Great Expectations 2010

Let's compare January 25, 2010 to January 25, 2009. This year 57 contracts have been accepted since New Year's Day with 19 of them short sales. Last year saw only 39 contracts in the same period with 16 being short sales. Our condo inventory in Cocoa Beach and Cape Canaveral shrunk by 162 units since last January while single family home supply increased by 20. Closed sales so far this month have exceeded last January's total. That and the increase in accepted contracts so far is encouraging except for the low inventory. Unless the spring flood of new listings happens soon, the increase in sales will likely fizzle. Picking off the good ones at the moment is requiring even more aggression on the part of buyers.

MLS inventory Jan 25, 2009 Cocoa Beach & Cape Canaveral

Condos, all prices_____720
over $500,000_________94
Single family homes___108
over $500,000_________33

MLS inventory Jan 25, 2010 Cocoa Beach & Cape Canaveral

Condos, all prices_____558
over $500,000_________76
Single family homes___128
over $500,000_________48

OK, now for a couple of stories from the trenches for those of you who like that sort of thing.

I called a listing agent about a new oceanfront condo listing last week to get in and preview for an out-of-town buyer. She informed me that because there were tenants in the unit who wanted to be disturbed as little as possible that only pre-approved buyers would be allowed to view the unit. No problem, my client is paying cash and has bought multiple similar condos in the last year and is very interested in her listing. I have successfully put together several purchases for him by viewing the properties and sending photos and handling the purchase without his ever setting foot in the units. Not good enough. Only agents accompanied by their pre-approved clients will be allowed into the unit. What the..? This is the kind of idiocy that agents wanting to sell property are faced with daily. And I thought having to drive across town to pick up a key to show a property next door was annoying.

Then there's the group of siblings I met with last week about selling their recently inherited condo to an interested buyer. I provided them with the three latest comps in their building. They informed me that another real estate agent had "appraised" their unit at a number $65,000 above the recent sale of an identical floor plan in much better condition and that they wanted to net $88,000 more than that last seller. I replied that that was very unlikely to happen considering the reality of the comps. After an uncomfortable silence with all of them staring at me like I had just sprouted antlers, one of them stated that he had just read that the market was moving up and that their expectations were realistic. They did call back a couple of days later and said, after thinking it over, they'd accept a mere $38,000 above what the last seller accepted for his nicer unit. We'll probably see this unit listed on the MLS soon by the agent that gave the crazy high "appraisal". His strategy is a well-used one, lead sellers to believe that their property is worth more than it is, get the listing and wait for the market to deliver a dose of reality. Then you can start dropping the price and, hopefully, eventually attract a buyer and cash a commission check.

"Take nothing on its looks; take everything on evidence. There's no better rule."_______Charles Dickens

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Everything is fine, ...really

The market has bottomed, inventory has dried up and prices are expected to skyrocket next year. Buy now or be priced out forever, historically low mortgage rates, population explosion, baby boomers, European buyers, median price up, year-over-year sales up, blah, blah, blah.

Let me translate the above Realtor-speak; "I will tell you anything in hopes of generating a commission check." Folks, some segments of this market are still dangerous and it would be prudent to be cautious with your real estate search. If your agent is saying any of the above phrases while waving his Time2Buy button before your eyes, put your hand on your checkbook, yell "watch out for the squirrel" and roll out of his Lexus onto the pavement. The damage to your body will probably be cheaper than the damage to your finances that was about to happen. This is historically the busiest time of the year for sales in our market and it would be easy for me to tell you that the recent activity in our market is evidence of the end of the troubled times, but, it just ain't so. There are scattered super deals to be had but they do not represent the bulk of the available listings and, if you aren't on top of recent activity, you won't be able to recognize the deals when you see them. The vast majority of current listings are over-priced. You need to be able to determine current value and negotiate a price below that number. If you can't, move on. The patient buyers are being rewarded.

There is a special danger in the high-end condo market as developers are sitting on dozens of units that they cannot move. Most of this inventory is not on the MLS so the reality of this segment of our market is hidden from examination but my observations tell me we are approaching a tipping point. No one knows how this will play out in individual complexes but the recent auction by the developer at Mystic Vistas likely sent a chill down the spine of every owner in that complex, especially when the record low prices became known. Owners in other not-sold-out new buildings and complexes should be similarly concerned. When a developer decides to unload his remaining inventory, all other units' values will be affected. If you're looking to buy in a new building, ask how many units are still unsold, find out how many (if any) owners are delinquent on their monthly fees and, most of all, be prepared to wait a long time for any appreciation. No rational person can look at the level of inventory and the rate of sales in the high-end condo market and expect things to turn around anytime soon. That doesn't mean there are no good reasons to own a condo in our great community. If you can strike a great deal and don't mind the possibility of no appreciation for a while, the best little beach town in Florida is waiting for you. The market decline so far does not appear to have affected the beach, the surf or the fishing. The market's direction was the last thing on my mind this morning as I stalked tarpon in the surf before coming to the office.

My intent from the day of my first post here in 2005 was to give you readers timely, accurate and honest information about the Cocoa Beach and Cape Canaveral real estate market. From the hundreds of emails I've received over the years, I know that many of you have profited from knowledge gained here. There is wheat and there is chaff. If you're buying or selling real estate in our market, you better know how to separate it.

'When the tide goes out, you can see who isn't wearing shorts.'
________________Warren Buffett

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