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Thursday, July 31, 2014

Key West Real Estate - 2014 Mid - Year Sales Report

I just did a quick review of single family home sales for Key West for the first half of 2014. I used the Key West mls database as the source for my report. If you have read a sales report in some other media, you may have seen different numbers. Our local mls runs from Key West up to Big Coppitt Key which is 11 miles from Key West and in my view has nothing to do with what happens in Key West real estate. I therefore eliminated all Big Coppitt sales from consideration.

The first half of any sales year tends to have the greater number of sales as compared to the second half because much of our real estate market is driven by second home sales. Second home buyers typically buy houses when they visit Key West between Christmas and the end of May. This is our prime sales period.

There were 154 single family home sales in Key West in the first half of 2014 which sold for an average sales price of $506 per sq ft. The least expensive home was located on Stock Island. It sold for $220,000.  The most expensive home was a four bedroom beachfront home on Sunset Key. It sold for $4,800,000.

Most second home buyers prefer to buy houses in the Old Town, Casa Marina, and Meadows areas. They typically want to spend under $500,000. Some may be willing to spend additional money to renovate to achieve their ultimate goal type of house. Some but not all potential buyers may be willing to rent (or even aspire to rent) their new home to help off set costs of ownership.

Other buyers with more capital to invest look at higher priced homes hoping to find their dream home type property. There were 40 single family home sales in excess of $1,000,000 in the first six months in 2014 which sold for an average of $791 per sq ft.  

I've said before that I am no statistician. I barely passed algebra in high school. But I got an "A" by being able to distinguish "Up" from "Down". I know that the Key West real estate market is up - big time.

I then went back to compare sales from 2008, 2010, and 2012 to see how our market fared just prior to the market collapse which occurred in 2008, reacted to the BP oil spill in 2010, and dealt with the economic recovery in 2010.

There were 98 single family home sales in 2008 which sold at an average of $504 per sq ft.  The least expensive home was located on Fogarty Avenue in midtown. It sold for just $234,400. Not surprising, the most expensive house was located on Sunset Key. It sold for $4,667,055. There were 28 homes that sold over $1,000,000 at an average price of $732 per sq ft.  Remember these numbers because it took six years for our market to catch up to these numbers.

The BP Oil spill occurred in April 2010. That was like the nail on the coffin as Key West real estate responded to the Great Recession. We had so many short sales and bank owned properties to begin with and then the market got slammed with a threatened oil slick that never materialized. Several buyers walked away from their escrow deposits because they believe the malarkey they read or heard about oil spill gunk hitting our reefs. The least expensive house was a foreclosure in Bahama Village that sold for just $79,000. The most expensive home was located on Sunset Key. It sold for $3,295,000. There were still 124 single family home sale with an average price of $381 per sq ft. That's a $123 per sq ft drop from 2008.  The recession and market spiral downward took its toll. There were still 20 houses that sold over $1,000,000 at an average price of $620 per sq ft. That's down $112 per sq ft from the 2008 average.

In 2012 there were 125 single family home sales that sold for an average of $383 per sq ft. That's a $2 per sq price increase over 2010. The least expensive house was located on Fogarty Avenue (again). This house sold for $170,000 while the most expensive house was located on Sunset Key (again). That house sold for $5,000,000.  In 2012 there were 14 homes that sold for more than $1,000,000 with an average price of $679 per sq ft.

I watched the wave of fear that set in after the 2008 market collapse. I remember writing many times about specific properties being "buying opportunities" because prices were so low compared to their real market value once the market recovered. I remember one who reader used to comment on blogs.  He (or she) would warn of a second impending market crash and implore readers not to believe my hyperbole. It was as if I were the Wizard of Oz - or at least the Wizard of Key West. 
When Realtors get a chance to talk to each other for a couple of minutes they invariably ask "How are you doing? Staying busy?" or words to that effect. Most Realtors I know were very busy this past season. There was a huge demand for houses in Key West. There was, however, only a modest inventory.  And then we had the FEMA flood insurance policy change which made flood insurance costs significantly rise over prior rates. Eventually Congress responded to political pressure and eased flood rates for full time homeowners.

I think the Key West real estate market is back and that prices will be higher next season. I remind potential buyers that people are always dying, getting divorced, or moving away. In Key West we have our fair share of flippers who buy low and try to sell high (or high enough to make a decent profit).  We still continue to see new bank owned properties hit the mls because the Florida foreclosure laws allows bad borrowers to remain in place for years as the foreclosure works its way through our courts. And there are a few ongoing short sales that are slowing working through the machinations of big banks and asset management companies. The point is we will have more houses to sell come December - if not earlier.

There is a large base of cash buyers and people who have cash and credit to buy a second home in Key West that are just waiting to find a property that suits their needs. Some of these buyers are probably reading today's blog while they are at work. Some people live with Zillow or some other internet feed letting them know when a new listing hits the Key West mls.

If you are looking to buy a place in Key West, please consider working with me, Gary Thomas. I am a buyers agent and a full time Realtor at Preferred Properties Key West. Please call me at 305-766-2642 or send me an email at kw1101v@aol.com.  Let me help you find your place in Key West where next year your home purchase will be a statistic for someone but a dream come true for you.

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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.