Halftime Report

The kind of morning that has me running through all my excuses for trading the desk and the Blackberry for a beach chair and a Randy Wayne White novel.

Halfway through May and this market is very active. Lenders are still killing deals right and left but a substantial number of persistent buyers are riding deals through closing. I have not experienced this level of activity in a few years. As of this morning, May 16, a total of 19 condos have closed in Cocoa Beach and Cape Canaveral at prices from $25,000 for a small foreclosed Golden Gate Manor 1/1 to another new, top floor Meridian for $630,000. All but two sales were for less than $300,000. Deals of note included the following:

Oceanfront buildings
3rd floor east corner small, 3/2 Cocoa Beach Towers - $340,000
3rd floor south view 2/2 Windward East - $285,000
3rd floor south view 2/2 Driftwood Villas - $210,000
Ola Grande ground floor 2/2 - $200,000

In non-waterfront sales, 2 units at the 4-year old Shores of Artesia closed for $170,000 and $150,000. The latter was a short sale. A foreclosed, ground floor corner 3/2 at Portside Villas went for $130,000. A big, 3-year old foreclosed Perlas del Mar 3/2.5 sold for $162,000. Sold new 2 years ago for $453,000. A big, 3/2 Bayport villa short sale closed for $190,000. New price in 2006 was $350,000.

In Banana River buildings there has only been one closed sale so far in May, a 2nd floor 2/2 at Rock Pointe for $180,000.

Of the contingent and pending contracts yet to close are several that will qualify as smoking deals. I will report on them as they close.

Piss and vinegar can't be summoned on command. The muted colors of a muted life will not suddenly brighten because you think it a good idea they should.
___________Travis McGee

Eyes right

A golfer pauses in his game yesterday at the Cocoa Beach Country Club to snap a photo of the space shuttle Atlantis taking off for it's mission to repair the Hubble space telescope. Astronaut Mike Massimo has promised to do occasional Twitter updates from the shuttle. You can follow him here.

Twelve days into May and sales are chugging along with 9 condos closed so far in Cocoa Beach and Cape Canaveral. Only one closed single-family home in the same period, a trashed 4/2 canal-front on Riverview in Cocoa Beach that sold for $225,000. The condos sold so far this month ranged from a tiny Golden Gate Manor for $25,000 to a 3rd floor, remodeled, south view 2/2 at Windward East that brought $285,000. A foreclosed Perlas del Mar that sold new in April 2007 for $435,000 went for $162,000 last week.

Short sale contracts continue to clog the system helping to push the number of contingent or pending contracts showing on the MLS to 105 this morning. Recent experience leads me to believe that only a fraction of these will close. Problems abound for purchasers ranging from tighter requirements for condo loans to unresponsive short sale lien holders. When it all comes together, patient buyers have scored some outstanding deals so far this year. I expect that to continue although supply for certain property types has become slim. Direct ocean, 2nd floor or higher units that are priced right are downright rare. Unrealistic sellers of those same units do, however, exist in great numbers.

If you'd like to get daily updates of all interesting activity (MLS and other) in Cocoa Beach and Cape Canaveral you can receive them by following my Twitter feed here.

Nancy Astor: “Sir, if you were my husband, I would give you poison.”
Winston Churchill: “If I were your husband, I would take it.”

Tweet, tweet

Osprey family at the Cocoa Beach Country Club.

OK, I've been listening to those of you who have asked for more frequent posts. You can now receive daily updates of interesting new listings, price drops and sold properties (with selling price) in Cocoa Beach and Cape Canaveral at my Twitter feed by clicking here. Add it to your favorites if you’re not a Twitter subscriber or just follow me on Twitter if you are a subscriber. I update as often as there is activity of interest, usually several times a day. No detailed commentary, just alerts. Nothing will change here at the blog.

All right ramblers, let's get rambling!
___from Reservoir Dogs

April Wrap-up

5'6" double winger fish by Larry Mayo

For all the activity we saw in April, actual closed sales fell below the same month last year, a trend we've yet to break in 2009 . There were a total of 34 closed condo sales in Cocoa Beach and Cape Canaveral compared to 42 in April 2008. A significant departure from previous months was the sale of five units for more than $500,000. Single family homes had a brisk month with eight closed sales ranging from a small 3/2 foreclosure on Watts Way that sold for $179,000 to a brand new 2361 sq.ft. canal-front, foreclosure on Bougainvillea that went for $447,455.

There are a surprising 80 contracts on condos and townhomes that are in contingent or pending status this morning that were executed since March 14. It's probably safe to say that many of these will not close. We are seeing an increasing number of contracts not survive to the closing table. The main culprits are failed financing and the often too-long short sale process.

MLS inventory May 5, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____688
over $500,000_________96 - 10 sold since New Year's Day
Single family homes____98
over $500,000_________35

I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said.
______________Alan Greenspan

Everything's Different Now...Again

Shuttle launch as seen from my office.

Fannie Mae rules changed again yesterday, probably to the detriment of home buyers. Like most well-intentioned policy changes, this one may cause more damage to an already-injured system. The Home Valuation Code of Conduct became effective May 1 and will force changes to the way appraisals are ordered for Fannie Mae and Freddie Mac loans. Rather than ordering appraisals from local appraisers who know and understand the local market, loan officers are now forced to order their appraisals from Appraisal Management companies who parcel out the appraisals to, in all likelihood, the low bidder. The intention of this new rule was to eliminate collusion between the lender and appraiser but the probable results will be slower loan approval times and appraisals done by out-of-town appraisers who don't understand the peculiarities of local markets. Result: failed loans.

Assumption is the mother of the screw-up.
_____________Angelo Donghia

The Sound of Settling

An oldie but goodie; Ritchie cruising at 14th St. circa 1995.

There are signs of life in the high end of the market after two very tough years in which we've averaged just one sale per month of condos over $500,000 in Cocoa Beach and Cape Canaveral. Of the 26 closed sales so far in April, a surprising 4 units crossed the resistant half-million dollar barrier. I'm not going so far as to read a new trend into this but it is unusual enough to warrant reporting. Two were in existing buildings, Ocean Oasis and Diamond Bay on the river, and two were in new buildings, The Meridian just north of the Pier and Ocean Cove in south Cocoa Beach. All of the remaining 22 closed condos sold for less than $400,000 with 7 being short sales.

Of the 26 sold units, 7 were direct river. Sizes ranged from 1234 to a whopping 4137 sq. ft. Price per square foot ranged from $104 at Four Seasons to $158 at Harbor Isles with an average of $128 per square foot paid.

Direct ocean, east-facing units accounted for 9 of the sales. Sizes there ranged from 1196 square feet at the Windjammer to 2552 at the Meridian. Price per square foot ranged from a low of $197 at La Mer in Cape Canaveral to a high of $324 at the brand new Ocean Cove. Average price per square foot for direct ocean units was $237.

Unlike most areas of Florida, our inventory continues to shrink and is at it's lowest level in years. The same geographical limitation that prevented overbuilding during the boom years is starting to look like the little red engine of promise for the Cocoa Beach market. /fingers crossed

MLS inventory April 26, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____686
over $500,000_________97 - 9 sold since New Year's Day
Single family homes____96
over $500,000_________35

Keep a fire burning in your eye
Pay attention to the open sky
You never know what will be coming down
_________Jackson Browne

Why rental restrictions matter

In this post I'm going to address an often-overlooked, yet very important issue that condo buyers need to understand before they begin their search for the perfect condo at the beach. If you're already a client, you know the drill and have heard the sermon, so, you can just skip to the quote.

In addition to amenities, view, association health, building condition, parking and all the other items that a condo purchaser should review, a prudent buyer also needs to understand the implications of rental restrictions and how they will affect his use and cost of ownership. Cocoa Beach and Cape Canaveral condominiums evolved in a different direction than many coastal Florida communities with the vast majority of condos here restricting rentals to a minimum of at least one month and ranging up to 12 months. The number of ocean complexes allowing weekly rentals in Cocoa Beach and Cape Canaveral is only about a dozen. The rental habits of our visitors makes these particular complexes the overwhelming best choice for owners who want the most flexibility for mixing personal use with income or for investors who want the maximum income possibility.

We have two distinct visitor seasons here, snowbirds in the cold months and vacationers in the summer. Our snowbird visitors typically stay for periods from a month to several months. Our summer guests are predominantly one-week vacationers. For condo owners in a 3-month minimum rental building, chances are high for finding a renter for three months or more in the January through April period, but finding a 3-month renter during the rest of the year can be difficult if not impossible. An owner of a weekly rental can usually count on renters during the entire year although much slower in the Labor Day to Christmas period. For owners of units with a six month or longer minimum, the choice is usually between a long-term tenant, which takes away the personal use option, or not renting at all to leave it open for personal use, which takes away all income.

For those not wanting or needing income, complexes that have longer rental periods may be preferable as they are typically quieter with more permanent residents and less visitors and the facilities like pools and tennis courts are less crowded.

If you're looking for a condo, determine in advance what your needs are for income and/or personal use and narrow your search to those complexes that match rather than finding out after purchasing that your plan of having a great beach getaway that also spins off a little income isn't realistic. If your buyer's agent hasn't asked you about your needs in regard to use and income or hasn't briefed you on the implications, fire her immediately. Why work with Eliza Doolittle when you can have Marie Curie?

You know, it occurs to me that the best way you hurt rich people is by turning them into poor people. ___Billy Ray Valentine

Hip to be Square

Suppose that, having heard various predictions about the "bottom" and the probable rebound in the real estate market, you have decided to take advantage of the crash and have been tracking real estate prices trying to anticipate the exact bottom. To maximize the opportunity you want to either buy right at the bottom or negotiate a price that will put you close to the bottom when that happens. How does a bottom in a price cycle look? What are the indications that it is close? The only absolute evidence that a bottom has been reached comes after the fact when sales begin to record that are higher than previous sales. With housing, this is a fuzzy process as all properties are not equal even with identical floor plans. For instance, in a condo complex, identical floor plan units will have different views, be in different conditions and be in different locations in the complex. Prices will always vary for identical units regardless of market direction. Just running the sales numbers does not give an accurate picture of market direction and a single selling price up or down may not indicate a trend reversal. I'm making two points here; one- that predictions are just that and should be taken with a grain of salt and, two- the bottom in prices will only be recognizable from the rear-view mirror. And, as I've said before, Ms. Bottomfeeder doesn't buy the market. She buys a specific property. That property type may lead or lag the general market.

Another twist in the bottom-searching strategy is that, for buyers looking for a specific property type, the supply of available matching units could skew the bottom for that property type years away from the general "market" bottom. A buyer looking to buy a non-waterfront 2/2 unit close to the beach will probably have multiple chances to steal a unit during the time of peak pain because of the high number of matching units. On the other hand, someone looking for a steal on a 4th floor or higher 2/2 direct ocean will have far less chances because of the much lower number of matching units. Narrow the search down with specific complexes and/or criteria like tennis courts, garage, pool and the choices shrink even more. For those looking to buy a Sand Dollar floor plan Stonewood on a high floor the lowest price sale could occur well before the market bottom when the only distressed seller offers her unit or, if no owner is distressed, those limited-supply units could skate right through a down market without a single low sale. Ask your buyer's broker about the reality of your expectations in case, like Diogenes, you may be embarking on a fruitless search.

My best advice to buyers is to not trust any predictions or bottom calls and try to be realistic about your expectations of a "deal". I think we can safely say that prices in Cocoa Beach and Cape Canaveral are not going to zero. Accepting that, and considering the 50%+ retracement in some prices, we can safely say that purchasing now, in most cases, carries far less risk than at any time since 2005. Is it still possible to overpay? Absolutely. I am still of the opinion that the new, luxury condo market presents considerable downside risk. The large number of unsold new units, tepid sales pace and the number of units being offered at less than their recent purchase price when new are evidence of an unhealthy market segment. Existing, older buildings are in a much different place. Many sellers, having purchased years ago, have a low basis and can be aggressive with their pricing. Example; looking for a direct ocean 3/2 between 2000 and 2100 sq.ft. in Cocoa Beach, I can find 8 units offered. The choices range from a 17 year old, 2nd floor unit for $359,900 to a 3 year old, 4th floor for $849,500. The newer unit, to be sure, is far nicer, but, a cool half-million dollars of difference is hard to justify. Be careful out there if you're purchasing. Opportunity abounds but risk is still present. You will be well-served to hook up with a well-informed and realistic buyer's agent, if you can find one, to help navigate the market. If your agent tells you the market has bottomed and it's a great time to buy, be skeptical. While both may be true, such a statement is too self-serving coming from a real estate agent to fail to light up the warning panel. If you do find a steal, congratulations and welcome to the best little beach town in Florida. Now, slow down, relax and enjoy life by the sea.

You are meant to play the ball as it lies, a fact that may help to touch on your own objective approach to life. ~Grantland Rice