June property sales

Today is the last day of June and most (but not all) MLS sales for the month have been posted. Single family home sales were very strong with 11 closed sales in Cocoa Beach and Cape Canaveral. Over half the homes were on the market less than 55 days. Five of the eleven sold for cash and seven were waterfront. Four were short sales and none were foreclosures. One of the short sales took only 35 days from contract to closing table. The longest took seven months to wade through the process.

We are left with 45 single family homes for sale this morning in the two cities. Of those, 27 are waterfront and zero are distressed (short or foreclosure).

It was another banner month for condo sales as well with 55 closed sales recorded as of this morning. Of those, 13 were short sales or foreclosures. Twenty sold for $100,000 or less and two closed for more than $500,000. 29% were on the market less than a month before selling.

Our MLS condo and townhome inventory is at 281 total units for sale in the two cities. Six of those are pre-sales in a proposed building. 27 units are asking over $500,000 and 28 under $100,000. Guess which ones will be gone first. Two thirds of the condo listings are in waterfront complexes. 12% of the total (34 units) are distressed with 11 of those in the Pier Resort.

There are 126 condo units currently under contract, half of those distressed.

We are seeing closed prices notching up in a few complexes. It seems a natural response to the supply and demand dynamic that is exerting itself once again with the abnormally low inventory. The disappearance of large numbers of distressed listings is also contributing. This may not be a duck but the waddling and quacking is beginning to look rather duckish.

While most of the country has been sweltering in the triple digits, Cocoa Beach has had a wonderful stretch of balmy weather after Tropical Storm Debbie passed over the state. Judging from the number of tracks I'm seeing on the beach, this looks to be a busy year for sea turtle nesting. Remember to turn your beachside lights off by 9 PM and make sure no light from your dwelling is visible from the beach distracting nesting turtles. I hope everyone enjoys the upcoming holiday and is safe. Hydrate and use your sunscreen. Cocoa Beach fireworks are on Monday the 2nd rather than the 4th.

"Do I contradict myself? Very well then I contradict myself. I am large, I contain multitudes." ____Walt Whitman

Anatomy of a flip gone bad

As I was doing my early morning MLS hotsheet yesterday to see what new activity had been reported in Cocoa Beach and Cape Canaveral overnight, I noticed that a house I'd shown a few times over the years had closed. It was a 50 year old canalfront 4/2 with 1764 square feet in Snug Harbor. Knowing that it had been a while since I had first shown it I checked the listing activity to refresh my memory. It went something like this:

It was listed by the seller in the summer of 2005 after he purchased the house for $570,000. Hoping to flip for a quick profit he immediately listed at an asking price of $699,900. Less than a month later the price was jacked up to $825,000. Now remember in 2005 you couldn't turn around without hearing a story or news report about the new paradigm in real estate. Heck, even the National Association of Realtor's chief economist had just published in February that year a book entitled "Are you missing out on the real estate boom? Why home values and other real estate investments will climb through the end of the decade - And how to profit from them."  Perhaps the seller had just picked up a copy of the book. I wonder how many people's lives were ruined after reading David Lereah's ill-timed tome or listening to his NAR propaganda during that time. [edit] By the way, adding insult to injury, David Lereah followed up in spring 2006 with an even more damaging missive entitled, "Why the real estate boom will not bust - and how you can profit from it." Yikes.

In January of 2006 the seller lost a wee bit of his irrational exuberance and trimmed the asking to $779,000 where it remained until March when he brought the price back to where he started 10 months earlier, $699,900. In July, exactly one year since first listing, he reduced the price by $50K to $649,900. By Labor Day we were starting to see signs that the party in run-away appreciation might be winding down. The seller was apparently not paying attention and kept the asking price unchanged until February 2007 when he made a bold price reduction of $200 to $649,700.. Perhaps he was encouraged by NAR's new $40 million  advertising campaign "Now is a great time to buy (or sell) a home." At any rate, something happened and he chopped the asking price to $499,000 on April Fool's Day. This would have been just enough to pay his $450,000 mortgage and closing costs and escape with only the down payment lost. Unfortunately, by this time, similar houses were no longer selling for anywhere close to that price.

Apparently, still willing to accept a loss, he dropped the price again two months later to $479,000. It stayed there until October at which point, motivated by who knows what, he raised the price to $649,000 where it stayed for one month until coming back to $499,000 (our April Fool's price) in November 2007. It stayed at that price until March of 2008 when it was raised to $590,000 where it stuck until 2009.

Come January 2009 the price was reduced to $549,000 where it stayed for three weeks before being pulled back to the April Fool's 2007 number of $499,000. The seller apparently liked the $499,000 number as he stayed put at that mark for over a year until March of 2010 when he whacked the price down to $399,000 where it remained until October of 2010 when the listing expired.

It disappeared from the MLS at that point for a year until it came back on as a short sale asking $279,000 in October 2011. It had a contract within a month and finally closed yesterday for $240,000. The bank lost over $200,000 and the seller lost over $100,000 during his seven years of ownership. The original seller who sold the house to him in 2005 made a tidy $358,000 profit after owning the house for five years. Timing is everything.

"Like the ski resort full of girls hunting for husbands and husbands hunting for girls, the situation is not as symmetrical as it might seem"  _____Alan  MacKay

By the numbers

Cocoa Beach and Cape Canaveral, where we are and where we've been.
Data from the Cocoa Beach MLS.

Condominium units for sale
June 2012 - 277 - down 50% from 556 units in June 2010
Pending sales - a whopping 136

Distressed condo listings as a percent
June 2012 - 13% - down from 56% of all condo sales in 2010

Months supply * - at most recent month's sales rate
June 2012 - 4.2 months - down from 10.9 months in June 2010
* this does not include pending sales

Single family homes June 2012
For sale - 46
Distressed - 1
Months supply - 3.3
Pending sales - 25

The high number of pending sales is due in part to the large number of previously contracted distressed sales working through the longer than normal contract to closing period. Over half of the pending sales are distressed. The rate of condo units going under contract was almost exactly the closing rate in the most recent month. That rate is holding steady with 43 condo units getting accepted contracts so far in June. The writing is plainly on the wall. Barring divine intervention during the summer the piper will be demanding his check by Labor Day. Might be time for local Realtors to be planning an extended fall vacation.

"You can deny reality; but, you cannot deny the consequences of denying reality." ___Ayn Rand

Meet the buyers - again

We had quite the electrical storm over the ocean yesterday

The media has recently been reporting (yet again) about the large numbers of foreign buyers active in the Florida real estate market. I thought I'd get under the hood and extract the data for the Cocoa Beach and  Cape Canaveral market. I've been asked, incidentally, if there is a website or a function in our MLS that gives me these statistics with a few key strokes. Unfortunately, there is not. I have to manually wade through sales, either from the property appraiser or the MLS or both and look at each sale to get the numbers that I present here. If there was an automatic function in the MLS it couldn't be trusted anyway considering the manipulation by those entering the data. Example: days on market. Almost every day I see old listings withdrawn and relisted to set the DOM clock back to zero. At any rate, these numbers were extracted from the most recent 50 condo sales recorded on the Property Appraiser's site in Cocoa Beach and Cape Canaveral, 25 in each city with one bank Certificate of Title excluded for a total of 49.

It looks like those large numbers of foreign buyers are active elsewhere in Florida. Of the 49 sales I examined only four buyers were from other countries, two Canadians and two Europeans. Twelve of the buyers listed the property as their mailing address which usually indicates that it is for their primary residence. Of the 33 remaining, eleven were Florida residents, sixteen were from eastern states and six were from states west of the Mississippi.

While I was at it I thought I'd revisit the Property Appraiser's "market value" as compared to the actual selling price. The average variation wasn't as great as the last time I looked but the outliers were still extreme. One condo was valued by the PA at 204% of the amount that it actually sold for. Another had a "market value" that was only 51% of the selling price. The PA's average market value for the 49 sales was 81% of the selling price which is right in the range that they hope to be. However, as long as the ends of the scale are off by a factor of two, "market value" should be used for entertainment purposes only, the same as Zillow.

Total condo inventory this morning is 283 in the two cities. Thirteen percent of those are either short sales or foreclosures with eleven of the foreclosures in the Pier Resort complex. We're down to 46 single family homes for sale with a lone distressed sale in the mix.

Someone caught a mixed-up130 pound yellowfin tuna in 140' of water off Port Canaveral from a 19' boat last week. They fought the fish for four hours but finally landed it and brought it back to the dock to everyone's surprise. We usually have to go to the other side of the Gulf Stream for these tunas, a trip of 60+ miles each way, and a 130 pound fish is a monster. Yours truly made a freediving, spearing trip yesterday and managed his first mahi on the spear, quite the accomplishment, at least in his own little mind. We also got a hefty cobia and some snapper on the spears. Summer fun in Cocoa Beach and tasty fare for the families.

“It almost looks like we’re in cahoots in the sunshine,” CB commissioner Skip Williams

Parsing May

A reminder from 2004 hurricane season

The numbers are in and May was another record setting month for residential sales in Cocoa Beach and Cape Canaveral. According to the Cocoa Beach MLS there were 14 single family home sales in the month, all but two in Cocoa Beach. The highest priced Cape Canaveral sale was a small 3/2 in decent condition a few blocks from the beach that sold for $172,000. Prices ranged from $130,000 for  a small 3/2 fixer-upper on West Volusia to $1.25 MM for a direct ocean 5/4 beauty with 3800 square feet in south Cocoa Beach. Eight of the fourteen closed for cash.

There have been only two months in which 60 or more MLS listed condos closed in our two cities since June of 2006, first in August 2011 and again in May of 2012. There have been 61 unit sales recorded as of this morning. As always, that number will likely increase as snoozing listing agents get off their behinds and close their listings. Twenty of the sales were for less than $100,000 and only six for $300,000 or more. The only condo to sell for more than $360,000 was the entire 4th floor Riomar in south Cocoa Beach. This 3008 square foot unit recorded for $675,000 but there were non-cash concessions that indicated the actual selling price as over $700,000.

Bayport in Cape Canaveral contributed four of the sales at blowout prices as low as $73 per square foot for a six year old 3/2 unit.

Magnolia Bay sold two more 2nd floor luxury units at very aggressive prices. Remaining inventory there is getting slim.

A Perlas del Mar luxury townhome in Cape Canaveral that sold new in 2007 for $450,000 closed as a short sale for exactly one third the original price. Stupid cheap at $64 per square foot. Try building one for that.

The last of the developer foreclosures at Mystic Vistas closed for $195,000. There are currently only three listings in the complex, lowest asking price $299,900.

Of the 61 closed sales in May, five were short sales and eight were foreclosures. Two thirds sold for cash. One by-product of the robust sales is a rapidly declining inventory. There are but 49 single family home listings in the two cities this morning. One is a short sale and there are zero foreclosures.

There are 289 active condo and townhome listings. Twenty are short sales and twenty are foreclosures. Of these forty distressed listings only one is direct ocean, a ground floor 3/2 in Cape Canaveral asking $249,900. Pickings are slim.

“How did you go bankrupt?
Two ways. Gradually, then suddenly.”
_______Ernest Hemingway

5000 words - click to enlarge

Canadian dollar to US dollar May 2012

Ding dong

Sweet Cushman scooter in front of The Surfinista

I know I've said before that no one would be ringing a bell at the bottom of the price decline but I changed my mind and just rang it. Readers know that I often mention that there is no "market" that one buys, only properties. The "market" bottom will not coincide in most cases with the bottom in specific property types, neighborhoods or condo complexes.  There are different dynamics at play in each category. This bottoming began over a year ago in troubled complexes like Mystic Vistas which was ahead of the curve because of the high number of developer foreclosures. We have already seen enough closed sales there at prices 20% to 25% above the lowest prices to safely say that it's unlikely we'll see any reason for prices to drift back to that range from two years ago when units sold for $150,000. The last of the developer foreclosures have closed.

The bell will be ringing later for a few other complexes like The Pier Resort which still has eleven active foreclosure listings, half of all foreclosures currently for sale in Cocoa Beach and Cape Canaveral. We could very well see prices drift lower there before the remaining units are sold. In general, the mountain of short sales and foreclosures have been absorbed. Those sellers who hung on through the downturn now have some negotiation strength selling into a skinny inventory without competition from loads of distressed properties.

Out of 362 total residential properties for sale in the two cities, 12% are either short sales or foreclosures, 3% of the total at the Pier Resort. Four new short sales units that hit this week in south Cocoa Beach have multiple bids and will be under contract shortly. Absent those and the Pier Resort units we are at 8% distressed. Compare that to 56% of condo sales distressed in 2010.

In 2010 the tide of distressed deals peaked. As of  May 2012 that spring tide of supply has receded. This morning we have less total condos for sale than we had distressed listings two years ago. Instead of a choice of 300 plus short sales and foreclosures in spring 2010, this morning buyers have 44 distressed sales from which to choose with eleven of those in one complex. For a buyer serious about getting a property here at a significant discount to recent prices, the quest to get the lowest price in the complex will more often than not be unfulfilled. Those waiting for another $150,000 Mystic Vistas since 2010 are still waiting and watching prices notch steadily higher.

Draw your own conclusions. If I were personally looking to purchase a residential property in Cocoa Beach or Cape Canaveral, at this point I'd be less concerned with getting the lowest price in the neighborhood than in getting exactly the best-suited property for me. Prices are still very discounted (in most cases) from the peak six years ago and the inventory continues to shrink. I'd love to have been the guy who bought a Mystic unit for $150,000, but, in the grand scheme of things, $200,000 ain't such a stinking deal, ego aside.

Enjoy your Memorial Day weekend. As I type this, the Dragon spacecraft is docking with the International Space Station. Right on, private industry.

"As Coroner I must aver, I thoroughly examined her.
And she's not only merely dead,
she's really most sincerely dead.
Ding dong, the witch is dead."
_____from the Wizard of Oz

May - so far

This needs to be repeated: All the research in the world and the most persuasive argument for a well-substantiated price is meaningless to a buyer or seller who refuses to accept it.

I can show a seller of real estate that the market price for her property is between X and Y dollars based on recent sales of similar properties. If she thinks prices are headed up and is unwilling to accept an offer between $X and $Y a sale isn't going to happen unless a buyer wants the property enough to pay more. Conversely, a buyer who believes prices are going lower and will only pay less than fair market value, may not find a seller willing to play. Despite the high incidence of unrealistic participants in our market we continue to see about ten pairs of buyers and sellers of residential properties finding the middle ground and closing every week in Cocoa Beach and Cape Canaveral.

As of this morning, May 18, 2012, there have been six closed sales of MLS-listed single family homes in the two cities. None were short sales or foreclosures. Of the 58 homes currently for sale there is but one short sale and no foreclosures. Of the six sales so far this month the highest price paid was $575,000 for a 5 year old, 4454 square foot, non-waterfront townhome in south Cocoa Beach. This half duplex has never been lived in and has been on the market since May of 2008 when it was offered for $1,395,000.

A waterfront Snug Harbor 4 BR, 2.5 BA on the secret pond on West Bay closed for $260,000. It had 2294 square feet and was on a big .48 acre lot.

A non-waterfront 4/3 with 2441 square feet on Greenwood in Cocoa Beach sold for $301,000.

A nicely remodeled 3/2 with 1329 square feet two blocks from the beach in Cape Canaveral sold for $172,000.

Condo sales are chugging along with 25 units closed so far. Two were short sales and two were foreclosures. Highest sale so far was $675,000 for the entire 4th floor at Riomar. A total of 3008 square feet with 4 bedrooms and 3.5 baths. Super luxuriously remodeled. There were some off-the-record concessions which made the actual price paid over $700,000.

A top floor SW corner with side ocean views at Majestic Seas sold for $360,000. It had 3 bedrooms, 2.5 baths, 2100 square feet and a two car garage. It was first listed less than a year ago for $669,900. That's a remarkably fast turnaround for an unrealistic seller.

Two more Magnolia Bay units have closed, both second floor. One with 2455 square feet sold for $340,000 and one with 2183 square feet sold for $300,000. The pre-construction asking price for the 2183 square foot units in 2006 was $549,900. Now that the complex has stabilized and is around three quarters sold, I think these units are excellent value at these prices. All have 10' ceilings and two car garages and the quality of construction is tops.

A 2nd floor, 3/2 direct ocean SE corner with 1625 square feet at Las Palmas on the ocean in north Cocoa Beach closed for $285,000. It was partially remodeled, fully furnished and had a one car garage.

A top floor corner Solana Lake 3/2 with 1956 square feet closed as a short sale for $230,000. It sold five years ago for $400,000.

One of the bank-owned Pier Resort units with 3 bedrooms, 3 baths and 3400 square feet sold for $265,000. A slight peek of the ocean across the Pier parking lot. They were asking $450,000 for these in 2006.

One of the big rambling corner 3/2 units at Shorewood sold for $210,000. It had 2104 square feet, a one car garage and the tiniest peek of the ocean if you squinted your eyes or used a Realtor mirror.

A south facing Royale Towers C building 7th floor 2/2 sold for $190,000. Had a one car and 1256 square feet.

A north facing Windrush 2/2 on the 5th floor with 1271 square feet closed for $199,500.

A top floor (7th) direct ocean Windward East 1/1 with garage sold for $175,000. 902 square feet.

A Stonewood D building ground floor remodeled 2/2 sold for a shocking $140,000 with the owner holding a mortgage.

Profitable flip: A nicely remodeled, second floor Royale Mansion 1/1 with a peek of the ocean closed for $130,000. We've seen prices for these units move up considerably from last year's sub-$100K closing prices. This particular unit was one of those, selling last August as a foreclosure for $90,500.

A very nice Captain's Cove canal-front 3/2 in Cocoa Beach sold for $129,900. This is smoking deal territory with 1841 square feet, garage AND a boat slip.

We set another MLS record this week with total condos and townhomes for sale in Cocoa Beach and Cape Canaveral dipping below 300 units for the first time. We stand at 294 total units this morning. Of those, 14 are short sales and 20 are foreclosures or 12% total distressed, also a record, the lowest level since 2007 when there were no distressed sales.

I had another crazy Realtor encounter this week, this one with a 20 plus year veteran who apparently is just learning about short sales. I'll spare you the details but trust me when I say that you can't depend on someone's years in the business to be an indicator of their competence. Choose your agent carefully and please ask a few questions of them to determine if there is any gray matter lurking behind the over-sized sunglasses. Sellers would be well-advised to check the MLS listing of their property. I'm sure many would be shocked at the photos or lack thereof and the chimpanzee narratives.

The lingering small swell is still here with favorable light winds most days and the recent rains have turned plant growth on high. Sea turtle nesting activity is strong with several new nests every night on the beach down my way. It's another beautiful spring in Cocoa Beach.

"I'm surrounded by water and I'm not going back again." __Zac Brown