REDUCED! ... meh

Looking up the channel along St. Croix from Fountain Cove.
Merritt Island in the distance and Banana Bay on left.

REDUCED! OWNER MOTIVATED! BRING OFFER! NEW CAR IN GARAGE! $50,000 DECORATING CREDIT! SELLER WILL PAY 2 YEARS OF YOUR MORTGAGE PAYMENTS!

Like Lisa Simpson, when I see any of the above or similar phrases in a real estate listing I usually yawn and say, meh. However, it's the last weekend of summer, seller sentiment is changing and the headline "REDUCED!" is starting to mean something. When I sift through the 129 price reductions on condos and townhomes in the month of August in Cocoa Beach and Cape Canaveral I'm seeing some serious price drops unlike the, mostly, baby step reductions earlier in the year. The pressure of the end of the summer season is apparently being felt and some of the reductions are significant. For example:

Villa Verde 3/3 in south Cocoa Beach from $1.35 million to $899,999
Ocean Terraces 3/2 reduced from $699,900 to $599,900
Cape Hacienda 2/2 from $315,000 to $225,000
Waters Edge 2/2 direct ocean from $259,000 to $219,000
Dolphin Beach from $240,000 to $129,900
Brisas del Mar from $185,000 to $120,000
Cape Shores from $199,900 to $119,900

I don't consider all of these to be good buys even at the newly reduced price but the amount of the drops tells me that the shift in seller mindset is speeding up in it's move towards acceptance and away from denial. Even with the highly picked-over inventory I suspect that the next few months will present opportunity for ready buyers. I would suggest, if you are going to be using a mortgage, that you go ahead and make contact with your lender before you start pursuing a deal. The rules for condo mortgages continue to change and you'll have more bargaining strength if you're already approved or paying cash. If you were pre-approved more than a couple of months ago, you need to talk to the lender again. Things have changed, yet again.

As of today, the Cocoa Beach MLS is showing 24 closed condo and townhome units in the month of August in Cocoa Beach and Cape Canaveral, well below last year's 39 sold units with nothing closed under $500,00. The number may drift up slightly as tardy listing agents update their listings next week. Hope you have a fun Labor Day. Be safe and close your shutters when you leave.

Homer: Kids... how would you... like to go to... Blocko Land??
Lisa/Bart: Meh.
Homer: But ... the TV gave me the impression that ...
Bart: We said "meh".
Lisa: M-e-h. Meh.

Notable August Condo Sales

Spotted dolphins playing around the boat in the ocean off Cocoa Beach.
__________________________________________________

As of this morning, August 23, we have had 18 closed condos in Cocoa Beach and Cape Canaveral in the month of August. Notable sales included:

Lowest price was $59,999 for a small 2/1, Star Beach unit in Cape Canaveral. This unit sold after being listed for only 3 weeks. The seller took 86% of his asking price of $69,900.

The highest price so far this month was $440,000 for a fully furnished, 3rd floor Mystic Vistas unit in the A building with an ocean view. This unit sold in 76 days for 88% of asking price. The selling price was $189,900 less than the seller paid for it in June of 2005.

A 3rd floor corner, direct Banana River 3/2 at Solana River closed for $350,700 after being listed for only 25 days. The seller got 95% of his asking price but sold for $84,300 less than he paid in March of 2005.

A 1725 sq.ft., 3rd floor, 2/2 Shorewood unit with a peek of the ocean sold for $236,000 after being listed five different times for an astounding combined 997 days with an original asking price of $464,900. It closed for 79% of the last asking price but almost double what the sellers paid when it was new in 1996. This is an extreme and costly example of chasing the market down and clinging to unrealistic expectations.

One of the bigger, 2348 sq.ft., Puerto del Rio units with a good river view from the massive, 4th floor wrap- around balcony closed for $233,000 or 78% of the original asking price in January this year. This was $54,000 less than the owner paid new in December 2003.

A Banana Bay townhome in Cocoa Beach sold for $161,000 in just 56 days, 89% of asking price.

And a Portside 1/1 with 943 sq.ft. sold for $92,000, lowest price yet in Portside and $23,900 less than paid for this unit brand new just two years ago.

We've seen four single-family homes close so far this month, all in Cocoa Beach, with waterfront prices from $340,000 to $570,000.

MLS inventory Aug 23, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____742
over $500,000________93
Single family homes___119
over $500,000_________44

If anyone has a particular market segment or subject you'd like covered in a post here, please email me and I'll do my best to accommodate.

"Life is not a matter of holding good cards, but sometimes, playing a poor hand well."
_____________Jack London

Waiting on a foreclosure

Sung to the tune of "Waiting on a friend" by the Rolling Stones.

I constantly get calls and emails from people wanting to pursue foreclosures and short sales in hopes of snagging a great deal. While there have been some outstanding deals in those two categories, there have also been equally outstanding deals in non-distressed properties. For instance, yesterday a big, direct ocean 2/2 condo in south Cocoa Beach was slashed to $219,000. This unit has no garage and the 2nd floor view is somewhat obscured by dune vegetation but at this price it's now priced below most river units of the same size. Someone's going to get the best deal of the year on the ocean here. It's not bank-owned nor is it a short sale. The 4th floor corner 3/2 at Ambassador Shores that closed last month for $235,000 was not a distress sale. Nor was the top floor 2292 sq.ft., 3/2 River Bend that closed for $265,000. My point is that, in your search for a deal, do not limit your search to distressed properties. There are occasional non-distressed properties closing at prices that qualify as "great deals" without the hassles and perils of bank-owned or bank-approved sales.

The numbers are in for July and we dipped below 2007 in total closed condos in Cocoa Beach and Cape Canaveral with a total recorded (as of this morning) of 35 sales. The highest price paid for a condo in July was $850,000 for a 5th floor northeast corner that sold new for $1,035,000 three years ago. A similar haircut was administered at Majestic Seas for a 6th floor southeast corner that closed for $712,500 which is $116,500 less than it's purchase price three years ago. John Edwards would be jealous. We had our busiest month of 2008 in the over $500,000 category with six units closed, two at the Meridian whose outstanding marketing team continues to pull rabbits out of an empty hat.

According to the tax appraiser's site only 12 of the May 17th auction units at Mystic Vistas had closed by July 23, so, I guess the early rumors of 20-something sold were inaccurate. The lowest recorded price was $181,500. I suspect this was the unit that sold for $165,000 with a 10% buyer's premium added. The math works.

If our seasonal trend holds true sales should drop significantly through the end of the year. The chart below shows what we can expect for the rest of the year if we follow 2007. The steep decline after August below looks the same if we chart the previous five years. As a buyer, expect to have more bargaining power during this slow time although you'll be dealing with reduced inventory as many sellers pull their listings off the market until spring. If you're selling, well, I won't repeat my broken-record message. You know the drill. Your time for action is now.



Single-family home sales were brisk in July with 11 closed sales bringing the total closed MLS-listed homes in Cocoa Beach and Cape Canaveral to 60 since January 1, 2008. Current inventory stands at 123. Lowest price, $147,500 and highest, $1.75 million.

Condo inventory is now at 746 with the lowest asking price, $49,000 for a small 1/1 Atlantic Gardens unit in Cape Canaveral, and the highest, $1.95 million for a 5000 sq.ft. new direct river penthouse in south Cocoa Beach. Until next post, be careful out there. There are hungry wolves wearing Time2Buy buttons who would love to eat you for lunch.

"I have known a vast quantity of nonsense talked about bad men not looking you in the face. Don't trust that conventional idea. Dishonesty will stare honesty out of countenance any day in the week, if there is anything to be got by it. "
________Charles Dickens

The Sweet Smell of Summer

One of the sweet smells of summer in Cocoa Beach, frangipani (aka plumeria).

As of today, the 24th of July, we appear to be on track to closely mirror last year's sales for the month of July in Cocoa Beach and Cape Canaveral. For the last five years, sales have peaked between April and June and then trended down to the lows of the year between October and January. Typically the number of closings falls off the cliff in October reflecting September's abrupt drop in sales activity and doesn't recover until February. I expect the same for this year.

Recent sales of note include a 4th floor, direct river 2/2 at Four Seasons in Cocoa Beach for $185,000 and a 5th floor, direct river 2/2 at Sunset Harbor that sold for $165,000. Best oceanfront deal of the month was a 4th floor, north corner 3/2 Ambassador Shores unit that I was able to negotiate on behalf of a buyer for $235,000. Unfortunately, our contract was taken away by another owner in the first right of refusal process that is in place at that building. We have had two $500,000+ units close so far this month, one of them a new unit at Meridian on the ocean. Of the 21 MLS-listed condos to close so far this year for over a half million dollars, nine have been at Meridian. I hope the buyers agents are doing the right thing and disclosing in advance and sharing with their buyers the excessive commissions being paid to them by the developer. Long-time readers of this blog know my stance on agent incentives. The practice reeks like shrimp heads in a hot dumpster. If you never read my first posts on the subject you can read them here.

Single-family home sales have been tepid with only three closed sales so far this month. One was a small but very cute 2/1 home with a pool one block from the ocean and 1/2 block from the river in south Cocoa Beach that went for $195,000. There are pending deals set to close soon that will cause some teeth-gnashing and rending of garments. I will report on them as they close.

As of yesterday, ten of the developer's auctioned units from the May 17 auction at Mystic Vistas in Cape Canaveral have been recorded on the property appraiser's site for prices ranging from $181,500 to $275,000. These were all new units from 1686 to 2059 sq.ft.

From Bankrate.com: "This week (July 17-23), 70 percent of the panelists believe mortgage rates will rise over the next 35 to 45 days."

MLS inventory July 24, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____753
over $500,000________95 - 21 sold since New Year's Day
Single family homes___125
over $500,000_________44

For those of you waiting for an outstanding deal, the pickings are slim. There have been very few priced-right new listings in the last few months and the ones that have appeared have been quickly snapped up. Be ready to pounce if you want to steal something and don't rely on the tardy listings at some of the popular real estate web sites. Your buyer's agent, if she's good, is your best weapon for early notice of hot listings. Justify your low offers with comps and/or well articulated reasons for a better chance at success.


"Honesty is never seen sitting astride the fence."
_____________Lemuel K. Washburn

July 14 Update

I grabbed the frame above from the Cocoa Beach Pier cam just a few minutes ago of a few guys catching the last few sets of the Hurricane Bertha swell.


MLS inventory July 14, 2008 Cocoa Beach & Cape Canaveral

Condos, all prices_____758
over $500,000________99 - 18 sold since New Year's Day
Single family homes___127
over $500,000_________47

Deals of note

New 1702 sq.ft., 3/2.5 Sea Spray townhome in Cape Canaveral,
______closed last week for $155,000

Third floor side ocean view Chateau 2/2 - weekly rentals
______closed for $215,000

Direct ocean 3/2, 1548 sq.ft. in a 4-unit building in south Cocoa Beach
______closed for $335,000

There's something happenin' here
What it is ain't exactly clear
________Stephen Stills

Everything is fine, ...really

The market has bottomed, inventory has dried up and prices are expected to skyrocket next year. Buy now or be priced out forever, historically low mortgage rates, population explosion, baby boomers, European buyers, median price up, year-over-year sales up, blah, blah, blah.

Let me translate the above Realtor-speak; "I will tell you anything in hopes of generating a commission check." Folks, some segments of this market are still dangerous and it would be prudent to be cautious with your real estate search. If your agent is saying any of the above phrases while waving his Time2Buy button before your eyes, put your hand on your checkbook, yell "watch out for the squirrel" and roll out of his Lexus onto the pavement. The damage to your body will probably be cheaper than the damage to your finances that was about to happen. This is historically the busiest time of the year for sales in our market and it would be easy for me to tell you that the recent activity in our market is evidence of the end of the troubled times, but, it just ain't so. There are scattered super deals to be had but they do not represent the bulk of the available listings and, if you aren't on top of recent activity, you won't be able to recognize the deals when you see them. The vast majority of current listings are over-priced. You need to be able to determine current value and negotiate a price below that number. If you can't, move on. The patient buyers are being rewarded.

There is a special danger in the high-end condo market as developers are sitting on dozens of units that they cannot move. Most of this inventory is not on the MLS so the reality of this segment of our market is hidden from examination but my observations tell me we are approaching a tipping point. No one knows how this will play out in individual complexes but the recent auction by the developer at Mystic Vistas likely sent a chill down the spine of every owner in that complex, especially when the record low prices became known. Owners in other not-sold-out new buildings and complexes should be similarly concerned. When a developer decides to unload his remaining inventory, all other units' values will be affected. If you're looking to buy in a new building, ask how many units are still unsold, find out how many (if any) owners are delinquent on their monthly fees and, most of all, be prepared to wait a long time for any appreciation. No rational person can look at the level of inventory and the rate of sales in the high-end condo market and expect things to turn around anytime soon. That doesn't mean there are no good reasons to own a condo in our great community. If you can strike a great deal and don't mind the possibility of no appreciation for a while, the best little beach town in Florida is waiting for you. The market decline so far does not appear to have affected the beach, the surf or the fishing. The market's direction was the last thing on my mind this morning as I stalked tarpon in the surf before coming to the office.

My intent from the day of my first post here in 2005 was to give you readers timely, accurate and honest information about the Cocoa Beach and Cape Canaveral real estate market. From the hundreds of emails I've received over the years, I know that many of you have profited from knowledge gained here. There is wheat and there is chaff. If you're buying or selling real estate in our market, you better know how to separate it.

'When the tide goes out, you can see who isn't wearing shorts.'
________________Warren Buffett