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Monday, December 1, 2008

Key West November 2008 Sale Report

Key West November Sale Report - 2008. That was not a typo. There was one single family home sale in the Old Town area of Key West in November. It was a cute little house on Southard Street that was listed at $599,000 and sold for $575,000. It has a pool and a great Old Town location. The price per square foot was $765. There are those who say a price that "high" is irrational in today's market. Hooey! There are only a few really cute well located single family homes for sale in Old Town. Now there is one less.

I did a quick survey of single family home sales in Old Town during November from 2004 through 2007 to see if the small number of sales this year was an anomaly. You decide: 2004 - 2 average price $710 per sq ft; 2005 - 2 average price $463 per sq ft; 2006 - 3 average price $678 per sq ft; 2007 - 4 average price $524 per sq ft.

I also did a quick survey of contingent and pending single family home sales in Old Town. This includes properties that are shown as "short sales". there are 10 homes in these classifications with an average price of $594 per sq ft.

I share the frustration of some of my readers about pricing. Some readers see the asking prices as being too high and out of touch with reality. Some criticize me for calling some properties good buying opportunities--especially houses in Old Town that may be priced high on a per square foot basis.

Most Realtors I know are showing properties and offers are being written. There are not any high end properties in the contingent or pending categories mentioned above (except for a sale of a U.S. government owned house on Sunset Key priced over $5 million that I excluded from consideration). Most of the high end properties are still priced high on a per sq ft basis. I went through the active and active short sale single family homes priced over $1.2 million. Some are price in the the low $400s per sq ft while some are well over $1100 per sq ft. There are 74 such homes listed for sale with an average asking price of $838 per sq ft.

The very recent reduction in mortgage rates to under 6% is making home purchasing even more affordable when you couple that reduction with the reduce prices we are seeing in Key West. People who are sitting on the fence waiting for the ultimate price/rate meltdown may mis-time the market and miss a great opportunity to buy when they can know exactly what they can get as opposed to waiting until some intervening event changes things again.

If you are looking to buy a place in Paradise, please call me, Gary Thomas, 305-766-2642 or e-mail me at Let me help you take advantage of today's bargain prices.


flipper said...

Gary your unwavering belief that the Key West real estate market, at least in Old Town, offers some good values (such as this recent sale at nearly $800 sq. foot) is very difficult for me to comprehend. While I will agree that a limited quantity of nice Old Town homes are now on the market, you seem to have lost sight of the following facts:

• The lack of supply is most certainly related to the fact that many current owners cannot accept the fact price levels have dropped and will continue to drop to something that approaches sanity. So they are sitting tight until they absolutely have to sell or the property is taken over by the bank.

• Demand has decreased significantly (and continues to decrease), for various reasons including an economy that is falling apart. I am not saying there is no demand, just that there is much less demand than say a year or two ago.

• People have three main reasons for buying a property in Old Town; for vacation use, for permanent residence, and for investment purposes. Potential purchasers in all three categories, if they are smart, will not buy at today’s prices. Why? Well, for vacationers there are plenty of very nice rental units available in Old Town, both short and long term. Even someone wishing to spend 6 months a year in Key West would be far better off to rent than buy at today’s prices. People looking for a permanent, full time residence and those looking for a good place to invest their hard earned cash would have to be absolutely crazy to buy at a time when every single indicator (stats, business and market experts, foreclosure rates, etc.) clearly point to a continued drop in housing prices over the next 6 to 12 months. While some areas such as Key West may not be as badly impacted, no area will be immune. That fact simply cannot be debated.

I know there will always be those who have enough money that price isn’t really an issue or consideration, and also those who buy for less rationale, emotional reasons, i.e. they just want to own something in the area, and that’s ok, they can continue paying $600 or $700 or $800 or more per sq. ft., but please don’t point to those people as evidence that the rest of us are “missing the boat”.

Gary Thomas said...

Flipper, you continue to advocate your views very thoughtfully.

There are buyers who are looking and making offers. Not all offers are accepted. The market is not hot yet. But those who are sitting on the fence may lose the opportunity to buy while prices are low. I know you think prices will continue to go down. They probably will for certain parts of the market here.

I read the county records regularly. There are definitely more foreclosures coming our way, including some big houses.

That does not diminish the fact that there are some good deals on smaller houses in Old Town. People were buying junk at very high prices 3 and 4 years ago. Those same buyers are hesitating now waiting for the market to go lower. Old Town may go lower. It may start to go back up just as quickly later this month or in January.

I'll bet you that the people who make out the best after this economic crisis is over are the people who bought at ridiculously low prices and who bought the very best properties. In our market most of the stuff that is being bought are short sales and foreclosures in New Town. The valuable properties have always been in Old Town and Casa Marina. That is where the deals are.


Anonymous said...

Fipper, you make some very good points.

Anonymous said...

Flipper is correct. Gary, there may be some so called 'good deals' out there (to you) but unless you have cash, who is buying? No one. No one can get a loan to buy let alone buy a vacation or second home. The locals aren't buying. So unless someone is out there purchasing these homes, they are not great deals. I can't wait to see how many realtors actually stay in the business this coming year as they can't be making much money in such a down market. Time to switch careers and cut the loses. Real estate won't be back to any idea of normal for several years.

Anonymous said...

Oh, and don't forget about the taxes and insurance on these so called deals. These never go down and with so many foreclosures and short sales to supply the county with needed revenue I am sure they never will and the same for insurance in a hurricane prone area (windstorm alone is outrageous). No, the investor is waiting and will continue to wait. And it may be a long wait for all those realtors wanting a sale in the near future.

Gary Thomas said...

Ask somebody that lives in Pennsylvania, New York, Virginia, or Connecticut about real property insurance. Our real estate taxes are nothing compared to there.

Why do some people have to view everything with so much negativity?



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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.