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Wednesday, January 20, 2010

The Bottom of the Barrel - Key West Real Estate

Bottom of the Barrel - Key West Real Estate
I think Key West real estate has hit the bottom of the barrel. CLICK HERE to see the remaining 17 single family homes priced at or below $500,000 and that are located in the Old Town, Meadows, and Casa Marina areas. The average house has 943 sq ft of living space and is priced at $477 per sq ft. I have written before that most of the buyers that call, email, or meet me say that they would prefer to purchase a house priced under $500,000. Kind of slim pickin's.

There are just 11 Active Short Sale single family homes that priced under $600,000. These houses average 1,331 sq ft and are offered at $339 per sq ft average. I feel confident that only the house at 826 Eaton Street would interest some potential second home buyers, and most potential buyers would probably would not consider even that house because of its location. There is nothing wrong with this house. But a lot of buyers will not consider Eaton Street, or White Street, or United Street, or South Street, or any street that looks upon the cemetery.

We must go outside of the Old Town are to find more houses under $500,000. There are 33 more houses CLICK HERE in the mid town and new town areas priced $500,000 or less. (One of those had extensive fire damage and is back on the market. No mention of the fire damage in the listing. I did not see any building permits either. I wonder how that happened.)

Currently, 57 single family homes in the Old Town, Meadows, and Casa Marina areas are shown in the mls database as being contingent or pending. Thirty-eight (or 66%) of those properties are shown as short sales. One short sale has been shown as contingent as far back as March 2009. Five of the 57 are priced over $1,000,000. The average house on the list has 1,490 sq ft of living space and is priced at $484 per sq ft.

There is an interesting conflict going on right now in the Old Town, Meadows, and Casa Marina areas of Key West. As you can see the lower priced homes market looks pretty bleak. There is scant inventory in the lower price range. The places that remain unsold may have locational issues or may need renovation. Renovation takes time and money so the cheaper prices will be off set by more spending later. I often drive potential buyers past most of the lower priced houses before I set up showings just because I know most people would not consider the location no matter how cheap the price.

There are 76 homes priced between $500,000 to $999,000 that are shown as Active (67) or Active Short Sale (9). The average house has 1509 sq ft of living space and is priced at $533 per sq ft. The total number of available single family homes (Active and Active Short Sale) is 217 with an average asking price of $666 per sq ft. The problem is most of these houses do not have active buyers-at the current asking prices. There are lots of buyers. The just are not shopping for houses in the mid-level price range. Everybody wants a "deal". So few sales are occurring in this price range.

The other day I wrote about 604 Elizabeth Street. The owner is a Realtor who had listed and showed the property himself for several months. The house had been priced too high for this market. The house is absolutely beautiful. It is located on a great Old Town block. The owner finally fired himself as listing agent and gave the listing to another agent. The asking price was lowered to a price point that made sense. Bingo! Contract!

Buyers remain focused on the low end of the market. And it looks to me like that market is all but gone. The mid-range market ( $500,000 to $1,000,000) has a good amount of available houses but that section of the market isn't really selling. The high end market isn't selling either. There are individual sales of high priced homes but not as many as one would expect-especially at this point in season. There are 140 single family homes in the Old Town, Meadows and Casa Marina areas priced at $1,00,000 or higher with the average home priced at 818 per sq ft. There are only 17 houses priced under $500,000 with the average house priced at $477 per sq ft. Something has to give.

CLICK HERE to conduct your own search of the Key West Association of Realtors mls database. If you see something you like, please contact me, Gary Thomas, 305.766.2642. I am a full time Realtor at Preferred Properties Coastal Realty, Inc. Our office is the exclusive Lower Florida Keys affiliate of Christie's Great Estates.

3 comments:

Anonymous said...

I disagree - we may be at the 'bottom of the barrel' in Key West but just who is buying homes?

December was the WORST month in 40 years history of real estate transactions. Broke records. okay, blame the tax credit expiring in November to some extent but I blame the idea that some feel that real estate housing market is in recovery. Far from it. There are more short sales and foreclosures that are not being reported. Do you realize that many banks won't even take back homeowner keys in lieu of foreclosure - they are that backed up in paperwork and homes?

And don't forget the Fed is set to end its mortgage backed securities program in March. If the Feds are providing liquidity just where will the next buyer get his loan? From private sources which have long since dried up or from capital they have invested they wish to pull out now that the market is uncertain or from the banks which aren't lending and could be well set for a huge interest rate hike depending on if we get a new Fed Chair (don't start with me there as politics of such are too much to translate here).

No, the housing market and in general all residential real estate (for now) is kaput, finn, gone bye-bye and dead as a doornail. Unless you have all cash to spend on a dying island lifestyle, I wouldn't part with money in this economic turmoil.

No vacation house or second home is worth such risks even if you are a gambling fool. I wouldn't bet on a hurricane hitting the island or an earthquake hitting Haiti so why should I bet on real estate in Key West at the bottom of the barrel now? Every realtor in Key West has been saying that for the last three years and everyday more and more homes go lower and lower in price as there is no money to lend.

Gary Thomas said...

Dear Anon: I will tell you who is buying homes.
(1) Locals-first time owners who are getting $258,000 each in non interest mortgages from the Monroe County and Key West Housing Authority Impact Fee Proviso Funding. 18 individuals and families are getting the money to purchase homes priced under $400,000.
(2) Second home buyers who are getting a second chance to purchase a Key West dream vacation home (or condo or townhome) at an affordable price.
(3) Affluent second home buyers with cash that are looking for a quality property that can be purchased at a deep discount to its real value.

There will be more short sales and more foreclosures. But everytime a new place comes on market in say the Golf Club, there are a bunch of ready, willing, and able buyers chomping at the bit to buy it if it is priced to sell. There is still an oversupply at Shipyard, which has yet to adjust to the new market. But when the prices fall there, as they must, Shipyard will bounce back as well.

There are a lot of cash buyers waiting to purchase the big houses. A lot of big house owners are hurting. That is why some have their properties for sale in this down market. It just takes one buyer with an acceptable price or terms to turn a "for sale" into a "sold".

BTW there is money to lend. Interest rates are still in the 5% range.

Gary

Anonymous said...

Hmmm, I was one of those "sold" statistics in December. I'm not a first time buyer or a second home owner. While jumping through the hoops to secure financing is required, I did not have difficulty securing it. I researched this (Key West) housing market for 2 years before buying, and I can absolutely confirm, that for the type of home I purchased (2 BR/2 BA, old town location & little renovation needed), the inventory just isn't there. The market may suck up north where you are, but down here in paradise, it's heating up (no pun inte..., well, maybe pun intended).

Mike

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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.