Where It's At

A brief summary of the current market trends in Cocoa Beach and Cape Canaveral. All data is from the Cocoa Beach MLS.

We began the year on January 1 with 303 condos and townhomes for sale in our two cities, 10% of those distressed (either short sales or foreclosures). Since then a total of 491 units have closed, 16% distressed. The higher closed percentage of distressed is explained by the high number of short sales contracted before the end of 2013 but closing in 2014. The trend of cash purchases dominating the condo landscape has continued with 63% of all condo purchases so far closing for cash. That percentage has stayed between 63% and 71% for the last three years.

The inventory this morning stands at 251 condos and townhomes, 19 of those not yet built. Of the 251, a total of 9% are distressed.

Single family home trends are slightly different. Since the year started, 102 have closed with 45% of those purchased with cash, 18% of the total distressed. Inventory right now is at 54 properties, 11% distressed.

We seem to have returned to our normal fall slowdown in activity. During the years following the crash, the fall was almost as busy as the spring and summer but that trend hasn't expressed itself this year. New listings remain alarmingly low. Buyers who are looking now, as always, need to have financing preliminaries taken care of (if not paying cash) and be prepared to move quickly when an attractive opportunity appears. If it's priced right, recent history tells us that it will be sold in a few days. Out of town buyers would be well advised to have a buyer's agent they can trust who can visit likely targets immediately and advise whether to offer or not. Waiting to get here in person to view a desirable property will reduce a buyer's chances of winning the race. It's not a risky nor uncommon practice to write an offer on a property sight-unseen with an inspection period long enough to allow time get here to physically tour and inspect the property. If you need a buyer's agent you can trust to guide you through the process, I'm happy to help.

Price is almost always different than value. ...price is what you pay for an asset, but value is what you get. ___________Brian Nelson

Bought & Sold - Your Info

If you've ever looked for real estate on a website and requested info on a property you may have been harvested and sold without knowing it. We agents get emails and phone calls daily from companies offering to sell us your info for exorbitant prices. On the big three websites, ZTR, your request for info can go simultaneously to up to three agents who won't owe anyone any additional payment should you use one of them. They have already paid to be there in the margin hoping for your request. On dozens of less prominent real estate websites, the process is different. The dominating business model is selling the leads they harvest. Should you care if your info is sold to an agent? You're going to want an agent to represent you anyway. Well, when your agent is giving up a third to half of his potential pay check, his devotion to your needs may be less than enthusiastic. Below is an example of the type of agreement these companies want from the agent to whom your info is sold. I received this one this morning.

______________________________

We, the Originating Broker, have referred to you, the Recipient Agent, our Customer {CUSTOMER_NAME}, a potential buyer, seller or renter, whom we have procured through our websites, including www.somethingorother.com, and direct contact. You have agreed to accept the referral of our Customer,...  subject to, this Standard Referral Agreement ("Agreement").

 With respect to any Customer, their family member, or any related party (familial or not) introduced as a result of the original referral of the Customer whom We have referred and for whom You have agreed to provide brokerage services, You agree to:

 1. Share with Us thirty (30%) percent of all gross commissions ("Referral Fee") due to You for each side of the transaction where You represent the Customer, whether the Customer buys, and/or sells and/or leases/rents any real estate, for a period of twenty-four (24) months following your acceptance of the Customer ("Referral Period").

______________________________

Do yourself a favor and try to contact an agent directly rather than through a website. You deserve their total commitment to you. This includes the big franchise websites, most of whom have even more onerous referral arrangements with their agents. Here's a disgusting take on how the nation's largest brokerage is handling this process and their big plans for squeezing even more out of their agents and franchisees.

A small swell has lingered even after the great waves of last week retreated. Not nearly as big but still fun. I hope all who enjoy the warm water and waves of fall have been able to get out and partake. The mullet run is on in all it's glory so surfers who do venture out are sharing the lineup with billions of mullet and the larger predators who feed on them. Fishing from the beach is epic on days when the surf conditions allow.

"I've been poor and I've been rich.

The first one stung but the second one itched."

________________________Patrick Stump

Price High & Hope For a Miracle

If your vehicle uses premium gasoline you may want to take a close look at the prices for premium on the signs at the left. The Sunoco at 1st St. South was charging 33 cents less for premium yesterday when those pics were taken than the Chevron in south Cocoa Beach. Reminds me of asking prices on our MLS except that some people are actually overpaying for the Chevron premium.

Sales have slowed to a crawl in Cocoa Beach and Cape Canaveral with just 16 condos and townhomes closed in the first half of September along with six single family homes. That's not surprising as we've closed a total of 481 condos and townhomes and 108 single family homes so far in the year and inventory is, to put it mildly, depleted. There are 241 existing condos and townhomes for sale this morning. That's equal to the number of units sold in just the first 18 weeks of 2014. As I've mentioned before, if we strip out the over-priced listings that have been languishing on the MLS for over 9 months, the actual inventory is below 200 units.

There were some compelling sales among the 16 closed so far. Someone got a good deal on a direct ocean 2nd floor weekly rental 2/2 Cape Winds that closed for $175,000 as a short sale. It needed some TLC but will be able to generate good income for the new owners.

A big direct ocean 2nd floor corner 2/2 at Coral Seas sold for $324,900. It had 1608 square feet and a garage.

Another direct ocean, weekly rental 2/2, this one at Spanish Main, sold for $260,000. It had 1177 square feet and a garage and sold fully furnished.

A small 2nd floor direct ocean Diplomat 2/2 with 900 square feet closed for $250,000. It was nicely remodeled and had no garage.

An original condition 2nd floor Sand Dollar south view 2/2 at Royale Towers closed for $220,000. It was fully furnished and had a garage.

A poolside ground floor Cocoa Beach Club weekly rental 2/2 sold for $205,000. 1098 square feet and carport only.

A nice 2nd floor 2/2 direct Banana River Waters Edge West in south Cocoa Beach closed for $199,910. It had a garage and 1268 square feet.

A 2nd floor furnished direct river Banana Bay 2/2 with 1316 square feet and a garage closed for $189,000.

Two townhomes on Colonial Drive near downtown Cocoa Beach closed within two days of one another for $155,000 and $160,000. Both were 3/2 with a garage and the higher priced one was slightly larger at 1537 square feet.

Someone got a very cool remodeled and furnished Aqua Sea 1/1 a couple of blocks from the ocean in south Cocoa Beach for $100,000. On the high side for 700 square feet not on the water but a gorgeous little unit.

The fall mullet run is on in full force with gazillions of finger mullet running south along the shore. Mix those in with the bazillions of pogies already scattered just offshore and it makes it a good time to be a pelican or snook, tarpon, ladyfish, bluefish, spanish mackerel, jack crevalle or shark. All the latter can be caught from the beach with a live mullet, pogie or appropriate artificial. The big swell from Hurricane Edouard will arrive sometime tonight so don't expect much to get done in this town tomorrow or Thursday. The boys will all be calling in sick.

"Yeah, well, you know, that's just, like, your opinion, man." The Dude from The Big Lebowski

Sales and Shenanigans in August

Condos sales in August in Cocoa Beach and Cape Canaveral continued at a slower pace with 49 recorded sales as of this morning in the Cocoa Beach MLS. That's 30% fewer units in July and August 2014 than in the same period in 2013. Prices on the other hand continue to increase. A Sandcastles 7th floor unit sold for $550,000 matching the highest price of the last ten years in that complex set back in the heady market of 2006.

Other sales of significance included the following:

• A top floor (4th) Meridian direct ocean 3/2 with 2072 square feet and garage sold for $850,000.
• A 5 year old direct ocean, 2nd floor Ocean Cove 2 BR, 2.5 BA in south Cocoa Beach with NO garage sold for $425,000.
• An oceanview 4 BR, 3.5 BA, duplex in Cape Canaveral with 2771 square feet and a two car garage closed for $415,000.
• A fully furnished 3rd floor direct ocean Canaveral Towers weekly rental 3/2 with 1417 square feet and a carport closed for $315,000.
• A furnished 10th floor direct ocean Xanadu 2/2 with 1761 square feet and garage sold for $310,000.
• A furnished, direct ocean 5th floor Stonewood 2/2 with 1317 square feet and garage closed for $305,000.
• A furnished 3rd floor direct ocean Sea Oats 2/2 with 1200 square feet and no garage sold for $305,000.

Based on those last three, it's looking like the market is comfortable with the $300,000 neighborhood for direct ocean 2/2 units in original condition above the ground floor. Remodeled units are bringing more, as always.

Now for a couple of head-scratcher sales recorded in August 2014.

A direct ocean 1st floor Spanish Main 3/2 sold at online auction for $199,000. What's interesting about this one is that Nationstar was holding an offer of $225,000 as a short sale when they decided to go ahead and foreclose and auction the unit. The auction appeared to have no bids and disappeared from the site only to show up weeks later as closed for $199,000. The buyer who offered $225,000 nor his agent was ever contacted by Nationstar.

In another crazy online auction Fannie Mae sold a direct ocean 2nd floor Driftwood 2/2 for $126,000. That's $100,000 less than the yet-to-close contract on an almost identical unit two doors down. To compound the craziness, this FNMA unit was first auctioned off in April with a winning bid of $192,000. That buyer failed to close but there were two other bidders who had each bid over $170,000 who were never offered the chance to reengage. A subsequent "quiet" auction produced a buyer who won for $154,000. Fannie Mae screwed up the first right process and lost that buyer and then contracted with a new auction firm who advertised an "in-person" auction that never happened. A "high-bid" contract was produced after the secret auction for $120,000 plus $6000 buyer fee. None of the earlier bidders can figure out what happened and none were ever contacted about either of the last two auctions. All were willing to pay the considerably higher numbers that they had previously bid. Someone needs to tell Fannie Mae that there are much easier and more fun ways to lose $100,000.

Snook season opened yesterday and the first stray schools of mullet are already showing up. I watched giant tarpon crashing schools this morning in south Cocoa Beach well within casting range of the beach. Surf fishing will be the best it gets in the next several weeks as the annual mullet run kicks into high gear and all the bigger predators move in close to the beach to feed on them. I'll be hoping for a tasty snook or two. A big tarpon from the beach, although inedible, is a nice consolation catch.

"If you don't know how to turn off the safety, being unable to fire the gun is the intended result." __unknown

How to Choose a Real Estate Agent

I struggled with the title of this post. I considered "How NOT to Choose a Real Estate Agent" but (uncharacteristically for me) discarded that in favor of a positive title although the intent of the post really is about what NOT to do when selecting an agent. I briefly touched on this in a post a couple of months ago but figured, considering the strong shift taking place, that it deserved revisiting..

The thing that got me on this subject again was the recent big increase of properties being listed by out-of-town agents. Over the years I've worked in the Cocoa Beach and Cape Canaveral market, most property listings here have been with local offices. I suspect most US markets have been the same. Makes sense to have a broker who knows the market and is readily available for buyers and their agents. Things are different now and the change happened quickly. Over a third of the new listings in the last two months in Cocoa Beach and Cape Canaveral are with agents and/or offices in other cities. There have always been some agents in other cities in our county who would have the occasional listing here, even some who did quite a bit of business, but never the proportion that we're seeing now. What happened? Consumers embraced the big online real estate sites for their real estate research and in the process discovered what appeared to be an easy way to find a local Realtor in their target market. The problem? The sites allow anyone willing to write a monthly check, no matter their location or qualifications, to buy their way into the list of local agents.

I searched Zillow this morning for a Cocoa Beach buyer's agent. (Results were similar for seller's agents.) Out of 13 "Trusted Pros" on the first page of 500 total results, only four work in offices in Cocoa Beach or Cape Canaveral. Note that the recommended agents rotate for every search so your results may differ from mine but, after doing several searches, it's obvious that my results are typical. Two of the Cocoa Beach "Trusted Pro" agents work out of offices in other counties over an hour's drive from Cocoa Beach and another seven work out of offices in other cities in our county. Four of the recommended buyer's agents had zero sales in Cocoa Beach or Cape Canaveral in the last 12 months and another agent had one. How did they get recommended? Easy. They pay Zillow to be there. No skills, experience or even physical proximity required. I could buy my way into recommended agent status in Key West or Pensacola if I chose. My value to a buyer in either of those markets would be considerably less than most of the experienced local agents but, that wouldn't stop an online advertiser from accepting my monthly check and proclaiming me a "Trusted Pro" in the area. The same is true for these out-of-town agents on the Cocoa Beach agent list. Does it matter? If I'm landing in Tegucigalpa I'd much rather have a pilot who has experience with that hairy airport than a guy who is making his first landing there. The more experience with that runway, the better. An agent unfamiliar with our market might not kill you but it is not in your best interest to have her in the left seat.

Feel free to use Zillow and other online real estate sites to look for a buyer's or listing agent but do yourself a favor and at the very least select an agent in the actual town you plan to buy or sell in. And, remember that there are active experienced agents in every market like myself who choose not to pay to be included in the Zillow cluster. You may overlook your very best choice if you limit your research to paid ads. I may be forced to surrender at some point and pay to be agent number 501 in Cocoa Beach but for now I prefer to be excluded from the list even though I have hundreds of successful landings and takeoffs here and know the terrain like the back of my wrinkled hand. For anyone looking to buy or sell a place here, you'd be well-served to extend your search for an agent outside the "Trusted Pros".

"Being the quiet, mysterious one doesn't get the ladies unless you happen to be high-end handsome." __applicable metaphor

Persistance

The slowdown in sales that I commented on in my last post, Cooling Trend, is persisting. The rate of new listings is not keeping up with the rate of sales. The inventory of  condos and townhomes in Cocoa Beach and Cape Canaveral this morning is 267 units if I include 19 non-existing, pre-construction units and 9 over-priced units that have been for sale and sitting empty since their construction six and seven years ago. That leaves us with 239 units of which another 33 have been for sale longer than nine months, several for years, indicating unrealistic pricing. An overflowing handful of other listings have had their days on market manipulated to appear as not having been for sale forever so the "really for sale" inventory of condos and townhomes in our market is below 200 units, probably below 150 if we filter out anything asking 20% or more above market value. That dearth of inventory, not a lack of interested motivated buyers, is the reason for our current sales rate of about one condo closing per day. We averaged over two per day the first half of 2014. I don't see any near-term catalyst that will be improving that. If anything, we may see sales decline even more as we move into the fall months.

Back to the mid 90s today. I can't imagine living anywhere but the coast in Florida. No matter the heat, we can count on the cooling sea breeze by early afternoon most days. Get away from the coast and the heat index goes Richter. The theme parks and inland golf courses must be especially brutal this time of year. Thankfully, the Cocoa Beach Country Club course sits on an exposed peninsula in the Banana river so it is exposed in most places to any breeze.

Our next scheduled launch is a SpaceX Falcon 9 in four days. Check the schedule of all upcoming launches HERE. A tropical storm could be influencing our local weather by the end of next week. A poorly organized mass is approaching the Lesser Antilles right now and moving northwest but not expected to have favorable conditions for turning into anything significant. Meh.

"Someone who is nice to you but rude to the waiter is not a nice person." anon

Cooling Trend

The crazy pace of sales in Cocoa Beach and Cape Canaveral has slowed. After a blistering first half of the year for property sales, July returned to a more sedate pace. My constant predictions about a coming slowdown have until now been entirely wrong. It seemed impossible that we could sustain an average pace of 63 sold condos a month with an inventory of around 250 existing units. Somehow we did until July. As of this morning, the Cocoa Beach MLS is reporting a total of 45 sold condos and townhomes in the month of July and 11 single-family homes. That's compared to 67 condos and 14 single families in June. There are 255 existing condos and townhomes for sale at the moment along with 19 very-optimistically offered pre-construction condos.

I expect the slowed pace to continue. Eleven of the 255 for-sale condos are bank-owned and six are short sales. The days of high numbers of distressed sales are, for the most part, behind us. We are at the lowest ratio of distressed offerings since the first short sale closed in our market in 2008. There are 27 pending distressed contracts yet to close so the boost in numbers from those will be inconsequential. While no one was looking, our market has returned to a healthy supply and demand dynamic. Demand exceeds supply by a good margin at the moment.

Of the 45 closed condo sales in July, 25 sold for cash. Only one of the sub-$100,000 purchases was with a mortgage. A quarter of the condo sales were at prices above $285,000 and a quarter were below $107,000. The higher priced sales were a good mix of ocean and river units.

There are currently 47 direct ocean listings. Six of those are asking $250,000 or less, most in that range in older buildings along Ocean Beach Boulevard. Twenty of the units have been for sale for over 300 days telling us that they are most likely overpriced.

I hope those of you who are surfers got to enjoy our first, brief hurricane swell this week as Bertha passed off our coast. Yours truly missed it completely while scalloping off Florida's west coast. On a bright note, the scallops are thick this year and my crew was able to limit out every day in less than an hour of snorkeling the grass flats. If you've never done it, it's a great activity for kids and adults alike and the bounty is very tasty.

"...one of the worst things society has done is name adipose tissue the same thing as a macronutrient."  comment on fat by a random Redditor

Big One Fails Again

It's happened again. A bushy-tailed loan officer promises he can loan on a condo and then discovers right before closing that the particular condo complex will not satisfy his bank's lending guidelines. The twist is that in this case the lender is local. I chant the "use a local lender" mantra constantly but it appears I need to qualify that. An overconfident, inexperienced local loan officer can blow your deal up just as effectively as the banker cousin back in Fond du Lac.

In this particular case the agent (not me) recommended a local lender who offers a specific loan product for unwarrantable condos, which this one was, to the buyer. The buyer elected instead to go with a local branch of the number one mortgage originator in the nation. The loan officer energetically claimed that he could do the loan. Remember the "Does This Make My Butt Look Big" post? He was just doing his job even though he didn't know there was no way his bank would loan in this particular complex. Any loan officer experienced with condos in our market would have instantly recognized that this condo-tel would be a problem, if not impossible, loan. The buyer didn't find out that the lender couldn't loan on the unit until well towards closing and is now scrambling trying to rescue the purchase through the originally recommended local lender.

Our takeaway here is that it is better to have a lender who can close the deal than one who promises the lowest rate or the bank with the most recognizable name. In addition, prospective condo buyers would do well to familiarize themselves with possible hurdles. My "Condo Mortgage or Root Canal" post from three years ago listed the major items that the lenders want to see in condo associations. A weekly rental unit may be attractive for the income possibilities but any condo that allows weekly rentals is going to be a mortgage challenge for multiple reasons. Ask your agent for recommendations for lenders who have products available for problem complexes.

I hope the surfers among the readers got some of the fun surf last Sunday. It was one of those rare summer surf days with a decent sized ground swell, clean conditions and all the waves one desired. Lots of smiles around town Monday. This coming Friday and Saturday are the last two days of our six day red snapper season in Atlantic waters. I got my one fish limit last Saturday with a 20 pounder and hope to repeat it again this weekend.

"Music was a lot better when ugly people were allowed to make it." ____Otis Gibbs