher costs of ownership as an acceptable issue and will continue to pay higher and higher prices for the limited number of condos available in our area. Maybe rents can be raised enough to cover the fee increases for investor-owned units. That seems unlikely to me but it won't be the first time our market has fooled me. By the end of 2024 and possibly as soon as the end of snowbird season we will know. In the interim I think it's reasonable to expect the inventory of condo units for sale to continue to increase as the higher costs of ownership sink in. I expect post-snowbird listings next spring to be plentiful. 

You have 16 days left in which to procure your gifts. Use them wisely. 

"One of the most frightening things about your true nerd, for many people, is not that he's socially inept - because everybody's been there - but rather his complete lack of embarrassment about it." _Neal Stephenson

Monday, December 04, 2023

Slowdown or Breather Before the Next Runup?

Tranquil moonrise in South Cocoa Beach.

Real estate sales activity in November was slow as is historically typical for the month. There were eleven closed single family homes in Cocoa Beach and Cape Canaveral in the month and 29 condos and townhomes. Median days on market has increased with closed condos at 35 days on market and 75 days for single family homes. Median price for closed condos was $400,000 and $1,020,000 for single family homes. Cash sales represented just less than half of single family home sales and 72% of sold condos.

New contracts were slow as well with only 26 new condo contracts during the month and thirteen new SF home contracts. As with the closed sales, the new contracts on homes during the month were concentrated in the higher-priced properties while condo contracts were more plentiful in the lower priced properties.

Inventory this morning stands at 240 condo units and townhomes for sale in the two cities and 32 single family homes. There is only one home for sale asking less than a half million. Median asking price for the condos is $397,000. Over a third of the condos have been on market for over 100 days. Median DOM for the entire condo inventory is at 68 days which is much higher than earlier in the year. All signs point toward a slowing market but, and it's a big but, this is always a slow time of year. Our market generally blasts off after New Years so we'll have to wait and see if the slowdown is seasonal or systemic. We have several well-known headwinds like rising insurance costs, rising condo fees and higher mortgage rates so it's anyone's guess whether we will be back off to the races come January. 

High today for Cocoa Beach, December 4, 2023 is 79° F with light winds. Very few snowbirds have arrived yet and visible human activity around town is minimal. I can feel the beach exerting a strong pull right now and I'm guessing others are feeling it as well. It's advisable to enjoy this last quiet period before Christmas if one isn't fond of crowds.

"It's hard to accept the truth when the lies were exactly what you wanted to hear." __unknown