We Have a Situation

Sunrise Thanksgiving morning in south Cocoa Beach

Our condo market is in trouble. The trouble started with Covid but is just now becoming apparent. The number of units sold in 2021 was the highest since I began keeping records in 2004. There were 863 closed condo sales in Cocoa Beach and Cape Canaveral that year. Prices had not yet returned to 2005-2006 levels for most units but there was a strong uptick in selling prices as demand climbed following the Covid lockdowns of 2020. Inventory had been in a broad decline since 2006 and bottomed out in 2022 adding fuel to the demand/supply imbalance. In April of 2022 there were less than 40 total units for sale in our two cities and buyers exceeded sellers by a large margin. Most new listings sold within days. Multiple offers were common and the legislation in response to the collapse of Champlain Towers South in June 2021 had not yet been signed into law.

Following the exuberance of 2021 and 2022, inventory began rapidly climbing at the same time prices began leveling out. The legislation requiring condos to establish a fully-funded structural reserve fund was signed into law in June 2023 with a deadline for compliance of December 31, 2024. As a result condo fees exploded as condo associations were forced to increase them in order to fund the new reserves and in some cases levy special assessments to repair existing structural issues. These fee increases didn’t happen overnight and in the meantime enthusiastic buyers continued to buy condos.

2025 sales shown through late November

By December 2024 the inventory of condo units had climbed to 298 units and most condos had raised fees and demand had cooled. Many sellers were clinging to expectations of the previous years’ selling prices but buyers were not sharing those expectations. Instead of $550 a month fees and a 3% mortgage like a few years earlier, a buyer was now looking at over $1000 a month fees and a 7% mortgage for the same unit. Justifying a beach condo was no longer possible for many buyers and they suspended their search. Sellers, on the other hand, clung to their visions of 2022 and refused to accept that the market was changing. Many of those sellers are still on the market although some are beginning to realize that the prices of recent years are not realistic in this market.

There are 30 units for sale right now asking less than the sellers paid in 2021, 2022 or 2023. There are another five asking within 2% of their purchase price and nine units who have curbed their enthusiasm with price drops between 23% and 40%. The most extreme example at the moment is a unit at 60% of the original asking price. This seller was asking $2.1 MM in 2024 and is now hoping to get $1.275 MM. The reality checks are not confined to the upper price range with listings like a unit in a riverfront complex that was asking $240,000 a year ago now down to $160,000.

Inventory has inched back up to 313 total units for sale this morning with a median time on market of 93 days, 81 of those units for sale over six months. Everyone is hoping for a strong selling season in the spring but the friction for buyers isn’t going to disappear with the arrival of the snowbirds. Higher fees, insurance and mortgage rates will persist. Of the units that have closed so far this month, the majority sold for large discounts to the original asking price and four of them sold for a loss. One unit stands out for seller optimism, a bad bet and, ultimately, capitulation. First listed three and a half years ago for $1,299,000, the seller decided to rent for a year after failing to sell, probably hoping for a better market a year later. After a year and $36,000 of rent collected they relisted and found a buyer for $575,000. Anyone hoping to sell needs to accept the reality of this changed market and think hard before making a bet like renting for a year in hopes of a better future market or clinging to yesterday’s price. Unless we have the busiest December of the last twenty years, this year’s total condo sales will continue our five year trend of declining number of units sold.

I hope everyone had a happy, stress-free Thanksgiving. For those who are here this weekend the Cocoa Beach Art Show kicks off tonight with a street party. Live music on the main stage on Minutemen Cswy. begins at 5:30 with FlowMotion followed by the always-outstanding FUNPIPE at 8:30. Hope to see y’all there. Congrats to the handful of people who won tickets to see Benson Boone at the Rocket Garden at the Space Center Saturday night. Enjoy the backflips.

“Sometimes I’m scared of being Ozzie Osbourne but it could have been worse. I could have been Sting.” _Ozzie Osbourne

Houses vs Condos

The moonrises over the ocean this week have been spectacular.

I mentioned in the last post that different market segments can behave very differently at the same time and used the Cocoa Beach single-family market and condo market as examples. Let’s dive into the details and see just how differently they are performing.

We typically have about five to six times the number of condos for sale at any one moment as houses. This morning there are 64 MLS-listed homes for sale in Cocoa Beach and Cape Canaveral and 299 condo units. During the month of October, 15 homes and 34 condo units closed. That means that we have about a 17 week supply of homes versus around 35 weeks for condos.

Median time on market for the sold homes in October was 55 days. For condos it was 151 days. As I mentioned in the Market Snapshot post, time on market is heavily manipulated so the real time to sell is longer than the MLS shows. More than a quarter of the sold properties, both homes and condos, took longer to sell than shown in the MLS but the fact that most condos are taking about three times as long to sell as homes is accurate.

Median selling price for homes was $1,012,000 and $335,000 for condos. Cash buyers dominated the market with two thirds of condo buyers and 60% of single-family home purchasers paying cash. That trend is likely to continue. There do not seem to be any reasons to expect market conditions to change until after New Years when we typically see an uptick in new listings and sales activity in both market segments. Until then we can expect more of the same absent some external macro event. Good luck to all participants. Knowing what’s going on in your market segment will go a long way towards success whether buying or selling.

Reminder to sellers to check your MLS listings for accuracy and completeness. The 15 condo listings on our MLS today that have incorrect or missing condo names may not be included in auto-search emails for buyers who are looking for a unit in a specific condo. If there are prospective buyers with an auto-search set up for Sandcastles, they are not going to get an email about a new listing there if the listing agent’s assistant spelled the name as Sand Castles.

Anyone willing to venture a guess on when/if the development of new houses on the site of Joyce’s Trailer Park in south Cocoa Beach will have its first completed structure? The MLS tells me that ten of them closed, all for cash, at prices between $970,000 and $1,495,000, between 2019 and 2022. Some of these closings happened before the slabs had even been poured and now they have been sitting at various stages of completion for years with sporadic activity and not a single one yet completed. I would love to hear from anyone with any insight into what happened or is happening there.

“A sane person to an insane society must appear insane.” _Kurt Vonnegut