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Wednesday, February 18, 2009

I told you so.......

This blog entry is for you disbelievers and prophets of doom and gloom, more toil and more trouble. It is also for you dreamers who want to buy a place in Key West but who fear that we are not at the bottom of the market.

I thought it would be interesting to see how many properties that I have mentioned in my little blog have actually closed since January 1, 2009. I used the Key West mls database and found that there were 46 closings to 8:30 AM today, February 18.

Here then are the houses that got away:

5601 College Road, Unit C 303 that sold for $399,000. CLICK HERE to see the unit. This sale may actually be good news for you undecided buyers. Unlike the other houses below, there are more of this same type of unit for sale now. This sale probably set the current watermark on pricing at this location. I know some don't like the location. Don't go there to look then. But the buildings are about 15 years newer than 1800 Atlantic and all have direct water views from the balcony with no noise from any nearby road.

525 Margaret Street, hidden Old Town two story house thoughtfully redone. Originally priced at $699,000 and sold for $500,000. CLICK HERE to see this beautiful home.

701 Elizabeth Street right at the top of Solares Hill that sold for an incredible price of $695,000. (Originally priced at $1,579,000.) CLICK HERE to see what you missed dearies.

3 Pinder Lane Old Town. This is absolutely one of the sweetest places I have ever been in my life. I loved this cottage. Everybody I showed it to loved it. It did not have parking, the bedrooms and baths were small, but this place is just magical. CLICK HERE to see the house that originally was offered at $1,390,000 and that sold for $900,000.

716 Olivia Street the Arts & Crafts house that needed just a wee bit of finishing sold in just about one day after a bank foreclosed its mortgage. The original asking price was $2,895,000. The bank owner asked $999,999 and it sold for $1,025,126. CLICK HERE and weep.

With the exception of the condo at Sunset Marina I think you would agree that each of the houses whether big or small is unique. They don't make any more of them. When they are gone, they are gone.

If you are looking for a place in Key West please consider using me, Gary Thomas, 305-766-2642 or e-mail me at Let me help you find your place in Paradise. Don't live your life regretting what you could have done. Do it.


Anonymous said...

The Captain says (again):

As recently as my last post I mentioned that properties you have featured on this blog have sold. (Off the top of my head and in addition to those you listed, I recall the Go Lane property selling recently). Which causes me to wonder why are the local brokers not happy with you, especially since not all the properties you feature are your own listings. Hmmm.....

However, your conclusion that the KW market has hit bottom based on sales of properties you have recently featured does not follow and is anecdotal at best. Notwithstanding the passage of the stimulus bill, the economy in general, and the real estate market in particular, have a long way to go in terms of recovery.

Captain out......

flipper said...

Gary yes I will agree that some of these homes are very nice, but I'm not sure I follow your logic regarding:

When they are gone, they are gone -This kind of thinking is exactly what caused me to propose to my starter wife (helped along I am sure by some not so subtle threats from her at the time). I was convinced that she was a very “unique” and special specimen that would be scooped up by someone else if I didn’t move quickly. Yikes, what a mistake…but I digress, and now my ulcer is starting to act up again. Anyway, in the next month or two there will be other nice homes (and not so nice homes) hitting the market and some of those will sell. And then one or two months after that, other nice homes will hit the market, and some of those will sell, and so on, and so on. At some point in the future you can pretty much bet that some of the homes you highlighted today will be back on the market. My point of course is that we are not talking about pieces of a pie that once consumed can never be tasted again. There will always be nice properties available in Key West; the question is though, at what price?

Incredible prices – Not sure how you arrived at that conclusion. Incredible based on what? Compared to prices two years ago? Absolutely! But if prices continue to fall to 2000 or 2002 levels as many people much smarter than I are predicting, these “deals” are not quite so sweet. In Key West, the median sales price of a home in 2000 was $213,000, and just over $300,000 in 2003 (see I think we are still a long ways away from seeing any incredible deals.

Anonymous said...

Flipper you made me laugh, thanks. You also make some valid points I believe.

Anonymous said...

We ain't no wheres near bottom and we ain't gonna buy anythin' yet cuz no ones a-lending money. Wait it out cuz ifin you buys now yous a-gonna regrets it, I guaranteee!

Anonymous said...

Thank you Mr. Trump for that insight.

Anonymous said...

No problem Mr. Greenspan.

Anonymous said...

Funny, ..., but true!

Anonymous said...

I was talking to a lady realtor (I won't mention who because yes, Gary, you know her!) in Key West yesterday about the housing market. She is quite prominent in the local real estate scene (has been and worked the Key West market for years) and knows of which she speaks. She told me that she has had several people with excellent credit (at least 800 or above) and money to put down (we are talking almost half the selling price) and yet they can't get a loan for the balance of the mortgage because banks are still not lending. She went on to state that commercial leases are doing well and just last we she signed three in Old Town alone. There are lots of lookers but very very few buyers and even those that want to buy had better have the money to pay cash otherwise nothing is moving. Just thought you would want to know.

Anonymous said...

Yes, the financial markets are frozen (nearly) shut. I agree that all-cash deals are the only way to close a sale in todays market, unfortunately. Gone for a really long while are the easy-terms lending environment we just came out of and which was the main reason the country is in the mess it is. I've heard a banker use the old stand-by line "fool me once, shame on you; fool me twice, shame on me". I am one of the "doomsdayers" you refer to in your post, Gary. Having an insiders hand in the "US financial system" I can say with much certainty (and quivering of voice and unsteadiness in posture) that there is a much lower bottom than where we are now. Unfortunate for me, since I long to invest in KW but am not in a position to buy with cash. The frozen lending environment does not bode well for me to get to paradise anytime soon, though the ever-deflating housing prices helps get me in a better position to purchase when (and if) the lending environment becomes more favorable. Keep up your optimism, Gary, it helps offset those of us like me who, while naturally are not pessimistic, get paid to be pessimistic (and also objective and realistic) regarding the state of the financial system! Your optimism also cheers me up as I dream of my future in paradise!

Gary Thomas said...

I have two separate sales that are set to close next week. One is a charming Old Town home that I have written about in the blog. My buyer obtained financing through a local Key West bank at the beginning of January.

I have another sale a relatively new Key West home that is also scheduled to close next week. It is being financed by a different local Key West bank. My buyer obtained financing since January 1st.

Maybe you potential buyers need another banker or real estate salesperson............


Anonymous said...

From Saturday, Feb 21, 2009 Key West Citizen Newspaper:

By MANDY BOLEN Citizen Staff

A declining population and plummeting home values have not brought an end to the affordable housing crisis in the Florida Keys.
In some ways, the current economic climate has made the situation even more dire, according to an update from researcher Ned Murray, who spoke to about 25 people who gathered Friday to hear the latest facts and figures.

Murray works for the Metropolitan Center, which is part of Florida International University. The organization provides research and problem-solving to urban areas in South Florida. In 2007, the Rodel Charitable Foundation commissioned the center to develop a report and survey about the area's housing needs.

Murray updated that report Friday using figures gleaned from the first half of 2008.

"Affordable housing in South Florida is a moving target, but one thing that never goes away is the demand for it," Murray said. "The data of today says that the trend for demand continues, and demand for housing always comes down to what you can afford."

Many people in Monroe County and Key West no longer can afford to spend more than half of their income on housing, meaning many have left the region.

"I've never seen numbers like these," Murray said when evaluating the percentage of income Keys residents spend on housing. Twenty-nine percent of renters in Key West spend more than half their income on it, while 47 percent of homeowners spend more than half their income on their mortgage.

"These numbers are really staggering," Murray said. "When people's housing cost burden gets to 50 percent, they start to leave an area. The housing issues today are much more complicated than they were three years ago. For example, the rental market gets further impacted than usual when people stop buying homes in this market."

He predicted a continuing population decline, but also pointed out that the region will continue to have a need for housing that costs 30 percent or less of a person's income.

Currently, his figures showed that in Key West, 2,764 households were spending more than half their income on housing.

City Planning Director Amy Kimball-Murley was encouraged by the fact that after Murray's presentation, the city finally has a housing goal, meaning officials now can strive to lessen the housing cost burden for those 2,764 households.
That could mean new construction, government subsidies or deed restrictions on existing housing units. Another option that could help alleviate problems would be to consider increasing the allowable density on land in some parts of Key West, she said.
Such adjustments would require a tremendous amount of public input, but would allow for more people and living units to occupy a given area.

Manual Castillo, the executive director of the Key West Housing Authority, encouraged action above all else.

"We haven't found the Superman to solve all our problems," he said. "We need to start taking little bites out of the apple."

So, you want to buy a house in Key West? Then here is what you do:

1. Have a great credit score. That means no debt and no past delinquencies. Can't do that? YOU CAN'T BUY!

2. Have AT LEAST 20 per cent down or more. And have AT LEAST some money left over for emergencies that will arise. I would say a good 3-6 months of income if you can. BUT DON'T RELY ON CREDIT CARDS TO DO THIS! Real money in the bank. Can't do that? YOU CAN'T BUY!

3. Have a steady stream of income from a well paying job that you (and your spouse if applicable)have been on for a long period of time and that earns you enough money to buy the property that you want without a foreseable chance of change. No documentation of income? YOU CAN'T BUY!

4. Make sure that your PITI (principle, interest, taxes, insurance) equals NO MORE than 28-36 per cent of your pay. Less is best - if you can. BUT NO MORE !! Can't do that? YOU CAN'T BUY!

5. Get pre qualified for a loan. Good luck with that one in today's market.

6. Don't buy more than you can afford!

7. Research and be prepared for a long process from start to finish.

8. Get a good realtor, a good inspector and listen to them. Sure, you can try to negoitate with them on the price of their services but remember - you get what you pay for and experience and expertise isn't cheap. However, no one is out to rip you off - the just deserve to get paid for helping you and that is why they are in the business.

9. Even though you may have all your ducks in a row, there will ALWAYS be something that crops up along the way - be prepared for that with money and time. And remember that if it is meant to be it will happen.

10. Get a mortgage lender who will listen to you and NEVER TAKE OUT A LOAN THAT IS NOT A FIXED LOAN and remember - you must be able to stay in the property AT LEAST 5 YEARS to see any sort of return. Can't do that? YOU CAN'T BUY!

This is just old school real estate talk. 20 per cent down, stay 5 years, 28-36 income to mortgage, insurance, taxes. And have enough on hand to realize owning a home is not cheap and little expenses can nickel and dime you to death if you don't have the money or the know-how to fix anything around the house.

If you can't meet all these requirements, I suggest you rent till you can or live with mom and dad or anything to save money until you can afford to buy. So you may be 40 and still renting. So what? Who cares? I would rather have security and money in the bank then try to keep up with my friends and their debt. There is no shame in renting and no everyone can own a home. That's life. There are winners and losers in the game and if you come up with the fuzzy end of the lollipop you just got to grin and bear it. Life is way to short to get in a finanical mess that is over your head.

Enough said.

Anonymous said...

My only added comment is that the housing market has at least another 10-20% (maybe more in KW) to shed and will take another 18-24 months (minimum) to stabilize the housing market, alone. The financial markets and banking sector not-withstanding. And that is without any ultra-disastrous event happening (like a sizable bank closing its doors) during this time. Heaven help those who are holding something when the bank calls the note. Yeah, me a doomer-and-gloomer. I'm with Volker on this one -- this one has the potential to might make the 30s look like a "swingin" era.

Doom-and-Gloom out.

Anonymous said...

And just wait till the government starts to take over the banking industry. It will make the great depression look like the swingin' era is a great analogy.

Real Estate is on the downward spiral and sinking into the abyss.

Anonymous said...

No jobs in Key West so the locals are not buying. Who is? A few here and there like out-of-towners who believe bottom is here and have cash to throw away (why they aren't buying stocks now is beyond me - have you seen what some are selling it at now? Wow!)but on the whole, the housing industry is just about at a standstill. Economic cycles will prevail and the industry will come around but not now. Not this year. Not next year. I doubt as long as Obama is in the White House (and yes, like Jimmy Carter he will be a one-term prez thank God!). No, when the Republicans get back in the White House in 2013 and the dust has settled on the 1 TRILLION DOLLAR bailout fiasco will the real estate market come back.

Anonymous said...

A great article from the local paper, the Key West Citizen, about foreclosures in town amongst the leaders, movers and shakers of Key West.

Now, I ask, what does it say about a town when the mayor is in foreclosure? Or the local tax collector can't pay their mortgage?????????

Here is the article:

By Anne-Margaret Swary, Timothy O'HaRA, Mandy Bolen and John Guerra The Citizen

Foreclosure activity is off the charts around the nation, and the Florida Keys are no exception.

Online records show about 186 new foreclosure cases were filed in January in Monroe County, representing a 50 percent increase over the 92 filed in January 2008. And it shows no signs of slowing.

"It's very depressing," said 16th Judicial Circuit Judge Luis Garcia. "I just spent the afternoon foreclosing on people."

The situation is so bad it's even ensnared some elected officials and political leaders who Monroe County residents look to for fiscal responsibility and budgetary soundness. Among them are Monroe County Tax Collector Danise Henriquez and Key West Mayor Morgan McPherson, according to The Citizen's court records search of all Keys officials. Schools Superintendent Randy Acevedo apparently has cleared up his foreclosure case, as has Key West City Commissioner Clayton Lopez, who blamed his on Hurricane Wilma.


Countrywide Home Loans Inc. filed a foreclosure complaint against Henriquez, her husband, Ralph Henriquez Jr., and their son, Ralph Henriquez III, in September, after the family had not paid their mortgage on their Key Haven home since March 2008, a lawsuit states. Countrywide claims the principal amount of the loan is $1.3 million, which covers the purchase and construction costs for the house and property at 23 Key Haven Terrace, which the family purchased in March 2007.
They bought and razed the house, which was destroyed in Hurricane Wilma in October 2005, replacing it with a prefabricated house, which is its homesteaded property, Danise Henriquez said. Countrywide agreed to loan the family $750,000 in February 2007, with the mortgage company loaning the Henriquezes $562,500 for a first mortgage and $112,000 for a second mortgage. The family contends Countrywide agreed to "provide an additional $200,000 credit line for use by Henriquez to pay the monthly mortgage payments," according to a counter lawsuit the family filed in December 2007.
Henriquez, who earns $107,000 a year, argues the family stopped paying the $8,355 monthly mortgage after Countrywide refused to issue the $200,000 line of credit. Henriquez declined to go into detail about the lawsuit, citing concerns from her attorney. She did say Countrywide owes the family "a lot more than $200,000."
The countersuit states that "Henriquez relied on this commitment" to "provide (the family) with a $200,000 credit line for use by Henriquez to pay the conventional loan monthly mortgage payments, along with other reasonable expenses in the maintenance of the subject property." Henriquez said her case is not a typical foreclosure.
"This deals with fraud and negligence on their part," she said. Henriquez was elected to office in November 2000. Before that, she served as the assistant tax collector for three years. She has a total of 17 years with the office, the tax collector Web site states. Her husband is a former Key West High School baseball coach and an on again-off again minor league professional baseball coach, and her son plays minor league baseball.


McPherson's two homes, including his residence on Northside Drive and rental home on Calle Uno on Rockland Key, are in foreclosure.
McPherson and his wife, Christina, bought the Rockland Key property in 2000 for $270,000. They paid $862,000 for the Northside Drive property in 2005, when McPherson ran for mayor and had to live within the city limits. He owes just more than $1 million on both properties, and on Friday said it could take a year until things are resolved. "But at least once the banks foreclose, then they will finally sit down at the table with you," he said. "I'm in the same situation as a lot of other people."


Lopez endured a foreclosure on his Amelia Street home in February, 2007. He said the situation stemmed from Hurricane Wilma, which all but destroyed the house. "We went into dispute with our mortgage company, and they wanted to increase our monthly payments," Lopez said, adding that he and his family were not even living in the hurricane-damaged home at the time. "We refused to pay and sought someone else to buy our mortgage." Court records show that within one week after the foreclosure by HSBC Bank, Key West Bank issued Lopez a new mortgage for about $220,000.
The case involving HSBC was officially closed in January 2008, according to court records.

His house was taken off the foreclosure list on Dec. 15, according to court records.
News of the impending foreclosure on his 1115 17th Terrace couldn't have come at a more inopportune time for Acevedo. It was used against him when he was seeking re-election to his post in November.
"I called and explained to [Saxon Mortgage Services] that I'm an elected official here and people will be spreading rumors," he told The Citizen on Aug. 28, 2008. "But it should be cleared up by now."
Acevedo and his wife, Monique, explained that their mortgage had always been paid on time but that their mortgage had been sold to Saxon Mortgage, a subprime mortgage company with a history of sending mortgage payments back to homeowners and claiming that mortgage-holders had failed to pay. Several states had claims against Saxon about mishandling mortgage accounts, and Acevedo said they had the same issue with the company. Court records showed the couple hadn't made three mortgage payments in the spring/summer of 2008, which put them in danger of losing their home. They owed $435,500.
"What happened with us is, our mortgage was sold a couple of times and Saxon put us in foreclosure," Acevedo said. "It was actually brought to our attention by [the] press and we straightened it out with the new company."

County stats:
Monroe County judges heard more than 1,600 foreclosure cases last year, which was almost double the 932 cases in 2007, he said.
"This year is just as bad if not worse," said Garcia, a circuit judge who recently began a program to help mediate cases. "We still have a high number of foreclosures. A lot of people aren't even bothering to show up for their hearings." More than half the filings in January -- about 104 -- were filed in the circuit court in Key West. Sixty-eight were filed in Plantation and 14 were filed in Marathon.
Nationwide, more than 2.3 million homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, according to RealtyTrac, an online marketplace for foreclosure properties that maintains a comprehensive foreclosure database.
RealtyTrac figures show Florida ranks among the top five in states with high foreclosure rates. It ranked second in January, with 40,770 properties receiving foreclosure filings.
Garcia said he is anxious to see how President Barack Obama's foreclosure plan will affect the local community. On Wednesday, the administration announced an additional $200 billion in government assistance to mortgage giants Fannie Mae and Freddie Mac, the largest makers of home mortgages in America.
Many Keys homes facing foreclosure involve second homes and homes with jumbo loans, meaning they are not backed by Fannie Mae or Freddie Mac. Up until last year, only mortgages up to $417,000 were eligible for a conforming loan through Fannie Mae or Freddie Mac.
"A lot of these properties were purchased during the real estate boom, a lot of them are jumbo loans and are close to $1 million or more," Garcia said. "So as I understand it, President Obama's program will not apply to those kinds of loans. So I don't know what kind of effect that will have for us locally."

Gary Thomas said...

I read the county records every few days, but I do not report the names of people who may be losing their property. It is public record, but nothing in Key West is ever private.

Good people are getting hurt. Good people make bad investments.

I lost a ton of money after 911 because I had borrowed on margin to buy too much stock. I did not get a bailout. I wish I had. I would be richer. I would take the money I lost then and buy some of the properties that I write about in my blog.

I'm not saying the overall market in Key West is healthy, cause it ain't. But there are some very attractive homes available to those with cash or good credit. You anonymous posters who say there is no money available speak with forked tongues.


Anonymous said...


No forked-tongue here, and no harm intended (really!) regarding your blog or livelihood. I read your blog every week and thoroughly enjoy it.

That said, I am just trying to add an *objective* voice to the seemingly polyanna-ish world that you and your other colleagues in the real estate profession are being forced to come to terms with. The go-go days of the real estate world over the past 10 years were fueled by the "drugs" of the easy lending environment, low interest rates, and speculative investment. Of these three "recreational use drugs", low interest rates remain but even this cannot "pry" good credit-risk investors off the real estate sidelines. The other two conditions that you and I enjoyed for so long won't reemerge as viable conditions until the real estate market sheds another 20% or so. Deflation, at least in the real estate market, is real today and will be for awhile. The reason, you ask? Well, why would a lender lend his good money for a property that is overpriced? In an appreciating market, sure; but not a depreciating market. You are right about all-cash deals happening -- that will always be the case though. As they say, 'Cash is King'. I won't even argue that some lenders are currently willing to make deals, however they are using pre-2000 underwriting standards, and most tighter than that. Every lender is looking at their balance sheet right now and daily seeing their losses mount on their own ill-advised easy lending of the past and are carefully rethinking their future lending strategy. For most this means, increasing their provisioning for future losses, which means that there is less to lend. And lend they will, but only to those who are very well positioned. Only a well-capitalized institution or one which did not attend the "drug party" of the past few years can make it through the real estate abyss of the next 24 months, IMHO. Just an opinion I realize, but I think somewhat informed and objective.

Anyways...I have made my point or two. We can agree to disagree on certain points. I will still read your blog faithfully. And maybe, just maybe, in another few years when the market becomes more rational and stabilized, I will come your way and give you some business.

Doom-and-Gloom (at least for a few more years), over-and-out.

Anonymous said...

Thanks to all of you for all your comments! This is really quite the informative blog!

Reader in Citrus County

Anonymous said...

It is interesting to see how corrupt the local government is in Key West when not only the mayor but the tax collector and the school superintendent are all in denial about their current upside down situation. Does this town have anyone in charge with more than 3 brain cells?

It just goes to show that some people like to think of themselves as big fish in a little pond. Posers the lot of them - they wouldn't make it in the 'real world'.

The Bubba system is alive and well in Key West - what a shame!


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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.