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Sunday, June 1, 2008

Bottom Feeders -- The New Key West Big Fish

There's a bit of a debate going on right now in Key West about how well or how poorly the real estate market is doing. Just to set the record straight, I'm not a cheerleader for the Key West Association of Realtors or the Chamber of Commerce. I don't have any axes to grind. I'm not trying to stir up any trouble. I write this blog to get new clients to sell real estate to. Some of my best friends are Realtors. No, I take that last remark back cause it isn't true. But the other stuff is.

Every month I try to compare that month's sales results to prior years so that we can see how we are doing now as opposed to the recent past. I used the mls database and input the search criteria and then change only the year being searched. My search is of Key West to Big Coppitt Key (our suburb).

May 2008 saw 14 single family home sales totaling $9,802,000. The least expensive home sold for $335,000 and the highest priced house sold for $1,925,000. The median priced home sold at $539,250. In 2007 there were 29 single family home sales totaling $27,855,250. The median priced home sold at $760,000. In 2006 we had 31 single family home sales totaling $37,871,000, and the median home sold then at $800,000. But it was 2005 that saw single family homes sales with a whopping $48,899,600 in total sales volume. In 2005 the median home sold for $970,000. If I did my math correctly that is a difference on the downside of 45%.

There were 8 condo and town home sales in May 2008 totaling $3,660,000. The median unit sold for $397,500. Back in May 2005 there were 28 sales totaling $20,247,000 with the median unit priced at $691,250. I think that is about a 42.5% downward adjustment. Downward adjustment is a euphamism for loss.

One of the good omens from May 2008 was the sale of 324 William which has been on the market for a long time. In 2007 it was offered at $2,349,000 or $1,092 per sq. ft. In 2008 it was listed at $1,985,000 and was on the market 135 days. It sold for $1,925,000 or $895 per sq.ft. That price is way on the high side for Key West home sales both in price and price per sq. ft. But I say it is a good omen because it tells me that nicely renovated homes in good locations have not lost their allure and maybe their value has not diminished as much as some would have us believe (or hope).

The Key West landmark home at 313 William Street priced at $4,275,000 or $1,497 per sq.ft. went under contract on May 27th. That is not a short sale property so it looks like some big bucks are being spent on another quality property. As Martha Stewart says "This is a good thing!"

In May 2008 there were 34 residential single family, condo, and town homes that were classified as contingent, contingent/kick out, or pending. Of those, 14 were either short sale offerings or bank owned properties. (The number may be greater because some agents do not list the offerings as "short sale" even though the seller clearly owes more than the asking price and there is no perceived equity.) The median price on the combined residential contracts is $438,500.

Most of the people I work with want the same thing: a nice house in Old Town with a pool at a cheap price. A few want a really nice larger Old Town home with a pool and off street parking at a cheap price. Everybody wants a cheap price, it seems. We call them bottom feeders. I say that in a nice way. They know they want to take advantage of the hard market we are in. I talk to other Realtors and we all agree on the same thing: the offers that are getting made are usually low ball offers. Most offers that we are making in our office are all cash. And I hear that is pretty much true for most other Realtors.

There are plenty of would-be buyers. They just don't want to get the very best deal they can get. Why pay retail if your brother-in-law can get it four you wholesale?
The flaw with bottom feeding is that all properties are not the same. Second, bottom feeders think that if you wait long enough you will get the property at its very lowest price. Wrong.

There is only one 313 William Street (mentioned above). And now some new buyer is going to get to own it. That means everybody else cannot own it. Even those who have the money cannot own it. Because it is one of a kind. Some people tell me they are looking at buying in other South Florida locations because the prices there are more reasonable. Probably true. But then Miami Beach is not the same as Key West. Nor is Naples, or Ft. Myers, or Delray Beach. You have to own a car and want to take your life in your hands to go grocery shopping in some of those places. They even have home invasions. Most of our crimes involve drunks driving, drunks loitering, or drunks involved in a domestic dispute. I personally (seriously) go through culture shock when I leave Key West. Sgt. Phil Esterhaus used to admonish the cops on Hill Street Blues "Hey, let's be careful out there" doesn't even apply to life in Key West. Except to watchout for drunk drivers.

Last week I discovered that the Key West mls is not the only source of real estate being offered for sale by Realtors. Some out of town Realtors are listing properties in Key West, but are not members of the Key West Association of Realtors. They legally don't have to be. They are not breaking any rules that I know of. They put up a sign and install a lockbox. You may find such a listing by walking by it or maybe find it on the internet. It's akin to "for sale by owner" only on steroids because there are several of these animals around. The problem is that out of town Realtors probably don't know squat about their Key West listing. They may have had a service company install the sign and lock box. They may have never seen the property and conceivably know nothing about Key West or the property other than the tax data. Some Yahoo in Tampa could be selling a house down here. Talk about buyer beware.

A side issue of out of town Realtors listing properties here but not through the Key West mls is that the number of properties being offered may be skewed downward because they are not reflected in the mls database. When one of these properties does sell, the sales info will go though the public record, but it will not show up in our mls records. I see this as being very troublesome.

If you are not totally frightened out of your minds by now and still think you want to maybe buy a house in Key West, please consider calling me, Gary Thomas, 305-766-2642 or contact me via e-mail at You can search the Key West Association of Realtor's mls website in real time and see everything we know about that is listed with us. As opposed to the Yahoos sitting in an office who knows where. CLICK HERE to do your own search. Then call me. I promise not to call you a bottom feeder.

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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.