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Friday, November 4, 2016

Key West Home Stretch Sales Report

Rita Hayworth and Dick Haymes at the Casa Marina Resort in Key West - 1954
Last week I had a lengthy conversation with a customer who bought and sold a couple of properties from me. We discussed the current state of the real estate market in Key West. I told her I think our market is both under priced and over-heated. I know that sounds inconsistent. I have studied this market since 1984 when I first visited the island of Key West when the Curry Mansion was listed for an astonishing one million dollars. Town folk thought the seller must be insane. I have been a realtor here since 1996. In late December I will be celebrating 11 years in writing this blog about Key West real estate. We had our downturn along with the rest of the United States right after 2008 Recession.  We experienced a second jolt  in 2010 after the media incorrectly reported that the Florida Keys were impacted by the BP Oil Spill. I can affirmatively report the Key West real estate market has otherwise risen year after year and that I have learned not to underestimate it.

Let's look at the sales of houses and condos & town homes for the first ten months of 2015 and 2016. Some readers may have seen a recent sales report generated by the Key West Association of Realtors. That report includes home sales for homes in our sales area which extends beyond Shark Key. My search is limited to areas between Key West and Shark Key.

2015  Total Single Family Homes SOLD  312
Lowest Price: $222,500    Median Price: $791,987   Highest Price: $5,000,000

2016  Total Single Family Homes SOLD 250
Lowest Price: $168,000     Median Price: $699,000   Highest Price: $6,225,000

2015 Total Condos and Town Homes  225
Lowest Price: $160,650     Median Price: $380,000    Highest Price: $2,300,000

2016 Total Condos and Town Homes  210
Lowest Price: $140,000     Median Price: $450,000    Highest Price: $2,100,000

There is an upward shifting price buyers are willing to pay for better homes in our market.  For readers outside of Key West is may seem incredulous but it is true that a starter home or a fixer-upper will likely cost about $500,000. And there are very few houses priced that low.

I did a second search to determine how many single family homes sold in 2015 and 2016 (from January 1 to November 3) with price spreads in the one to two million range, two million to three million, and over three million. The results are amazing.

2015 Single Family Homes SOLD  by Price
$1,000,000 to $2,000,000:  65
$2,000,000 to $3,000,000:    8
$3,000,000 and beyond:        3
Total:                                    76

2016 Single Family Homes SOLD by Price
$1,000,000 to $2,000,000:  47
$2,000,000 to $3,000,000:  13
$3,000,000 and beyond:       9
Total:                                   69

I read these statistics to show we are in a price downturn. I think our market is over-priced and that has caused the decline in the total number of sales. We may also be sharing in the national decline in total home sales reported on September 22, 2016 by the National Association of Realtors®.  Our market is different than most of America because we have a limited land mass and severe governmental restriction of building new housing. A good portion of the Key West market involves the resale of historic old homes. Buyers in all price ranges are impacted by the governmental rules and regulations which in my opinion have a depressing effect on the price buyers are willing to pay for a home.  We are now in the home stretch. Maybe the last two months of sales will exhibit a tremendous surge in home sales and upward price spikes.


Anonymous said...

Maybe if the MLS was public again that would also help. Dumb move. Really dumb move.

Anonymous said...

Public access to Key West MLS,6

Gary Thomas said...

Yes and yes. And thanks.
People who want to search Key West will need to set limits using the Flex search system. I suggest that you use Mile Marke4 as your base. This search parameter should include all houses located on the Island of Key West but not beyond and it assumes the listing realtor did not use the incorrect mile marker.

I will revise the search button at the top of my blog.


Anonymous said...

I hope you don't mind if I make a suggestion. Flex mls will accept key words for search. If you type Key West in the top field that will let you limit the results by island or city. Like you said, assuming the listing has it placed in the correct location.

I'd also like to ask a question. These two sentences of your post seem to contradict. Can you elaborate?

"I told her I think our market is both under priced and over-heated."

"I think our market is over-priced and that has caused the decline in the total number of sales"

Thanks for a great blog.

Anonymous said...

Good question. What does that mean?

Gary Thomas said...

Dear Anon, In the fourth sentence of the first paragraph I stated my perception of the current state of our market "sounds inconsistent:

We are not experiences the sales we should because prices are too high. There is not enough entry level properties for buyers to buy. First time buyers (locals and people without half a million dollars) can't afford to pay the sometimes ridiculous asking prices sellers are demanding.

At the same time there are a lot of buyers who have the means to pay for homes in the $1,000,000 and up price. And they grab the good houses in good locations soon after they get listed. In the past couple of weeks we have had several new listings in the near-and-over $3 million price range. I think the $3 million range is our new norm for nice homes. That's scary because I question how many people can afford that price.

When I have actually left Key West and traveled elsewhere I have looked at the asking prices of houses. I don't think our really nice houses are price any higher than most of the properties I think are comparable. In fact I think some of our properties may be under priced given the location and or amenities offered. For being located on an island, we don't have that many waterfront properties - especially single family homes. We don't have that many waterfront properties with boat slips. Isn't that odd - an island house with few single family homes with either water views and or a boat slip for quick water access? If we had such properties they would be in really high demand and would be very valuable in my opinion. Scarcity drives prices up.

I don't know if the nice homes are the problem in our pricing. The more common problem is dealing with heirs who have become the owners of generational ownership of a single family home in Old Town. They have seen their friends and cousins make a lot of money off the sale of other ancestral homes. They want the same thing - lots of cash for trash. So they hold out for more and more. Their basis in the old family house is zero or near zero. They can pay the annual taxes which are minimal because the houses are homesteaded and taxes are nil. They probably don't have the house insured so they are not paying flood or wind insurance which are new owner with a mortgage will have to pay. These sellers are willing to wait until the right buyer comes along willing to pay ransom for the old family home. That's the way it is in Key West. Period. That drives up prices on everything else.


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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.