Sunday, February 18, 2024

Full Snowbird

Halfway through February and sales activity in Cocoa Beach and Cape Canaveral is typical for this time of year, slow but picking up. After closing 28 condo and townhouse units in January, we've already closed 24 so far in February. Median time on market for all closed units since January 1 was 54 days with a median selling price of $323,000. Slightly more than half of the purchasers paid cash for the property. The median association fee for the sold units was $660 per month. There are currently 254 total units for sale with a median asking price of $435,000 and median time on market of 75 days.

Single family home activity has been sedate with a total of ten homes closed since New Years Day. Median selling price was $925,000 with a median time on market of ten days. There are a total of 34 houses for sale this morning in the two cities plus another three offered pre-construction. Median asking price of all homes is $980,000 with a median time on market of 60 days.

We are just now entering the busiest season of the year for visitors and real estate activity. In March we have a crowded confluence of snowbirds, school baseball teams with families in tow and a sprinkling of lost spring breakers. Some of those visitors will use their time here to look for a property and several will find one and go under contract. Should we expect anything to be different this year? 

Maybe. The substantial increase in condo fees has been reflected in rising rental rates. Snowbird rental prices have been steadily increasing in recent years with extra large increases the last two. There are modest 2/2 oceanfront units commanding $6000 a month rent this season that rented for $3500 just three years ago. The specific units in my example are paying over $20,000 annually just for property taxes and condo fees when those expenses were just $10,800 in 2020. The snowbird who may have thought about buying one of these units this year will be looking at a $600,000 purchase price and monthly expenses of around $2000 a month before any mortgage payment. Does it make sense to own with those numbers rather than pay $18,000 rent for a three month stay? Add to that the risk of further depreciation as selling prices in our example complex have pulled back substantially in the last two years. I don't know the answer but the math is likely to exclude some from our pool of potential buyers. Maybe dropping prices will pull those reluctant buyers back in.

How about the market at large? Sales volume remains in line with historical volume for this time of year so any concerns about higher carrying costs, if any, are subdued. Even so, I don't think the market will continue to shrug off higher taxes, insurance and condo fees without some compensating pull back in selling prices. I will be surprised not to see a decline in most condo selling prices similar to the pull back in my example above. Many smaller complexes have not had any recent sales so owners in those complexes have been unaffected and unaware of the declines in other bigger complexes. The next sale in those buildings might reveal that the decline has metastasized.

Single family homes, resilient in their scarcity, do not appear to be as affected by increasing costs as the condo market. That market is far smaller and responding to a different dynamic. Insurance costs have accelerated at a similar rate to condos but with no apparent effect, yet. Perhaps the always-low inventory will continue to support that segment of our market. We shall see as the season unfolds.

"The fact that some people can't distinguish between etymology and entomology bugs me in ways I can't put into words." _Gemma Amor

Tuesday, January 23, 2024

Chugging Along

There are currently 28 existing single family homes for sale in Cocoa Beach and Cape Canaveral plus another three offered for preconstruction reservation. Median asking price of the active listings is $986,000 and the lowest priced home available is $577,700. Median selling price of the three homes closed so far this month is $1.06 MM. Last January the highest selling price of the five homes sold was $600,000. 

Condo inventory in our two cities is ramping back up and is at 254 units for sale this morning with a median asking price of $425,000 and median time on market of 81 days. Seventeen units have closed so far in January with a median selling price of $313,000 and median days on market of 45 days. Slightly over half of those sold for cash. Another 33 condo sellers have found buyers since January 1 as have seven single family home sellers. 

It's still too early into snowbird season to get any kind of meaningful read on the direction of our market in 2024 but with 40 new contracts in the first 23 days the prospects are promising. We began last year with 135 condo units for sale compared to our current 254 units and single family homes inventory was just slightly less than it is now. I'm usually happy to offer a prediction on market direction but I'm stumped with this market. Higher inventory and longer time on market seems a negative indicator but sales activity is right in line with a normal January so far. Interest rates, though less than a few months ago, are still higher than they were at the beginning of last year. Shockingly high insurance premium increases and ballooning condo fees have yet to be reflected in sales activity. I do expect a reckoning in the condo market as the fee increases become more widespread but it might be after summer before we can get a feel for that impact. Selling prices have pulled back significantly in a few larger condo complexes but there are many smaller complexes that haven't had any sales by which to judge price direction. For now, it's wait and see. 

The first wave of snowbirds have arrived with many more to follow in February and March. Those who got here early have had to deal with a wetter and colder start to a year than is normal. The golfers among them had to find other activities during the many course-closed days at the Cocoa Beach Country Club. Hoping for more sunshine and less wind moving forward. 

Speaking of colder, check out the temperature map above. A difference of 40 degrees between Destin and Cocoa Beach on this January day. Cold fronts routinely cross northwest Florida in the winter but lose their strength as they move further south and many either don't make it to Cocoa Beach or arrive with much less intensity. We certainly get our cold spells but nothing like the frequency or intensity that our Pensacola to Panama City people experience. Snowbirds considering a Florida beach town as a getaway spot from the winter cold would be prudent to choose their Florida destination wisely.

Sufficiently advanced ignorance is indistinguishable from malice.”