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