Great Expectations

I had an interesting conversation with a prospective buyer last week. Among his criteria was "being able to take advantage of the poor market conditions in the area in terms of significant below market pricing and leveraging the fact that he'd be paying cash". "Poor market conditions"? The current market would be better described as en fuego (see the previous post). "Significant below market pricing"? I'm not aware of any sales happening at significantly-below market prices. Buyers are standing by ready to purchase good properties when they're priced at current levels with over half of them paying cash. I suspect this particular buyer is going to be looking for a very long time unless he modifies his expectations.

Are the deals all gone? No, but expecting to purchase property significantly below market pricing will eliminate most if not all possibilities. There are plenty of properties that are deals at current market levels. Just matching the last sale in many neighborhoods and complexes would qualify as a deal in my book. Some prices at current levels are down 75% from the peak. Expecting to buy significantly below that level is unrealistic. As always, buyers need to do their homework and know the dynamics at play in the current market so they can have a better chance of success. I'm glad to help if you have questions about the Cocoa Beach and Cape Canaveral market.

Some of you will have read this similar post from 2009 but it's worth revisiting. Self Defeating Games

"Amateurs talk strategy, professionals talk logistics." ___Gen. Omar Bradley

Burn rate and parades

We crossed a threshold this week with 574 closed condos and townhomes in Cocoa Beach and Cape Canaveral so far in 2012. That is the highest number of closed sales for any year since 2005, which was the biggest year in history with 805 closed condos. With just 17 shopping days until Christmas I thought it would be a good time to calculate the burn rate again. Speaking of shopping days, does that term even apply in 2012 with most stores open seven days a week and online shopping always available? On the subject at hand, I have figured these burn rates in Cocoa Beach and Cape Canaveral using the MLS for sale inventory this morning December 8, 2012 and the monthly average sales using sold numbers for the most recent completed three month period, September, October and November 2012.

Condos and townhouses
All prices - 290 units for sale - selling 17% of supply per month.
Under $200,000 - 123 units for sale - selling 27% of inventory every month.
$200,000 to $400,000 - 118 units for sale - selling 9% a month.
Over $500,000 - 33 for sale - selling 5% per month.

While inventory in the lower price ranges is drying up, the high end still has a healthy supply although down drastically in the last year and a half. There are 117 pending condo sales, none over $425,000. Hopefully, new listing activity will increase soon to take up the slack. Distressed sales are still at 11% of the total supply.

Total single family home inventory stands at 50 today. That's a 6 month supply at the current sales rate. As in 2011, the lower price ranges are the most active with but a 3 month supply of sub-$200,000 houses for sale about the same as in 2011. There are 16 pending home sales on the books right now.

The Cocoa Beach Christmas Parade is today in downtown CB beginning at 2 PM. Bring the kids, the dog and lawn chairs and enjoy this small town tradition and visit with friends. The route will be south on A1A from the Kelly Slater statue down around City Hall and back up Brevard Ave.

"We don't expect kittens to fight wildcats and win

- we merely expect them to try." __Robert Heinlein

Short sales and income tax

A reminder to sellers who closed a short sale in 2012. If you had forgiven debt, you have reportable income. The absence of a 1099 from the lender does not release you from the obligation to report the forgiven debt as income. On the other hand, if the lender did not provide a release of the balance due, there is no income to report. But, you're still on the hook for the unpaid balance.

2012 short sellers, if you haven't done so already, contact your accountant or tax adviser now for how best to handle your possible tax liabilities. There may be beneficial strategic moves you can make before the end of the year.

"I have turned down a lot of money for things that would have made me feel cheesy."  _____Tom Petty

More trend examination

Rise of the full moon Nov. 27, 2012

Being a numbers guy I'm constantly doing mental math and looking for patterns in everything. At restaurants I'm silently estimating average ticket, seating capacity and rate of table turn and doing an estimated daily gross instead of just enjoying my meal. It's a curse. I spent a good part of the Art Festival last weekend trying to estimate hourly take for the Kettle Korn guys who had a line at almost all times waiting to shell out $5 or more for bags of yummy Kettle Korn. Let's just say that they had a good weekend. Finding myself this morning without any scheduled property showings, I thought it was a good time to once again crunch the details of the recent sales and try to determine some of the current trends. I used the most recent completed month, October, for closed MLS-listed condo sales in Cocoa Beach and Cape Canaveral. Not surprising is the continuing reduction in the percentage of cash sales nor is the continuing shrinkage of distressed sales. Selling price as a percentage of asking price remains high as does the high number of quick sales and full asking price sales. Stats from those sales are below.

Total condo and townhomes sales - 55
Distressed (short and foreclosed) - 25% - down from 34% in September
Financed with a mortgage - 47%
Cash sales - 53% - down from 75% just a year ago.
Sold in less than 30 days on market - 44%
Sold for full asking price or more - 24%
Average selling price as a percentage of asking price - 96%

The busiest price range was between $100,000 and $200,000 with 40% of all sales falling in that range. 35% of the sales closed for less than $100,000 and 25% closed for more than $200,000.

Condo inventory this morning stands at 286 units with an additional 50 single family homes for sale in the two cities. Only 11% of the active listings are distressed. With the current dynamics it is more important than ever to be well-informed if looking to buy. With so much competition for the priced-right listings (almost half selling in less than a month and a full quarter selling for full asking or more) buyers need to know how to identify those listings. Throwing out random lowball offers isn't working right now. The lowest discount to asking in October was 15% and was a sale in which I represented the buyer. Just throwing out an offer that was 85% of asking would not have succeeded. We were able to show the seller that their asking was unreasonably high and produced solid comps to justify our reasonable offer. By knowing the market and doing our homework and then demonstrating the reasoning behind our offer we were successful in our purchase.

Low offers without justification have very little chance of success in this market. Conversely, knowing what the current market is paying for properties with specific criteria, basing an offer on that knowledge and providing substantiation with the offer is a recipe with a very good chance of success. For unique or low-supply property types, buyers may have to try another strategy. Your buyer's agent, if he's good and if he's doing his job, will know what tack to take. As always, knowledge is power. Have questions? Call or email me.

"There is no excellent beauty that has not some strangeness in the proportion."  ______Francis Bacon

November halftime report

I didn't choose the thug life. Thug life chose me.

The week of Thanksgiving 2012 and as of Tuesday morning the 20th, 21 MLS listed condos and townhomes have closed in the month in Cocoa Beach and Cape Canaveral. The majority of the closed sales fall in the over $200,000 range with a full third closing at prices between $200,000 and $300,000. This is a shift away from the lower price ranges that we've been expecting as the supply of sub $100,000 distressed listings have dried up. I don't track median closed prices but it appears that that number has probably moved significantly higher this year because of this shift.

Sales of note so far have included the following:

A 2nd floor 3/3 corner unit in the new Ocean Cove building in south Cocoa Beach with 1902 square feet and a single garage that closed for $585,000. This was the last new unit for sale in the building.

Another direct ocean, this one a 4th floor SE corner 3/3 unit in Sand Dunes Cape Canaveral closed for $450,000. One car garage and 2102 square feet.

A 10 year old Country Club Point direct Banana River 4/3 that has been on the market since 2008 sold for $399,000. This beautiful unit has high ceilings, 2 car garage and 2115 square feet.

A nicely remodeled 4th floor direct ocean Xanadu 2/2 sold for $330,000. These units are big for a 2/2 at 1761 square feet. This unit had a one car garage and new hurricane shutters in addition to the new remodel.

River Bend in south Cocoa Beach was on fire last month with several closed sales. Another  unit has closed so far this month. This one a 3rd floor direct river 3/2 with 2050 square feet and one car garage. Closed for $282,500.

Two non-direct ocean Shorewood units have closed. Both were 5th floor B building big 2/2 units with 1862 square feet and one car garages. One was a corner with wrap balcony and was newly remodeled. It sold for $280,000. The other non-corner sold furnished for $235,000.

A 3/2, 2nd floor direct ocean Sun Club in south Cocoa Beach closed for $250,000. Small for a 3/2 at 1344 square feet. Has a one car garage.

A 2nd floor direct river 8 year old Solana River unit in Cape Canaveral sold for $225,000. This big 2/2 unit has 2055 square feet and a single car garage.

Three units at 6 year old Bayport have closed so far this month. All had one car garages. A 5th floor 3/2 corner with 2092 square feet sold for $220,000. Another 5th floor non-corner with 2032 square feet closed for $182,900. A same size 3/2 on the 4th floor closed for $163,000.

A top floor (5th) Port Royal SW corner 3/2 with 1572 square feet sold fully furnished for $220,000. Had a one car garage and was partially remodeled.

One of the bank-owned Pier Resort 3/3 east facing units with 1900 square feet and one car garage sold for $175,501.

A 2nd floor direct river Costa del Sol 2/2 with 1315 square feet and one-car sold for $147,000.

A 2nd floor 6 year old Puerto del Rio short sale wins the "smoking deal" award in this group of sales. This 3/2 corner with 1862 square feet and one-car closed for $140,000.

A lakefront Harbor Isles 3/2 on the 2nd floor closed for $140,000. This 1401 square foot unit came with a one car garage.

A furnished non-waterfront Four Seasons 2/2 with 1058 square feet and no garage closed for $92,000.

A ground floor 7 year old Portside Villas 1 bedroom 1.5 bath with 943 square feet sold for $76,000. No garage.

MLS condo and townhome inventory stands at 288 units for sale this morning and there are 49 single family homes for sale in the two cities. Forty listings are either short sales or foreclosures making 12% of the total inventory distressed.

Space Coast Art Festival is this weekend in downtown Cocoa Beach. If you can, try to make it. The streets will be closed off and there will be thousands of friends and visitors checking out the hundreds of exhibits. It's always a good time.

"There are things we do not know we don't know." __Donald Rumsfeld

The trend is your friend (sometimes)

Click on charts for larger easier-to-read versions.

The trends of recent months remain firmly in place. Sales held strong through October (55 condos and 9 single family homes) even as the inventory depletion continued. At October's rate of sales it will take just five months to sell the entire MLS inventory.

Distressed listings (short sales and foreclosures) in Cocoa Beach and Cape Canaveral are now at their lowest point since 2007 when there were none. Of our total residential inventory of 325 homes and condos there are only 32 short sales and foreclosures offered, 10%. Only one of those is a single family home.

2013 should be an interesting and different year for real estate sales in our market. I expect selling prices to continue their slow increase as a side effect of the low inventory and diminishing distressed listings. We should also see far fewer total sales next year unless some as-yet-unknown source of properties falls on our market. The rumored backlog of bank-owned properties predicted to flood markets has yet to appear here on the beach. At this point I see no reason to think that we will see any significant number of new bank-owned listings here. County records show quite a few REO properties in other parts of our county but they include very few in Cocoa Beach and Cape Canaveral. Personal anecdotal observations seem to indicate far fewer unit owners behind on condo fees than in recent years. This from daily conversations with owners, board members and property managers. That would support my hunch that there are not a lot of pre-foreclosure or future short sale condos hiding out there.

Buyers need to realize the changes in our market and adjust their expectations accordingly if they hope to purchase a property here. Those hanging their hats on paying no more than the lowest price already recorded for a comparable property will likely be disappointed. Unless there are multiple units selling at the exact same price, only one buyer buys at the absolute bottom. Everyone else has to be content with buying near the bottom. At current prices, missing the absolute bottom by a few thousand dollars does not a bad deal make. Buyers with reasonable expectations (swift decision making doesn't hurt) are still being occasionally rewarded with smoking deals.

“Markets aren’t completely efficient, but they are mostly efficient. Easy money tends to be rapidly removed by the largest, fastest, most connected participants. In other words, someone other than you.” __from Mortality Sucks

October out with a bang

Slater Brothers contest site Sunday Oct. 28, 2012

While the Twitter feed of my daily updates is down I will post updates to the main blog here. Twitter and several other major websites are feeling the effects of Hurricane Sandy.

First we'll look at the single-family home sales since last Wednesday.

Lowest price of the five sales was for a 2 story, 2 bedroom, 2 bath beach house in south Cocoa Beach across the street from the beach and a stone's throw from the river. It had a garage and 1433 square feet and closed for $164,200.

A 10 year old 3/2 half-duplex on Adams in Cape Canaveral with 1476 square feet and 2 car garage sold for $169,000.

A foreclosed 3/2 on Dorset in Cocoa Beach with 1858 square feet and 2 car garage sold for $202,000.

A super nice 3/2 with 1860 square feet and 2 car garage in Harbor Heights Cape Canaveral sold for $325,000.

The huge 5 year old, 2 story beauty at the end of the canal on Catalina in Cocoa Beach that's been for sale for around two years finally sold. This house has 7 bedrooms, 4.5 baths, a 3 car garage and a total of 6475 square feet under air. Closed for a remarkable $599,000.

Condo sales of note in the last week included the following:

A 4th floor direct ocean Meridian 3 bedroom, 2 bath with 2072 square feet with many upgrades and built-ins and garage closed for $690,000. According to my research, this is the first resale at Meridian that has sold for more than the original when-new selling price. Times are a-changing.

A 4th floor Michelina direct ocean 3 bedroom, 3 bath corner with 2011 square feet and garage sold for $680,000 according to the MLS. Details of this sale are somewhat hazy as the sale is recorded on the appraiser's site for $560,000. Insight anyone?

A 2nd floor direct ocean southeast corner Chateau by the Sea (next to the Pier). It was a 2 bedroom 2 bath completely remodeled and furnished weekly rental unit. Closed for $255,000.

Two River Bend side view units in south Cocoa Beach closed in the last week. Both were 3/2 units with 2292 square feet and garage. A 4th floor south facing closed for $250,000 and a 2nd floor north facing sold for $240,000.

A furnished, very nice condition Coral Seas 2nd floor direct ocean 3 bedroom 2 bath with 1969 square feet and garage closed for $320,000.

A furnished Flores del Mar south facing 2nd floor, 3 bedroom, 2 bath with 1589 square feet and garage sold for $255,000.

A south ocean view 5th floor 2100 Towers 2/2 with updated kitchen and garage closed for $215,000.

A 4th floor direct Banana River fully furnished River Lakes 2/2 with 1244 square feet and garage closed for $180,500.

A direct river Sunset Harbor 4th floor 2/2 with 1323 square feet and two garages sold for $154,000.

A 5th floor ocean view, fully furnished Port Royal of Cocoa Beach 1 bedroom 1 bath with 960 square feet and garage sold for $130,000.

A 2nd floor furnished Villages of Seaport 2/2 with 1014 square feet and open parking closed for $144,000.

An Oceana of Cocoa Beach 2/2 with 912 square feet and garage closed for $112,000.

A 3rd floor Twin Towers short sale 1 bedroom 1 bath sold for $71,100.

A very nice ground floor Riverview Manor 1/1 with 665 square feet and open parking sold for $61,000.

It was a busy week. After being postponed for two days because of Hurricane Sandy the Slater Brothers Annual Surf Festival ran last Sunday in perfect conditions, sunny skies, offshore winds and surf that was clean and a couple of feet overhead. Local boy CJ Hobgood took a break from the world tour to come home and snatch first place away from the less-fortunate local boys. All this while Sandy was bearing down on the northeast with (unknown at the time) devastation. Our thoughts are with all of those so severely affected by the storm.

"Mounting evidence suggests that beer, and the beer industry that surrounds it, may be as good for growth as excess sobriety." ___Charles Kenny

Catch-up on October activity

I am back. Thanks to the tolerance of those who've had to deal with my very sporadic access to email and total lack of cell phone service for the last two weeks. I am freshly recharged and here for you again. For the record, I was delivering a boat from Florida to Abaco in the eastern Bahamas. Weather was mainly perfect and the diving was a welcome change from our less than clear and always deep waters offshore central Florida. The tasty crustaceans pictured were welcome visitors to the dinner plate most nights. Lobsters the size of the two larger ones are unusual in the Bahamas but are there if you know where to look. For perspective, the smallest one pictured is just barely legal size. Easy access to these abundant and beautiful waters is just another plus of living in Cocoa Beach. One hour from Melbourne International Airport by air.

During the two weeks there has been brisk activity in the Cocoa Beach and Cape Canaveral real estate market, mainly in condos. A total of 22 units closed in my absence. Sales ranged from a high of $347,500 for a remodeled and fully furnished, direct ocean 6th floor Emerald Seas 3/2 to $42,776 for a foreclosed Lamp Post 1/1 that was listed for $29,900. That's 43% over asking price. Competition in the lower price ranges has become fierce as supply has dried up. A slightly larger Star Beach foreclosure closed for $35,700.

A couple of short sale 3/2 units on Orlando Ave. one block from the beach were picked up by an investor for $65,000 and $85,000. Both sold for $6000 over asking.

A Portside Villas 2/2 ground floor sold as a short sale for full asking price, $89,900. It took about 2.5 months from contract to close. This particular unit sold new in 2006 for $229,900.

A direct ocean, top floor (5th) Sand Dunes in Cape Canaveral sold as a short sale for $305,000. It is a 3/2 with 1612 square feet and a garage. This particular short sale was previously approved by the bank with another buyer at $325,000. When that buyer walked I presented an offer for my client for $305,000 and we were able to get approval at the $20,000 lower price.

A 4th floor Treasure Island Club 2/2 in Cape Canaveral overlooking the manatee canal sold for a remarkable $110,000 as a court ordered sale. It has 1200 square feet and an excellent view.

In another short sale, someone bought a 1st floor direct ocean Sand Pebbles 3/2 with 1375 square feet and garage for $195,000.

A gorgeously remodeled 2/2 Beachwalk canal-front unit with deeded boat slip and garage sold for $165,000. It has 1479 square feet. This sale pushes the comps up in this complex after the last two sales recorded for $130,000 each.

A 3rd floor 2100 Towers 2/2 with a peek of the ocean closed fully furnished for $168,000. It has a remodeled kitchen but no garage.

Another of the Sea Spray townhomes in Cape Canaveral sold as a foreclosure for $91,000 which was $1100 above asking price. These units sold new in 2006 for $315,000. Garage, 1702 square feet and 3 bedrooms and 3 baths.

A direct ocean North Triton Arms 2 bedroom 1.5 bath, 2nd floor unit in downtown Cocoa Beach closed for full asking price, $175,000, after two days on the market.

Buyers take note. If you see "bank-approved" price on a short sale listing it usually means that the first buyer walked after the bank issued the approval letter. There are many reasons for walking away. Sometimes the buyers have found something else during the often-long wait but many times the bank approved price is higher than their initial contract and they refuse to move up to the approved price which may still be in "smoking deal" range. What it means for the next buyer is that, if they are good with the approved price, they can usually close in less than a month. Just because the first buyer walked doesn't mean the approved price is not a deal.

I will resume my usual schedule of updates now. Wind is honking in Cocoa Beach and the island I just left is preparing for Tropical Storm (soon to be Hurricane) Sandy.

"One of the unique things about planes is you can put them pretty much
anywhere you want. They just might not be in the configuration you'd
prefer by the time they get there." ___anonymous