I always loved watching Road Runner cartoons. I always hoped against hope that Wile E. Coyote would smarten up and not get done in by the smarter Road Runner. But Wile E. Coyote never got it. He never learned from his prior run-ins with the Road Runner. He always broke the cardinal rule:
"You can only not fall before you run off the edge of the cliff, not after."
Something is going on in Key West real estate and it does not look good. I did a couple of quick searches of Key West real estate sales and learned the following.
1. There are 209 single family homes listed for sale in our market priced under $3 million. The current average asking price is $1,207,268 or $651 per sq ft for a 1871 sq ft home. Key West has a permanent population of around 25,704. The median annual income in Key West in 2014 was $53,796. I don't think a lot of our local population can afford the asking price for many of the homes for sale in Key West. But we have a thriving tourist market which brought over 4.5 million visitors to Key West in 2014. Many of those guests fall in love with our town and set out to buy a second home here.
(There are 15 homes priced over $3 million at prices per sq ft that skew the price per sq ft so I eliminated those for consideration.)
2. As of March 29, 2016 there are just 50 single family homes under contract. The average asking price is $884,348 or $571 for a 1661 sq ft home. It seems like the public is willing to settle for less than is offered by the current market.
3. Between March 1, 2016 and March 29, 2016 116 single family homes have had price reductions. The current adjusted asking prices of this select group is now $1,204,925 or $561 for a 1852 sq ft home. That statistic tells me there were way too many homes priced way too high.
4. Today there are 40 single family homes listed for sale at an asking price of $2 million or higher. During the calendar year 2015 there were just 11 sales at $2 million or higher. I realize we are just three months into the 2016 selling season, but that season is 3/4 over. I honestly wonder how many $2 million buyers are out there. There were 57 single family home sales in 2015 for homes priced between $1 million to $2 million. As of today there 71 single family homes offered in this same price range. It looks to me like we have an over supply of really high priced homes that only folks from outside of Key West can afford to buy. I know from experience many of the would-be buyers are looking for a place they can rent out part of the time to help pay for the house. These are not home purchases, these are investments.
There are some wacko sellers out there - sellers with huge edifice complexes. They are people who did some creative things to their properties like updating a kitchen or redoing baths. Maybe they added expensive kitchen appliances or installed imported light fixtures or added some other feature that sets their property apart from the rest of the market. I don't know that a Viking range or SubZero refrigerator adds that much more value to a home in any one's mind more than the seller. I am sure that some sellers think their design sense justifies a premium price far in excess of what other houses in the same area have actually sold for. I know from experience some swell-headed sellers will not accept the fact that a new lender will not loan new money on a house that will not appraise for the asking price no matter how chic it may be.
And then there are the heirs - the heirs of the dearly departed former Conchs. These are the sons and daughters, the grand children, and the nieces and nephews who want their share of the ancestral home no matter the condition. They have all witnessed or heard tales about how much some other friend or cuz received from the sale of a some other departed soul's home. They want what is theirs by birthright. The more heirs, the more the price goes up. It seems there is never enough cash to go around to console one's loss for the departed.
If you are looking for a second home or a new primary residence in Key West, please consider working with me, Gary Thomas, 305-766-2642. You can also contact me via e-mail at firstname.lastname@example.org. I am a full time Realtor at Preferred Properties Key West. I'll do my best to keep you from falling off the cliff.