Key West Summer Doldrums - Is Now a Good Time to Buy a House?

Key West is in the summer doldrums. The weather is really hot. A lot of the locals are away on vacation, including a lot of local real estate agents. The Key West MLS has had only a few entries in the past couple of weeks - a couple of new listings, a couple of sales, a few properties change to under contract, and a few listing expirations or extensions. Most seller will be waiting until late October or November before they put their properties on the market.

A couple of weeks ago I reported the actual sales we experienced in Key West from January 1st to June 30th. I thought it would be interesting to see how may properties we currently have under contract.  I did this is part because potential buyers often quiz me or relate concern about the state of our market because of all the For Sale signs visible throughout Old Town and the Casa Marina. What they often do not see are "riders" attached to the sign letting the public know that particular house or condo is under contract.

I sat down at my computer and did a quick search of the MLS to see how many properties are under contract. My search revealed that there 44 single family homes under contract in Key West.  A 462 sq ft cottage in Bahama Village offered at $389,000 is the lowest priced house in Key West. While the price is low the price per sq ft $841.99 which is pretty high considering the "bedroom" is really a loft accessed by a ladder.

The Key West real estate haters are going to hate this: there are four homes under contract with an asking price of over $1,000 per sq ft.  Three of these homes are located in Old Town and 1026 Von Phister St is located in the Casa Marina Area 

Address                                           Ask Price        Sq Ft                   Price Per Sq Ft

719 Fleming St                                 $2,495,000       2488                     $1003

620 Olivia St                                   $2,275,000       2093                      $1087

1026 Von Phister St                         $3,425,000      2693                      $1170

623 William St                                 $2,175,000      1825                      $1192

There are 12 single family homes located in Old Town under contract where all but 3 are priced over $600 per sq ft.  At least one of the three is definitely a fixer in my book. The other two would benefit from a renovation. When renovated each of these houses would appreciate greatly in value as is the long term pattern for homes located in the Old Town district. My experience has been that houses in Key West tend to appreciate at 10% or greater year over year. Houses in better locations appreciate at higher rates and less well located properties appreciate at the lower end of the trend line. I know the stock market has appreciated at a higher pace over the past couple of years. The thing is some sinister force or could wreak havoc on the stock market at any time and many people could lose their nest eggs. People who buy real estate might see their asset devalued in a crash, but they would still own the asset. And if there is no crash, homeowners and their children, grandchildren, and friends could enjoy the use of the house for years.

There are only two houses under contract in the Casa Marina. 1100 Johnson Street which was built in 1959 went under contract within three days of being listed at $1,500,000. A similar mid-century home located and down a couple of houses was purchased for $1,500,000 a few years ago. It was totally razed and replaced with a new grand contemporary house that is probably worth $3.5 million of greater in our current market. 1026 Von Phister was purchased in April 2015 for $1.8 million. It was thoroughly renovated and is under contract. The asking price on it is $3,150,000. Most but not all of the lots in the Casa Marina Area are 5000 sq ft or larger. Most of the existing homes in the area do not come under the purview of our Historical Architectural Review Commission which gives owners or builders a wider latitude of what they may build and materials they may use to create their dream home. This is important as newer homes often are less expensive to operate and less expensive to insure. These cost savings occur year over year and make the long term price of a Casa Marina home a better value as compared to homes in Old Town where innovation in construction is not always permitted.

1100 Johnson St (potential tear down or renovation project) under contract in 3 days at $1,500,000 asking

1026 Von Phister St under contract - $3,150,000 asking price

The remaining sales are scattered among these Key West neighborhoods:  Bahama Village - 2; Old Town north of Truman - 2. The Meadows Area - 3; Midtown and Newtown - 26; Golf Club -1. The average offer price among all 44 listings is a whopping $1,079,643 with a per sq ft price of $602.   There is a large inventory of unsold houses at the Golf Club. I think prices there may have appreciated beyond present perceived value. I think the houses are actually a very good value as compared to other parts of town. However, most second home buyers continue to want to be near Old Town and do not want to drive that extra five to ten minutes to get to Old Town.

If I actually knew anything about housing located in the other Lower Keys I would write about it because the MLS is very active for this part of real estate market. I can report that market appears to be very brisk as compared to Key West. 

I have been an active Realtor in Key West since 1996.  I have seen the highs and the very lowest of lows of our market. I believe we still have a lot of over-priced inventory for sale.  Buyers who are looking for a deal ought to consider making a quick trip to the Keys to see if there is something available in their price range that might be worth a wrestling match with a seller who has not sold his property. Buyers should take advantage of the doldrums. They might end up getting a good deal in the end.

If you are thinking of buying a place in Key West please consider calling me, Gary Thomas, 305-766-2642. I am a buyers agent and a full time Realtor at Preferred Properties Key West.