Mini-Season

Late April and we are into our mini spring slow season that lasts until schools begin letting out for the summer and vacationers replace the snowbirds that just departed. We usually have about a month and a half of respite before the summer season begins in earnest in June.

It’s been a busy snowbird season for real estate sales. After closing 55 units in March, three weeks into April and we have closed 28 condos and townhomes and 15 single-family homes so far in the month. Most of these were contracted in February and March. First the condos:

Inventory this morning stands at 313 units for sale in Cocoa Beach and Cape Canaveral. Median time on market is somewhere around 90 days adjusted for listing agent monkey business. Median time on market for the 28 closed units was 113 days. The half that were on the market more than 113 days averaged selling for just 82% of original asking price. Most of these had multiple price drops over the life of the listing confirming what the high discount is already telling us, unreasonable initial expectations from the sellers and reluctance to accept the market’s message. Four of the units sold for less than the sellers paid, all four of those purchased in the last five years.

The half that sold in less than 113 days averaged 94% of original asking price. That market message is clear. Price realistically and get closer to asking price and sell faster. Half of the closed units sold for $300,000 or less, a lower median than we’re used to.

The single family home market has been very busy with 15 closed sales so far in April with a median selling price of $885,000. All fifteen were in Cocoa Beach with none closed in Cape Canaveral. In strong contrast to the 113 median days on market for the sold condos, median time on market for the homes was 47 days. The current inventory is 56 homes in our two cities with a median time on market of 88 days. This market segment is far healthier than our much larger condo market.

In a surprise move, the new Destination Downtown Food Hall closed it’s doors last week after just ten months in business. I’ve heard no word on what may happen to the prime downtown property at the former location of Yen Yen’s Chinese and, before that, the Prince of Wales Restaurant.

The extent of the earlier freeze damage to our vegetation all over town is plainly obvious now. Our streets are lined with piles of trimmings from dead and damaged palms, plumerias, mangoes, sea grapes and beach cabbage among others. I’m seeing green shoots around the base of the sea grapes and beach cabbage and a few green leaves on some mango trees but a lot of the more tropical species were killed outright. The coconuts appear to have mostly survived after shedding layers of fronds in the weeks following the freeze. This is exactly how climate zones are defined and redefined. I wonder where the new northernmost Florida coconut tree is. The previous placeholder probably did not survive.

“You can clutch the past so tightly to your chest that it leaves your arms too full to embrace the present.”____Jan Glidewell 

How Much Is It Worth?

Outside the city limits looking south over unincorporated south Cocoa Beach towards Patrick Air Force Base where the land widens in the distance, Banana River on the right, Atlantic Ocean on the left. Now you know.

[This is a repost of a still-relevant article from ten years ago.]

Following up on my recent post, When There Are No Comps, I'd like to explore the trustworthiness of comps a little more. An oceanfront condo sold recently in south Cocoa Beach for what seemed an unbelievably low price. It was a private sale and not on the MLS. I saw the contract. Written in the contract was a line that the purchaser would get use of the unit for the months of January, February and March free of cost for life. Sounds crazy since by buying the unit the purchaser gets exclusive use of the unit anyway. It was a tactic to defeat the first right of refusal process in this particular condo complex. It was intended to make the contract unattractive to any owners that wanted to exercise their right which would have been sure to happen since the price was so low. I feel fairly certain that the sales price on this contract did not accurately reflect the actual amount of money that changed hands. By writing the odd clause in the contract, the seller defeated the first right process  AND, if the contract price was indeed lower than the actual money changing hands, reduced his capital gains tax liability and the purchaser's  property taxes going forward. A win for both parties to the fraud but not for other taxpayers and other owners in the complex whose units now appear to be worth less than they really are.

I am aware of another unit in Cocoa Beach, also a private sale not on the MLS, that is due to close shortly that will likely record for an amount less than the actual selling price. Any Realtors or appraisers using it or the previous sale for comps will be using flawed information and will not get an accurate estimate of whatever property they're trying to value.

This works in the other direction as well. Developers are fond of propping up the comps in a new development by issuing credits to buyers at closing. I've seen "decorating credits" of up to $75,000 issued to a buyer of a new condo unit. That sale may have recorded at $600,000 but with the cash back to the buyer at closing the actual price was $525,000. A seller a year down the road may reasonably think his unit is worth $600,000 plus some appreciation. As long as the new buyer isn't aware of the unrecorded credit or the giant bonus [bribe] paid to the first buyer's agent he may willingly pay $600,000+.

This brings up an interesting point. If sales after the developer's departure reflect the inflated recorded comps as true then the initial deception becomes reality. This is actually the case at one very popular luxury complex in Cocoa Beach. There is another luxury complex in Cocoa Beach where a good number of the post-completion sales were by the developer and entities that he controlled. Several of the recorded sales involved property swaps and other off contract compensation that make selling prices seem far higher than they actually were. Private sellers in this building can't figure out why they aren't able to get any action at their asking prices which seem in line when compared to the bogus recorded prices.

Comps are only as good as the veracity and completeness of the information contained in them. Agents rarely make notes on closed sales that the entire contents were included in the final price or that commission was reduced or that the owner is getting the month of March free for the next five years. All those things affect the actual price paid. In the end it is prudent for all parties to a transaction to realize that comps are just part of the story and that there are often details that will never be known. CMAs and appraisals are only one person's opinion of value and that opinion is often formed with incomplete and/or inaccurate data. Proceed accordingly and don't lose a deal because of an opinion of value that might be flawed.

"False opinions are like counterfeit money, printed first by guilty men and thereafter circulated by honest people who perpetuate the crime without knowing what they are doing." ___paraphrased from a quote by Joseph de Maistre
 

More Than April Fools Day

Today is April Fools Day and is also the scheduled launch day for the four astronauts on Artemis II who will loop around the moon before returning to Earth, a trip of around 685,000 miles over ten days. Should the launch be scrubbed today we have five more days in this month’s window to reschedule a launch, tomorrow through the 6th. A lesser known fact about April 1st is that is the traditional departure day for the biggest wave of snowbirds beginning the northward migration back to their home states. Snowbirds come and go in our area from November through April but a very large group of them have seasonal leases through the end of March which makes today, April 1st, their checkout day. We will still have a few lingering snowbirds and occasional spring breakers but the traffic, grocery stores and golf courses will be noticeably less crowded beginning tomorrow barring a rescheduled launch of Artemis.

Inventory of condos and townhouses this morning in Cocoa Beach and Cape Canaveral is 296 units. We usually get an increase in inventory as snowbird-occupied units vacate and are listed for sale so we should see that number back up over 300 units shortly. There were 54 units closed in the month of March, five more than last year but fewer than in each of the preceding fourteen years. Median selling price was $305,000. Prices ranged from $127,500 for a one bedroom dump needing work in a riverfront complex in Cape Canaveral to $979,000 for a luxurious newer riverfront 3 BR, 4 BA with two garages in south Cocoa Beach across the street from the ocean. Monthly condo fees ranged from $260 to $1390 with a median fee of $697. Less than half the buyers used a mortgage for their purchase.

There were twelve single family homes closed in the month from $425,000 for a fixer-upper, non-waterfront 3/2 in Cocoa Beach to $2.7 MM for an expansive riverfront estate in Cape Canaveral. Median selling price was $664,000. Median time on market was 64 days. Inventory this morning stands at 65 houses.

Godspeed to our astronauts and to the thousands of snowbirds also taking flight today.

“I’m so mad that I’m getting older. It makes me reckless.” _AdelePeak