Proud Cocoa Beach residents watch Discovery leave Earth while surfers enjoy the surprise north swell and beautiful conditions. All work in Cocoa Beach ground to a halt as everyone turned their eyes skyward.
Tuesday, July 26, 2005
Discovery is up
Proud Cocoa Beach residents watch Discovery leave Earth while surfers enjoy the surprise north swell and beautiful conditions. All work in Cocoa Beach ground to a halt as everyone turned their eyes skyward.
Monday, July 25, 2005
Space Shuttle Set To Go
The shuttle is poised for a second try at launch tomorrow. It's been a while since we've seen a shuttle flight and Cocoa Beach is excited. Our real estate market is less than excited and seems to be in a slow simmer at the moment. Over half of all condo sales in the last 14 days were under $400,000. The upper range continues to languish and we're seeing properties in all price ranges sit longer than they did earlier this year. Summer is historically slower, so, I'm unwilling to call this anything but a seasonal slowdown.
An interesting footnote is the fact that no Portside Villas units have gone under contract in the last 14 days. That's with 26 units actively for sale on the MLS. Word is that the first 2 buildings will close in August or September.
MLS Stats for July 25, 2005
contracts last 14 days
condos over $500,000___ 3
condo under $500,000__ 32
homes over $500,000____ 2
homes under $500,000___ 4
active listings
condos all prices______420
condos over $500,000__ 126
homes all prices______ 59
homes over $500,000__ 36
Sunday, July 17, 2005
Waiting on the Space Shuttle
It has been an intense week here on the Space Coast with the impending launch of the Space Shuttle Discovery and the return to space for the U.S. manned space program.
Residents of our area are very proud of our astronauts and engineers and all those who contribute to this incredibly complicated and dangerous endeavor. If things go as planned, we should see a second try at a launch the end of this week. So far we are enjoying the flood of journalists and film crews from all over the world. In the absence of launch news they have been scrambling for stories since the first launch delay. There was even a film crew in my favorite sushi bar, Yen Yen, last week.
Our market continues at a somewhat subdued pace as is normal for this time of year. Inventory is almost unchanged and the pace of sales is holding steady. I had to adjust my MLS stats this week as we had a group of 39 developer contracts go contingent or pending all at once. I subtracted these numbers from the totals because they are not accurately portraying actual sales during the period. Investor demand for pre-construction remains high with not enough first-round, pre-construction units available to fill that demand. There is continuing resistance from buyers in the high-end resale units. If you're playing with pre-sales in the high end, you better be prepared to close. At the other end of the range, sales are robust. Portside Villas is maintaining brisk resale activity, I believe, because the current prices still represent good value and they are in a very sweet spot of the market, under $300,000. We will probably never again see new construction beachside for under $300,000.
You may want to read an interesting article in today's Florida Today about condo conversion This is a trend we've been seeing in our area that we can probably expect to continue. With property values soaring and rents flat, it is inevitable that this happens. Take a recent conversion, Brisas del Mar in Cape Canaveral.
This 14 unit apartment building represented some of the developer units I factored out of my stats this week. This property as rentals was probably generating around $100,000 a year in gross rents. Converting to condos yielded around $2.6 million before costs. With numbers like these, we can expect this trend to continue. There are still quite a few rental properties in Cocoa Beach and Cape Canaveral that are suited to conversion.
Other developments locally are the ground-breaking of the 77 unit Magnolia Bay complex on the river in south Cocoa Beach and the tear-downs of 2 more houses on the west side of S. Atlantic Ave. This is a trend I see continuing. There are quite a few old houses across the street from the ocean that are candidates for tear down and replacement. We saw a tear-down condition home built in the 1920s sell recently for $649,000. It commanded that price because it sits on a lot large enough to build 3 units. Expect to see luxury townhomes or condos there soon.
Here are the numbers for July 17, 2005.
contracts last 14 days
condos over $500,000___ 6
condo under $500,000__ 31
homes over $500,000____ 3
homes under $500,000___ 3
active listings
condos all prices______417
condos over $500,000__ 126
homes all prices______ 55
homes over $500,000__ 32
Do your homework, get pre-approved before you start your search for property and keep your procrastination in check. It can cost you a fortune.
Residents of our area are very proud of our astronauts and engineers and all those who contribute to this incredibly complicated and dangerous endeavor. If things go as planned, we should see a second try at a launch the end of this week. So far we are enjoying the flood of journalists and film crews from all over the world. In the absence of launch news they have been scrambling for stories since the first launch delay. There was even a film crew in my favorite sushi bar, Yen Yen, last week.
Our market continues at a somewhat subdued pace as is normal for this time of year. Inventory is almost unchanged and the pace of sales is holding steady. I had to adjust my MLS stats this week as we had a group of 39 developer contracts go contingent or pending all at once. I subtracted these numbers from the totals because they are not accurately portraying actual sales during the period. Investor demand for pre-construction remains high with not enough first-round, pre-construction units available to fill that demand. There is continuing resistance from buyers in the high-end resale units. If you're playing with pre-sales in the high end, you better be prepared to close. At the other end of the range, sales are robust. Portside Villas is maintaining brisk resale activity, I believe, because the current prices still represent good value and they are in a very sweet spot of the market, under $300,000. We will probably never again see new construction beachside for under $300,000.
You may want to read an interesting article in today's Florida Today about condo conversion This is a trend we've been seeing in our area that we can probably expect to continue. With property values soaring and rents flat, it is inevitable that this happens. Take a recent conversion, Brisas del Mar in Cape Canaveral.
This 14 unit apartment building represented some of the developer units I factored out of my stats this week. This property as rentals was probably generating around $100,000 a year in gross rents. Converting to condos yielded around $2.6 million before costs. With numbers like these, we can expect this trend to continue. There are still quite a few rental properties in Cocoa Beach and Cape Canaveral that are suited to conversion.
Other developments locally are the ground-breaking of the 77 unit Magnolia Bay complex on the river in south Cocoa Beach and the tear-downs of 2 more houses on the west side of S. Atlantic Ave. This is a trend I see continuing. There are quite a few old houses across the street from the ocean that are candidates for tear down and replacement. We saw a tear-down condition home built in the 1920s sell recently for $649,000. It commanded that price because it sits on a lot large enough to build 3 units. Expect to see luxury townhomes or condos there soon.
Here are the numbers for July 17, 2005.
contracts last 14 days
condos over $500,000___ 6
condo under $500,000__ 31
homes over $500,000____ 3
homes under $500,000___ 3
active listings
condos all prices______417
condos over $500,000__ 126
homes all prices______ 55
homes over $500,000__ 32
Do your homework, get pre-approved before you start your search for property and keep your procrastination in check. It can cost you a fortune.
Monday, July 04, 2005
Happy Independence Day
Happy Independence Day - Yesterday, as I cruised down the Banana River from Cocoa Beach to Port Canaveral and the ocean, I considered the recent changes in our river shoreline. Beginning in south Cocoa Beach on the river we passed five condo developments under construction and 3 others yet to break ground. As we headed north we saw to the west on the eastern shore of Newfound Harbor in Merritt Island, dozens of large new homes and one new, 3-building condo project. Under the 520 bridge and north to the Port, we saw 4 new developments on the shoreline in Cape Canaveral. There are over 600 new units in just these existing riverfront projects in Cocoa Beach and Cape Canaveral. Add the planned projects, unfinished new oceanfront and non-waterfront developments and the supply of new units beachside is well over 1000. That's a lot of supply for a market that recorded 39 units sold in the last 2 weeks. Where is the disconnect? There are two distinct sides to the new supply market. One is the pre-construction market which is dominated by investors who rarely plan to live in the units. These sales most often don't show up in our MLS. The secondary market, on the other hand, are the buyers who are purchasing for residences or for second homes. These sales do show up in the MLS and are reflected in the numbers I report here. Draw your own conclusions. Noteworthy this week; sales in the over $500,000 range have ticked upward significantly. Also of note is the fact that mortgage rates continued their fall. Here are the numbers for July 4, 2005.
contracts last 14 days
condos over $500,000___ 8
condo under $500,000__ 31
homes over $500,000____ 5
homes under $500,000___ 3
active listings
condos all prices______417
condos over $500,000__ 124
homes all prices______ 53
homes over $500,000__ 31
Have a safe 4th, use sunscreen and drink plenty of fluids. It's hot out there. Remember, it's a $200 fine for possessing fireworks in Cocoa Beach.
contracts last 14 days
condos over $500,000___ 8
condo under $500,000__ 31
homes over $500,000____ 5
homes under $500,000___ 3
active listings
condos all prices______417
condos over $500,000__ 124
homes all prices______ 53
homes over $500,000__ 31
Have a safe 4th, use sunscreen and drink plenty of fluids. It's hot out there. Remember, it's a $200 fine for possessing fireworks in Cocoa Beach.
Sunday, June 26, 2005
The Swamp Ape & Negative Cash Flow
Negative Cash Flow. I get a lot of requests for "a good beachside investment property that will break even or generate a little cash". Folks, that has become the swamp ape of the Florida coast. In other words, they are rumored to exist, some sightings have been reported but no actual photos can be found (except for the one below and it is somewhat suspect).
With recent years seeing unprecedented buying of second homes and investment property on or near the beach, the supply of rental properties is huge. Rental rates have barely budged in years while selling prices have headed for the stars. What that means for investors is that income can no longer be a criteria for making your buying decisions. If you must have positive cash flow, you haven't been and won't be buying beachside unless you are paying all cash or making a substantial down payment. Don't let the dreaded phrase, "negative cash flow" scare you away. There are some extreme exceptions to this such as high-occupancy, short-term rentals that are owner-managed combined with interest-only loans. At any rate, let's explore a real world example.
Example; an oceanfront condo in Cocoa Beach that just sold for $380,000 this month is next door to an identical unit for rent at $1350 per month. That's $16,200 in income before any management fees. This particular unit can expect about $8800 in condo fees, property taxes and insurance. If the new owner has an 80% mortgage at 5.75% for 30 years his annual mortgage expense will be $21,288. That boils down to cash out of pocket at $13,888 per year. There are other variables such as tax savings, repairs, vacancies, damages but the fact is that this new owner had better have around $1157 per month of extra money to take care of his new investment. Does that make this a bad investment? Not when you consider that this same unit according to tax records has appreciated at 38% per year since it was last purchased in 2003 and stands a good chance of continuing to appreciate. These rates of appreciation can't possibly continue, you're probably thinking. I agree except that all the new supply of oceanfront condos approaching and exceeding a million dollars has pushed a large number of buyers down into this lower price range and continues to do so. There is a far greater supply of buyers willing to pay $500,000 for a unit than there are buyers for million dollar units. Building has not slowed and demand is still high so I expect a reduced but substantial rate of appreciation to continue for select price ranges.
Any investment in real estate at this stage of the game has risk. Interest rates could skyrocket, the so-called "bubble" could burst and everything will have been a bad investment. However, if you choose your targets carefully you can mitigate that risk and enjoy healthy returns on your investment barring a catastrophe. Make sure you know what areas of the market are moving, what areas are not and don't walk away from an otherwise good investment because of negative cash flow.
In our example above, this owner will make over $20,000 a year after debt service and expenses if appreciation cools to 10% and will still make money at only 5% appreciation per year. He also has the possibility of having another 38% year in which case he stands to make a healthy six figure return in one year. I measure all my investments by comparing risk and reward. The possibility of making six figures on the high side and breaking even on the low side meets my criteria.
Do your own due diligence and if you're buying in another market, find a guy like me who understands and studies his market and use him to help you select your properties. If you're buying in Cocoa Beach or Cape Canaveral, you've found your man. Email me at larry@southcocabeach.com or call me at 321.917.5786 and I'll help you locate the perfect property.
Tuesday, June 14, 2005
June 14 Update -
An early tropical storm was all over the news last week but turned out to be an anti-event. Hurricane season is high on everyone's radar and should be on buyers' minds as they select properties. Storm damage was inconsistent and there were quite a few properties that suffered NO damage during last year's active season. The market has not rewarded these storm-tested properties with a price premium but they should, in my opinion, command a higher price than properties that suffered storm damage. Be sure to ask your agent about a property's performance during last year's storms before making your offer.
There has not been a lot of change in our activity since my last update. Rate of sales is pretty constant and the activity is still concentrated in the under-$500,000 range. We have a 48 week supply of over-$500,000 condos at the current sales rate and a 17 week supply of under-$500,000 units. Mortgage rates dropped once again last week to their lowest level of 2005 at an average of 5.66% nationwide for a 30 year fixed rate. Our strong appreciation rate continues for the lower priced properties but we are seeing some resistance to ever-increasing prices in the high end.
MLS statistics for Cocoa Beach and Cape Canaveral
Active listings:
Condominiums______418
__over $500,000____120
Single family homes___55
__over $500,000______34
Contracts in the last 14 days
__condominiums_____40
__over $500,000______5
Single family homes___4
__over $500,000______4
If you have specific questions about our market or properties, you can email me at larry@southcocoabeach.com or call me at 321.917.5786. Be aware of the sun and the heat when you're out there in our beautiful Florida outdoors and take cover at the first sign of an approaching thunderstorm. A lightning strike will ruin a good day at the beach or the golf course.
Here's one of our new buildings in south Cocoa Beach. Oceanfront penthouse, 3 bedrooms, 4 baths, 3400 sq. ft. with rooftop deck; $1,700,000.
There has not been a lot of change in our activity since my last update. Rate of sales is pretty constant and the activity is still concentrated in the under-$500,000 range. We have a 48 week supply of over-$500,000 condos at the current sales rate and a 17 week supply of under-$500,000 units. Mortgage rates dropped once again last week to their lowest level of 2005 at an average of 5.66% nationwide for a 30 year fixed rate. Our strong appreciation rate continues for the lower priced properties but we are seeing some resistance to ever-increasing prices in the high end.
MLS statistics for Cocoa Beach and Cape Canaveral
Active listings:
Condominiums______418
__over $500,000____120
Single family homes___55
__over $500,000______34
Contracts in the last 14 days
__condominiums_____40
__over $500,000______5
Single family homes___4
__over $500,000______4
If you have specific questions about our market or properties, you can email me at larry@southcocoabeach.com or call me at 321.917.5786. Be aware of the sun and the heat when you're out there in our beautiful Florida outdoors and take cover at the first sign of an approaching thunderstorm. A lightning strike will ruin a good day at the beach or the golf course.
Here's one of our new buildings in south Cocoa Beach. Oceanfront penthouse, 3 bedrooms, 4 baths, 3400 sq. ft. with rooftop deck; $1,700,000.
Monday, May 30, 2005
Memorial Day Report - HOT!
What a beach day it was yesterday. Light offshore winds and family picnics up and down the beach. Did I say HOT? It was hot. Certain areas of our market continue to be red hot, as well.
I can't seem to turn on the news or pick up a magazine without being confronted with the phrase "real estate bubble". For an investor in a hot market such as Florida, that phrase is sure to increase the heart rate. I just purchased another waterfront property myself this month. Am I crazy? Perhaps. I'm a little different from most of the profiled flippers in the money magazines in that I live and work in my market as an active real estate agent and know from first hand experience the trends of supply and demand in my market. I have access to statistics and I deal with buyers and sellers every single day. I think I have mitigated my risks by identifying the areas of my market that are most likely to give me a good return with the least risk. All property types in my market are not equal in their risk and likely return. Having said that, I could be wrong.
Mortgage rates took another drop this week and the national average is now at 5.65% for a 30 year fixed rate as reported by Freddie Mac. That's lower than the point at which we began the year. The predicted rise in mortgage rates is taking it's sweet time to happen.
MLS statistics this Memorial Day in Cocoa Beach and Cape Canaveral.
Active listings:
Condominiums______422
__over $500,000____112
Single family homes___54
__over $500,000______35
Contracts in the last 14 days
__condominiums_____43
__over $500,000______3
Single family homes___9
__over $500,000______3
I don't want to keep repeating the same message in every update but the statistics keep pointing to the same thing; the under $500,000 range is where the action is right now in our market. We have a supply of 147 properties over $500,000 and had 6 sales in that range in the last 2 weeks. At that rate it will take almost a year to sell our current supply. Contrast that to our supply of 329 properties under $500,000 selling at a current rate of 23 per week and you see that we have less than a 15 week supply. If you're on top of numbers like this, it's easy to make decisions about where to invest your money here. You can still purchase very nice direct river condos with beautiful views of the islands like this for just over $300,000.
I could be wrong, but, I believe that condos in this price range in good locations are your best bet for continuing returns on your investment. If you'd like to know what's available out there, shoot me an email at larry@southcocoabeach.com I promise to freely share my knowledge and perceptions of our market with you as my buyer in a completely unbiased manner. Cocoa Beach is small enough that, if you buy here, I'll probably be bumping into you in the grocery store, so, I want you to be happy to see me. Enjoy the holiday and don't forget the sunscreen.
Incidentally, updating an ongoing story, there are 35 MLS-listed, assignment-of-contract units active in Portside Villas today. Prices continue to rise at the same time that supply is increasing. This anomaly can be explained by the unprecedented under-pricing of these units at last years pre-construction prices and the ongoing optimism of the investors. Those who have already flipped have made incredible returns on their investments but the remaining sellers continue to increase asking prices. Is $262,500 too much for a brand new 1168 sq. ft. 2 bedroom condo walking distance to the beach and the Port? I'll keep you posted as this story unwinds through the end of the year.
I can't seem to turn on the news or pick up a magazine without being confronted with the phrase "real estate bubble". For an investor in a hot market such as Florida, that phrase is sure to increase the heart rate. I just purchased another waterfront property myself this month. Am I crazy? Perhaps. I'm a little different from most of the profiled flippers in the money magazines in that I live and work in my market as an active real estate agent and know from first hand experience the trends of supply and demand in my market. I have access to statistics and I deal with buyers and sellers every single day. I think I have mitigated my risks by identifying the areas of my market that are most likely to give me a good return with the least risk. All property types in my market are not equal in their risk and likely return. Having said that, I could be wrong.
Mortgage rates took another drop this week and the national average is now at 5.65% for a 30 year fixed rate as reported by Freddie Mac. That's lower than the point at which we began the year. The predicted rise in mortgage rates is taking it's sweet time to happen.
MLS statistics this Memorial Day in Cocoa Beach and Cape Canaveral.
Active listings:
Condominiums______422
__over $500,000____112
Single family homes___54
__over $500,000______35
Contracts in the last 14 days
__condominiums_____43
__over $500,000______3
Single family homes___9
__over $500,000______3
I don't want to keep repeating the same message in every update but the statistics keep pointing to the same thing; the under $500,000 range is where the action is right now in our market. We have a supply of 147 properties over $500,000 and had 6 sales in that range in the last 2 weeks. At that rate it will take almost a year to sell our current supply. Contrast that to our supply of 329 properties under $500,000 selling at a current rate of 23 per week and you see that we have less than a 15 week supply. If you're on top of numbers like this, it's easy to make decisions about where to invest your money here. You can still purchase very nice direct river condos with beautiful views of the islands like this for just over $300,000.
I could be wrong, but, I believe that condos in this price range in good locations are your best bet for continuing returns on your investment. If you'd like to know what's available out there, shoot me an email at larry@southcocoabeach.com I promise to freely share my knowledge and perceptions of our market with you as my buyer in a completely unbiased manner. Cocoa Beach is small enough that, if you buy here, I'll probably be bumping into you in the grocery store, so, I want you to be happy to see me. Enjoy the holiday and don't forget the sunscreen.
Incidentally, updating an ongoing story, there are 35 MLS-listed, assignment-of-contract units active in Portside Villas today. Prices continue to rise at the same time that supply is increasing. This anomaly can be explained by the unprecedented under-pricing of these units at last years pre-construction prices and the ongoing optimism of the investors. Those who have already flipped have made incredible returns on their investments but the remaining sellers continue to increase asking prices. Is $262,500 too much for a brand new 1168 sq. ft. 2 bedroom condo walking distance to the beach and the Port? I'll keep you posted as this story unwinds through the end of the year.
Tuesday, May 10, 2005
May 10 update - Cocoa Beach
May 10, 2005
Even though mortgage rates continue to drop, the supply of homes and condos in Cocoa Beach and Cape Canaveral, according to MLS records, has changed little in the last 14 days. New projects are adding supply at an even pace to units sold. We have had 42 condos go under contract in the last 14 days; 3 over $500,000. Stats as of this morning, May 10 are as follows:
Active condominiums_______ 433
over $500,000____________ 134
built 2004 or later__________163
Active single-family homes____ 60
over $500,000______________ 38
Contingent last 14
single family homes________3
condos_________________42
over $500K______________3
Construction of new condos is continuing at a strong pace, especially in the extreme southern end of Cocoa Beach where the island is at it’s most narrow part. This is where I live and is my favorite part of Cocoa Beach. We have the Banana River on the west side of A1A and the Atlantic Ocean on the east. The low population density here keeps the beach uncrowded. There are currently over 200 condos under construction or planned in this 3/4 mile stretch. Considering how many high-end condos sit empty for out-of-town owners, I suspect I'll still be able to stroll an uncrowded beach even after the build-out is complete. I foresee a short-term crunch in the sales of new condos here with all the new supply, but, long term, this area will always be special. This is the time to be aggressive with offers as sellers severely outnumber buyers in this predominantly over-$500K market.
If you’d like a list of current projects, email me or give me a call at 321.917.5786.
As always, these opinions are mine alone.
Even though mortgage rates continue to drop, the supply of homes and condos in Cocoa Beach and Cape Canaveral, according to MLS records, has changed little in the last 14 days. New projects are adding supply at an even pace to units sold. We have had 42 condos go under contract in the last 14 days; 3 over $500,000. Stats as of this morning, May 10 are as follows:
Active condominiums_______ 433
over $500,000____________ 134
built 2004 or later__________163
Active single-family homes____ 60
over $500,000______________ 38
Contingent last 14
single family homes________3
condos_________________42
over $500K______________3
Construction of new condos is continuing at a strong pace, especially in the extreme southern end of Cocoa Beach where the island is at it’s most narrow part. This is where I live and is my favorite part of Cocoa Beach. We have the Banana River on the west side of A1A and the Atlantic Ocean on the east. The low population density here keeps the beach uncrowded. There are currently over 200 condos under construction or planned in this 3/4 mile stretch. Considering how many high-end condos sit empty for out-of-town owners, I suspect I'll still be able to stroll an uncrowded beach even after the build-out is complete. I foresee a short-term crunch in the sales of new condos here with all the new supply, but, long term, this area will always be special. This is the time to be aggressive with offers as sellers severely outnumber buyers in this predominantly over-$500K market.
If you’d like a list of current projects, email me or give me a call at 321.917.5786.
As always, these opinions are mine alone.
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