Sell in May

Beautiful palm tree bloom at the Cocoa Beach Country Club.

Property sales in April in Cocoa Beach and Cape Canaveral, while brisk, declined year over year for the fifth consecutive month. The record low inventory levels we hit last summer were impacting closed sales numbers by year's end. We have since recovered somewhat in number of properties for sale but still remain well below historic levels. There are 296 condos and townhomes and 71 single family homes for sale this morning in both cities. As I've mentioned before, many of those properties are so overpriced as to be "not really for sale".

In the month of April there were 16 closed sales of single family homes. Median price was $300,000 with all of the upper half waterfront. There were 66 closed condos and townhomes with a median price of $186,000. Half were cash deals. Only two condos closed for more than $300 per square foot. One was a luxurious fully furnished direct ocean Meridian 3/2 and the other was an 844 sf Chateau that squeezed over the $300 mark because of the math of the smaller than average size. Most direct ocean units above the ground floor closed between $235 and $300 per square foot. That fact has not settled into many seller's reality. Hopeful sellers of direct ocean units take note: Units commanding above $300 have been in exceptional condition and usually fully furnished or way below average size as in the case of the Chateau unit. There are 25 units currently asking over $300 per square foot, four of them over $400/sf. In my opinion, only six of the 25 are worth above the magic $300 number and none of them over $400.

Unless we have a strong second half of the month, May sales look to fall well below last year's 71 units. Prices, however, continue their slow upward trajectory in spite of the slowing number of sales. Those looking to buy, as always, need to be able to distinguish those properties that are priced within striking distance of fair value. It is possible to waste a lot of time and energy looking at nice but overpriced property.

The weather in Cocoa Beach the last few weeks has been about as good as it gets. Light winds, moderate temperatures, warm ocean water and a lingering small longboard swell. Add the absence of crowds and it is everything one expects in a small Florida beach town. Today's forecast; sunny with a high of 80 and light variable winds. Superboat races tomorrow offshore Cocoa Beach between the Pier and Lorrie Wilson Park.

"You know what the secret to weight loss is? Don't eat much." ___Simon Cowell

Downtown Cocoa Beach Pub & Restaurant Crawl

I'm happy to report that there is plenty of life in the Banana River contrary to some recent sensationalist social and mainstream media reports. The stone crab claws pictured came from the Banana River this week along with many dozens more not pictured. There appears to be no trace left in late April of the brown tide that killed off thousands of fish in March. This doesn't mean that we shouldn't continue our efforts to reduce our nutrient rich runoff that triggers the algae blooms. Our river is special and beautiful and as we found out, delicate. Despite the brown tide event, it has produced quite a few tasty meals for me this week. I like mine dipped in a little honey-mustard sauce.

Other than Post Office boxes, all of Cocoa Beach including areas north and south of the city limits  share one solitary zip code. We are all 32931 but there can be quite a bit of difference in specific areas. I often talk about this. There is the one that attracts the bulk of the tourists that is centered on the Pier and Ron Jons area and seems to be most outsiders' image of Cocoa Beach. The other Cocoa Beach, the one that I love, begins at the Kelly Slater statue at the fork in the road at 4th St. North as one heads south.

Despite the small size of downtown Cocoa Beach, there is quite a bit there. How many restaurants and bars are there in downtown Cocoa Beach? I used to say more than three dozen but thought I'd take the time to walk the four block area of downtown and make a list. Turns out there are more than I thought. I have provided links to everyone's websites or lacking that a link to their Yelp review page. If one finds themselves thirsty, hungry or wanting to hear live music in downtown Cocoa Beach, there is no good excuse to do without.

Exiting my office just north of 1st St. North on Brevard Ave. I walk a half block north past Jonathan's Pub and The Elks Lodge to N. 2nd St. and east around the corner. On the corner of Orlando Ave. is Jazzy's Mainely Lobster seafood market and restaurant. Taking the sidewalk north up Orlando, immediately next door is The Pig and Whistle British Pub . A half block further north and we're at Burger Country. Right across the street is Slow and Low BBQ and just beyond in the same block is the Surfers Pub and Bruno's Pizzeria. Since I'm keeping this to just the downtown area I walk one block east to Barrier Jacks Restaurant and then turn back south. First I come to the Cocoa Beach Brewing Company and right next door, Pineapple Point bar and restaurant. A couple of buildings down is The Mango Tree fine dining restaurant. I cross the street now to the ocean side and continue south past 1st St. North and first up is The New Habit, sandwiches and ice cream. Around the corner on Minutemen to the beach and we have everyone's favorite dive bar and music venue, The Beach Shack on the ocean and right across the way, also on the ocean is Coconuts, restaurant and bar. Immediately west of Coconuts is one building housing Hunker Down Bar, Fat Kahunas Restaurant, Cafe Playa Cuban Restaurant and shortly to open, The Thirsty Oyster oyster bar. Just across Atlantic Ave. and just south of the currently closed old Surf Restaurant is Venice at Cocoa Beach, bar and restaurant and the Subway sandwich shop. In the first block of Minutemen west of the ocean we have Yen Yens Chinese restaurant, Heidi's Jazz Club, The Heidelburg Restaurant,  Minutemen Tavern and the Cocoa Beach VFW. Just around the corner across from City Hall on Orlando Ave. is Twin Finnegans Irish Pub. Continuing west on Minutemen on the north side across the street from City Hall we begin with Cocoa Beach Thai and Sushi on the corner and then Casablanca bar. Next door in the Mai Tiki Market we find The Fat Donkey ice cream and desserts, The Tiny Turtle Caribbean Fusion restaurant and Wahoo Coffee Company. Across the alley behind Mai Tiki is Coastal Produce, produce market and deli and across Brevard Ave. is Jenna's Breezeway  restaurant. Walking back east up the alley (Wayne Coombs Way) behind Mai Tiki Market we get to Slingers Cocoa Beach Chicago-style hot dog joint on the right and Roberto's Little Havana Cuban Restaurant on the left. Across Orlando Ave. is Oasis Shaved Ice and The Florida Key Lime Pie Company. Heading north towards N. 1st St. we have the Surfinista, smoothies. coffee and health food and right across Orlando Ave. is Juice and Java Cafe. Around the corner on N. 1st St. behind the Surfinista is The Green Room Cafe health food restaurant. Continuing north on Orlando towards N. 2nd St. we pass Simply Delicious Cafe & Bakery and Surfer Joe's Tropical Ice before passing  Cocoa Beach Sports Pub with the attached Mexican grill. At 2nd St. North I retrace my steps to the office where we find our last eatery directly across Brevard Ave,, the always excellent,  Pompano Grill fine dining.

If I missed any, please let me know. By my count 18 of the over 40 listed have live music at least some of the time and only eight or nine of the 40 plus don't serve any food. If your image of Cocoa Beach is tourists, T-shirt shops and traffic it may be time to venture south..

"I'm sorry about last night. The next time I act in a willful or vain manner, you have my permission to put poison in my food, if you are not already planning to do so. Were you actually involved in a bank robbery? I think one of us is crazy. It's probably me. Take care. Your loving husband, Hack"
__from The House of the Rising Sun by James Lee Burke

Onshore and Honking

It's been a windy few days in Cocoa Beach with temps in the 70s and 80s. The ten day forecast is for decreasing winds, clear skies and highs between 76 and 84 degrees. Surf was excellent for a few days last week before the winds arrived. It is still full-on Victory at Sea conditions right now with favorable surf conditions not expected again before next weekend. I can wait.

I often read or hear something about our local real estate market that is at odds with the reality that I am experiencing. I ran into an old acquaintance this past week and he started off the conversation with the statement that there aren't any deals to be had and that he thought the market might be overheated. I suppose when one hears that multiple offers are common and properties are selling within days of listing the conclusion might be that the market is too hot. The reality is that prices have been steadily rising since bottoming in the years 2009 through 2011 but not at anything approaching the pace of the bubble years 2003 through 2007. Even with the rebound in prices, some properties are selling at 60% or less of their 2006 prices. Facts don't always support the popular dialogue. Beware headlines and anecdotal evidence. My post Headlines < Statistics < Truth from last summer is worth a reread for those with the time.

Despite significantly fewer visitors in Cocoa Beach and Cape Canaveral since the first of the month, condo sales have been brisk with 21 units going under contract in just the last seven days. Nine of those units were on the market less than two weeks. There have been 47 new condo listings since April 1. Well, to be totally accurate, 43 new ones and four old listings withdrawn and relisted to trick the system into making them appear fresh.

My favorites of the new listings that are still available include the following:

•  A furnished one bedroom 5th floor direct ocean unit in a newer building in Cape Canaveral with high ceilings and a garage asking $249K. 
• I also like a 7th floor direct ocean 2/2 unit in south Cocoa Beach with a garage asking $375K. 
• New last week was a 10 year old, 4th floor corner direct Banana River unit in Cape Canaveral with a private two car garage and a boat slip with boat lift asking $395K. There are not many opportunities to own a condo unit with a boat slip especially in a newer building. Likewise, private two car garages are uncommon. This is a good one in a good building. When new in 2005, these units sold for as much as $710,000 without a boat slip.

There are a few others that are interesting but the three above stand out for me. Anyone interested in looking at these or any others feel free to shoot me an email or phone call.

"No problem is so big or so complicated that it can't be run away from."  __Miki Dora

Off Season and Beautiful

Cocoa Beach has returned to its sedate off-season pace with the departure of the bulk of our winter visitors. Green fees at the Cocoa Beach Country Club drop to summer rates on Saturday and it's already possible to roll up on a beautiful day without a tee time and get on the course. The algae bloom in the Banana River has dissipated and fish are being caught. Ocean water temp in the surf is in the mid-70s and the beaches are, for the most part, deserted as in the photo above from last week.

Real estate sales in Cocoa Beach and Cape Canaveral this month have slowed somewhat since 69 condo units and nine single family homes closed in March. Only 23 condos and townhomes and 3 single family homes have closed in the two cities since April Fools Day. All three of the houses were non-waterfront Cocoa Beach homes that sold for less than $300,000. Seven direct ocean condos have closed, most at prices in the mid-$200s per square foot. We continue to see premium furnished units commanding prices of $300 per square foot and higher. Sellers expecting to get anywhere near $300 per foot better have a new or nicely updated unit with nice furnishings, a great view, and a garage. So far this month the highest price per square foot was again at the nine year old Meridian with a super nice, beautifully furnished 2nd floor unit there bringing $342 a foot. Contrast that with two good but not updated 24 year old Emerald Seas units that sold for $236 a foot or the 50 year old 1st floor Crossway that sold for $164 per foot.

For sale condo inventory has dropped back to 280 total condos and townhomes in Cocoa Beach and Cape Canaveral while single family home supply has increased to 80. If history holds, it's reasonable to expect sales to continue at this slower pace through May and then pick up during the summer months through Labor Day. Those who have only visited Cocoa Beach during the snowbird or summer seasons might enjoy late April and May here. There is very little traffic, restaurants are uncrowded and the weather is close to perfect. I am digging it.

"A vacation spot out of season always has a very special magic." __Max von Sydow

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