SNAPPED

The real estate market here has been somewhat stressful in recent weeks. In fact, it has pushed some participants right over the edge. The message below was mailed yesterday by a local agent to every member of our county association of Realtors. It is presented unedited except for the city location for your entertainment and contemplation. Caution: profanity

"I have had a dozen showings on a vacant house in $City.  Only 3 agents left cards.  and nobody, actually nobody called to offer feedback.  and only 2 responded to email feedback inquiries.  Who the hell trained you?  or should I say, who did not train you?  If u dot want to leave a card or provide feedback, dont fuckin show any of my listings."

A followup email was sent to all members last night (probably with his broker's gun to his head) apologizing for the profanity but interestingly not withdrawing the order to not show his listings. It's pretty amazing that someone with people skills like this has listings. I wonder how well he'll handle an offer. I imagine he'll be as difficult to deal with as the wound-up agent I was negotiating with last week who took more than 24 hours to respond to every email and phone call. A negotiation that should have taken one day stretched to six because the agent was either too busy or too slack to professionally and promptly respond to the buyer's agent.

Folks, choose your agent carefully. Settling for an incompetent or cuckoo agent can be an expensive mistake. If your agent is too busy to respond to you promptly she is probably too busy to deal competently with the other parties to your transaction. If she can't handle the stress you can do better.

"I find it rather easy to portray a businessman. Being bland, cruel and incompetent comes naturally to me. "  __John Cleese

Shrinkage

11 PM, May 7 and the first named storm of the 2015 Atlantic hurricane season, Ana, formed off the coast of South Carolina. We got a taste of this storm as it was percolating northward a few days ago with an inch of rain early Wednesday in Cocoa Beach but clear skies by dark. We have had some fun small surf from the storm and mellow longboard conditions are still lingering this morning, better south.

May is blueberry season and there are several places to pick for those interested. The photo is from Holland Family Farm in Mims where you can pick three different varieties for $3 a pound. Lots of fun and well worth the short drive from the beach. The kids will love it. No charge for the ones you eat while picking.

Our inventory according to the Cocoa Beach MLS this morning is hanging steady with 226 condos and townhomes for sale in Cocoa Beach and Cape Canaveral and 61 single family homes. Properties have recently been selling faster than new listings are appearing so it is reasonable to expect the inventory to continue to shrink. In the last four weeks there have been 54 new condo listings and during the same period 67 units were contracted. There were 13 new single family listings while 21 were contracted in the same four weeks.

Of the 61 single family homes for sale in Cocoa Beach and Cape Canaveral only one is distressed, a foreclosure. There are zero short sale single family homes. There are five foreclosed condos for sale and a lone short sale. In spite of the tight inventory, those looking for an oceanfront condo have several new  listings this week that deserve consideration at prices from the low $300s to the mid $600s. Several new riverfront listings as well. Those who understand the magic of south Cocoa Beach have several ocean and river units available. If you need a buyer's agent I'm happy to show any or all of them.

Cocoa Beach Firefighters golf tournament Saturday morning, May 9, 8 AM. Join us for a good cause. $50 for 18 holes includes lunch by Long Doggers and a shot at prizes with proceeds to benefit the CB Firefighters Charitable Fund. Weather is forecast to be perfect.

Happy Mother's Day to all qualifiers and to those in the bullpen.

"If you want to assert a truth, first make sure it's not just an opinion that you desperately want to be true."  ____Neil deGrasse Tyson

Another Day - Another Record

Real estate inventory in Cocoa Beach and Cape Canaveral continues to set successive all-time low records. This morning there are a total of 226 condo and townhome units for sale in our two cities. Half of those have been for sale for three months or longer and fully a third have lingered for over half a year. We can safely assume that these are what I call "not really for sale". In this market, if a property is priced close to fair value it will sell quickly. I have seen some units sell recently for more than what I considered fair value so taking a stab at over-pricing does have some merit if a seller isn't in a rush. If the unicorn buyer hasn't shown up after three months, it's time for a seller who really wants or needs to sell to get realistic. The market is always right.

There was another record set this week. After hovering around 7 to 9% of the total units for sale for about a year, our distressed inventory (short sales and foreclosures) plunged this week to just three percent of the total. Out of the 226 units for sale, six are bank-owned and for the first time since 2007 there is but one short sale condo in Cocoa Beach and Cape Canaveral. On inventory in general, our bread and butter property type has always been direct ocean units with at least two bedrooms and two baths above the ground floor. Buyers looking for one of these units asking less than $300,000 have zero to consider this morning.

It is just as tight in almost all property types. There are 63 total single family homes for sale in Cocoa Beach and Cape Canaveral. Buyers looking for a waterfront single family have 27 to consider, none of them distressed. If the budget peaks at half a million dollars, there are but ten on the list. Buyers, you better have a direct MLS link and/or a buyers agent who is on the hunt for you if you hope to score the property you want. There are others looking for that same property and they may be able to move more quickly. Need a buyers agent? Contact me. By the way, 67% of all condos closed in our two cities so far this year have closed for cash.

How do you know there's a drummer at the door? The knocking keeps speeding up and slowing down. How do you REALLY know there's a drummer at the door? Your pizza has arrived.

"Everyone is a genius. But if you judge a fish on its ability to climb a tree, it will live its whole life thinking it is stupid." ___Albert Einstein

A Timeline of Disaster and Recovery

I began writing this a year ago in 2014 when the Magnolia Bay project in south Cocoa Beach finally sold out after a grueling decade of drama and hardship. I decided then to wait until the dust had settled before posting it. Now seems as good a time as ever.

----------[ from spring 2014 ]

Something happened last week in Cocoa Beach for the first time in almost ten years. The number of units offered by the developer at Magnolia Bay returned to zero. The very last one was contracted. It was a crazy, ten year roller coaster ride. Much money was lost, homes and businesses were lost and yours truly got yelled at a few times.

It was 2004 and flipping real estate was the national pastime. The most profitable niche in our local market was buying pre-construction contracts. It was possible at most projects to put down 10% to reserve a unit and then ride the runaway appreciation for a couple of years before either closing or selling the contract for a profit. Tripling and quadrupling the investment in a year or two was the norm. There were $18,000 reservations at Portside Villas that profited $100,000. There was so much demand for pre-construction that one major developer held drawings to pick names of lucky buyers who were "permitted" to reserve a unit. Timing was everything. An investor stood to make the greatest gain if he could have the longest time from reservation to close. As we found out later, he also had the greatest exposure to ruin. A few lucky contract holders at Sol y Mar and Almar in south Cocoa Beach got a profitable bonus when the City of Cocoa Beach imposed a construction permit hold for about a year before those buildings got started.

The easy money was pretty much finished by 2006 in Cocoa Beach and Cape Canaveral. Pre-construction contract holders who hadn't flipped by then were faced with a dilemma; go ahead and close for an immediate paper loss or walk away from their deposit. In almost every case, walking from the deposit was the wiser move. The projects that closed after 2006 turned out to be disasters for the buyers who chose to close. A few developers and banks suffered huge losses as well. The area of south Cocoa Beach outside the city limits was especially hard hit with unfortunate timing for multiple projects.

Magnolia Bay was supposed to begin early in the decade on a big parcel of riverfront in south Cocoa Beach between Jack Baker's Lobster Shanty and the River Falls subdivision. It was an overgrown snarl of vegetation and mangroves with a secret homeless camp hidden in the middle. The residents of the River Falls subdivision mounted an organized opposition to the planned project that resulted in several emotional County Commission meetings. I was verbally attacked by angry homeowners because I dared to speak on the developer's behalf to the Commission. For me it was less about the project getting approval than it was about the hypocrisy of the opposition. Most of the vocal homeowners were living in an area that had just been developed a few years earlier on a similar piece of riverfront land. "I've got my house. Now, no more construction."

The Commission eventually approved the project with a concession on height of the closest building to the subdivision and a planting of screening vegetation. (Interestingly, that screen is not in evidence today in 2015) The delay would prove to be disastrous. Construction began and business at the nearby Express Grocer exploded from the influx of construction workers. This in addition to their regular business from the little trailer park next door made life good for Sam, the owner, and Gary, the long time clerk. I can still remember the sign posted on the door one day: "Gary is not allowed to give credit anymore.  signed, Sam"

Pre-construction units at Magnolia Bay were first offered in 2005 from $549,900 to $899,900. The lowest prices were for the five Plantation units on the 1st floor in the middle C building. The highest prices were the two top floor Signature units at $899,900. The corner Savannah units in the C building were $689,900, $729,900 and $769,900, prices climbing with the floor number. Even with the heady prices being paid for new condos at the time, this was rarefied air for non-oceanfront units.

The first group of reserved units began closing in January of 2007 at the pre-construction prices with eleven units closed that year and three the following year. By that time, the real estate crash was the headline of the day and fear predominated. I have no idea how many buyers walked away from their pre-construction deposits rather than close. Although painful at the time, that decision would prove to be prudent for those who did. The last unit to close in 2008 was the first to close for less than the pre-construction price. At the new reduced prices, four more units closed in 2009 with two Plantation units going for $370,000. By the end of 2009 the first short sale was in the works and it (2nd floor Plantation) closed in December 2010 for $300,000 as did another short sale Plantation that set what was to be the lowest sold price at the complex, $295,000 for a 1st floor (above the garage) unit. Plantation units have sold since for as much as $418,000. None have yet approached the what now seems crazy high pre-construction prices.

As I finish writing this in April 2015, there are three re-sale units offered, two Plantation units asking less than $370,000 and a Savannah corner for $455,000. Market dynamics suggest to me that we'll continue to see rising prices here though I doubt that I'll live long enough to see them get to pre-construction levels again. Sam and Gary don't care either way. Express Grocer is gone for good. I wish them well wherever they are. The site of the old trailer park next door sits empty, the residents and trailers moved out for a townhome project that never materialized, victims of timing and the market crash..

Just across the highway, after years of no new construction in south Cocoa Beach, pre-construction units are today being offered at two new projects. Prices start at $800,000 for oceanfront units at Cocoa Cabanas with construction well underway. Time marches on.

"I feel bad for the homeless guy, but I feel really bad for the homeless guy's dog, because he must be thinking 'Man, this is the longest walk ever.'" ___Norm Macdonald

When's It Gonna Pick Up?

I hear it from waiters, snowbirds, random golf partners, neighbors, past clients, the guy dipping bait at the marina. They all ask the same question; "When's the market gonna pick up?" The accurate short answer to the question is "six years ago".

In Cocoa Beach and Cape Canaveral the number of sales bottomed in 2008 and that number has increased every year since. I have to go back 118 months to June of 2005 to find a month in which more condos closed in our two cities than in March of 2015. I think it's bound to slow down soon because of the record low inventory but so far my prediction of that happening has been premature.

If the question was "When are prices gonna get back to the highs?", my answer would have to be "Almost certainly not for a long, long time." Example: a two bedroom, two bath riverfront Cocoa Beach condo that closed two weeks ago for $170,000 sold in March 2005 for $292,500. That's a lot of appreciation to get that one back to it's high. Another direct ocean 2/2 unit that closed last month for $360,000 last sold in March 2006 for $545,000. Those two are fairly representative of the price recovery progress of most condos. Anecdotally, the rapid rise in prices that we've been seeing for the last few years seems to be slowing down. We actually had a couple of closed condos in March that were at prices below what they sold for in 2011 and 2013. The slowdown is a healthy development although probably not welcome to sellers who have been holding out for higher prices. Those sellers playing the waiting game should make themselves familiar with their real cost of waiting and what amount of appreciation it takes to make waiting profitable and how likely that is to happen.

I got a little ahead of myself talking about the end of snowbird season. There appear to be larger numbers than usual who have extended their stays past Easter. Traffic has lightened considerably since Easter but is still heavier than normal for this month. Local golfers,  the business league at the Cocoa Beach Country Club resumes for 2015 next Tuesday, April 14. Join us. Tee off anytime between noon and dark. Everyone is encouraged to participate and to occasionally look over their shoulders at the group following. You know what they say, "While we're young."

I dipped a few gallons of the Oak Hill reds in the photo one night this week. Fun to catch and fun to eat.

“The best minds of my generation are thinking about how to make people click ads”
___Jeff Hammerbacher

Beneath the Surface

Icebergs and alligators; the greater danger is usually hidden beneath the surface.

And just like that, the season is over. Easter Sunday began early with crowds on the beach in several places for sunrise services. The weather cooperated with perfect conditions as the sun rose into a clear 71 degree sky as the full moon set over the Banana River.

March 2015 in the Cocoa Beach real estate market was, without exaggeration, gangbusters. There were 73 closed condos and townhomes in Cocoa Beach and Cape Canaveral and 15 single family homes. Eleven of those were distressed, short sales or bank-owned. Another 96 properties that haven't closed yet have gone under contract since March 1, twelve of those distressed. For sale inventory this morning is scary low in condos with only 236 condos and townhomes left for sale in the two cities. Single family home numbers are a little better at 72 listings. Only 7% of the total for sale listings are distressed.

On a side note; many of the current listings are way over-priced. This is more true with oceanfront condos than any other property type. To the 18 aspiring record setters out there priced above the highest recent $/sf sale, consider that only two units have closed in the last six months for more than $300 per square foot and both of them were super-nice units in luxury, newer buildings. All 18 of the units priced above the highest one are beautiful and desirable but all 18 of the sellers are going to have to modify their expectations if they really want to sell. Those dreaming of over $400 per square foot will have to be content with dreaming. I guess you can't win the lottery without buying a ticket. Asking $400 per square foot for any oceanfront condo in Cocoa Beach in 2015 has about the same chances of success as buying a Powerball ticket. Not impossible but pretty close to it. Fully a third of these pie-in-the-sky sellers are in the same building. They are apparently reinforcing one another's impossible dreams. Talk around the pool must be interesting;

"Any nibbles on your unit?" 
"No written offers but several showings and feedback has been good. You?" 
"Same. We might raise the price after Easter. Larry says market is on fire."
"Yeah. Us, too. Did you see what Remrem is asking for his? We might be too low."

I get asked why an agent would take an impossibly over-priced listing. Sometimes, it worth having a too-high listing at a busy spot just for the sign exposure. In 2015 there are even better reasons not to decline an over-priced listing. With the recent evolution of online real estate, every listing an agent has generates traffic and inquiries from several dozen real estate websites. It can be good for a listing agent to have over-priced listings if she can sell other fairly priced listings to the inquiries she gets from Zillow et al for the too-high ones. Don't count on a listing agent to refuse a listing because it's too high. It's still good for business. Sellers who want to sell need to know what the market has recently been paying for comparable properties. If they price accordingly they can expect to pick up a check in a reasonably short time. If they ignore the comps and list for a crazy over-the-market number, at the very least they get to enjoy the fantasy of their unit being worth $too-much (around the pool). A check, however, will not be forthcoming.

Whether you're buying or selling, if you'd like an idea what a property is worth right now, I'm happy to give you my opinion. I'm not an appraiser but I am an involved market participant and a committed statistician who has been studying, slicing and dicing our small market for many years. I know this market like very few.

While I wasn't paying attention this blog had it's tenth birthday last month. Since March 2005 I've published 509 posts (and written a few dozen others that didn't make the cut for whatever reason or controversy) and we've had 293,211 visits to the blog, half of those in the last three years. The Cheerleaders and Bad Haircuts post warning about NARs ill-timed, self-serving Time2Buy campaign in 2007 has been read 1434 times making it the most read post of all. Thank you to all who've read, commented and/or emailed over the years. I've enjoyed it all. Plenty more to come. It's probably time to ruffle some feathers again.

"Remrem is a fine soldier and a gentleman but a cubit of his company can stretch a league."  ___Wilbur Smith from Desert God. [Apparently chatterboxes are not a modern phenomenon.]

Contraction, My Brother

My old companion, the corn plant (Dracaen fragrens) bloomed again this year for the third time in the last four years. This hardy plant has been with me for over 20 years. It is apparently rare for an indoor specimen to bloom. According to Wikipedia this African native helps remove indoor air pollutants and is very tolerant of neglect. For the week or so that it blooms, my house smells like the Chanel facory.

Inventory of condos and townhomes is down to 240 units in Cocoa Beach and Cape Canaveral. Over half have been on the market since last year, many for years. Two thirds of the single family homes in the two cities have been for sale since last year or before. The new listings that are priced anywhere near fair market value are selling immediately. The overpriced ones stagnate and contribute to making the inventory numbers far less dire than the reality. The reality is there are very, very few properties that are attractively priced. Buyers need to accept that they may need to be patient and, at the same time, ready to move when a good target has been acquired.

Of the 64 single family homes for sale, a third of the offerings are above $500,000 and a third are asking less than $385,000. About half are waterfront. There have been four new listings since March 1. During the same time seven have gone under contract. Both definitions of contraction are at play here.

There have been 26 new condo listings since March 1 and 55 closed sales. In the same time there were 37 newly accepted contracts. Of the accepted contracts a third contracted within four weeks of listing. There are only thirteen foreclosed and five short sale units on the market today. The distressed property dynamic is all but finished in our market.

There were a few interesting, attractively-priced  new listings this week. They included:

• A 14 year old 3 BR, 2.5 BA townhome on the Cocoa Beach Golf Course with a two car garage asking $235,000. 
• A cute, remodeled and fully furnished one bedroom unit in an oceanfront building asking $135,000.
• A ten year old 3 BR, 2.5 BA Majestic Bay townhome with 2307 square feet and a two car garage for $225,000.

Weather has been wonderful this month as we are winding down to the end of snowbird season. The first and largest wave of the northward migration begins Tuesday as those with leases ending March 31 hit the dusty trail for home. Spring break is finished for the majority of schools but we'll continue to see a few stragglers and a handful of lingering snowbirds through the middle of April. It will soon be possible to shop at Publix without protective pads and a drive to the Port for lunch won't take half a day (unless, of course, one wants it to).

Potential buyers, Drop the mouse! Do not click on the "More Information" button next to the listing on Zillow, Trulia, Homes or Realtor.com or any other real estate website. Your info is going to be sent to as many as four self-proclaimed "expert agents" or, even worse for you, the listing agent. Some sites will send your info to an agent who has agreed to pay a huge chunk of the eventual commission to the company operating the website as a referral. That much reduced paycheck in no way is good for you.

You do NOT want the listing agent or one of her staff  writing an offer for you. You'd be better off with some dufus who paid Zillow for your info representing you than the listing agent or another agent from her office. They are prohibited from advocating for you in the deal. That dufus (or me) can battle for the best deal for you with no regard to what is best for the seller. Dufus might not have the experience or skills to do the best job but the law doesn't stop him (unlike the listing agent) from trying. A buyer's strongest play is to have a buyer's agent who is representing only them. We are not hard to find but Zillow or the others are not the place to look.

"A man who doesn't care about what he looks like, he's applauded. We say, 'Oh, he's not superficial.' I, myself, am deeply superficial."  __Fran Lebowitz

Don't Say That. Really.

For most people that I encounter in real estate transactions, buyers and sellers alike, removing emotion from the process is difficult. It's easy enough to intellectualize that emotion shouldn't be a factor but it manages to intrude in a large number of negotiations. An irrational, emotional response from the other party can often drag an otherwise rational person straight into the mud and reduce or kill chances of success.

There are an number of self-defeating trigger phrases that can get that response. I've seen the phrases below derail many negotiations over the years that otherwise stood a good chance of reaching agreement. A person hoping to buy or sell property (or most any other thing) would be wise to resist uttering these phrases or adopting these mindsets. At the end of the day, the buyer and the seller decide what they are willing to accept or pay.

"I will not play games." - I hear buyers say this often, especially in multiple offer situations. Guess what? Negotiating is a game. You can't win without playing. Offer what you're willing to pay and take into consideration everything that the other party is telling you. Withdrawing because you "won't play games" only guarantees that you won't get that property. Your initial offer may very well be enough.

"I'm not going to give it away." - Consider that your idea of "giving it away" might be at exact market value. Our robust market is more than willing to give you market value or above. That is never "giving it away" even though it might be less than you paid at the market peak.

"The offer is too low. I'm not going to respond." - Unless you are firm at your asking price, always respond to an offer. Most buyers can't help themselves from making a first stab at trying to get the property for less than market value, sometimes with a stupid low offer. I've seen crazy low initial offers work their way up to a number that was acceptable to a seller. Respond to lowballs as if they were good offers. You decide how much to counter. Keep the buyer in the game until they have demonstrated that they won't get near your number. The initial offer is an invitation to begin the negotiations.

"I will not pay full price." - I've been asked many times what percentage of asking price the first offer should be. There is no magic percentage. As I've related before, full price at Target may equal exactly the final price at Macy's after the sticker markdown and additional discount at the register. Know what any property is worth before you offer. Full price can be a good and fair price. While you're screwing around offering a set percentage off asking price, another buyer may have recognized that it's priced right and offered the fair full asking price.

"If they won't include the (fill in the blank) the deal is off." - If the Sonos sound system wasn't included in the listing don't include it in the offer. I've seen buyers walk away from a fair price on a property because the seller wouldn't include furniture that was never intended to be included. Keep your eye on the ball and don't complicate your offer. You can always get a sofa.

"Not a penny more." - Really? So if the seller's mental walk-away number happens to be $100 above your "not a penny more" number, you don't want this house that is exactly what you're looking for (your words). This phrase tells the seller to not even try to compromise somewhere between his last number and your take-it-or-leave-it number. Not a smart strategy. Stay in the game until it works or it doesn't.

"Not a penny less." - Same as above. It's a dare that pride will not let many people accept. You can just as easily make your counter without adding the end-of-negotiations phrase.

"I would have paid that." - This is a good one. You couldn't have paid that without even offering. This is usually in response to a property going for well less than asking. The seller's agent probably already told them that their asking was too high but they didn't listen and clung to the too-high asking price. When the fair offer came in, probably with justifying comps, they accepted reality and the offer. This goes back to knowing what a property is worth. Your buyer's agent can include comps with your offer to demonstrate to hard-headed sellers that your offer is on the money. Solid comps from the buyer's agent with the offer will often swing the tide. Note: If there aren't comps to justify a lowball, don't try to manufacture a justification with irrelevant comps or the Property Appraiser's or Zillow's idea of value. Knowledge and negotiating skills, have them and use them.

How 'bout this weather. Summer came early this year. Back up to 85 again today with light west winds and continued clear blue skies. This has been the busiest March in Cocoa Beach in my memory. I suppose cold weather in the north and low gas prices have contributed. This past weekend, in addition to the usual venues, there was live music in the Juice and Java parking lot and the Mai Tiki complex. The stray spring breakers wandering around downtown Cocoa Beach must have thought they'd found Florida's Bourbon Street, with live music in over a half dozen places in a one block radius. Monday morning, the streets and parking lots (ours included) downtown looked like there had been a heavy snowfall of trash. We had it all cleaned up and ready for the next onslaught by noon. Three more weeks.

"This land is your land and this land is my land, sure, but the world is run by those who never listen to music anyway."  ___Bob Dylan