Reality Check 101

I thought by this point in the cycle that most property sellers would have come to terms with the new conditions in our real estate market. Not so. There are large numbers of owners who are clinging to a 2005 reality. If you're trying to sell a property you may want to get a second opinion if you've caught yourself saying any of the following:

* I won't sell for less than my payoff.
* I'll just hang on to it until I get my price.
* I'll wait for the market to turn around.
* I need to clear enough to (fill in the blank).
* I'll just rent it until the market turns around.
* My neighbor got $X for their's.

People, these are all forms of denial. It is what it is. What your condo was worth in 2005 has no bearing on what it's worth in 2007. The unfortunate reality is that we had an unsustainable run-up in prices and they have reversed direction. This is true in most markets in the United States. There are many factors contributing to the decline. In my opinion, the biggest factor is the decline itself. The thousands of investors who were buying property strictly for the appreciation have disappeared along with their exotic, easy-to-qualify-for mortgages. There are still buyers in our marketplace but they are buying to move into and they know they're in the driver's seat. If you aren't flexible, they'll just go to your neighbor who may have moved past his denial and transitioned into a let's-do-a-deal mentality. If you want to sell your property, take this reality check.

* What are similar properties being sold for today?
* What is it costing me every month that I hold on to it?
* What is it likely to be worth a year from now, two years?

There is the possibility that this market will turn around and take off again soon. I think that is unlikely considering inventory levels and changes in the mortgage market, but, as always, I could be wrong. If you disagree and are willing to take that chance, hang on. Consider that your taxes and insurance in our county will run somewhere around 2% to 3% annually not including lost opportunity on the equity. Add mortgage interest to that and a $500,000 property with an 80% mortgage will cost around $40,000 per year excluding any tax benefits with no repairs or maintenance while waiting out the downturn.

I have been involved in 3 deals in the last 2 weeks in which the sellers had been trying to sell for at least a year but were hanging on to unrealistic prices. Had they priced aggressively earlier they could probably have sold for more. Denial carried a heavy cost in these cases.

My point here is to be realistic with your pricing if you must sell. Talk to someone who is knowledgeable and willing to tell you the truth about the market and price to sell. If you're looking to buy, there are some incredible deals to be had if you're looking for a place here. Even though double-digit appreciation is unlikely to resume anytime soon, this is still a magic little beach town with friendly residents and an abundance of natural beauty. We welcome new neighbors who will come to love this special part of Florida like we do.

I'll leave you alone on a beautiful day at a park in south Cocoa Beach waiting for the manatees and dolphins. Picnic anyone?

Relatively Speaking...

March was a fair month for real estate sales in Cocoa Beach and Cape Canaveral. Unless, of course, you compared it to the halcyon days of March 2005. We had 28 MLS-listed condo sales (2 over $500,000) and 8 SF home sales (3 over $500,000) compared to 81 and 15 respectively in March 2005. Condos have averaged around 1 sale per day so far in 2007 with little variation while single-family home sales have been steadily increasing. At the current rate, we have a 19 month supply of homes and a 34 month supply of condos in all price ranges. If I isolate the $500,000 plus condo market, things are considerably less rosy. At March's sales rate we have an 85 month supply of half million dollar plus condos. Homes over $500,000 are in much better shape with only a 21 month supply.

Closed MLS sales in Cocoa Beach and Cape Canaveral

CONDOS

• March___2007__28
• February_2007__35
• January__2007__23

SINGLE FAMILY HOMES

• March___2007___8
• February_2007___6
• January__2007___3

Current Inventory

• Condominiums______954 all prices
• _________________171 over $500,000
• Single family homes___156 all prices
• _________________63 over $500,000

Offshore fishing has picked up and the winds have finally eased off. Catches this week have included lots of wahoo and dolphin and some decent catches of grouper and snapper. A few boats have made the trek to the other side of the Gulf Stream to hunt for tuna. Most of them scored decent catches of yellowfin to 80 lbs. and smaller blackfins. I slipped out one day with a couple of friends and managed a small wahoo. Here is one of my favorite ways to enjoy wahoo.

Wahoo and avocado tiradito

Deja Vu, All Over Again

I thought I'd revisit my comments from a year ago as, by this time last year, the slowdown was beginning to catch everyone's attention. This excerpt is from March 22, 2006.

"Are there problem areas in our market? Yes, most definitely. I've been cautioning about speculation in high-end condos for some time now. I suspect that there will be a lot of pain among the pre-construction investors in high-end condos this year. But at the same time, thousands of homeowners will be enjoying Cocoa Beach for it's beaches, surf, fishing, wildlife and all the other things that make this such a special place in the world. Will the speculators' departure affect this underlying market? Probably. All markets operate on supply and demand."
Read the entire post here.

Sales in 2007 have slowed from the same period a month ago and condo inventory continues to creep upward. Single-family home inventory took another big jump and is at a record-setting 173 MLS listed homes in Cocoa Beach and Cape Canaveral. I'm happy to report that our office participated in a large number of the few sales so far in March.

Here's the steal of the week; south Cocoa Beach direct river, 2/2 condo across the street from the beach listed for $274,900 ($60,000 less than the owner paid 2 years ago). This is the view.



Cocoa Beach and Cape Canaveral MLS Stats

Sold March 1 through 18
Condominiums____10
Single-family homes_5

Active for sale
Condominiums____1022
Single-family homes_173

If you have ideas for future posts or comments, please email me.

Inventories and Sales numbers

I thought I'd do a little more deep analysis after the responses to the "Under the hood of the MLS" article. I went back and pulled up inventory and sales figures for the last three spring seasons. The results were surprising. I expected to see the rapid increase in inventory but I did not expect sales in 2007 to be as strong in comparison as they were. Here goes:

Inventory of MLS properties in Cocoa Beach and Cape Canaveral

April 2005
Condominiums__420
SF homes______45

August 2005
Condominiums__443
SF homes______62

October 2005
Condominiums__558
SF homes______63

January 2006
Condominiums__785
SF homes______102

May 2006
Condominiums__1047
SF homes______138

March 4 2007
Condominiums__1023
SF homes______154

Sales from Jan. 1 through March 4

2005-Condominiums__139--SF homes__9
2006-Condominiums___73--SF homes__10
2007-Condominiums___54--SF homes__11

The shocker for me in these numbers was the constant rate of sales for single family homes. 2007 has actually been the busiest Jan-Feb season for sales of homes. Condo sales, as expected, have been in a constant decline since peaking in 2005. Another surprise is the level inventory number. We first topped 1000 in total condo and townhouse listings in Cocoa Beach and Cape Canaveral in May 2006, but have hovered around the 1000 number since while single family home numbers have continued a slow increase.

Our inventory has gone from a 6 month supply for condos and 10 month supply for homes in spring 2005 to a 38 month condo supply and a 28 month home supply in 2007.

Conclusions; If you're selling, don't despair. Sales are happening. There is just much more competition and prices have declined. Do your market analysis and be realistic with your pricing. Don't be insulted by low-ball offers. They are the norm now. Reframe your take on a low offer as an invitation to negotiate, not as an insult. Be prepared to take longer to sell unless you price aggressively to move to the front of the line. If you must sell, you cannot afford to price at or above competing properties. You must lead the pack and price under the competition, all other things being equal. Don't forget your carrying costs if you're willing to wait until you get your price. The cost of an extra 6 months selling time on a $500,000 property can easily exceed $20,000 in interest, taxes and insurance. If you want straight advice about selling your home in this difficult market, call me at 321.917.5786 or email me. Things have changed and successfully selling a home requires adapting to the changed market.

Seven Reasons for Cocoa Beach in February

Manatee and baby in one of the Minutemen
canals Wednesday morning this week.


The rocket launch last week as seen
from south Cocoa Beach.


Pelican #235 Tuesday this week at one of the
magic bends in the canal system of Cocoa Beach.


Spotted dolphins playing around the boat last
Thursday off the coast of Cocoa Beach.


Sunset over Merritt Island this past Tuesday
evening as seen from Houseboat Cut.


Last Wednesday morning on the river side of
the Port Canaveral locks.


My godchildren from France enjoying a ride
through the Banana River canals of Cocoa beach
yesterday.

Wherever you spent it, I hope your February
was as magical and enjoyable as mine.

Early Feb. Numbers

Revised total closed sales of MLS-listed properties for January in Cocoa Beach and Cape Canaveral were:

Condominiums______22
Single Family Homes___3

As of this morning, Feb. 18, the totals since Feb. 1 are:

Condominiums_______15
Single Family Homes___4


Looks like we're on pace to exceed January's numbers. I continue to see deals significantly below year-ago prices and there is an increasing number of properties on the market at below purchase prices from the last 2 years, so, barring any unexpected developments, I expect this increased activity to continue. There has, so far, been no mass capitulation in high-end condos although I'm hearing stories about strong-armed tactics from developers trying to force defaulting buyers to close on pre-construction contracts. On the surface that would suggest that the developer believes the unit is worth less than 90% of the contract price.

Current MLS Inventory in Cocoa Beach and Cape Canaveral

Condominiums_____1039
Single family homes__148

If you've got anything interesting to share about our market, please email me. Until next time, keep a close eye on your chips and question everything you hear from the main-stream media.

Under the Hood of the MLS

As of this morning, January 28, we've had a total of 16 MLS-listed condos and townhomes closed since Jan. 1 in Cocoa Beach and Cape Canaveral. Prompted by the national and Florida housing sales numbers for 2006 that were reported this week, I decided to dig a little deeper into our data for numbers that I don't usually track. Since many sold listings are not the original listing, I had to get under the hood of the system to get original asking price and date. These numbers are more accurate than those pulled straight from the surface of the MLS.

Average Days on Market__247
( longest, 495 days and shortest, 1 day)

Average Percentage of Original Asking Price__83%
( lowest, 70% and highest, 100%)

Median Price__$274,900
Average Price__$324,000 (skewed high by one $867,000 sale)

Active For Sale
single family homes_____153 ( 59 over $500,000)
condos & townhomes___1050 (200 over $500,000)

Using sales from the last 90 days, our selling rate for condos is just under one per day for all prices. Selling rate for over $500,000 condos is three per month and single-family homes are moving at a rate equal to 28 per year. I noticed in the data that a few sales were for less than the previous purchase price, in one case below the 2004 purchase price. I would suggest that you question everything you hear about the real estate market and distrust all reported statistics. Mine are somewhat more reliable than the mainstream media because I scrub the numbers but my conclusions are only as accurate as the data I have to work with, the MLS. My object is to provide as much information as possible so that those of you making real estate decisions in Cocoa Beach and Cape Canaveral can better understand our market dynamics. The market continues to change and I hear lots of misguided opinions being stated as fact, especially from within the real estate industry. I'll repeat; Knowledge is power. Email me with any questions or comments on our market.

I blinked.

I must have blinked when winter happened. It's another balmy January day that feels like May and I'm still waiting for that day when I'll have to trade the flip flops for shoes. It just hasn't happened yet. In the first half of January 07 (through this morning the 15th) we have had 15 MLS-listed residential properties reported as contracted in Cocoa Beach and Cape Canaveral. That leaves 1165 still actively for sale. The breakdown is as follows:

ACTIVE FOR SALE

single family homes______151 ( 57 over $500,000)
condos & townhomes___1014 (199 over $500,000)



The construction of the first phase of The Enclave pictured above is well under way. This development takes an entire city block between 3rd and 4th Streets South and north and southbound A1A. The first phase will consist of 12 of the planned 24 single-family residences. These 12 units are being offered for over $1,000,000 each and several are reportedly sold. It is interesting to note that none of these homes are waterfront and that last year only 5 homes sold in Cocoa Beach (according to the Brevard County Property Appraiser) for over $1,000,000, all of them waterfront, 3 on the ocean and 2 on the river. The other 9 Cocoa Beach single-family homes on the MLS this morning offered for more than $1,000,000 are all on the water. I haven't researched tax records beyond 2 previous years but it appears that these will be the first million-dollar-plus non-waterfront homes ever sold in Cocoa Beach. I look forward to rest of this story.



One of my favorite current offerings (photo of the boat slip above) is a big 2/2 condo 4 blocks from the beach in downtown Cocoa Beach with a garage and boat slip, just reduced to $249,500. Boat slips are becoming increasingly more valuable as the numbers reduce with stricter environmental regulations. This particular unit is priced below similar units in other complexes without boat slips.

One last note for seafood lovers; If you find yourself at Port Canaveral, you must stop by The Redhead and order the oyster shooters. For $6.99 ($5 at happy hour) you will receive 6 shot glasses, each containing 2 plump Blue Point oysters topped with a delicious red sauce and a dash of horse radish. Enjoy these sitting on the back deck watching fishing boats, cruise ships and dolphins. You'll thank me.