Putting right along

Photo above was taken from the top floor of Xanadu looking south towards downtown Cocoa Beach. The Pig and Whistle Pub is the brown roof building in the dead center of the shot. The white buildings on the river in the top left are Harbor Isles with Merritt Island off in the distance.


Sorry for the lag between posts as I've been traveling. We are back on the regular schedule now.

Action in the Cocoa Beach and Cape Canaveral condo market has been strong so far this month with 46 accepted contracts since June 1. Fourteen of those were short sales and a few others were foreclosures. Only 2 of the units were asking above $500,000. With sales at Meridian winding down to the last few developer units I expect the over-$500,000 sales to drop off the cliff. Of the fourteen condo sales over $500,000 so far in 2009, eight were Meridian units. That leaves us with a rest-of-the-market sales rate of one half-million-dollar-plus condo per month. That's with an inventory this morning of 97 units, eight years worth not even factoring in the shadow developer inventory which will easily swell that number by 50% or more. Not good news for the luxury condo market.

We have had an impressive 25 closed condo sales so far in June, two over $500,000, both at Meridian. Twenty of the thirty sold for less than $230,000. That paints a pretty clear picture of our market. If I gave any credence to median price numbers that metric would look horrific year over year. The bright spot in all this is the fact that so many units are selling despite significant hurdles with financing and the difficulty of bringing a short sale to the closing table.

Only one single family home has closed this month in our market, a direct Banana River home on Jack Drive that closed for $450,000. Another three went under contract since the 1st.

Of the sales of note so far this month, my favorite has to be the Fountain Cove 3rd floor unit that closed Monday for $185,000. I presented an offer exactly one year ago today on this unit for $190,000 when it was listed for $243,500. Not only did the listing agent rudely dismiss the substantiating comps we included with our offer, she actually called back after the seller refused to counter to deliver a second message from the sellers, "Tell them to go buy another condo." We did. You can read the entire sadly funny exchange here. Others of note included;

• A five year old top floor, 1918 sq.ft. Solana on the River closed for $215,000 as a short sale.
• A 2 year old 3/2 Puerto del Rio in Cape Canaveral with 1862 sq.ft. sold for $205,000 as a short sale.
• A direct river River Bend 3/2 with 2050 sq.ft. and a boat slip in south Cocoa Beach was stolen for $260,000.

MLS inventory June 18, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____681
over $500,000_________97 - 14 sold since New Year's Day
Single family homes____102
over $500,000_________39

“If you can't make it good, at least make it look good.”
_________________Bill Gates

Semi-charmed life

Big fish in the surf at sunrise in south Cocoa Beach. The office can wait.

We are seeing more and more condo sales fail because of financing-related issues. With Fannie Mae's new rules related to association health, many condo complexes are missing the cut for Fannie Mae loans. As these loans represent a sizable chunk of the available condo financing, the impact is significant. The new scrutiny includes review of reserves, number of owners past due on condo fees and percentage of units owned by a single entity. I am aware of buildings that are immediately disqualified because of the latter. Another fly in the ointment is the new appraisal rule mandating no direct contact between the lender and the appraiser. Good intentions but the result has been less than impressive. Instead of experienced local appraisers who understand our market and who receive the entire appraisal fee enabling them to spend the time necessary to do an accurate appraisal, the man or woman doing the appraisal now is often the low bidder who is receiving at times 1/3 of the fee,(2/3 going to the appraisal management company) and may be driving across the state to do the job. For the fee being collected, there is not a lot of incentive to research the difference between a weekly rental building and a one-year-minimum rental building or the significance of the higher value of a building with a recent major concrete reno project and one staring at a major project in the near future. Think the low bidder will consider other good comps when it's pointed out that the ones he used aren't really comparable. Not happening.

There are a few takeaways here;

• Buyers, your financing may not happen no matter how shiny your credit report is.
• The appraisal will likely not represent a true picture of the condo's worth (could be high or low), although a buyer may use a low appraisal to his benefit in renegotiating a lower price post-contract.
• Cash is no longer king. It is ruler of the universe. Sellers, you must treat cash offers as golden because they may be the only way you will sell your unit in this environment.

Time for predictions. The biggest question on everyone's mind is, when will the market bottom? I can't say but we have already seen sizable upticks in selling prices in a few complexes. That doesn't mean another distressed seller or bank-owned unit won't surface in these complexes. It does indicate that we are sniffing around the bottom when there are buyers willing to pay more than the previous low price. With prices now at pre-runup levels, the amount of downside is reduced enough that, barring total economic collapse, the "bottom" is close enough that risk levels are tolerable in some buildings and complexes. I am talking about existing buildings with no developer-owned units. This does not apply to any of the new luxury units. I expect more price erosion, possibly significant, in the over $500,000 condo market with the most pain in the brand new buildings. I would not pay today's asking price in any new building in Cocoa Beach or Cape Canaveral.

If you are looking for a very specific type of unit or in a specific building or area, waiting for the bottom could turn into an exercise in frustration. You need to to recognize when you've found the perfect unit and do your best to negotiate the best price possible rather than hoping to find the perfect unit at the exact market bottom. Example: if you wanted to buy a unit in Mar Bleu in south Cocoa Beach, you have had 2 chances since 2003. No units have been offered since the last sale last summer.

One thing that is easy to predict is the rate of sales for the rest of the year. We are right at the peak time of year for condo sales and we can expect sales to decline from this point through the end of the year if recent years are an indication. Graph of sales so far this year over the last two years below.



Sellers; take note. If you don't have a contract yet and you'd like to sell this year, get aggressive and do your best to reach acceptance on any offer you receive. Recognize that it's very likely that your expectations are not realistic and that you may have to accept less than you thought. When I bring you an offer please consider it carefully. There are 671 condos currently offered on the Cocoa Beach and Cape Canaveral MLS and, if you are unwilling to accept the June 2009 reality, we'll move on to the next one.

No fashion error was ever made in black.
_______________Calvin Klein

So long Spring, hello Summer

A quiet morning this week in south Cocoa Beach.

It's the last day of May and the month has been another busy one in the Cocoa Beach and Cape Canaveral real estate market. We're still lagging last year's numbers but the pace is steady. May was the peak month for condo sales last year and there is no reason to think 2009 will be different. There were 36 closed condo sales in the two cities during May as indicated today in the Cocoa Beach MLS. Only 2 of those sales were for more than $385,000, one, as always, a brand new Meridian penthouse for $630,000 and the other, a huge Ocean Pines penthouse with 65' of ocean balcony that sold for $575,000.

There were nine single family home sales in the month with eight of those in Cocoa Beach. Six were waterfront with the highest price paid for a massive, 2 year old, 6354 sq.ft., 7 bedrooms and 4.5 bath canal home that closed for $690,000.

Other notable deals of the month included;

A Brisa del Mar condo conversion 2/1 that sold new in 2006 for $200,000 sold as a short sale for $76,400.

A very nicely remodeled, non-waterfront Oaks 2/2 in Cape Canaveral sold for $85,000

Direct Banana River ground floor, River Lakes 2/2 in south Cocoa Beach was stolen for $130,000

Four year old Shores of Artesia townhome, 1 block from ocean, sold new in 2005 for $307,000. The new buyer got it for half off in a short sale for $150,000. On the market just 17 days.

A huge (2424 sq.ft.) Perlas del Mar w/2 car garage didn't last long on the clearance table. This 2 year old unit sold new in 2007 for $453,000. The brain trust at JP Morgan Chase agreed to dump it for $162,000. Also on the market for just 17 days.

A 2-year old, 3/3.5 townhome in a small building (Sea Shell Cay) close to Villages of Seaport that sold new in 2007 for $437,000. It was also a foreclosure and closed for $166,250, full asking price. Sold in 6 days.

A direct Banana River Rock Pointe, oversized 2nd floor 2/2, went for $180,000.

A 3-year old Cape Canaveral Bayport villa w/2 car garage that sold new in 2006 for $350,000 sold for $190,000 as a short sale.

There were 3 excellent deals in weekly rental ocean condos this month. One was a ground floor Ola Grande 2/2 next door to the Cocoa Beach Pier that sold for $200,000. This unit rents for $800 to $1100 per week. Do the math. A 4th floor southern view, 2/2 next door at Chateau by the Sea closed for $202,000 and a 3rd floor north facing Sandcastles 2/2 was stolen for $210,000. Similar rents for all and all three sold fully furnished.

A ground floor direct ocean 2/2 at Beachwinds in Cocoa Beach closed for $280,000.

A very nice, partially furnished Harbor Isles 3/2 corner, direct river sold for $285,000.

A nicely remodeled, 3rd floor, southern view Windward East also sold for $285,000.

A rarely available, east end unit, 3rd floor, 3/2 at Cocoa Beach Towers closed for $340,000.

And rounding out the most interesting deals of the month, a partially remodeled, huge (2484 sq.ft.) 3/2, 2nd floor direct ocean with balconies on both the east and west sides at Constellation way down in south Cocoa Beach (Little Malibu) sold for a remarkable $385,000 or $155 per square foot.

In the sky, there is no distinction of east and west; people create distinctions out of their own minds and then beleive them to be true.
____________Buddha

Want to see something really scary?

This is the one month graph of 30 year fixed rate mortgages. The blastoff at the right end happened Wednesday this week.

Just for balance, here's a happier graph for those who are holding Canadian Dollars. This is from March 2 through today. We're at .91 US$ to the Loonie this morning, the highest level since last October.



Yang cannot exist by itself; it can exist only when it is supported by yin.
___________Shao Yong

I'd Like to Sell Your Condo but... - Redux

South Cocoa Beach backyard.

I had several incidents with listing agents doing crappy jobs for their clients last week. It got me to thinking about revisiting a post from last year, I'd Like to Sell Your Condo but... In that post I listed my top 5 reasons for properties not selling. Those reasons still stand as the top five most common but I've encountered a few contenders for the list since that time.

How about the listing agent who was out of town last Tuesday when I presented an offer on one of his short sale listings in Cape Canaveral. His assistant responded with the news that he would return this week and present our offer upon his return. No one in his office was qualified or motivated enough to present in his absence and he apparently didn't think it important enough to plan for in advance. It's day 7 and the seller just saw the offer for the first time. Think this short sale will breeze through the process when it finally does get submitted? We're not holding our breath. By the way, this listing office specializes in short sales and loan modifications. They pitch themselves as the experts.

Then there's the listing agent who pitches low commission to get the listing with the understanding from the seller that there will be no advertising, virtual tours or open houses. I suspect he neglects to tell them that the MLS photos will suck as well. That already low commission is then divided unequally with the buyer's broker being offered a rock bottom amount in the MLS with the listing agent unencumbered with any responsibilities other than fielding offers should one actually materialize and keeping the lion's share of the paycheck for his non-effort. Does that keep me from showing his listings knowing that my efforts will be rewarded with a 33% to 50% pay cut? No, but I'm guessing that there might be a few hungry buyer's agents who may just skip over his listings in favor of ones that will put more groceries on the table. His clients are apparently content to mentally spend the fantasy dollars they are saving while they sit in their La-Z-Boys waiting for the doorbell to ring. This same office is one of the ones that routinely keep keys in the office, often miles from the properties, to save money on lockboxes. It might be prudent to reconsider if you are inclined to go with the low bidder to help you sell your property.

Here are a few requests I'd like to address directly to the listing agents to help those of us on the buying side get your properties sold.

Ms. Listing Agent,

please consider putting your cell phone number in your listings just in case I have questions from an interested buyer and your office is closed. Don't be afraid that you're going to be bothered after hours by pesky buyer's agents. We're just trying to sell your listing for you.

please consider putting a lockbox on your property so that I don't have to drive to your office twice to pick up and drop off keys. The time we save may allow us to see more than one of your listings. If your broker is too cheap to furnish an electronic lockbox, Ace Hardware sells good combo lockboxes for less than $40. (I understand that some property management companies don't allow lockboxes. In that case, carry on.)

please don't use jailhouse mirror photography on the ocean view so that we don't see the hulking building immediately next door. We're going to see it the moment we walk in the door anyway and the obvious deception may turn off the buyers, who might have otherwise been OK with the compromised view.

please don't code your listing as waterfront if it's not. We agents know that Villages of Seaport property is technically oceanfront as it extends from Atlantic Ave all the way to the ocean but if your listing is a half mile hoof from the beach, it's not oceanfront and does not deserve that dishonest classification, technicalities aside. Like the misleading ocean view photo above, you're only attempting to mislead internet-searching buyers who will know the truth when we pull up or when I explain your deception to them.

please don't start defending your client's outrageous asking price when I bring you a reasonable offer. Please take the offer to the seller of the property and let them decide how to respond. You only look silly trying to rationalize why your listing is worth $100,000 more than recent comparable sales. I may occasionally present unreasonably low offers but, just like you, I am not a principal to the transaction. The actual buyers and sellers make the decisions. An offer, no matter how crazy it seems, is an invitation to begin negotiations.

Do not take this rant as an insinuation that all listing agents are slackers and/or deceitful. That is not the case. There are many who go above and beyond the call of duty to get their clients the best possible deal at the best possible terms. You know who you are and I appreciate your efforts and professionalism. The rest of you that inspired this post, consider cleaning up your act.

My aim is to put down on paper what I see and what I feel in the best and simplest way.
_____________Ernest Hemingway

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