All About the Benjamins

All About the Benjamins
One of the current media trends is comparing similarly priced homes in different parts of the country. The February 2007 issue of Key West magazine compares a home at 416 Elizabeth priced at $3,9 million to a home in Santa Fe and a home at 800 Amelia priced at $2,395,000 to a home in Malibu priced at $2,4 million. HGTV has a weekly program that does the same. In each instance price comparisons help potential buyers pick the best buy for the buck. So, by extrapolation, home buying is All About the Benjamins.

I started today on the treadmill at the gym, which lead me to consider the present value of big homes in Key West in the current market. There are 31 homes priced at $3 million or more in the Old Town area of Key West. With a couple of glaring exceptions, most are reasonably priced to sell in the current Key West real estate market or about 115% over the target sales price. There were seven sales of single family homes priced above $3 million in Old Town since January 2006. There is clearly a bigger supply of big houses than there are buyers. And come to think of it, there are a bunch of homes priced just under $3 million like the El Encanto I wrote about on January 26th.

I think some of these big homes are bargains. Some are under priced because the real estate market in Key West is currently undervalued as compared to other parts of the world. Some sellers must sell their homes and have priced them to sell. That is different from sellers who may sell if they can get "their price".

Our market does not compare to Miami or Ft Lauderdale. I think our market compares to other world class destinations, at least the upper end does. Many Europeans have second homes in Key West. The Euro and the British Pound are far more valuable than the American dollar which makes a second home in Key West or any other destination resort more affordable for wealthy Europeans.

The homes to the right tell us a story about what is coming in Key West. The house under construction at the corner of Whalton and Johnson Streets in the Casa Marina area is a prime example. I don't know the owner or builder, or the estimated construction costs. The owner bought the lot in 2005 for $1,850,000 and the new home will surely cost somewhere around $1.5 - $2 million to construct.

The house across the street at the corner of Whalton and Casa Marina Court sold in July 2006 for $3.4 million. It was previously owned by author Philip Caputo and had seen better days. There is a construction crew there now doing what they do--rebuilding homes in paradise. This house has ocean views and immense grounds. I expect the new owner will be spending in excess of $1 million on updating this home.

Another big house is going up at the Grinnell and Johnson Streets. The house next door is priced at $3.5 million. The house across the street (also shown with magnificent palms) was put on the market a couple of months ago at $3.5 million and went under contract within two weeks.

These homes in the Casa Marina area are expensive by Key West standards, but may be under priced as compared to homes in other destination resorts. I think they are buying opportunities.