June Flowers and Property Sales

It might have been nothing more than a cruel tease but we got our first long, soaking rain of the season on Friday after months of little to no rainfall. Every green and blooming thing in town is radiating happiness and it seems to be affecting the humans as well.

The month of May finished with a bang in the local real estate market. As of this morning, the MLS is showing 67 condos and townhomes closed in Cocoa Beach and Cape Canaveral during the month. As is normal in our market, over half sold for cash and ten sold in the first week on the market. Average days on the market are creeping up as sellers, emboldened by low inventory and rising prices, are listing with ever more optimistic initial asking prices. As always, the market ultimately decides the selling price, not the seller. The MLS is showing 204 total existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning and another 27 to-be-built units.

Action in the higher end of the condo market was subdued with only ten of the sold units closing for more than $399,000. Over half closed for less than $220,000. Decent oceanfront units were closing for prices mainly in the $230 to $285/sf range with only one smaller unit commanding over $300 per square foot. For perspective, there are 33 units currently asking over $300 per square foot. Only a few of them deserve that price.

Single family home sales continued at a strong pace with 16 closed in May, five of them over a half million. Only three of the homes sold for cash. A third of the homes sold in the first 30 days on the market. There are 73 homes currently for sale in the two cities.

Bottom Line
The song remains the same; know how to, or have a buyer's agent who does, accurately estimate fair value of properties for sale. If a listing is priced closed to fair value, it usually sells quickly. If a condo, know that over half the interested parties will likely be offering cash. Those who have been looking for a while will know that putting off an offer until travel arrangements have been made will likely contribute to being to the table too late. It's possible and usually advisable for out of town buyers to have their agent go ahead and offer on attractively priced properties sight unseen as long as they can negotiate a long enough inspection period to accommodate travel here for viewing. As we oldtime surfers used to say, "the lip does not linger".

SpaceX launched a previously flown Dragon Spacecraft on a resupply mission to the ISS yesterday and successfully landed the first stage of the Falcon 9 rocket vertically at LZ1 at the Cape after stage separation. The tremendous sonic boom of the returning Falcon loosened caulking and fillings all over town.

"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."  __Robert Heinlein

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Don't Panic...Yet

A fine example of Jurassic World Cocoa Beach wildlife. I've seen this guy chase snakes away.

A few things: Several dozen property owners in Cocoa Beach and Cape Canaveral woke up Sunday morning of Memorial Day weekend to find (if they looked) that their property was being advertised on Zillow as "foreclosed" or "pre-foreclosure (auction)". Must have made for an interesting morning for those who caught it. Most probably didn't but you can bet that real estate agents across our area are frantically researching the flood of new distressed properties that their Zillow-using clients are calling about. The handful that I looked at when I got the alert proved to be mostly previously foreclosed properties that had long since been sold and off the MLS in some case for over six months. It was either a computer glitch during the night or a deliberate ploy by Zillow to increase traffic, their life-blood. We may never know. For the record, of the 298 residential listings in Cocoa Beach and Cape Canaveral this morning only five are distressed, four of them bank-owned, one auction and zero short sales.

In the shenanigans category; another agent mentioned to me that a settlement statement he saw last week had a substantial "marketing fee" being paid by the seller to her broker. This was in addition to the commission already being paid which was at the top of the range I'm used to seeing. Not sure what extra "marketing" on this particular property deserved a bonus beyond what is usually provided in a listing but, hey, if they'll sign agreeing to pay more, why not? My opinion; disgraceful gouging, but I don't have all the details and perhaps the seller insisted to weekend ads in The Telegraph and Le Monde. to which the listing agent agreed with the extra fee.

We are resting at a measly 200 total existing condos and townhomes actively for sale in Cocoa Beach and Cape Canaveral. There are another 27 pre-construction units offered to the market's collective indifference. The low inventory numbers may have finally put the brakes on the sales rate. In the last two weeks only 21 units have gone under contract, quite a slow-down from activity in the first quarter. Five of those sold within the first five days on the market. So far in the month of May, 53 units have closed, 32 of them bought with cash. Fifteen single family homes have closed so far in May with only three of those purchased with cash.

Speculations: A frequent question I get is "Should I wait to look for a property to purchase in Cocoa Beach assuming prices will be better later?" Looking at our 200 unit inventory, which I though would level out many dozens of units higher, I don't see any forces that would contribute to prices retreating from current levels. This is, of course, barring a macro event like dollar collapse, war with North Korea or another country gaining control of our executive branch. Demand is still high and the appreciation we see appears to be at a healthy sustainable rate. Without a flood of new properties, the demand should continue to exceed the supply well into next year and beyond. The takeaway for those who agree is to continue the search if purchasing is the goal. Waiting for a dip in prices could prove expensive.

There's an excellent new fish market downtown Cocoa Beach on the beach side of South Atlantic just south of Minutemen next to the sunglasses shop. It's Coconut's Fresh Catch Market and it's not what you might expect. I've been in three times and I've found big, fresh cuts of locally-caught fish, tripletail, cobia, tuna and mahi in addition to some other not-local fish. Homemade crab cakes ready to cook for $5 each. The prices are slightly higher than the markets at the Port but the difference won't buy the gas there and back and the quality is equal. If you like fresh seafood, check them out and support this welcome addition to the community.

On this Memorial Day we celebrate and honor those who made the greatest sacrifice defending our freedom and way of life. Think about the idea of someone you don't know dying to protect your right to the way of life you enjoy. That is what this holiday is about. In addition, there are thousands of living Americans serving right now knowing the possibility of their making the greatest sacrifice is part of their service. To those before you and to you, thank you and a tip o' the glass.

“There are so many ways to be brave in this world. Sometimes bravery involves laying down your life for something bigger than yourself, or for someone else. Sometimes it involves giving up everything you have ever known, or everyone you have ever loved, for the sake of something greater.
 
But sometimes it doesn't. Sometimes it is nothing more than gritting your teeth through pain, and the work of every day, the slow walk toward a better life." __Veronica Roth, Allegiant

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Fear and Loathing in Cocoa Beach

I apologize for the long interval between posts. Over the last couple of weeks I began writing two different tales of shenanigans and outrageous behavior in the local real estate market, a favorite subject for writer and reader. Alas, a moment of level-headedness led me to shelve both articles. Rather than leave the reader hanging, briefly, one was about an episode of collective insanity at one of Cocoa Beach's largest (and tallest) condos. After years of willingly filling out prospective buyers' lenders' questionnaires, the association decided that they would no longer complete the required form. I happened to be the unfortunate agent with a buyer seeking a mortgage who was first confronted with the new policy. The association, after refusing to complete the form, referred the lender to the association's attorney who likewise refused citing imagined liability. What the association and their attorney failed to anticipate was the consequence of not completing the form. Without a completed form, the 108 owners in the building would not be able to sell to someone who needed a mortgage to purchase. It would effectively become a cash-only building. Here's what the form looks like for those interested.

After a few owners were alerted to the consequence of the new policy a small uprising ignited, the questionnaire was swiftly completed by a Board member and the loan package proceeded to underwriting, disaster averted.

The other tale of real estate drama I chose not to share was having my behind chewed viciously by a listing agent over some excluded contents in a "fully furnished" condo. She felt that I was being unreasonable in asking for an excluded items list prior to making our best and final offer. We ultimately offered without the list which was then produced, five days after listing, with, in our opinion, excessive exclusions. We ultimately reached agreement but not before I endured a scathing tirade and a hangup. All part of the job. About hangups: I got to thinking that punching the red "END" button on a cell phone, no matter how vigorously, is not nearly as gratifying as slamming a heavy phone receiver into its cradle. The millennials among us will never experience that warm fuzzy. On to real estate activity in Cocoa Beach and Cape Canaveral.

Since May 1, fourteen single family homes and 45 condos and townhomes in our two cities have received accepted contracts and another 70 new listings have come on the market. During the same time 46 properties have closed. Over half, 26, of the sold properties sold for cash, no mortgage. Inventory this morning sits at 206 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral. There are another 27 pre-construction units offered but they seem to be attracting very little attention despite compelling pricing at at least one of the projects. There are 72 single family homes for sale in the two cities, half of them waterfront and just under half asking over a half million.

Super boat races in the ocean off Cocoa Beach this weekend. Best places to view other than from a helicopter or boat will be in the stretch from about the Pier to Xanadu. The boats will be available for up close viewing on their trailers Friday night downtown. Hope to see some of you there.

"We felt the lightning
 And we waited on the thunder."  __Bob Seger

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This Is No Social Crisis

Minutemen Causeway streetscape is nearing completion. Landscaping is being plugged in and it looks like the finished product will be beautiful. It's very welcomed. The oceanfront block is closed to vehicular traffic and is pedestrian only now, pavers and planters from Atlantic Ave. to the beach.

Sales activity in Cocoa Beach and Cape Canaveral continues at a plodding pace thanks to the depleted and showing no signs of changing inventory. With a total condo and townhome inventory of 209 existing units in the two cities, finding a suitable property has become more of an epic quest than a narrowing down of suitable possibilities. Those looking for a single family home are even more constrained with a total of 72 possibilities, half of those asking a half million or more.

In the two weeks since Sunday April 16, forty three people were successful in their condo search and were able to put units under contract. During the same two weeks nine single family homes were contracted. With a roster of hundreds of agents trying to get a slice of the beach pie and only a few dozen actually involved in transactions, you may soon find your last agent bagging groceries at Publix. Those with a gainfully employed spouse may have the luxury of retreating beyond the break on a locally shaped log. Tasty waves in Cocoa Beach are in much greater supply than attractively-priced real estate listings.

A third of the condos were on the market less than a month and half of those less than a week. It's competitive for buyers and units that are priced right when listed are gone quickly. This has changed seller and listing agent behavior. Why not overprice and see what happens? The seller can always reduce the price later and the listing agents need inventory so anything, no matter the price, is good for them. Speaking of overpaying, buyers, when faced with an unreasonable seller of a property they like, have to ask themselves whether it makes sense to knowingly overpay by X% now or risk not finding another suitable property during the time prices move up by X+Y%. Buyers who made this difficult decision at any time in the last several years came out ahead. Buyers who think like I do that the demand and supply dynamic will continue to nudge prices higher should not run from a small overpayment. Conversely, buyers who think that prices will not continue the current trend should stick to their guns and not pay a dime more than what the comps suggest is current fair value. It's important to know how to figure out what that number is or have an agent who can. No matter who is doing the estimation remember that one comp does not determine fair value. Randolph may have sold his unit down the hall for $220,000 but that doesn't automatically make mine worth $220,000 when similar units in other buildings are selling for $250,000. Be smart and look at all angles. Creative thinking may be rewarded.

You can't always get it
When you really want it
You can't always get it at all
Just because there's space
In your life it's a waste
___________________The Who - Another Tricky Day

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Welcome to the Slowdown

Snowbird season ended with a bang Easter Sunday and we woke up Monday morning to a different, much less hectic town. I can once again drive from downtown Cocoa Beach to Port Canaveral for lunch and expect to make the trip there, eat an excellent fish sandwich dockside and drive back in little more than an hour if need be.

In the week from Sunday April 9, 2017, through Sunday, April 16, a total of 18 condo units and seven single family homes received accepted contracts in Cocoa Beach and Cape Canaveral. The homes were in a range of asking prices between $289,900 for a non-waterfront 4/2 three blocks from the beach to $749,500 for a gorgeous two story 3000 square foot beauty on a canal.

None of the condos contracted during the week were asking over a half million and half of them were under $200,000. Current condo inventory for sale stands at 210 exiting units in the two cities. That's about a three month supply at the current sales rate. Pickings are slim for the fairly large numbers of prospective buyers.

Those of us in south Cocoa Beach have been entertained in the last week or two by frequent sightings of a wild bobcat that has been roaming the dunes. The swamp rabbit that's been eating my backyard flowers has apparently been successfully avoiding contact with this large predator as I continue to wake up every day to fewer flowers. Those of you with pets are probably well-advised to keep the little fluffies safely inside for a while.

Crews have been making noticeable progress (finally) on the Minutemen streetscape project with the center block leveled and sidewalk work begun. Palm trees are going in on the ocean end of Minutemen and my first impression is positive. It's a great visual improvement. Don't forget Friday Fest this Friday night downtown. I hope to see y'all there.

"A Southern accent is not a club in my bag." __John Oliver

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Winding Down

The crush of snowbird season 2017 is firmly behind us now. After Easter we will drift into a brief slow season before school is done for the year and summer vacations kick in. Anyone who has only seen Cocoa Beach during the busy snowbird or summer seasons might be surprised at the laid-back feel here in late April and May. It's a good time to be in Cocoa Beach.

Property sales were slower in Cocoa Beach and Cape Canaveral this past week, Sunday April 2 through today. There were 15 condos and two single family homes contracted during the seven day period while we gained 13 new condo listings and 5 new single family homes. Our inventory of properties for sale is virtually unchanged from last week with 219 existing condos and townhomes and 68 single family homes currently offered. Only a third of the single families have been for sale for longer than three months. In contrast, over half of the condos have been for sale longer than three months, a sure sign of overpricing. Of the 174 condos closed so far in 2017, 54 sold in the first two weeks on the market with 35 of those gone in the first five days. Price it right and it's gone immediately.

I would advise those of you looking to purchase to get your finances in order prior to starting the search. If you're going to be getting a mortgage, talk to lenders now, choose the one you want to work with and begin the process. You are guaranteed to become frustrated along the way with the many requests for documents so getting in front of that will make your life less stressful. Same for cash buyers. Know how long it will take for your funds to become liquid and have a proof of funds document ready to provide with your offer.

Post-Inspection Price Reductions

The large majority of purchase contracts that I see for beach properties are written using the FAR-BAR "As-Is" contract. "As-Is" in theory means that the contract is for the property in the condition it's now in, "as-is". In practice, "As-Is" means the buyer is willing to purchase the property for this price IF no deal-killing conditions are found during inspection. It's not uncommon for the buyer to go back to the seller after inspections have been done and ask for either repairs or a price concession for issues found during inspection. That is fair for hidden issues. Here on the beach the number one hidden issue is a rooftop AC compressor with one rusted foot in the grave. That is a reasonable issue for price renegotiation if it wasn't disclosed already. Going back after inspections and asking for concessions for issues that were either disclosed or are plainly visible is not going to be well received. The "As-Is" contract gives the buyer "sole discretion" to cancel the contract and receive refund of deposit if done within the inspection period. That puts total control of the contract (read: negotiating strength) in the buyer's hands. If the seller refuses to renegotiate the buyer can either stick with the original contract and move forward or cancel. It's worth keeping in mind that in the current market, a seller stands a good chance of finding another buyer while a buyer may have a much harder time finding another suitable similar property.

It's Master's Sunday and we have four players within two stokes of the leaders, Justin Rose and Sergio Garcia. It's gonna be a good one. John John Florence won the Margaret River Pro in West Oz yesterday at Main Break in sizable and challenging surf. John has all the raw talent that we saw from Kelly at the same age. The Cocoa Beach business golf league kicks back off this Tuesday at noon. Anyone who'd like to get together for a weekly nine holes is welcome. It's fun, rates are super low and there is a chance to win a few bucks on a skin. Come on out. It's a friendly bunch of guys and girls. Tee off anytime between noon and dark.

"My parents didn't want to move to Florida but they turned sixty and that's the law."  __Jerry Seinfeld

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The Difference a Week Makes

More of the same this past week in the real estate market but a lot different feel around town otherwise. We are into the winding down of snowbird season 2017 with the departure of the first major wave of northward migrations last Saturday. The traffic in Cocoa Beach was noticeably lighter Monday April 2. By the time Easter has come and gone it'll be back to dusty little cow town with walk-ons at the Cocoa Beach Country Club golf course the rule rather than a reason for the starter to look at the offender like an antler-sprouting Under Armour-wearing alien.

Condo sales in the week beginning Sunday March 26 were right in line with the previous trend; 24 units under contract in the week with five of them under contract in less than seven days. There was not a lot of oceanfront unit activity probably because that segment of our inventory is the most picked over and depleted. There were 22 new condo listings in the same seven day period along with seven new single family home listings. Nine homes went under contract during the week.

As of this morning, there are 67 single-family homes for sale in Cocoa Beach and Cape Canaveral at prices between $379,000 for a fixer-upper canal home in south Cocoa Beach to a brand new direct ocean five bedroom beauty downtown offered for $2.995 MM.

The condo inventory managed to shrink despite it's alarming low level with the combo of sales and withdrawals exceeding the new listings. We are down to 213 existing units for sale in our two cities. If I'm looking for an ocean condo I am encouraged to see that there are 100 listings showing as oceanfront. Being the skeptical sort I have to take a closer look. I must eliminate six as they are proposed and not in existence yet. Another 35 are asking over a half million and about half of the remaining have either no view or a peek so tiny as to be nothing more than a cruel reminder of what might have been. As a public service I must remind readers that those listings that appear too good to be true are exactly that, in every single case. When I receive an email about the very nice looking, 16 year old oceanfront 2 bedroom, 2.5 bath townhouse in Cape Canaveral asking $170,000 I don't even have to look at the MLS to know that it's another Villages of Seaport listing that the agent has misleadingly classified as "oceanfront". Listing agents feel justified doing that because the Villages property has a sliver of oceanfront that is as much as a half mile from some of the lovely townhomes. Owners in those units rarely repeat their first trek to the beach from their "oceanfront" condo opting instead to load the car rather than melt another pair of flip flops strolling the blacktop to the beach.

Negotiating tip 72: keep the chances of finding a replacement property in mind before walking away from a negotiation. Personalities often overtake logic during adversarial back and forths. Walking away from a $5000 impasse in negotiations and then waiting six months to try to buy another might make sense for a $100,000 property. Walking away over $5000 on a half-million dollar condo of which there are few available could very well cost much, much more six months down the road when the next target appears. Relative and absolute dollars are different. No one wants to overpay but sometimes the decision to overpay a little now for a property that hits all the buttons is more prudent than taking a gamble on finding a similar property later for today's price. We must play the cards we are dealt. Small unpleasantries now can eliminate large unpleasantries in the future.

Good hunting out there. I'm here if you have questions or a good knock-knock joke. Publix is safe once again. Feel free to approach the free coffee or blood pressure machine without fear of a running check against the beach toy display.

"The funds in your retirement account can be exchanged with zero transaction costs. Every day you do not sell them, you are deciding to buy them." __Ketawa - Boglehead

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