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Wednesday, April 2, 2008

First Quarter Real Estate Sales in Key West

Let's take a quick look at how well the Key West real estate market fared during the period of March 1st rough March 31, 2008 as compared to the same periods in 2005, 2006, and 2007. The year 2005 was a record year for Key West. There were 45 single family home sales in March totaling $55,369,000 and 36 condo sales totaling $24,880,513. Then the market began its slide. And Hurricane Wilma occurred in October and that created an even greater sense of uncertainty about Key West and Key West real estate as an for primary home ownership and as an "investment" vs. second home ownership as fulfillment of a dream.

The years 2006 through 2006 had the biggest dip in home sales to only 17 for $16,389,000, but there were 20 condo sales totaling $14,045,000. In 2007 there were 21 home sales for $17,320,550 and condo sales increased to 23 for $19,056,725. This year the single family home sales increased again to 25 that totaled $19,565,300. But condo sales slumped to only 14 with a paltry $5,115,450.

The First Quarter in 2005 saw 102 single family home sales totaling $123,299,090 against 46 this year with a volume of $39,589,300. The average home price declined 29% from the 2005 level. But condo sales during the same time fared worse. There were 82 condo sales in 2005 totaling $55,871,563 vs. 29 this year with only $13,240,950. The average condo sale declined from $681,361 in 2005 to $456,584 this year or about 33%.

Back when I started this blog I wrote about real estate market cycles. They start with euphoria transition into denial and end in capitulation. I think and hope we're in the final phase. Everyday for the past three months I watch the mls as real estate owners price or re-price their real estate offerings based on the new real estate reality in Key West. The mark downs and even new offerings at significantly lower asking prices is noteworthy. I'll probably get yelled at for saying it but the condos out on the east side of the island are free falling as are the units at Key West Golf Club. A lot of owners are just "walking away" from Golf Course condos that they purchased in 2005 when the average unit sold at $681,361 vs 2008 when the average unit sold at only $348,700--that's just about a 50% drop in price. The "value" of the units is still there. But the price is gone. And so are the owners. They are leaving their homes or investments. They are trying to sell short and walk away. There are currently 29 units on the market at the Key West Golf Development with an average asking price of $455,372. For example, Mr. A bought his unit in 2004 for $549,000 and it is now priced at $299,000. He had an 80% loan but got a boost from his lender of an auotmatic second of $54,900 to help with his down payment. Still, he had $54,900 of his own money in the condo. That will be his loss. The lender will probably end up losing $294,000 on this deal when real estate commissions and other sales costs are included. And remember,there are 28 other properties for sale there alone. And the sales are not over.

I've seen a change in the market in Old Town as well. The grand homes are still retaining their allure but they don't sell that often. The large expensive renovations have started to take their hits. Many have been reduced in asking price because they did not sell. I've written about several of them. The homes that would have sold three years ago around $3 million are now worth about $2 million or so.

Just about every Realtor in town is busy showing property and many properties are going under contract every day. A lot of the folks I've been talking to are looking for bargains and they say that they think we are at or almost at the end of the down market and that is why they are starting to look. Key West has not lost its allure. It just got way over-priced, and the national economy and the mess in Washington just compound buyer uncertainty.

1 comment:

Gary Jones said...

My wife and I are Realtors® in Maryland and we are seeing the same thing in our market. I personally don't think this will change until the pricing returns to about 2003 levels. I think we are getting to that point. Real Estate Prices have climbed about 75% across the country with the average wages increasing about 20% in the same time frame. When you have that much of an imbalance between wages and Real Estate pricing, you will have this type of slow down and depreciating values. If you are interested in buying, now is a great time to start. Interest rates are at lows not seen in about 5 years. Take your time and have your Real Estate Agent do a little research for you. Don’t fall in love with any single property. You may have to make several offers to obtain the right property at the right price! Happy Hunting!


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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.