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Wednesday, November 24, 2010

Behind the Key West Real Estate Sales Report

The Key West Citizen,the local newspaper, regularly publishes a sales analysis provided by another real estate company with offices throughout the Florida Keys. All Realtors have access to the same statistical data, the Key West Association of Realtors database. Private sales where Realtors are not involved are not reported in the statistical data.

The front page of last Sundays Citizen ran this item "Keys home sales lag, In Key West, sales plummet". CLICK HERE to read the article. Within a couple of hours I got an email from a reader asking what I thought. I had read the same story before I got the email so I already had done some fact checking on my own.

The premise of Sunday's article is that real estate sales throughout the Florida Keys are down and that Key West sales are down significantly. The article stated "Key West sales plummeted 27 percent, from 138 last year to 81 this year, while sales remained stagnant in the Lower and Upper keys." I did my own checking and found numbers to be a little different but the same general result.

2009 (July 1 to October 1)
Total residential units sold in all Florida Keys 501

2010 (July 1 to October 1)
Total residential units sold in all Florida Keys 483

Then I researched sales from Key West sales up to and including Shark Key because those areas includes Stock Island, the Key West Golf Club, and Key Haven. Then I looked at three price groups to see how each fared.

$1,000,000 and above
2009 (July 1 to October 1)

Total residential units sold in Key West 183 with 9 sales over $1,000,000
(The 9 homes sold for an average sq ft price of $588. Only one house was bank owned and it sold for $438 per sq ft.)

2010 (July 1 to October 1)
Total residential units sold in Key West 112 with 5 sales over $1,000,000
(The 5 homes sold for an average sq ft price of $525. Only one house was bank owned [916 Fleming which sold for $493 per sq ft. It was an
incredible bargain.])

$500,000 to $999,000
2009 (July 1 to October 1)
Total residential units sold in Key West 25 at an averages sales price per sq ft of $418

2010 (July 1 to October 1)
Total residential units sold in Key West 14 at an average sales price per sq ft of $434

$200,000 to $499,000
2009 (July 1 to October 1)
Total residential units sold in Key West 19 at an average sales price per sq ft of $275

2010 (July 1 to October 1)
Total residential units sold in Key West 64 at an average sales price per sq ft of $294

I talk with other Realtors all the time and ask how they are doing. Most have been reporting slow sales. I can tell by what is going under contract (as reported by changes in the Key West Association of Realtors mls from "active" to "contingent" status) that the market is soft, but it is always "soft" during this time of every year. The solds for the three month time period in 2010 compared to 2009 are down significantly.

People are not buying the big houses-homes priced over $1,000,000. It's not that buyers are not looking. They are. They just are not buying.

Our office lost the sale of a major Key West house because of the oil spill. The buyer balked a few days prior to the scheduled closing because of the oil spill. I don't know how many other deals in all price ranges that may have failed. I did have a sale that closed, but my buyer was wavering until the last minute. The media got a lot of people riled up about the prospect of Key West and the coral reefs being damaged by the oil spill. The same thing happens almost every summer when CNN or the Weather Channel send bimbos down here to stand at the Southernmost Point whose job it is to predict the demise of Key West.

If that multi-million dollar sale had closed at the price I heard, it would have signaled other buyers looking to spend big bucks that it was okay to buy. Nobody wants to be the fool-the guy that spends too much or who buys too soon. The guy who buys an iconic house in a place like Key West gets noticed. People talk about him. People write about him in the papers and in blogs. Realtors tell potential buyers about the guy that got the great house at a great price. That sale gives permission for other buyers to follow. But the deal that could have given lots of buyers permission to buy did not occur because of the hysteria about an oil slick that did not happen in Key West.

The Key West real estate market traditionally "tests" new market highs. I have seen it happen again and again over the years. While we have sold houses at higher prices than those currently available, buyers are resisting purchasing until they feel it is safe. I think this persisting reticence gives a real buyer actually looking to purchases a big house tremendous leverage.

The inventory of mid-priced houses ($500,000 to $999,000) in the Old Town area is small. These are the homes most second home owners are looking to purchase. If homes that are priced higher were reduced to a more realistic sales price, they would have a better chance of getting sold.

Homes, condos, and townhomes in the $200,000 t0 $500,000 range continue to be very popular. The majority of those sales are bank owned properties and short sales. That inventory is getting depleted. There will be new bank owned properties, but I think the number of new units will be fewer. The banks are getting better at evaluating new short sale contracts, and they are moving through the system much quicker than previously. Many of the properties in this price range are being purchased by full time Key West residents and investors who see the low market prices as buying opportunities. The Key West Golf Club has had a tremendous run. (I have sold 11 units there during the past year.)

CLICK HERE to search the Key West mls database. See for yourself what is available in your price range. I'll bet you will not see much to choose from. There is still a bunch of junk for sale in bad locations. There are still a lot of properties that are priced too high for this market. Nobody is going to look at a house that is priced too high because they envision an unreasonable seller. Buyers avoid looking at a house they expect they might like if they expect the seller is an idiot.

The heartening news from Sunday's news article about plummeting prices is the fact that the sales price per sq ft has gone up for houses priced between $200,000 to $1,000,000. The number of units sold is down compared to last year which was a much better year than 2008.

If a seller really wants to sell, he or she needs to meet the market. I recommend that sellers obtain an appraisal from a disinterested certified real estate appraiser and set the asking price at the appraised price. (I know real estate agents can do CMAs. Too many agents overstate potential sales prices just too get listings.) And too many sellers continue to set the asking prices higher than the price they want and they end up missing the market. We have five good months of potential sales coming up. Let's see how many sellers actually meet the market and achieve their goals.

If you are looking to purchase a home in Key West, please contact me, Gary Thomas, 305-766-2642 or by email at I am a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West. I am pretty much a buyer's agent but I take an occasional listing (which I then sell).

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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.