Beware the Market Snapshot

Typical crowded beach in south Cocoa Beach last week

I receive quite a few marketing direct mail and email blasts from real estate agents, mortgage brokers, title companies and such that include market statistics in their sales pitches. Market statistics are provided by most local Realtor associations to their members for use in marketing. They are most commonly presented (in my experience) as a market wide snapshot demonstrating the health and direction of the local market. All good and I imagine this might be meaningful in some concentrated, homogenous markets but in our 72 mile long county with many distinct and separated cities and communities an overall “market snapshot” is worse than meaningless. It’s misleading. The market viewed as a whole may suggest a different reality than the specific market niche one may be selling or hoping to buy in. Those using these stats rarely mention this. It’s marketing after all. The temperature of the Palm Bay single family home market has very little to do with the health of the beachside condo market. In fact, the one and two story, non-waterfront beachside condo market has little in common with the oceanfront condo market just as the Cocoa Beach single-family home market often moves counter to our condo market. Beware the market snapshot.

Condo inventory in Cocoa Beach and Cape Canaveral has increased slightly with 298 total units for sale as of this morning. The median time on market shows as 112 days but that is misleading because of the way that the MLS calculates combined days on market. The listings that gave up on selling last year and rented for a few months hoping for a market improvement can come back on the market now as a brand new listing with zero combined days on market. Same holds true for a listing with a clever listing agent who cancels and relists to get a new MLS number. There are many of both types of these listings in the current inventory making the time on market appear less than it really is.

A total of 37 units have accepted a contract so far in October. The median time on market indicated by the MLS was 131 days but a look at the relisted units among them like those mentioned above reveal the actual time to sell to be much longer.

Reality is starting to set in for many sellers with overly optimistic expectations. Among the 37 units contracted so far in October a few stand out for their extreme price reductions that produced results.

• Oceanfront unit - original asking price $650,000. Asking when buyer found, $499,000.

• Oceanfront unit - original asking price $439,900. Asking when buyer found, $349,000.

• Oceanfront unit - original asking price $1.1 MM. Closed for $880,000.

• Riverfront unit - original asking price $595,000. Asking when buyer found, $410,000.

• Oceanfront unit - original asking price $700,000. Asking when buyer found, $499,900.

• Oceanfront unit - original asking price $549,000. Asking when buyer found, $399,900.

• Riverfront unit - original asking price $364,900. Asking when buyer found, $284,500.

• Oceanfront unit - original asking price $439,900. Asking when buyer found, $349,000.

• Riverfront unit - original asking price $470,000. Closed for $311,000.

And the most extreme of the reality checks this month; a seller of an oceanfront unit who was originally asking $1.3 MM with no luck even after several large price drops over the course of two years decided last year to let the listing expire and rent the unit. They came back on the market this month at an asking price of $599,000 and found a buyer quickly. A reality check of over $700,000 and a cautionary tale for those who may be thinking of pulling their listing to wait for a more favorable market. Are you feeling lucky?

Some of the 37 units sold for or will close for less than the seller paid for the unit. In addition to these I’m also starting to see new listings of units that were purchased in the last three years or so that are back on the market with a starting price of less than the price previously paid. This may have more to do with substantially increased condo fees over the last three years than to overall market sentiment but it’s certainly worth paying attention to as it’s not something we’re used to. Markets don’t correct overnight but they usually give hints. Whether this is a hint or a temporary aberration remains to be seen. I’ll continue to pay attention.

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” ___Warren Buffet