Another one bites the dust

This unwinding of the housing bubble has touched many lives. Besides the flippers who were too late to the party and people who bought more home than they could afford with exotic mortgages, some innocent victims have been dragged down, too. A deadbeat homeowner in my building has decided to walk away from her mortgage and will be leaving the remaining owners with thousands in unpaid assessments. My life will go on even though it riles me to have to pay for someone else's bad choices. It may hurt more for my retired neighbors. More heartbreaking is the impact on the decent people who run the small grocery store close to my home. They didn't speculate on pre-construction condos or try to flip houses and yet their lives have been changed forever.

It all began when construction began on the big empty parcel of land that was to become Magnolia Bay. Business picked up as workers walked over for lunch, snacks, cigarettes and so forth and the promise of all the new families that would be moving in made the future look bright. Shortly thereafter, the trailer park next door that housed the biggest part of our grocer's customers was purchased. With plans to build townhomes on the site, the trailers were progressively moved out or torn down until the property was empty. Things were still looking good even with the loss of the regulars. With 77 new half million dollar plus Magnolia Bay units and 18 new townhomes right next door, the customer base was growing and being upgraded and the construction workers were providing business in the interim. Life was good.

Then, Magnolia Bay sales slowed and the planned 4 buildings got scaled back to 3. Scheduled closings failed to happen and the construction workers finished their work and moved on. Today, the grand buildings at Magnolia Bay are mostly empty and dust blows in the sea breeze on the site of the old trailer park. The only townhomes there today are in the picture on the "coming soon" sign. Business at the grocer who stocked my favorite beer in a corner of the walk-in cooler at my request dried up to a trickle and, this week, he told me that this is his last month there. He can't make it any longer.

There are multiple losers in this story; the developers of Magnolia Bay, the trailer park residents, some of whom had lived there for decades, the owners of the trailer park property, the customers of Express Grocer including me and, most of all, Sam, the grocer and his family, and Gary, his long-time employee, who has been known to extend credit to a down-on-his-luck customer or two. Sam, your family, and Gary, you will be missed by many. You are good people.

My favorite Express Grocer memory will always be the sign that appeared on the door one day. It read:

Do not ask Gary for credit. He is not allowed to give it anymore. Sam

September Stats for Cocoa Beach

Delta rocket launch on Sept. 27 as seen from the boardwalk.

Property sales slowed considerably as we moved past Labor Day here in Cocoa Beach and Cape Canaveral. Condo sales slowed to less than half the pace of recent months and the over-$500,000 condo market ground to a halt with not a single unit closing in the month. The most notable sale of the month was this beautiful riverfront home in Cocoa Beach that sold for $1.92 million.

A new price reduction worth noting is this 7th floor 3/2 direct ocean Crescent Beach Club unit that was just dropped to $409,000.

Closed 2007 MLS sales in Cocoa Beach and Cape Canaveral

Condos

• Sept.______16___0 over $500,000
• August____34___3 over $500,000
• July______39___3 over $500,000
• June______40___6 over $500,000
• May______35___2 over $500,000
• April______43 __3 over $500,000
• March_____36__2 over $500,000
• February___42__5 over $500,000
• January____28__3 over $500,000

Single Family Homes

• Sept._____4
• August___9
• July_____8
• June_____5
• May_____5
• April_____4
• March____8
• February__6
• January___3

MLS For Sale Inventory - September 30, 2007

• Condominiums_______894 all prices
• ___________________132 over $500,000
• Single family homes___167 all prices
• ____________________72 over $500,000

If condos were watermelons

How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg. Abraham Lincoln

I am perplexed at the level of denial that remains in our condo market. You would think that after watching prices decline for almost 2 years that sellers would have gotten the message. I am negotiating on behalf of buyers on two different condos this week. In both cases, the sellers are clinging to the belief that their condo is somehow worth more than other recent sales in their building even when the other units were more desirable. Folks, it doesn’t matter that your neighbor sold low because he was behind on his mortgage. Nor does it matter that you need to clear X dollars or that Mr. Smith got $XXX for his unit last year or that you spent a small fortune on new granite and stainless. Mortgages are more difficult to get than just a month ago and every time a lower sale closes, your unit is worth less. It’s unfortunate, but it is what it is. If you want to sell, don’t let a qualified buyer walk away because you have an irrational need to get more than the last comparable sale.

I grew up in watermelon country and every summer, the watermelon growers would set up roadside stands selling their melons. If farmer Ed priced his at $5 each and Farmer Cletus next door priced his at $4 , Ed had to match his price or watch his melons sit unsold while losing value until they were spoiled. As long as both farmers’ melons tasted equally fine, the lower price dictated the market. In particularly productive years, prices got really low when everyone had a roadside stand with lots of inventory. I can remember 10 for $1.

The current condo market is like one of those productive years. The market is saturated with inventory and prices have retreated. Cling to the belief that you’ve got a $5 watermelon in a $3 year and you’ll continue to hold it while your neighbors who’ve responded to market conditions sell their’s. There is also the risk that, as more melons ripen, the price will drop to $2. At that point, the $3 you turned down looks good. As silly as it sounds, condos are like watermelons. Deny it if you dare.

September Deals of Note

The deals continue to happen. Closed so far in the month of September;

a 1525 sq.ft. condo in an oceanfront building with this side ocean view for $212,000 or $139/sq.ft., exactly half the original asking price in February 2006 of $425,000.


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Also closed was a brand new 2032 sq.ft. condo in the building below with a view of the river across the street in Cape Canaveral for $238,000 or $117/sq.ft.


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Another 2/2 oceanfront condo with 1316 sq.ft. and the view below sold for $262,000. Originally listed for $329,000 in April this year.


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And my nomination for smoking deal of the month; a 2100+ sq.ft., 7th floor Constellation 3/2 unit that has been beautifully remodeled to like-new luxury status. Sold for $495,000. It was originally listed for $759,900 in February 2006. This unit has expansive ocean views and all 3 bedrooms have sliders that open onto balconies with killer views. The master opens onto the ocean balcony and the other bedrooms open onto a balcony with views across the Banana River to Merritt Island. Below is a shot of the kitchen which has the most beautiful granite I've ever seen.


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There are other listings that are pending that I suspect will break new ground to the downside. I will report on any of note as they close. If you're looking to buy, do your research, be careful and don't be afraid to offer low. If you're selling, don't deny the trend and don't make a mental line in the sand. It has proven to be costly. Next post will be on short sales, the new twist on foreclosures.

Bite in the Bight - 5 years later

The Canaveral Bight, the crescent of beach between the north jetty at Port Canaveral and the tip of the Cape, lined with rocket launch towers, has been off limits to fishermen since the events of September 11, 2001. The powers that be recently re-opened this area to recreational fishermen. I took the opportunity to fish with my friends Chip and Carol from Orlando on September 11, 2007. Along with hundreds of lesser fish and a few drag-screaming blacktip sharks, I managed this small tarpon on 15 lb. spinning gear. Back to the market next post.



This fish was released healthy to fight another day.

Year to Date Numbers

Here are the sales through the end of August and the current MLS inventory of properties offered for sale. Our condo inventory continues to shrink while single family home supply is almost unchanged. Single-family home sales have been robust with July and August being the strongest 2 month period so far in 2007. In the over-$500,000 condo market, 27 units have closed so far this year while there are 139 listed for sale, a 39 month supply at this pace. In the under-$500,000 condo market a total of 265 units have closed through August 31 with a current supply of 743, or a 23 month supply.

Closed 2007 MLS sales in Cocoa Beach and Cape Canaveral

Condos

• August____34___3 over $500,000
  
• July______39___3 over $500,000
  
• June______40___6 over $500,000
• May______35___2 over $500,000
• April______43 __3 over $500,000
• March_____36__2 over $500,000
• February___42__5 over $500,000
• January____28__3 over $500,000

Single Family Homes

• August___9
  
• July_____8
  
• June_____5
• May_____5
• April_____4
• March____8
• February__6
• January___3

MLS For Sale Inventory - September 6, 2007

• Condominiums______882 all prices
• __________________139 over $500,000
• Single family homes__172 all prices
• __________________72 over $500,000

Last week while mortgage lenders were dropping like flies and the main stream media was reporting that jumbo loans would now require a minimum 20% down payment, my wife closed an over-$500,000 home sale with a 100% mortgage. As always, take everything you hear with a grain of salt and get a second opinion even if you're certain of the first. George Bernard Shaw put it more eloquently than I, "Beware of false knowledge; it is more dangerous than ignorance."

A Photo Cruise along South Cocoa Beach

I took a cruise down the Banana River shoreline of south Cocoa Beach yesterday and took photos of all the riverfront condos so that you readers can better visualize the buildings that I mention so often in this blog. Starting at the extreme southern end next to Patrick Air Force Base we have the brand new, super-luxury Villa Verde. Several units available from about $1,000,000.


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Heading north the next building is the new Orlando Beach building, 4 units available from $499,000.


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Past a few classic old Florida homes on the river like these two with great back yards.


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Then we get to River Bend.


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For perspective, just past River Bend, you can see Crescent Beach Club (on left) and the Constellation which are both directly on the ocean. The upper floors here have not only an ocean view but a western view across the wide part of the Banana River all the way to south Merritt Island. This is the most narrow point of the barrier island with just a sliver of land separating the ocean and the river. Two very nice units in Constellation went under contract last week at bargain prices.


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Next we get to River Villa (on right) and Dockside, both with boat slips for all units. You can see Casa Playa on the ocean between these two buildings. There is a penthouse for sale at Casa Playa which could have the best views and layout of any unit in Cocoa Beach.


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Continuing north past the old Dolphin Inn we get to River Place. That is Waters Edge on the ocean looming in the background. No boat slips here.


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Immediately next door is Water's Edge West which shares a river dock with Water's Edge on the ocean. You can catch a glimpse of the massive new, three-story duplex behind the building.


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Heading north we see The Carlyle (on left) and Riomar on the ocean. There have been two sales this year in the Carlyle for at least $1 million each. In the Riomar, each unit is an entire floor so you have windows on all four sides. There is a 3rd floor unit available for $899,000.


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Next on the river we come to Crescent Palms (on the right) and Garden by the Sea, soon to be completed. 2650 sq.ft., 3/3 units available in Garden from $655,000. Pretty much the entire Crescent Palms building is available, one 2293 sq.ft., 3/3 unit for $455,000, $244,000 less than the owner paid 2 years ago.


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Last condo on the river in south Cocoa Beach before the split in A1A is Magnolia Bay. No fire sales available yet.


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From this point north there are only single family homes on the river until River Lakes and Harbor Isles which are about 1/2 mile away. Hope you enjoyed the tour. It was pleasant from the boat.

Florida Insurance Reductions

Cocoa Beach Sunrise, August 25, 2007

Even with the mortgage market in turmoil, sales are closing. So far this August, we've had seven closed sales of MLS-listed, single-family homes in Cocoa Beach and Cape Canaveral. Three of those were in the tiny Harbor Heights neighborhood in Cape Canaveral. The other four were in Cocoa Beach, two on canals and only one over $500,000.

We have had 22 MLS-listed condos close in the same area since August 1, on pace with the first half of the year, roughly one a day. (Actually, since today's Julian date is 240 and total condo sales so far for the year are 288, the exact number is 1.2 per day.) The only 2 sales over $500,000 were new units at Meridian on the ocean, one for a whopping $1,049,900. I understand that closings of pre-construction contracts there are in full swing although only a fraction were listed in the MLS and will not show up in the MLS data. So far, none have shown up on the Brevard Property Appraiser's site. Overall condo inventory continues to slowly shrink, down over 10% from the high point reached in May 2006.

MLS Inventory - August 28, 2007

• Condominiums______900 all prices
• __________________147 over $500,000
• Single family homes__176 all prices
• ____________________73 over $500,000

Owners of detached single-family homes in Florida are finally getting a break on their insurance rates. The Legislature has designated $250 million for free wind inspections that will qualify homeowners for insurance breaks with certain hardening features including hurricane doors, windows, roofs, shutters, etc. Some homeowners will qualify for assistance in getting strengthening done to their homes. I have personally heard of one homeowner getting a $4600 rebate. The program is called My Safe Florida Home. Check it out if you own a detached single-family home anywhere in Florida. Unfortunately, the program is not available for condos or businesses.

The Labor Day holiday weekend is coming up and my favorite season in Cocoa Beach begins again. Snook season opens September 1 and the mullet run starts soon with all kinds of action in the surf for anglers fishing with live mullet. This is a great time to visit as the summer crowds are gone, water is warm and the ocean is alive with fish and waves. Here's a sweet little rental condo in south Cocoa Beach if you'd like to visit.