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Tuesday, March 29, 2016

Key West Real Estate - Gravity Lessons



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 kw1101v@aol.com. I am a full time Realtor at Preferred Properties Key West. I'll do my best to keep you from falling off the cliff.


5 comments:

Anonymous said...

Exactly. You hit the nail on the head, once again, Gary. The posts from a few days ago are merely what followers of Key West have known for years. Over- pricing gets you shock results and when push comes to shove, some do go over the cliff due to ignorance and greed. (And certainly, " Guam Boy" and his ilk are prime suspects.)
Doug Mayberry had an excellent blog awhile back concerning the Key West market and how long it takes for million dollar homes to actually sell. And despite what investors and speculators will tell you ( or insult you due to the obvious inflated price tags) it can take years. Nothing is ever guaranteed. Anywhere. Key West is no exception.

FloridaAG said...

Also agree entirely Gary. Your blog is what I have been saying all season concerning the asking prices.

Cody Goldman said...

Finally a realtor who tells it like it is. I have been watching the real estate for years and for the last six months or more just questioning when is it going to hit the ceiling? I think it has. I have noticed the difference between the list price and the sales price as well. Its always about supply and demand. has the demand from the people that can afford it been satisfied? what happens when rates go up for those who are financing? prices must come down.

Anonymous said...

"Guam Man" is preferred. But thanks for mentioning me "Dumb post kid". I completely agree with Gary as well. If Rudy Molinet were still here selling he wouldn't pander for even a second to this sellers greed. Truth is, if all the other Realtors got on the same page as Gary and refused these outrageous listings then sellers would have nobody to sell for them. In the end all it does is produce a stale listing and waste Realtors time and money.

Anonymous said...

This is one of the swell - headed sellers, from Donkey Milk Lane?

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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.