In Like a Lion

I didn't expect the condo market in March to continue at February's tepid pace and I was not disappointed. March roared in like a lion and as of this morning, April 2, the Cocoa Beach MLS is showing 66 closed condo units in Cocoa Beach and Cape Canaveral in the month. As always that number will grow as lazy listing agents get off their backsides and record their closed listings. Single family home sales were slow with only seven closed.

There were three noticeable trend shifts in March. They were:

Higher Priced Units - Higher priced units were very active and the premium buyers were willing to pay for exceptional units was evident. In the last twelve months only seven oceanfront units have commanded more than $300 per square foot. Five of those seven closed last month. This trend is likely to continue. Three of the seven record-setting sellers were represented by Cocoa Beach's powerhouse little agency, Walker Bagwell Properties. Seventeen units sold for more than $300,000 with nine of those over $450,000. Highest price paid in the month was $1.1 MM for the entire 6th floor of the Riomar building in south Cocoa Beach. Fully and beautifully furnished with 3008 square feet and four bedrooms and 3.5 baths it is an exceptional unit. Not surprising, it was a WB listing.

Currency Exchange - The effect of the weakening dollar that began in January began affecting local sales. As foreign currencies, especially the Euro, the British pound and the Canadian dollar, began rising from historic lows it became prudent for foreign owners of US properties to consider selling to lock in profits before the deteriorating exchange wiped those paper profits out. With quite a few properties in Cocoa Beach and Cape Canaveral owned by Canadians and Europeans that currency shift spurred a few sales. If the dollar continues to weaken, at some point this will have the reverse incentive and begin encouraging purchases by foreigners as their currencies gain purchasing power.

Condo Mortgages - March 2016 saw the highest percentage of condo buyers using mortgages since 2008. After running at around one out of three sales for six years, exactly half of condo buyers in March used a mortgage for their purchase. This in spite of the difficulties involved with Florida condo mortgages.

Our inventory is hanging steady at around 300 units for sale in the two cities. In spite of the fact that only seven units have closed for over $300 per square foot in the last 12 months, 29 of the current listings are asking over that number, five of those over $400 a foot. I suspect that only eight of the 29 stand a chance of getting over $300/sf, none of those in the one collectively-delusional building with six crazily overpriced listings. Having said that, I do expect prices to continue the steady upward direction that they've been in for the last six or so years. If you are selling an oceanfront condo and are expecting over $300 a foot, it better have a great view, be new or nicely remodeled and have a garage. If it's original 1985 condition or has an average remodel you're not going to get that number. However, you will get the best price you could have gotten in the last several years. If you've got a unit that you think deserves a premium, let's talk.

Nine of the 66 sold units closed at or above full asking price. The average selling price was 95% of last asking price. Twenty eight sold in a month or less. All but three of those 28 sold without a price reduction. Of the 22 listings that had to reduce price, average days on market was 101. Of those that sold without a price reduction, average days on market was 52. Obviously, if a seller wants to sell quickly, pricing right is instrumental.

Before making an offer, a buyer is faced with the somewhat daunting task of determining if a listing is overpriced or not. If it's one of the priced-right listings, offering below full asking is probably a recipe for failure. On the other hand, if it is overpriced, there is a possibility of getting it well below asking. Without knowing current fair market value, a buyer is dancing in the dark. Most good buyer's agents that are active in our market can determine fair value. When I say "our market" I mean Cocoa Beach and Cape Canaveral. The rest of Brevard County has no relevance to this market. I will add that it takes more than MLS access to figure out fair market value. An agent from off the beach may not know relevant details to recent sales and is at risk of misjudging value. I see it all the time and use it to my clients' advantage. Whether someone is buying or selling, using an agent from the immediate area can help prevent costly mistakes. Three dozen sales in Merritt Island or Palm Bay last year does not assure an agent is qualified to navigate the beachside market.

The Banana River made a remarkable snapback this week. After a broad, brown tide algae bloom that triggered a massive fish kill last week most folks were concerned that this was it, no going back. I'm happy to report that the river has cleared up somewhat and there are good numbers of fish and crabs still alive. Mullet are jumping, birds are diving and stone crabs are finding their way into traps. Not saying it wasn't a significant event but that it was probably not as bad as most hyperbolic Facebook posts might suggest. If we can get our nutrient runoff under control we stand a good chance of seeing the river back in its previous pristine glory. The City of Cocoa Beach is to be commended for getting in front of the problem with sewer upgrades, runoff containment and muck-dredging already ongoing before the bloom.

Satellite surveillance reported a large swarm of humans flowing northward away from Cocoa Beach all day on Friday. Simultaneously, the Cocoa Beach Country Club announced a precipitous drop-off in tee time reservations and an impending green fee reduction. Likewise, early bird attendance at local restaurants was down significantly Friday evening and, according to experts, expected to continue through the end of the year. Theories abound but most locals are not concerning themselves with the details. I think with the reduced traffic I'll drive to the Port for lunch and maybe schedule 18 holes at the Country Club.

"As you get older, the questions come down to about two. How long? And what do I do with the time I've got left?" ___David Bowie

How To Blow Up Your Deal

This will be an short post. I was involved in two back to back incidents last week of near deal-killing credit missteps by borrowers that prompted me to write this.

It's amazing how often otherwise intelligent people make stupid decisions that threaten to kill their property purchases. When a loan officer implores a borrower not to make big purchases, take on new loans or apply for new credit before closing, that borrower is well-advised to listen. The loan guy knows that any of those things can reverse a mortgage approval and it can happen just days before closing. I have seen buyers purchase furniture for a new house prior to closing and have that new debt kill their mortgage approval. One of the two deals from last week that I mentioned almost blew up because the buyer applied for a new credit card the week before closing. Leasing or purchasing a new car before closing is an almost certain deal killer for the average mortgage. If you plan on using a mortgage for a property purchase, keep your credit usage as close to zero as possible between the time you apply and closing. Once closed, have at it.

The brown tide algae bloom in the Banana River that began earlier this year has intensified and produced a massive fish kill this past week. Yesterday afternoon I watched the west wind pushing hundreds of dead fish up along the eastern shore of the river south of the Thousand Islands. The water looks like rusty chocolate milk and the stench of dead fish is gagging this morning. The City of Cocoa Beach has been making recent expensive and progressive moves to address water quality in the river and limit runoff, erosion and sewage leakage. I hope those actions aren't too late and that our neighboring communities along the river will do their parts and we can see the river return to its former beauty and health. Thankfully just across the street yesterday the Atlantic Ocean water was Caribbean blue, water temp in the mid 70s and head high sets were peeling in both directions to the delight of locals and visitors.

"All water has a perfect memory and is forever trying to get back to where it was." __Toni Morrison

11 Years and Counting

The 11th birthday of this blog slipped by me earlier this month unnoticed, not that I planned to bake a cake or have a party, but it's fun to look back. A lot has changed since that first post on March 4, 2005. The market in Cocoa Beach and Cape Canaveral in March 2005 was, to put it mildly, insane. There were new condo complexes going up everywhere a developer could purchase a piece of dirt. Investors were putting their names on waiting lists hoping to be selected for the opportunity to plunk down 10% to reserve a unit. Almost all were planning to flip the contract for a profit before actually closing on the unit. It had been working splendidly for a few years until, sometime that year, it didn't. Scores of "investors" were left holding the bag. The lucky ones walked away from their 10% deposits, poorer but smarter.

When I wrote that first post the national average rate for a 30 year fixed rate mortgages was 5.77%. In Cocoa Beach and Cape Canaveral there were 154 units in oceanfront complexes active in the MLS with prices ranging from $179,900 for a 1 bedroom at the Saturn in Cocoa Beach to a pre-construction 5th floor penthouse at the Ocean Club in Cape Canaveral for $1,279,900. That project turned out to be a disaster with only one of the 11 units closing. The bank eventually sold off the remaining 10 units in 2010 at far less breathtaking prices.

In the miracle mile of south Cocoa Beach between the fork in A1A and Patrick Air Force Base there were over 200 new condo units under construction or awaiting groundbreaking representing over $150,000,000 of inventory. The cheapest among these were a few 2nd floor pre-construction Magnolia Bay units offered for $549,000. Every single project turned out to be a short-term failure, victims of unfortunate timing. Eleven years later all the complexes have recovered and the millions of evaporated dollars are but a memory. One thing not forgotten by owners in several of those buildings is the broken promise of a clubhouse over the river in the old Fisherman's Wharf building. A couple of days ago I was sitting on the deck of the newly opened Squid Lips looking over at that building wondering if I will ever see it finished. If ever finished it will be the coolest clubhouse of any condo in the county. Picture below.

2005 would turn out to be the peak year for condo sales with 805 units closing that year. By the end of the year inventory was approaching 1000 and would peak just under 1200 units the following year. This morning there are less than 300 total units in the MLS in the two cities with 128 of those in oceanfront complexes. The nationwide average 30 year fixed rate mortgage is at 3.68%. Prices, while rising steadily, are not even close to 2005 levels with units in many complexes still selling at numbers 40% and more off the peak.

For those who may have missed the news, the iconic Pumpkin Center on the ocean between South 3rd and 4th street was completely destroyed by fire night before last. Plans for an eleven story Red Roof Inn are already in the works.

Relax. Just kidding about the RRI. Hopefully we'll see something worthy of the location built on that 200 feet of oceanfront..

Your leavin' left me goin' crazy
I'm countin' on a needle to save me
I drop it in the groove
And we go 'round and 'round
And down in a spiral
I guess I really oughta call and thank you
I rediscovered Red Headed Stranger
Got down with old James Brown
And found New Grass Revival
If you find your way back, I owe you a beer
For my record year

______________Eric Church from Record Year

Slowdown

After breaking sales records every year for the last ten in Cocoa Beach and Cape Canaveral the recent sales numbers are hinting that the skinny inventory may be starting to overwhelm the strong demand. With February's lackluster numbers we now have three consecutive months of lower year over year condo sales. December lagged the previous year by 13 units, January - two less and February came in 22 units less than February 2015, slightly more than half the activity of a year ago. Single-family home sales were similarly slow with only eight homes closed in our two cities in February. Inventory has recovered somewhat (up about 40% since Jan. 1) so I suspect this slowdown will be short-lived. There are 98 condos and 28 homes currently under contract awaiting closing.

Home sales of note included a nine year old 6475 square foot, 7 bedroom Cocoa Beach canal home that closed for $550,000 ($85/sf) and a brand new waterfront 2414 square foot Key West style two blocks from downtown that closed for $655,000 ($271/sf).

In a departure from recent months, activity in the higher priced condo market was absent. Only one unit sold for more than $400,000, a 2140 square foot three bedroom direct ocean unit in a small three unit building in south Cocoa Beach that closed for $425,000. Only four of the 28 closed condos were oceanfront. Four of the sold units were bank-owned, all less than $206,000. Nineteen or 68% of the condo sales were cash.

The forecast for the next week and a half is looking good. Cocoa Beach is packed with snowbirds, day riders escaping Bike week and early spring  breakers. Drive carefully and look out for the other guy.

"The truth is, everyone is going to hurt you. You just got to find the ones worth suffering for." _______________Bob Marley

New Construction in Cocoa Beach

Woke up this morning to an announcement of a new Cocoa Beach oceanfront building by the Dorough Brothers. Most will remember Howie Dorough as a member of the Backstreet Boys. The brothers' company has been a prolific developer and investor in our area for over a decade with multiple oceanfront buildings under their belt. The new building, Flores de la Costa, is going up just north of Wilson Ave. in the north end of Cocoa Beach. Units are two, three and four bedrooms and sizes range from 1133 to 2460 square feet. Pre-construction prices for the units currently offered in the five story building range from $258 to $380 per square foot with prices for the 2/2 units at $325,000. With a two week rental minimum these look very attractive from an investment standpoint. These prices should be a wake-up call for some sellers of oceanfront units in other, older buildings.

Buyers looking for an oceanfront unit with at least three bedrooms currently have 43 other units to consider if  the Mystic Vistas A and B buildings are included as oceanfront. [Readers know that I don't consider Mystic as oceanfront] Sellers of sixteen of those units in the older buildings asking over $340 per foot may want to reconsider their asking prices.

Also on this morning's hotsheet are two brand new townhouses two blocks from downtown Cocoa Beach. Construction has already begun and these two, 3 BR, 2.5 BA units will share a dock and both have a two car garage. Asking prices are $379,000 and $389,000.

Now for recent shenanigans. I showed a house the other day that is listed on the MLS as being concrete block construction with four bedrooms. The listing agent is known for being difficult and I've shared stories in the past of a few crazy encounters with him. This particular concrete four bedroom house turned out to be a wood frame two bedroom house with an extra "bedroom" in a separate structure in the back yard. The homeowner was shocked to find out that it was listed as a four bedroom and said she'd call the agent immediately to correct it. Two days later it is still unchanged.

After an intense downpour during the night in Cocoa Beach, the sky has cleared and it's already 74 degrees and forecast to hit 79 by early afternoon. We will hit the 70s every day for the next week according to Weather Underground.

"We should be MOST skeptical of ideas we like because we are sufficiently skeptical of ideas that we don't like."  ____Penn Gillette

How We Doing?

We be doing just fine. As expected, closed sales in the first month of the year were somewhat slow which has been the trend for the twelve years I've been tracking the Cocoa Beach housing market. Historically December is the slowest month of the year followed closely by January. (See the monthly breakdown of the last eight years in the chart below.) Things pick up quickly after January and the five months March through July usually account for over half of the year's sales. I think we can expect that trend to continue in 2016 especially considering the big jump in inventory. The for-sale condo inventory in Cocoa Beach and Cape Canaveral increased to 281 units by the end of January. That's over a hundred more than just five months earlier.

During the month 43 condo units closed compared to 46 last January. Sales of note included the following:

• A gorgeous 3 story, 12 year old townhome in Cape Canaveral with peeks of the ocean and 3087 square feet and two garages closed for $725,000.
• Two direct Banana River Harbor Club units in Cocoa Beach closed in January. One was a 2nd floor 3/3 with 2417 square feet that closed for $515,000. The other was a 2nd floor 3/2 with 1805 square feet and sold for $384,000.
• An unusual 5th floor direct ocean Driftwood of Cocoa Beach. This unit was actually two combined units with a total of 4 bedrooms, 3.5 baths, 2 carports and 2507 square feet. It sold for $448,000.
• A furnished 3rd floor direct ocean Canaveral Towers 3/2 in original condition. Weekly rentals allowed in this building makes for an excellent income opportunity. It closed for $370,000
• Another weekly rental building, Sandcastles in Cocoa Beach, had two closed sales in the month. Both were west end 2/2 corners with side ocean views and 1286 square feet and garages. The north side 7th floor with a better view closed for $352,000 and the 6th floor south side unit closed for $320,000.
• A north facing 11th floor 2100 Towers 2/2 with 1400 square feet and a garage closed for $350,000.
• A remodeled 4th floor direct ocean Park Place in downtown Cocoa Beach with 1316 square feet and a garage closed for $337,500.
• A furnished direct ocean 2nd floor Ocean Pines 2/2 in downtown Cocoa Beach closed for $325,000. Had 1353 square feet and a garage and was in original condition.
• A 1st floor direct ocean Beach Winds 2/2 just north of downtown Cocoa Beach sold for $292,500 in five days. It was the extra wide Sand Dollar floor plan with 1478 square feet and had a garage.
• A 1st floor beautifully remodeled and furnished direct ocean Sea Oats 2/2 with 1278 square feet and no garage sold for $280,000 in eight days.

Single family home inventory is still tight with only 66 homes for sale in the two cities. In the month of January eleven homes closed at prices between $175,000 for a fixer-upper 3/2 to $1.15 MM for a five bedroom direct ocean home south of downtown Cocoa Beach.

Snowbird season is in full swing with the golf course and the grocery stores clogged once again. Expect to spend up to three hours playing nine holes at the Cocoa Beach Country Club and wear protective padding if braving the aisles of Publix. Many of those sweet snowbird ladies are hockey fans and will not hesitate to check you against the cooler door if it looks like you're breaking away for the express lane.

If venturing out to the schools or Country Club area around 8 AM or 3 PM, remember the detour around Minutemen Causeway between Brevard Ave. and Cedar. You'll thank me if you approach the detour on any street other than North 1st. Take N. 2nd, 3rd or 4th to Cedar and avoid the bottleneck that the school traffic causes twice daily on North 1st St.

"Always remember: Success is due to your intelligence and effort. Failure is due to the political party you didn't vote for."  ___Morgan Housel

You Want How Much? Really?

Sorry for the time between posts. The new year has gotten off to a busy start here in the home of Florida surf culture. Thanks to Pam Werneth for the awesome shot of the girl surfers at the Pier. These girls not only rule in the waves but also rip on their skateboards. For me, this shot epitomizes life growing up in Cocoa Beach. Kids in the surf and riding skateboards to school. Many of you Cocoa Beach locals know Pam and her jewelry. If you don't, check out her very hip creations at JewelrybyPam.com 

At least one of my hopes for the new year has been realized, more inventory of properties for sale. In the two weeks since January 1 there have been 66 new condo listings in Cocoa Beach and Cape Canaveral. Not surprisingly twelve of those already are under contract. Our total condo and townhome inventory in our two cities stands at 261 units this morning, 19 of those yet to begin construction. That's the highest number of units for sale since May 2014. None of those are short sales and only five are bank-owned.

Single family home inventory remains very low with only 56 properties for sale right now. None of the 56 are short sales or bank-owned. We've only had seven new single family home listings this year and four of those are already under contract. I don't know if Snowman is still out there but I think we can put to rest once and for all his impending flood of listings from the banks' shadow inventory.

I expect the supply of new listings to continue barring some unforeseen event. Demand is strong and prices have not run away. Prices for most properties are still well below the highs of 2006. Example, direct river Harbor Isles 2/2 units. Two closed in 2006 for $290,000 and $335,000. Prices declined and at the bottom, five units closed under $150,000 between 2011 and 2013 and have been gradually increasing since. One of those five was totally remodeled and resold last year for $259,000. There is a new listing this morning of a nicely remodeled unit for $238,000.

Those looking to purchase have a decent supply to choose from depending on criteria. If the criteria are weekly rental direct ocean condo with three bedrooms, there are only two to consider. If the criteria are east facing direct ocean above the ground floor with at least two bedrooms and two baths, there are 31 possibilities between $2.386 MM and $350,000. [For the record I didn't include Mystic Vistas units as the row of townhouses between those buildings and the ocean keeps them from being "direct ocean". Shoot me. For the same reason I excluded Conquistador units in the building on the west side of Ridgewood. Hardly direct ocean although some are described as such in the MLS. If the price seems too good to be true for a direct ocean unit it almost always is. Listing agents tend to go with what has been allowed in the MLS in the past and Conquistador west building units and everything in Villages of Seaport continue to be listed as oceanfront although, in the case of some Villages units, over half a mile from the beach.] OK, back to the 31 units matching my search. At least a third of them are ridiculously overpriced. About half are fairly priced or within striking range of what I consider fair value. There is a handful that I consider bargains at current asking and two that are fairly priced trophy units. Contact me if you need a hand separating the good from the bad and the ugly.

I've had some interesting encounters over the last two weeks that I'll share in an upcoming post. I have also had the pleasure of working with three outstanding listing agents this week. I often bash poorly performing listing agents here and will continue to but I need to recognize good performance when I encounter it. Without naming them, there are three ladies from south of Patrick who went above and beyond to help sell their respective clients' properties. Your efforts are appreciated. For the agent in Cocoa Beach who forgot to mention to the tenant that we were showing the unit, not so much. I reluctantly also offer congrats to the Crimson Tide. Whatever.

"Some people are born on third base but think they’ve hit a triple."
___Mark Kingwell

The Balmy Wrap-up

It's hard to believe that it is the last day of the year. 8 AM and it's already 76 degrees and predicted to hit 84 which is 17 degrees higher than the average temperature in Cocoa Beach on December 31. The sky is blue, there is just a breath of wind and there is a small, waist high junky swell for those so inclined. Water temp in the mid-70s so wetsuits aren't necessary or even desirable.

Sales have remained slow since my last post but we have managed to close 704 condos and 164 single family homes for the year in Cocoa Beach and Cape Canaveral. Only 26 of the home sales were in Cape Canaveral but a remarkable 11 of those were in the small neighborhood of Harbor Heights in Cape Canaveral.

In Cocoa Beach we saw the highest price ever paid for a home when the oceanfront Pumpkin Center estate just south of downtown closed for $4,000,000. This estate sits on 200 feet of direct ocean and has over 10,000 square feet in multiple buildings with 11 bedrooms and 13 baths. Contrast that with another direct ocean home in south Cocoa Beach sitting on 50 feet of oceanfront that sold for $675,000. Someone scored a killer deal.

Of the 138 single family homes closed in Cocoa Beach this year, 37 sold for a half million or more. Lowest price paid was $120,000 for a tiny 2/1 cottage close to downtown. Overall median price was $375,000 and a little more than a third were purchased with cash.

Of the 704 condos closed so far over half were purchased with cash, 61% to be exact. Ten percent of the sold condos were bank-owned and 14 were short sales. There were 27 condos closed for a half million or more with the highest paid, $1,250,000 for a top floor southeast corner Meridian that sold in seven days on the market. That price came out to a jaw-dropping $508 per square foot. Unique properties command unique prices. Median condo price was $175,000 and lowest paid was $29,900 for a tiny efficiency at The Plaza in Cape Canaveral.

There are almost certainly dozens of people right now who hope to purchase a direct ocean (east facing) condo unit here in the coming year. Those potential buyers need to have a grasp of what units are worth if they hope to be successful in their quest. Prices paid for the 80 direct units that sold in 2015 ranged from $187 to $362 per square foot (if dropping the highest and the lowest). Pricing by the square foot is inexact but it's usually the best starting point in an exercise of estimating value. The median was $250/sf with only three units selling for more than $300 per square foot. Those properties that sold for more than $250 per square foot were generally newer or nicely remodeled and/or furnished. Buyers and sellers need to remember that their estimate of value, no matter how they arrived at it, is an estimate. The opposing party will almost always have a different estimate. Sales happen only when the two parties can reach an agreement or compromise on that estimate. I hope I can continue in 2016 to help many of you in your quest to acquire the perfect beach getaway in our favorite Florida beach town. A happy, safe and prosperous new year to all. Larry out. 

"You are the average of the five people you spend the most time with." ___Jim Rohn