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Thursday, August 30, 2007

The Fall of Duval




The national news is filled with stories about the woes of the real estate market. And I have been writing about the woes of Key West for some eight months. But two days ago I got a shot of reality about the really big woes of Duval Street.

Duval Street is Key West's "Main Street". It starts at the Gulf of Mexico and ends at the Atlantic Ocean. The shops, restaurants, bars and hot spots are the engines that drive the Key West economy. Duval is Key West street of dreams.

So I was shocked on Tuesday when I went to In Touch, my favorite card & novelty shop. There were signs posted on the doors and windows saying closing forever, all merchandise 75% off. I went inside and the store was almost totally vacant. There were a few remnants left on the shelves--very few. The lights were even turned off for the most part. The AC was working. And the shop's owner, Frank, was sitting behind the counter.

He said that the building had been sold and the new owner was raising his rent from $10,000 per month to $12,000 per month. Ouch! He said he had rented the same amount of space directly across the street for $10,000 so he was moving. Screw the new landlord, an Israeli. But then he told me about all of his neighbors who were also closing. Forever.

He reported that retail on Duval is for the dogs. He said nobody, nobody, is making any money. He said Kennedy Galleries is totally gone--all seven locations. He then enumerated the fate of each neighbor. But he said the misery is going on all the way up and down Duval

Later I had dinner with a friend and discussed what I had seen and heard. He said that the owner of Fast Buck Freddies had told him the same thing. Fast Buck Freddies is another Kew West institution with trendy merchandise you don't see anywhere else in Key West. But even Fast Buck has fallen victim to the Duval fall. My friend said the owner told him that Fast Buck has had to revamp is merchandising to include more schlock just to keep the cash registers busy.

Duval goes through the summer blood-letting every year, but this time it looks much more serious. I have never understood how or why landlords raise the rents so high as to drive tenants out. It has been going on for years and the practice has destroyed many an honest businessman.

By coincidence The Key West Citizen has a feature story in today's edition about the same subject, but on businesses located four blocks to the north. GO HERE to read the tales of woe for more desperate business owners.

CLICK HERE to checkout the real estate listings for Key West and the lower Florida Keys. Give me a call or email me at garyethomas@aol.com to get more information on any of the listings. Thanks.

Sunday, August 26, 2007

Remains of the Gay





During my very first trip to Key West back in 1984 I was told I had to go to Atlantic Shores for Tea By the Sea. I was staying at the world famous (and it really was back then) La Te Da on upper Duval Street. La Te Da had it's own Sunday Tea Dance and I mistakenly thought that was where I supposed to go to have fun. Which I did.

I did make it to Atlantic Shores during the daytime, however. Right in the middle of Spring Break and the placed was jamming with gays, frats, locals of all descriptions, left over hippies, and nudies galore. You see Atlantic Shores was a clothing optional resort located at the southernmost end of Simonton Street on the ocean in a funky 1950's motel gone askew! There were so many people that I left after a couple of hours of people watching and tanning. It was just overwhelming.

You had to walk past the economical motel rooms from the South Street entrance then through the gravel parking lot (which served as Key West's only drive in movie theater on Thursday nights) to the elevated pool, deck, bar, and pier. Later the owners added a walk-up snack shack.

It wasn't until later visits to Key West that I actually got to go to Tea By the Sea.
Tea started at 8:00 PM every Sunday and lasted until 11:00 PM. You could hear the music for blocks around even though Key West has a noise ordinance that is supposed to forbid such noise. Sometimes the place jammed like there would be no tomorrow and other times it whimpered. Sometimes there would be a sudden drenching rain and everyone would try to gather inside the covered bar area waiting for the showers to pass.

Two of the things I remember most about Tea By the Sea was the deck bouncing up and down as people danced and walking out on the pier looking at the sky, the water, the twinkling of lights on the ocean and the stars above (I swear on a clear night you could see all the way to Key Largo or all the way past Saturn or Jupiter).

I eventually succumbed to the lure of Atlantic Shores and became a regular tanner. Like many locals I would go there daily and rent a lounge chair and bake my skin for hours every day. I would buy lunch and start cocktailing way before I should have. The place was intoxicating on many levels!

I had to stop the daily tanning when I decided to sell real estate full time. And then I stopped going to Tea By the Sea. A couple of years ago it was announced that Atlantic Shores would close and be torn down only to be replaced by luxury condos. There were some legal battles over development rights and they eventually got resolved in favor of maximum development. Surprise!

I took the two sunrise photos of the remains of Atlantic Shores today, July 26th. The sign is the only remnant left. All of the buildings and the pool and deck are gone. The gay resort is gone. Progress!

Thursday, August 23, 2007

Tomb with a View





Perhaps my pun isn't very funny. This little charmer at 730 Passover Lane sits directly across the street from the Key West Cemetery and the priced was just reduced to from $695,000 to $609,000. CLICK HERE for a full description of the features of this house.

Click on the photos to see larger views of this quintessential Key West cottage. The living area is quite large features a vaulted ceiling. There are lots of windows and french doors so the entire living-kitchen-dining area is open and inviting. The kitchen is new, compact, and has lots of special little features.

The house has one bedroom that also has a vaulted ceiling. It, too, is bright and cheery. But there is also a second level loft with room for a queen size bed and that floor space is not counted in the home's square footage.

There rear courtyard has an outdoor shower, brick pavers, pond, and lots of foliage. The white picket fence at the front sets off the smart street appeal of this smart looking little home.

Now about the location. 730 Passover Lane is a short four blocks walk to Duval and three blocks to the Historic Key West Seaport. CLICK HERE for a Google Earth View of the location. The location across the street from the cemetery provides something most Key West homes do not have: lots of sunshine and uninterrupted views, quiet neighbors, and the assurance that the neighbors are not going to build something on their property.

This house is priced to sell quickly. Don't miss the opportunity. Call me today. 305-766-2642.

Friday, August 17, 2007

There's a Storm a Brewing



The conventional wisdom of Realtors in Key West has been that if we get through this summer without any hurricanes that the buyers will comeback sometime after Christmas and start buying the good supply of now reasonably priced homes and condos.

I have been following the annual and predictable rise in the Key West real estate market every year since I first came here in 1984. And with the exception of 1989-190 and 2006-2007, the market has consistently risen without fail. You will remember there was a recession in 1989-1990 that really hurt most of the American economy. But Key West bounced back more quickly than other parts of the country. I was in commercial banking at the time and we could not sell anything. It was not that there was no interest in buying, but buyers were deterred by high interest rates and uncertainty in the economy.

Fast forward 17 years to 2007. The White House says the economy is robust. Hooey! There is a storm a brewing. Many of our manufacturing jobs have been outsourced to Mexico or Southeast Asia. Detroit has lost its market edge on domestic cars in the USA. Affordable health care is unavailable for millions of Americans. Our borders are being overrun by illegal aliens. And the cost of oil and other commodities is on the rise again.

Congress has allowed market makers to create new "financial markets" that have dramatically impacted the cost of just about everything. When I was a kid in the 1950s and 1960 we had hurricanes in the USA. But the cost of gas and heating oil stayed the same for year after year. I am not an economist so my assumptions are just based on real life experience, but I think the oil companies back then just built the short term uncertainty of supply into their cost of doing business. Then about 1972 or 1973 the price of gas jumped overnight about 30% because of OPEC. I remember the cost of gas in Colorado went from $.22 a gallon to $.33 or $.34 in a week of so. The public went crazy. There were lines of cars waiting to be filled. The world was coming to an end. But we eventually got used to being hosed. Now those that high price seems so reasonable.

But consider what has happened to the price of milk. When I was a kid the milkman delivered two gallons of milk twice a week directly to our front door. I think the price was about $.45 per gallon. I know that when started buying groceries myself when I entered law school in 1969 the price was just about the same. And it stayed that way until 1971 or 1972. Then the price of other commodities skyrocketed. We were still involved in the Viet Nam War and the Nixon Administration instituted was and price controls. That eventually (in the early 1980s) led to 20% interest rates.
Fast forward to 2007. The emergence of corn oil as a bio-fuel has caused the price of corn to be as manipulated as the price of crude oil. That same corn is fed to cows and other animals, and that price increase has caused the price of milk to rise in Key West to $4.49 per gallon for MacArthur's Milk. Store brand milk is about $.50 cheaper. The price of beef and chicken is likewise higher.

Yesterday Countrywide Financial Corp., the leading US mortgage lender, said it borrowed $11.5 billion from 40 banks to boost its stressed finances, sending shock waves through the markets. Cost of mortgages and even availability of mortgages just got higher and more doubtful--especially in Key West where the cost of housing is higher than the national average.

So I guess I am doubtful that even if we get through this summer without a hurricane that buyers will return. They come down and look at property, but they have not been buying. This may be a good time for cash buyers to pick up some bargains in Paradise.

If you are feeling a little adventurous, CLICK HERE to checkout all of the current mls listings for Key West and the Lower Florida Keys. Then give me a call at 305-766-2642 or send me an e-mail at garyethomas@aol.com, and I'll gladly help you find a little piece of Paradise at a bargain price.

Saturday, August 11, 2007

Flipping Out




BRAVO TV did it again. They created a new truly must see tv show with a cast of zanies that you will adore. The new show is called Flipping Out and it is the saga of a real estate professional who buys houses, re-styles them, and flips them for a profit. The difference between this show and other similar shows about house flippers is that the "star" is quite mad. In a good way. His name is Jeff Lewis and he comes across as vain, maniacal, egocentric, glib,lonely, caring, self-absorbed, funny, and sexy. He buys houses with "potential" and gives them sex appeal. His sense of style is right on.

I mention the show here because it is fun to watch and it shows the risks one takes when a flip is undertaken. Especially in the current real estate market. Granted Beverly Hills real estate is not the same as Key West. But the risks are the same only with more zeros. Watch it on Bravo TV on Tuesdays.

Thursday, August 9, 2007

Key West Commercial Real Estate




Ever hear of Seller's Remorse? It is when a seller regrets having nixed a sale because he thought he could get more for the property at a later date only to find out that he was wrong. Dead wrong.

Such may be the case for the owner of a commercial condo CLICK HERE located in the same developments as our office, Duval Square at 1075 Duval Street.

The Duval Square is is a planned unit development that stretches from Duval to Simonton Street just one block south of Truman. There are several restaurants including Square One Restaurant plus various commercial businesses on the ground floor and about 22 two story townhomes on the second and third levels of the buildings. We are about four blocks from the Atlantic Ocean. Upper Duval has really changed in since the mid 1980's. Back then the world famous LaTeDa's guesthouse and restaurant were the primary commercial activity in the area. But two decades later there are many restaurants, galleries, guesthouses, and the Butterfly Conservancy that line the street.

Club Body Tech closed its doors two years ago. I was a member and the gym had been a thriving business. In my opinion the absentee owners hired a very poor manager that ran the business into the ground. Equipment got broken and wasn't repaired. The showers and locker rooms were never clean. The office was as messy as a pig sty. And the membership fees were very high compared to the level of service offered.

The condo owner has had the property on the market ever since the gym closed. The initial asking price was $1.3 million. That is $387 per square foot for the largest commercial space in the complex--3361 square feet. The first Realtor to list the property told me that the seller did have offers near the asking price but that he wouldn't budge off the asking price. Two years later the price was just reduced to $600,000 or less than half of the original asking price. The price per foot today is $178. There are three other commercial spaces also for sale and they are priced at $684 per sq ft (656 sq. ft.), $570 per sq. ft. (700 sq. ft.), and $873 per sq. ft (800 sq. ft.).

Now the owner of the former gym property bought the unit in 1996 and paid $300,000 so he will not lose and principal but his holding costs (taxes, insurance, association fees, cma fees, and debt service if any) are adding up. Two of the owners of the other units for sale bought at prices much lower than their asking price so they are alright as well. But I do think there prices are very aggressive for this market. The owner of the forth unit paid $450,000 three years ago and he must be bleeding. His space is across the courtyard from the old Club Body Tech and several different businesses have failed at that same location.

I think the owner of the commercial condo that was the Club Body Tech probably does have seller's remorse. And I think the sellers of the three other units for sale need to reassess their current asking prices. There is not a lot of commercial space for sale in Key West overall. There are, however, too many commercial spaces for sale of for lease on Duval. Duval Street property owners have gotten way to greedy for their own good. They charge exorbitant rent which causes small business owners to fail whether they lease or own the property because the lease payments or mortgage payments are too demanding. Other commercial areas of Key West seem to fare much better.

CLICK HERE to search for additional commercial properties in Key West and the lower Florida Keys. Then give me a call to help you find your next business in Paradise 305-766-2642 or email at garyethomas@aol.com.

Tuesday, August 7, 2007

July Real Estate Sales for Key West



I have often reported that the best time to buy a home in Key West is during the summer when sales are low. There usually is not as large a selection because sellers typically wait until late fall to list hoping to sell in a more robust market.

Key West had only ten single family residential sales for the month of July. The least expensive was a 2 bed 1 bath home with 627 square feet. It was on the market only 27 days and was listed and sold at $390,000. The average home was a 2 bedroom 2 bath with 1309 square feet that was listed at $912,709 but sold for $826,591 after being on the market 186 days. The most expensive home for the period was a 3 bedroom 4 bathroom with 2,710 square feet that was listed and sold at $2,675,000 after 549 days on the market. There were 17 sales during the same time period in 2006 and 17 sales during 2005.

Condo sales were much worse. There were only 5 condos sold during that same time period. The least expensive was a 2 bedroom 1 bathroom on the golf course with 680 square feet. It was listed and sold after being on the market for over a year. It was re-listed at $392,000 and went under contract 4 days later. It sold for full price. The average condo was a 2 bedroom 2 bathroom with 1,036 square feet listed at $656,800 and sold at $584,200 after 239 days on the market. There were 13 sales during the same time period in 2006 and 18 sales during 2005.

The National Association of Realtors reported dismal sales results last week for the period ending July 31st and that sent (and other disappointing economic news) the DOW into a tailspin. There is no mistaking it: Key West real estate is in the dumps. Here is another interesting tidbit.

The Key West rental market isn't fairing much better. There seems to be an oversupply of homes, condos, and apartments for rent. Many would-be sellers have opted to rent there properties rather than trying to sell them in this market. That means that renters for once have an advantage because the rates are down for rentals as well or the rates have not risen by 10% over the prior year as is the norm.

The houses and condos that sold quickly during the month of July were priced to sell. Not priced to see how many cobwebs could be grown. There are some good deals in the Key West market. CLICK HERE to preview all current mls listings in real time and then give me a call to see if we can find a home or condo that suits your needs. Thanks.

Saturday, August 4, 2007

Won't You Be My Neighbor?--Part 2




I thought I would share some pics I took this morning of some of the sites near my house in the Casa Marina area. (Turn OFF your pop-up blocker. Click any photo to see a larger version.) Since my neighborhood does not have any commercial activity itself, I had to ride my bike about 3 blocks to the White Street corridor. White runs from the Atlantic Ocean to Eaton Street. About one mile. The US Navy and US Coast Guard own the small strip of land on the other side of Eaton that ends at the Gulf of Mexico.

But the area nearest my neighborhood stretches a whopping 3 blocks. CLICK highlighted name to see photos of the sites I am describing. One of the first scenes from the 1950 Tennessee William's movie The Rose Tattoo was shot from the old Key West High School that is now the Glen Archer School on United and White. The road back then was dirt. Today the road is paved and the front of the school is landscaped. The tiger is a favorite photo-op for tourists. Across the street is the new National Weather Service station for Key West. And across the street to the north is Dairy Queen.

Down one block on White and Catherine is my gym Island Gym. I wrote about it in January--when I was heavy. Lost it! Across the street are several small shops, art galleries, and eateries. Page's Paint is where I buy my paint. The guy's are great and you get a local's discount too. (I'm serious. I wonder how many tourists shop there for paint to take back home.) Mo's is a French Restaurant, but not the kind you would expect. Try it sometime for a meal you remember. But don't blame me if you don't like it. Not that the food is bad. It is just very strange.

Faustos grocery is across the street. It's a landmark. Everybody goes there even though the produce is usually older than St. Louis. The meat is top rate, however. And the Lotto line is always busy with Key West characters. Gotta go there for sure.

On the corner of White and Virginia you have Faustos parking lot, Dog 30 ( a new dog store--they don't sell dogs but do sell dog things.) Next door is Island City Tile one of two tile stores within the same block. The M&M Laundry and Sandy's walk-up coffee bar and sandwich shop are always busy. (I often stop at Sandy's to buy my customers coffee when we are driving around looking at homes.) And across the street is The Wave Gallery. There corner building is always a delight.

Down at the corner of White and United are two landmarks: The Chevron Station and across the street DION'S QUICK MART. Dion's is also a gas station and chicken station. Best chicken on the island.

I wonder if the guy who left the front loader in the street next to DION's knows something I don't...

So that's a part of my neighborhood. I'll post more pics later of some of the homes in the area.

If you live in Key West you already know how wonderful a place it is to call home. If you are thinking about buying, checkout the mls listings by CLICKING HERE and then please give me a call at 305-766-2642. Prices are down and there is a good selection in all Key West neighborhoods.

Thursday, August 2, 2007

The Key West Antiques Road Show



Do you regularly watch Antiques Roadshow on PBS? I do. It's a great diversion from the mindless dribble that has become so much of broadcast television. It is great fun watching regular people who discover that some item they bought at a thrift store or estate sale is worth a gazillion dollars. I think we all enjoy that and wish that it could happen to us.

Almost every appraiser ends up his or her discussion of the item with a statement of its' value--as if that value is the end-all of the discussion. Depending on the value we then get to see its' owner puff-up like a peacock or feign thanks to the appraiser. But the show troubles me just a bit because the focus seems to be on dollar value of the item rather on its' intrinsic worth.

Maybe Antiques Roadshow is just a reflection of our society's obsession with how much something costs. Magazines such as Architectural Digest have regular features comparing similarly priced homes in different geographic regions. Key West Magazine and The Key West Citizen newspaper regularly have similar features. I have even done such comparisons in this blog. But I think those comparisons miss the point. Price is not the same as value.

I am remodeling my house. And I have learned a valuable lesson about what things cost--or the price of everything. Here are a couple of examples. I used to think of nails and screws as being almost free because you need so many of them to build a house. Wrong. Go to Ace Hardware and checkout the prices. We have metal roofs in Key West, and they are attached to the house by specific metal screws. And those screws cost $.26 each. Electric wire is priced by the foot and most new wiring and most re-wiring require three strands of wire (or one strand of Romex)to run each course. Windows and doors, marble and granite, glass tiles and mosaics, bath and light fixtures and kitchen cabinets come in varying quality and price ranges. Once you finish the inside you get to start on the garden and pool. And you start the spending process all over again. Palms and pools are priced by the foot, so the bigger (or more rare) the palm or the larger (or more opulent)the pool/deck;, the higher the cost. And if you are fortunate enough to live in Key West you get to pay more for every item just because of it. But that is not the point.

I have written before about what I call "staple gun remodeling" referring to cheap redo a house in order to sell it for a quick profit. There are numerous examples of homes and condo conversions where attractive but relatively inexpensive kitchens and baths are installed along with a fresh coat of paint and maybe even new windows and doors. The property looks good, but most of the improvements were done just to surface areas and not to the building itself. You get the point.

Since we have so little actual new construction in Key West, most resale homes are remodels. And it is always nice to see a real quality renovation that uses quality materials and has quality workmanship. Then when you add those qualities to mature landscaping and a great location you get to see the real value of the property.

It is really frustrating right now. I have several people I am working with that are in the market to buy a second home or a business. Each person (or couple) focus their attention on price above all. They want the best price. I get it. I do the same thing. But my recent experience in redoing my house gives me a better appreciation for the real value of some of Key West's homes. There are some real bargains available right now. The real estate market is always slow in the summer, but this summer is a killer. Some businesses have closed. There are more foreclosures than ever before. And there is the omnipresent fear of another hurricane and the dread of what could happen. Prices are down about 33% pretty much across the board from what they were two years ago. But buyers are not buying.

I think it was back in 1990 when there was talk that Citicorp which was then the first or second largest bank in the United States might fail. The stock went down to $8 per share. I reasoned that the U.S. government would not let that bank fail because the consequences for the U.S. economy would have been disastrous. So I bought Citicorp stock. It eventually went back up to over $160 per share. I knew the low price of the stock was not a true reflection of its value. Citicorp's assets were enormous. It was the market's perception of problems that had devalued the stock, but not the value of the underlying assets.

And I think that thought process is what is at play in Key West real estate right now. There are many, many high quality properties that are going unsold because prospective buyers are focusing on price rather than looking at the underlying value of these properties. Sure there is a bunch of crap in the market. A good Realtor can help a buyer avoid that--or buy it for next to nothing if you are so inclined. But the smart buyer may be the one who, like me when I bought Citicorp, sees an asset that has been beaten down.

Give me a call if you are interested in looking for a bargain in the Key West real estate market. 305-766-2642 or email me at garyethomas@aol.com. Thanks.

CLICK HERE to checkout all current Lower Florida Keys mls listings. Remember to turnoff your popup blocker so that you can see the photos.

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The information on this site is for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, real estate, or otherwise. Information has not been verified, is not guaranteed, and is subject to change.

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Gary Thomas in a Nutshell

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.