August sales

Sorry for the break in posts. I avoided the Labor Day crowd in the mountains of North Carolina.



The numbers are in for August. As you can see from the graph above, we have taken the first step off the seasonal sales cliff. After trending above last year's numbers in June and July we had a total of 27 closed MLS-listed condos and townhomes in Cocoa Beach and Cape Canaveral in the month of August, slightly behind last year's 30 units closed. The sales ranged from $37,000 for a tiny Lamp Post efficiency in Cape Canaveral to $2.01 million for the entire top floor of Ocean Cove in south Cocoa Beach. This particular brand new unit was 6000 square feet with 4+ garage spaces and a private boat slip across the street on the Banana River. Shortly after this sale closed, the developer slashed over a million dollars off the prices of the remaining unsold units in the building.

Sales of note included a Meridian resale that went for $575,000, over a hundred thousand less than the new purchase price just two years ago. In south Cocoa Beach a fifth floor Crescent Beach Club south corner unit closed for $425,000. It was a three bedroom unit with 2278 square feet. Next door at the Constellation a 6th floor unit with 2419 square feet sold for $395,000 and a 5th floor south corner beautifully totally remodeled unit at Coral Sands went for $405,000.

A foreclosed Perlas del Mar in Cape Canaveral sold for $165,000, a remarkable $285,000 less than the new purchase price two years ago. A 2/2 townhome at Villages of Seaport closed for $107,000 as a short sale.

There were only four closed single-family home sales in the month, none for more than $200,000 and none on the water.

For those looking for direct ocean units in the lower price range, I can find 29 units this morning with at least two bedrooms asking under $300,000 that are east facing. Over-priced listings still dominate the declining inventory but gems are there for the patient. If you'd like a daily dose of new listings, price drops, sales and market news of note you can follow my Twitter feed. In case you missed it, snook season has opened and the fish are already on the beach feeding on the early schools of mullet making their annual run southward. Use a cast net to catch mullet from the beach, put one back out with a weight to keep it on the bottom and hang on for some of the best eating in the ocean.

Comments are welcomed on any of the posts here.

"When a true genius appears in the world, you may know him by this sign, that the dunces are all in confederacy against him." _________Jonathan Swift

If Willy Loman had a blog

More of our great surf recently. Laza tags a screamer with typical nonchalance.

I continue to be amazed at the disingenuous hype being dispersed by others within my industry. I can't go to a real estate blog or website without reading the same old crap intended to entice buyers into making a move and purchasing a property. Folks, you need to be very careful choosing a buyer's agent to assist you in your search. There are plenty of warning signs that should give you pause, chief among them, the absence of cautious advice and/or undiluted enthusiasm about the market. If your agent is spending too much energy convincing you that everything is great with our market, you need to reconsider his motivations and sincerity.

and ... reason Number 1 that your agent may not be a good choice: He makes a blanket, unqualified statement containing any variation of the words, "Now is a good time to buy." It may be a good time to buy some isolated properties, but, as I research the available listings on our MLS, I find far more properties that are severely over-priced than those that may qualify as a "good buy". If you accept that well-worn phrase and come into our market thinking that it applies to all properties, you may well become the next bagholder.

Having said all that, now is a good time to sift through the available properties looking for those good deals hidden among the clutter. Arm yourself with knowledge of recent sales that are comparable to the property type you're seeking and keep your focus. Don't chase something you don't want just because it's a deal or because you're impatient. Your search may have started with direct ocean units and became diverted to side views because of the lower prices. As I've said before, that forty grand you saved on the purchase price might not taste as sweet when you're sitting on your side-view balcony staring at the building next door with a cold north wind in your teeth. Patience has been rewarded this year.

Speaking of patience, let's discuss short sales. A buyer in a short sale is at the total mercy of the listing agent and, in many cases, completely in the dark throughout the process. I have worked with some real pros on the listing side (you know who you are and I thank you) and with some that are completely clueless to the process and have a possibility of closing a deal approaching zero. In addition to the listing agents who can't close a short sale, there are short sale listings in our system that are, I suspect, just bait to get the phone or in-box lit up. Proceed with skepticism and caution in this part of our market and don't even consider offering on a short sale unless you are willing to wait indefinitely. If you do put in an offer on a short sale, know that closing is not certain. Keep looking while the bank twiddles it's thumbs. It's possible to find non-short sale properties at the same levels as many of the short sales without all the hassles.

MLS inventory August 31, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____635 - 22 sold so far in August
over $500,000_________78 - 22 sold since New Year's Day
Single family homes___108
over $500,000_________43


"Expect ALL estimates of time to be overly optimistic."_____Larry

What a day it was

Sunday, August 24 in south Cocoa Beach. It was like this all day except for about an hour during which we endured an intense electrical storm that chased everyone from the beach. Of course, we locals were back in the water by 5 PM when the sky went blue again and the tide ebbed. The shot above is of one of my friends and her son sharing a wave out back about midday. You can click on the photo for a larger image.

Note: I have turned on comments for the blog for the first time since it's inception in 2005. Feel free to leave comments on any posts. Vulgarity will not be tolerated but difference of opinion is welcomed.

The World is a Vampire

Delta rocket launch, sunrise Aug. 17, 2009

We're halfway through August and, as expected, activity has slowed. We've had 12 closed sales from the Cape Canaveral and Cocoa Beach MLS, 11 condos and one single-family home. The home was a small 3 bedroom, 1.5 bath short sale on south Orlando Ave. that closed for $139,000. The sold condos ranged from $79,900 for a foreclosed, non-waterfront 2 bedroom 2 bath unit at Costa del Sol to $425,000 for a 5th floor direct ocean, southeast corner at Crescent Beach Club in south Cocoa Beach. This unit had 2278 square feet with 3 bedrooms, 2 baths and a massive wrap balcony.

An interesting sale was the 2nd floor, southeast corner at Palmas de Majorca in downtown Cocoa Beach. This 3/2 unit had been on the market for 731 days, always overpriced and was down to $549,000, the most recent still-too-high asking price when something enticed the seller into accepting $400,000. Maybe he read my "Breakdown, go ahead and give it to me" post or perhaps the appraisal came in low. At any rate, for $186 per square foot, this one was a deal. The too-close boardwalk traffic intruding on the privacy from the 2nd floor probably contributed to the low price. It was, beside that shortcoming, a very nice unit.

Another good deal was a Constellation 3/2, this one on the 6th floor with 2419 square feet and panoramic views of the ocean and the Banana River across the street. Sold for $395,000 or $163 per square feet. Don't expect to get a smaller unit for these $/sqft numbers as large size contributes to the low ratio.

Someone picked up a 2/2 direct river, 2nd floor Sunset Harbor for $146,000. Needed some updating. Another foreclosed 4 bedroom, 2.5 bath Perlas del Mar in Cape Canaveral sold for $165,000. It sold new two years ago for $450,000.

The 3rd floor south ocean view Cape Winds, 1 bedroom 2 bath unit that was offered as a short sale for $150,000 got a contract in just seven days.

That's it for now. New listing activity is slow as are sales and there have not been a lot of compelling new offerings. That is normal for this time of year. If the short sale bottleneck opens up we could have a surge of closings which would be welcome. I received lender approvals this week for two short sales that have been in the system for 105 and 75 days while I have four others that have been leapfrogging desks for up to 150 days without approval. Go figure.

"Despite all my rage, I'm still just a rat in a cage."
_____________Billy Corgan

Does this make my butt look big?

Rocky shoreline in Satellite Beach at low tide. There are no rocks in Cocoa Beach but as one heads south, rocks are first encountered at Patrick Air Force Base and the rocky shore continues all the way to Indialantic.

Does this make my butt look big? Everyone knows there is only one correct answer to this question no matter who is doing the asking. There is another popular question that also has but one answer. That question is one that is posed to loan officers and mortgage brokers every day, "Do you foresee any issues with my getting a loan on this property?" Day one in loan officer school the class is asked this question and then instructed to shout in unison, "No, not at all." over and over until the phrase is firmly imprinted on their brains. Then, when "the question" is posed by an actual borrower, the neuro lingual programming takes over without any conscious thought and "the answer" comes forth confidently. Doesn't matter that the Florida condo that the borrower is asking about is 1800 miles away from the lender's office or that the last Florida condo loan that the loan officer did was in 2006. "We can do it" he says with a confident smile. Right. He can do it until he can't and that usually doesn't becomes evident until well down the road towards closing.

All borrowers who are buying a Florida condo would be well advised to talk to a lender in the market in which they are purchasing. There are issues with Florida condo loans that lenders will not encounter anywhere else. A great credit score and previous relationship with a distant lender might not be enough when the hurdles to closing start appearing. A good local lender who is active in our market will have knowledge about Florida-specific loan issues and will likely have encountered many of the sure-to-happen problems with previous loans. That knowledge allows him to be proactive rather than reactive in addressing these issues. Anticipating and working to solve an issue before it presents itself can be the difference in making a closing date or not.

Disclaimer: I'm not saying out-of-area lenders can't close deals here. It happens all the time, but, from plenty of personal experience, I can say without hesitation that the odds of having problems are increased when the lender is not local. Just don't expect a loan officer to admit that his performance out of state may be compromised by lack of local experience. Remember the NLP "answer" from class. I can close deals and represent buyers anywhere in the state of Florida but I don't venture outside my market because I can't do the best possible job for my client in a market I don't know. Greed and false confidence encourages many realtors and lenders to venture out onto the thin ice, often to their client's detriment. Be skeptical when yours fearlessly claims proficiency in an unknown market.

/cue theme song (everyone sing along)__ "Knowledge is power..."

"Education is when you read the fine print. Experience is what you get if you don't."_____Pete Seeger

Dear Miss Cleo, What's next?

We had a total of 37 closed condo and townhome sales in Cocoa Beach and Cape Canaveral in the month of July as recorded in the MLS as of this morning. The number, as always, will likely creep up slightly as a few tardy listing agents record their sales. Lowest sale was a foreclosed Pearl of the Sea one bedroom unit at $45,000 and the highest was $740,000 for a mac-daddy 7 year-old penthouse unit at Ocean Terraces in downtown Cocoa Beach. It was the entire top floor, 3464 sq ft with four bedrooms, three baths and a 2 car garage.

There were three sales over a half million dollars, the most in a single month so far in 2009. Only eight of the sales were for more than $268,000. Short sale closings were off with only five closed short sales in the month. That doesn't necessarily mean that short sale activity has slowed. Anecdotal evidence from my desk and conversations with other agents suggests that there are stacks of short sales in limbo with the lenders taking longer than ever to reach a decision. If they ever start moving on the short sale process we could see a surge in closed sales.

The "smoking deal" of the month was a short sale at Lookout Point three blocks from downtown Cocoa Beach. A 2 bedroom 2 bath unit with boat slip and private garage closed as a short sale for $145,000. The busiest complex of the month was Shorewood in Cape Canaveral with five closed units followed by Xanadu in Cocoa Beach with three closed.

Inventory is down to 639 condos and townhomes with 95 of those offered as short sales. There are 110 single family homes currently offered in the two cities. Only three of those are short sales.

Miss Cleo has advised that we can expect, barring a surge in closed short sales, activity to decline through December following our normal trend. If you hope to sell this year, make your selling decisions accordingly.



"When your arm gets hit, the ball is not going to go where you want it to."
_____________________John Madden

Hard Decisions

Another hot Mayo board. This one is a 6'2" quad in Coke bottle tint.

I have talked to several distressed property owners over the course of the year who have found themselves in the undesirable position of owing substantially more on their mortgages than their properties are worth. Whether they bought at the peak or refinanced with cash out, they now struggle with their obligation to continue to pay off a loan that's far more than the property would bring in a sale. Many feel an ethical obligation to continue to pay regardless of the impact on their personal finances. Even some of those not so ethically encumbered continue to pay for fear of ruining their credit or even shame among their peers should they decide to walk away. Those who find themselves in this position have three basic choices; continue to pay, pursue a short sale or simply walk away. Without taking any position on the ethics or morality of choices two or three, I will point the reader towards a very interesting discussion of the subject at Mish's blog. Excerpt below.

"Mortgages are not ethical documents, they are legal contracts. The typical residential mortgage for an owner-occupied home gives the borrower two options: pay on time and in full, and keep paper title to the house, and full entitlements to any appreciation upon its later sale after the mortgage is satisfied; or, stop making payments, and hand the keys back to the lender. Morality and ethics don't even enter the equation. Either option is perfectly legal for the borrower, and the only criteria should be business-based. All the ethics you need are contained within the four corners of the pages of the mortgage contract."

"It doesn't matter which side of the fence you get off on sometimes. What matters most is getting off. You cannot make progress without making decisions."_________Jim Rohn

Breakdown, go ahead and give it to me.

Woke up this morning thinking another surf before work would be in store with a light morning wind and a dying swell, but, it was not to be. Swell has dropped enough overnight that the half tide this morning was just not working. Possibly at the late afternoon low tide if the onshore wind isn't on it. At any rate it's been a welcome three days of good surf.

In lieu of ocean communion I headed to the office early and began sifting and number crunching through the MLS trying to sniff out the ever harder to find gems hidden in the active listings. I focused my search on the type of unit I am most often asked about, direct ocean with a good view. To set a base line, I began by searching for all direct ocean units above the ground floor with at least 1200 sq. ft. that have sold in Cocoa Beach and Cape Canaveral since April 1 this year. [sales before April 1 are ancient history in this dynamic market] Discarding all sales of brand new units and those that didn't have a direct, east facing view the list contained 15 closed sales through yesterday. Lowest price was $207,000 for a 2/2 Driftwood in original but decent condition. Highest price paid was $675,000 for the northeast corner Xanadu penthouse, attractively remodeled. Sorting for price per square foot, the lowest price paid was $155 per square foot for a partially remodeled 2nd floor Constellation and the highest was $259 for a gorgeous 2nd floor, 5 year old Ocean Oasis. The average was $211 per square foot. I got the same number even when throwing out the high and the low. Only three of the sales were for less than $196 per square foot.

Now I have a number that the current market is paying for this type of unit. I also know from my research that these sales closed at an average of 90% of the last asking price. Searching using the same criteria for active listings and capping the price at $675,000, the highest paid price in my sold search, I have a list of 57 units actively for sale above the ground floor, east facing with at least 1200 square feet. Not surprisingly, the range of asking prices is out of touch with the reality of the sold range. Sorting on dollars per square foot, the lowest price is $184 per square foot (suggested short sale price) for a mostly-original Waters Edge 6th floor and the highest is, hold your breath, $353 per square foot for a Canaveral Sands 3rd floor corner with some updates but far from plush, offered furnished.

Of the 57 units on our list, 47 are asking more than 10% above the average on the sold list and fifteen dreamers are asking more than 10% above the highest. The average asking price of all 57 units is $260 per square foot or 23% more than the average sold price in the most recent four month period.

Our takeaway: The "for sale" market, for the most part, is out of touch with the recently sold market. There are anomalies and exceptions, of course, and these are the ones that buyers should be looking for in addition to the ones that are obviously priced right. I will consider paying above the average closed $/sq.ft. if the unit is exceptional in some way. If I can get someone's expensive remodel for a fraction of what it would cost me, it's worth consideration. I'm also willing to pay more for a corner or a second garage. On the other hand, I'm going to need to purchase below the average if a unit needs work. Buyers need to be thinking like appraisers. Establish a base price based on square footage and then adjust up or down for pluses or minuses. Also, as I mentioned in a recent post, it's vital to justify your offer with hard numbers like the ones here. Your offer may be far below asking but real world examples may be enough to snap an optimistic seller out of Lala Land. If you're offering and your agent is too lazy to do this research for you feel free to use my numbers here, or, probably smarter, find an agent who will.

By the way, in my search of active listings, there were six units asking less than the average sold $/sq.ft., two of them nice units firmly in the "deal" category at full asking price. Now, no TV until you do your homework.

"Deep greens and blues are the colors I choose."
__________James Taylor