1124 William Street

This morning's Business Report on CNN.com says Tough Day on Wall Street."Dow tumbles 226 points on worries that housing, subprime mess will dent corporate earnings growth." A few days ago I wrote about my experience in the ever unpredictable stock market. When prices are rising people want to go there and make their fortune. And when the market dips, they cringe, hoping it is just a momentary hiccup. Well,we've got that same situation going on in the Key West real estate market right now. People bought everything in site at the drop of a hat just three years ago. Then the market moderated a bit and people were still buying, but acting more cautious thinking that we were in a bubble. Then Wilma occurred and knocked us to the ground.

There was a falling down worthless shack at the corner of William and Amelia Streets. The lot was 3939 square feet and a quiet location across the street from the rear of St. Mary's Catholic Church. Most of the other properties in that neighborhood have not yet been gentrified.(Read about the exception a bit later.) It was purchased by a local contractor-developer in February 2006 for $675,000.

The builder just completed building an entirely new house on the property and listed it last week for $2,250,000. Brand new two-story home with beautiful finishes and elegant details. Boasting bright & spacious rooms with high ceilings and hardwood floors. Features 3 bedrooms & 2.5 baths, gourmet kitchen with granite counters & top-of-the-line stainless appliances and an open living & dining area that opens onto the poolside terrace. Lots of windows and glass doors, crown molding, custom built-ins, covered porches & balconies and off-street parking. It has all the bells and whistles a buyer wants in a Key West home--except the location. And there's the rub. More on that later.

The same contractor-builder built four single family homes on Ashe Street two years ago. They had all the bells and whistles as well, but they were constructed on basically 0-lot line lots, meaning no yards. They had pools and off street parking, but everything is cramped and that particular block on Ashe is not one of the best Old Town locations. The same contractor-builder is currently building a house almost identical to 1124 William on the corner of Grinnell and United Streets. Untied is a busy street during the day. The neighbors include an elementary school playground, a four story warehouse, newer townhomes, an adjoining renovation, and older Conch homes in need of renovation. Again,not the best location.

The houses on William and Grinnell were both started at about the same time and it looks like Grinnell is almost near completion. So I assume it will be listed for about the same price. It does have a larger yard and may be a little larger in usable square feet as well.

Back to 1124 William and its location. The real estate axiom "Location, Location, Location" rings true when thinking about the price point for this house. It is priced at a whopping $2,250,000 for 1782 sq. ft, or $1,262 per square foot . That's expensive. Especially in this market. The high end of construction costs a normal person would pay in Key West for this type of property would be $400 per sq. ft (or $712,800) in my opinion. And I think the builder brought the property in for less than that. Add his purchase price and construction costs and his stake is around $1,387,000. So he looks to make a hefty profit if he can sell the house near the asking price. My guess is that he can't and won't.

If you were a buyer looking for a second home in Key West and had over $2 million to spend, would you prefer a location right in the heart of Old Town, a property with a water view, a large lot in the Casa Marina area, or a new house in a quiet, but marginal neighborhood? My guess is that the last option would also be the last choice. A block to the east another contractor known for his superior construction and high prices built two spec homes at the corner of upper Windsor Lane. Both were on the market for two years and neither sold. He is now living in the larger house and the adjacent house appears to be rented.

My experience has been that second home buyers buy price first, location second, and amenities third. Most buyers know the market before they start to shop so they know about what they can get in their price range. And I don't foresee anybody running to buy 1124 William at the asking price or anything near it. That' my opinion.

There are a lot of well located properties on the market at better prices. Check out the mls listings below.
CLICK HERE for more information on 1124 William Street. CLICK HERE to search all current mls listings. Then give me a call to help you find your home in Paradise. 305-766-2642. Or email me at garyethomas@aol.com.