Unintended Consequences

Wednesday, 4 February 2009

A quiet Cocoa Beach canal junction on a sunny February morning.

Price erosion has not moved pari passu for all property types in our market. While all have suffered, some segments, have been more resilient than others, like weekly rental oceanfront condos. The upper end of the condo market has not shared that resiliency. There have been only two closed sales of condos since January 1 in Cocoa Beach and Cape Canaveral for more than $350,000, both short sales. One was a 4 bedroom, 3.5 bath, 3024 sq. ft. Crescent Palms penthouse that sold new in December 2005 for $775,000 and changed hands last week for $380,000. The other was a Meridian unit that sold just 18 months ago for $699,900 and closed last week for $550,000.

The weak sales trend of December (15 closed sales) continued in January with a total of 16 closed MLS condo sales in the two cities compared to 26 units last January. Two single family homes have closed since January 1. Inventory of condos and townhouses is hovering just over 700 in all price ranges with 92 of those asking over $500,000.

The intention of the new Fannie Mae condo loan requirements in January was to lessen risk, but, the consequences are fewer qualifying complexes and fewer able-to-perform purchasers. If the new, higher down payment requirements weren't enough, the root-canal-like condo certification questionnaire will make some condo complexes off limits for Fannie loans. If you are buying or selling a condo anywhere in Florida and a Fannie Mae loan is involved, be prepared to be frustrated. If you are buying with cash, feel free to wear your crown while shopping. You rule.

"Bureaucracy is a giant mechanism operated by pygmies."
___________________________Honore de Balzac