Pharaoh Has Arrived

Ancient Egyptian temple in Florida? No. Just a corner of the new Dinosaur Store and Museum on 520 in Cocoa Beach just west of A1A.

This morning I was reading a draft of a post from one year ago in which I was parsing the reduction in the Cocoa Beach and Cape Canaveral condo inventory and whether or not it signaled some recovery in the market. My conclusion then (Feb 2008) was that there was no indication of recovery. Even with January sales holding steady at the previous 2 years' levels and inventory 17% lower than the high point set in May 2006, the Feb. 2008 absorption rate was at an all time high. Fast forward to February 2009 and the trend is intact. Condo inventory has dropped to two thirds of the May 2006 peak but sales have resumed their slowdown with January 2009 condo sales almost 40% behind January 2008. It seems likely that this trend will continue.



Take-away action points:

Sellers, continue to reduce your expectations and treat all offers as an invitation to negotiate no matter how crazy low they may be. Emotional responses can be costly.

Buyers, be bold but try not to let your schadenfreude show during negotiations. No matter how obvious a seller's desperation, it is possible to destroy your chances of getting a deal with ungracious negotiation tactics.

The most difficult thing in any negotiation, almost, is making sure that you strip it of the emotion and deal with the facts.
_______________________Howard Baker

Direct Ocean under $250,000

Check out the view from this small, 2nd floor direct ocean unit. If you're uncertain about committing big dollars for an ocean condo but would still like something nice with a view, this unit might fit the bill. This beautifully tricked-out unit will likely sell in the low $200s. The next lowest MLS price of a direct ocean unit above the first floor is $260,000. You can see the details of the complete $70,000+ remodel in the slideshow here.

This is not my listing. It's here because it's the lowest priced, 2nd floor or higher, direct ocean unit with a view that I'm aware of in Cocoa Beach or Cape Canaveral. I know that many of you are looking for something in this price range but have been disappointed with the stickiness of ocean condo prices.

Observe the opportunity.
_______Ecclesiasticus (ch. IV, v. 20)

What Goes Up ...

Notable price drops and new listings since February 1st from the Cape Canaveral and Cocoa Beach MLS.

Brand new, foreclosed, never lived in 2300+ sq.ft. canal home off Minutmen Cswy.
_______________________$459,900

Two year old, 7 bedroom, 4.5 bath, 6300+ sq.ft. canal home with all the bells and whistles, Originally asking $1.3 million, dropped to
_______________________$799,900

A 2 year old, 2300+ sq.ft., 4 bedroom, 2.5 bath townhome in Cape Canaveral that sold new for $450,000, offered this week as a short sale, suggested price; _______$199,500

Two year old, 3 bedroom, 3 bath, 2100+ sq.ft. river condo in south Cocoa Beach, sold new in 2007 for $549,900, now offered (not a short sale) for
_______________________$398,500

A 3 bedroom, 2 bath Cape Canaveral townhome that sold new in 2006 for $255,000, now offered as a short sale, suggested price,
_______________________ $149,900

And crazy price drop of the month, the previously profiled 4300+ sq.ft. canal home that started at $1,199,000 last June posted it's 29th teensy price drop this month to bring it to a still-too-high $979,000.

There are plenty of others out there but I thought these would be interesting. As I've mentioned in recent posts, if you're not paying cash, be prepared to pony up more than you thought for a down payment. Talk to a lender now to find out what may be required of you for a mortgage, especially if it's a condo, AND, pray for warmer weather.

Well he who waits for the day's riches will be lost
In the whispering tide
Where the river flows
Tomorrow never knows

__________Bruce Springsteen

Unintended Consequences

A quiet Cocoa Beach canal junction on a sunny February morning.

Price erosion has not moved pari passu for all property types in our market. While all have suffered, some segments, have been more resilient than others, like weekly rental oceanfront condos. The upper end of the condo market has not shared that resiliency. There have been only two closed sales of condos since January 1 in Cocoa Beach and Cape Canaveral for more than $350,000, both short sales. One was a 4 bedroom, 3.5 bath, 3024 sq. ft. Crescent Palms penthouse that sold new in December 2005 for $775,000 and changed hands last week for $380,000. The other was a Meridian unit that sold just 18 months ago for $699,900 and closed last week for $550,000.

The weak sales trend of December (15 closed sales) continued in January with a total of 16 closed MLS condo sales in the two cities compared to 26 units last January. Two single family homes have closed since January 1. Inventory of condos and townhouses is hovering just over 700 in all price ranges with 92 of those asking over $500,000.

The intention of the new Fannie Mae condo loan requirements in January was to lessen risk, but, the consequences are fewer qualifying complexes and fewer able-to-perform purchasers. If the new, higher down payment requirements weren't enough, the root-canal-like condo certification questionnaire will make some condo complexes off limits for Fannie loans. If you are buying or selling a condo anywhere in Florida and a Fannie Mae loan is involved, be prepared to be frustrated. If you are buying with cash, feel free to wear your crown while shopping. You rule.

"Bureaucracy is a giant mechanism operated by pygmies."
___________________________Honore de Balzac

Bust a Move

Looking north along the river shoreline in south Cocoa Beach on a calm January afternoon (yesterday) just after sundown.

Activity remains strong with 21 accepted contracts happening in just the last 7 days in Cocoa Beach and Cape Canaveral. Among the contracts were two more of the listings that I mentioned in an earlier post as attractively-priced. Even with more stringent mortgage requirements, deals are coming together when the price gets in the zone. If you're looking, do your homework in advance so that you'll know when the price is right and be prepared to move when the opportunity presents itself.

The fantastic weather continues with a high of 82 predicted today.

"The lip does not linger." Unknown surfer

Times Like These

Activity has been brisk so far in 2009 with 39 residential properties going under contract since January 1 in Cocoa Beach and Cape Canaveral. Not surprisingly, over 40% (16) of the 39 were either short sales or foreclosures. Of the 16 contracts, two were on properties I mentioned in my post last week. Of the remaining listings that I profiled, the 2/2 ground floor unit at River Lakes has been reduced yet again to a remarkable $160,000, a price not seen there since 2003. Prices peaked at $330,000 in 2005 in this complex. A new short sale listing this week at Hidden Harbor in Cape Canaveral, a 3/2 offered for $119,000 will take prices at that complex back to 2003 as well.

We continue to see new short sale and foreclosure listings being offered and I expect that to continue. I just received notice yesterday that a unit in a small ocean building in south Cocoa Beach will finally hit the courthouse steps next week, 20 months after the last mortgage payment and condo fee was paid. I have mentioned this before but it bears repeating. Do your due diligence of the condo association in any complex that you are considering. In this particular case, the association has lost around $10,000 in missed assessment payments and stands little chance of collecting it. Guess who makes up the deficit... Correctamundo; the other owners. The specter of having to shoulder more than one's fair share of common expenses is especially scary for buyers in new buildings with unsold units. Condo associations are like people. Some manage their money well and others are a mess. Well run associations with excess cash can usually deal with delinquent owners without a heavy impact on the responsible owners but those associations who run on a shoestring, month-to-month budget (there are plenty of these) have to turn to the other owners to pony up the missing income. Consider yourself warned.

MLS inventory Jan 25, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____720
over $500,000_________94 - 0 sold since New Year's Day
Single family homes___108
over $500,000_________33


"Somehow I know it will never be the same."
_________Jack Johnson

Cocoa Beach Potpourri

This is a secret little kayak launching ramp on the Banana River behind the Cocoa Beach Country Club. I shot the photo early today on our first truly chilly morning of the winter. I was tempted to discard the flip flops in favor of closed shoes but habit overruled reason.

I thought for today's report I'd sift through the available offerings and post my favorites. None of these are listed by my office. I'm more than a little surprised that some of these haven't sold yet considering the price.

First up is a big price reduction this morning of a direct river 2/2 at River Lakes in Cocoa Beach just two blocks from the ocean. Comes with a private garage and is now offered for $165,000.

This next one is a mystery. Direct ocean 2/2 at Waters Edge in south Cocoa Beach offered for $164,000. Does the somewhat obstructed view and lack of a garage really mean this unit should be selling for less than $122 per square foot?

How about a direct river 2/2 at Harbor Isles for $169,000? It's a short sale, so, that price is subject to bank approval. That's half what these units were selling for a couple of years ago. There is also a lakefront 3/2 at Harbor Isles offered for $190,000. Both of these have private garages and use of three pools.

Lowest price unit with a deeded boat slip is a 2nd floor, 2/2 unit at Beachwalk behind the Publix Plaza offered for $199,000 with garage.

There is a 2nd floor, direct river 2/2 at the small River Place building in south Cocoa Beach offered for $197,900. It has an unobstructed view across the wide part of the river to south Merritt Island and the beach is right across the road. Comes with a garage.

Among the short-term rental condos there are several that stand out. Lowest priced short term rental unit in Cocoa Beach is a no-view studio at the Marlin Apartments behind the Holiday Inn, asking $130,000. Lowest priced 2/2 unit in Cocoa Beach is a side view Chateau next to the Pier offered for $239,000. It has a little peek of the ocean. Lowest price 2/2 with an unobstructed ocean view is a top floor Spanish Main for $299,000. Photo of view below.



My favorite of the available short-term units is a 4th floor south view Cape Winds one bedroom unit. The one bedroom units at Cape Winds are unusual in that they have two full baths making them comfortable for four people. They rent in the $900 per week range making the asking price of $179,000 quite attractive. View from this unit below.



In non-waterfront properties, there is a foreclosed, 2/2.5 townhouse, 2 blocks from the ocean and downtown Cocoa Beach with 1827 sq.ft. asking $124,900.

Lowest priced waterfront single family home is a partially gutted 3/2 on Cocoa Isles Blvd. Asking price; $209,000. Needs lots of work. Builders were paying $400,000 for these houses a few years ago and tearing them down to build new ones. If you don't want to have do any work, you can get into a big, 3/2 home in excellent condition on the water with dock and boat house close to the Cocoa Beach schools for $370,000. View below.



Note to prospective condo purchasers: Freddie Mac and Fannie Mae have just announced revisions to their down payment requirements for Florida condos. If you haven't talked to your lender in the last week about your condo purchase, you need to check back in to see if your loan is effected. Even though rates continue to fall, standards are becoming increasingly strict, even for owner occupied units.

"Your time is limited, so don't waste it living someone else's life."
____________Steve Jobs

Short Sale Shenanigans

They're at it again. As short sales have increased in number in our market, so have the shenanigans. A short sale is a sale in which the lender agrees to take the loss in a sale at a price below the outstanding mortgage balance. The lender approves the final price and the homeowner walks away without having to cough up the deficit, although in some cases he may have signed some nebulous IOUish thingy (promissory note). There has been a spirited, although unresolved, discussion among the members of our local board of Realtors about the procedure for handling short sales. In the absence of strict guidelines, many listing agents are having to make up the rules as they go. The seller in a short sale is walking away with zero cash and often blames the lender for the mess he's in. The details of the sale mean less to him than getting out from under the debt. Even though the lender makes the final approval, the listing agent has no obligation to that lender. The seller is the actual client and can call all shots except final approval. As you might have guessed, in lieu of specific instructions from the seller, the way the listing agents choose to handle the sale is often determined by what benefits that agent.

A listing agent told me yesterday not to bother showing her client's short sale listing as she had just submitted an offer to the lender. Never mind that our offer may have been better. Of course, she may have had both sides of the transaction and is hoping for double commission or she may have just been lazy and not wanted to have to prepare and submit all the required paperwork with my offer.

How about the listing agent who lied about submitting another agent's offer to the lender because he was waiting for a buyer of his own so he could make more money on the deal. He admitted this to a buyer of one of his listings who relayed it to me.

Or, there's the short sale listing agent who marked "backup" on a second offer before submitting it to the lender. I don't know if she's hoping to influence the final decision on the lender's desk or, lacking specific guidelines, she's just treating a short sale as a regular sale.

What about the listing agent who, last month, only submitted one of three offers on his short sale listing to the lender, the lowest of the three. If his seller instructed him to submit only that one offer, did he do anything wrong? He is obligated to obey his client, the seller, not the lender.

And, how about the listing agents who are advertising properties as short sales but have not even talked to the lenders about the possibility of a short sale. They're wasting everyone's time and setting up both the sellers and the buyers for disappointment. Listing agents, I know you're reading this. Do your homework before initiating the wild goose chase. Your chances of getting paid are only increased when you do your job.

If you're a buyer who's out there looking for a deal among all the short sales, be aware that the process can be long and that you may never know exactly what is going on after you submit an offer. Be patient and keep looking after you make an offer. You may find something you like better before you get a response from the bank. Only a fraction of short sale offers result in a closed sale and a buyer can be left hanging for months waiting for an answer. Expect to be frustrated and take everything told to you with a grain of salt. The dishonesty index is creeping back up and, as always, it is prudent to be skeptical. If you'd like a tough, cynical buyer's agent to guide you through the process, I'd be happy to be your designated hitter.

Our unbelievable weather that dominated in December continues. Cocoa Beach forecast for Jan. 5, 2009 --- Sunny, light east winds with a high of 80 degrees, low of 60. See you on the beach.

"Relativity applies to physics, not ethics."
__________________Albert Einstein