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Wednesday, October 1, 2008

Out of Business

Those of you who come to Key West know the Pegasus Hotel at the corner of Southard and Duval Streets. There are several store front shops on the Southard Street side including the now Out of Business Psychic. The Psychic of all people should have seen the downside--you'd think.

It's that time of the month again. Time to recap what happened in the Key West real estate market for the month of September 2008 and to compare it with the same time for previous years.

I've said before I am not a numbers guy. I guess I'm in the wrong business because numbers are really important in real estate. Anyway, in 2005 there were 23 single family home sales in Key West totaling $27,454,266. The number dropped to 14 sales in September 2006 with sales of $9,730,000, and fell further to 5 sales in 2007 for only $4,386,500. In 2008 we had 20 sales totaling $12,026,000. We are improving, right? Yes and no. Our sales are up over 2006 and 2007 but they are only 44% of what they were in 2005. Five of the 20 single family home sales were bank foreclosures and 5 were short sales. So one half of our market was distressed property. And I think several of the remaining sales were distressed but not characterized that way because of the way they were marketed.

In 2005 there were 12 condo and town house sales that totaled $8,326,000. That number fell to only 6 sales in 2006 with sales of just $2,728,000. In 2007 the number bounced back to 11 sales of $9,421,000. 2008 produced 11 sales of $3,414,000. Looks bad, right? Maybe. Maybe not. Six units at the high end Key West Beachside Resort closed in September 2007 and that drove prices very high. If those sales are eliminated, there were five market sales of condos totaling just $1,885,000. So it sort of looks like we improved over condo and town home sales over years 2006 and 2007 this year, but we are near the number of sales for the year 2005. But our sales price are off by 59% over what they were in 2005. Out of the 11 condo and town home sales we had in September 2008 3 were bank foreclosures and 3 were short sales. So, again, distressed properties made up at least half of that segment of the market again.

I just checked the Key West Association of Realtors website. There are 1116 residential units for sale in the Key West area. That number does not include timeshares. There are still plenty of people looking to buy in Key West. I know some have decided to hold off doing anything until the uncertainty in Washington and Wall Street clears. As if that is ever going to really change. If the Psychic who went out of business across the street from our office is any indicator of predictor of what the future holds, don't believe anybody who tells you what the future beholds. They don't know. But past behavior is a good predictor of future behavior.

We have been improving year over year. We will not go back to the price levels of 2005 for some period of time. But our sales volume in terms of numbers of units sold is progressing to the same level. That is encouraging even if prices are down. But down prices are good for buyers who got sold out of the pricier market. So now some people who missed the earlier price ride are in on the ground floor of what may become another rise in prices. Who knows? The Psychic is Out of Business.


flipper said...

Let's just hope that an unemployed realtor (a few of those around these days)doesn't decide to fill the vacancy left by the Psychic. Realtors have been telling us every month,for about 18 months now, that the market has bottomed out and is heading straight up (the odd exception such as yourself Gary has been a bit more in touch with reality). Even a bad psychic is going to be right some of the time.

Gary Thomas said...

flipper, I've got news for the readers: it isn't over.

The Monroe County Clerk's records show more foreclosures are on the way. The recorder was slow in entering data onto the website and a lot of new entries were added in the last week. Lots of new foreclosures are going to happen in Monroe County and especially Key West.

Several owners of the pre-foreclosures happen to be realtors. Many are / or were "investors". And some are full time home owners.

The misery of others does not negate the fact that our market is up even if the prices are down.

And Old Town is still expensive as compared to other places in the US because of the scarcity of houses. If you look at prices in Aspen you will see our prices are cheap by comparison.

Andrew said...

Hi Gary,

I am a semi-regular reader of your blog, and always find it interesting and engaging. I do, however, take issue with one thing.

In your most recent entry you discuss the recent sales statistics for Key West. Key West is treated as a single market in the discussion even though it is clearly several distinct sub-markets within the small 2 by 4 island. You have even acknowledged this fact in many of your commentaries. Old Town, New Town, and Casa Marina have distinctly different economics. It’s almost like citing sales statistics for the continental US when discussing Key West. Citing sales statistics for “Key West” as if it were a single market does not have much meaning. IT would be much more informative if the sales statistics for Old Town year by year were compared. Or Casa Marina. That would provide a much more accurate picture of what’s going on.


Gary Thomas said...

Andrew: You've got a great idea. And I'll try to do it. But my work will be really hard because there are some realtors that felt the absolute necessity to mess with our mls a couple of years ago. Prior to messing, Old Town was Area 1, Casa Area 2, Mid Town was Area 3, and New Town was Area 4.

Recently Area 1 got sub categories for North of Truman, South of Truman, Truman Annex, the Meadows,Casa Marina, and a couple others. Now its easy to single out those specific areas. But I'll have to manually search through a kagillion sales to distinguish Old Town for future reviews. But the idea is great and I'll do it.




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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.