Key West Old Town Sales Report - October 2008

Last month a reader suggested that I report on the sales of just the Old Town area as opposed to all of Key West. I thought his request had real merit since that is the area that is most popular with out of town buyers looking to purchase a property here. So here is my spin on current Key West real estate sales.

I gathered the sales info for the years 2004 through 2008. Pretty simple stuff. And the results are not surprising. The fall months historically are slow months. It usually takes a good 30 to 60 days for a contract to evolve into a closed sale. A contract signed around July 4th might take until late September or early October to close if the buyer is relying on borrowed funds. (Bank approval of the loan application, appraisal, survey, title work, etc. Each item takes time and time enlarges the date for final closing.)

2004 was the base year. We had 9 single family homes close for a total of $7,612,000 or sales at $699 per sq ft in Old Town. There were 8 condo and townhome sales totaling $4,745,000 or $866 per sq ft. Remember there were a lot of "conversions" of larger buildings into condos back then. Interestingly, I counted 7 of the total 17 sales in 2004 as being short sales or foreclosures as of today. The number could be higher because I relied just on properties I know from memory that are in foreclosure.

2005 marked the end of the housing bubble and sales had already started to tighten. In 2006 Key West was still reeling from Hurricane Wilma and the downturn in the real estate market. We did not know then that Key West was only a microcosm of what was transpiring nationally. And I don't think any of us understood the world wide importance of the burst of the housing bubble until late summer in 2008. Sales of single family homes in 2005 dropped to only 3 with a sales volume of $4,590,000 or $876 per sq ft. There were 9 condo sales that year at $8,061,750 or $951 per sq ft.

In 2006 the single family sales increased to 6 with a total of $6,047,500 or $683 per sq ft. There were 4 condo and townhome sales totaling $2,017,500 or $703 per sq ft. Condo prices were dropping more as compared to single family homes.

In 2007 there were 5 single family home sales totaling $5,290,000 at $647 per sq ft. Condo and townhome sales dropped to $640 per sq ft as there were only 4 such sales that totaled only $2,198,000.

And this year, 2008, sales have nose dived. There were only two single family home sales in Old Town. One was in Bahama Village and the other was a brand new house at 408 Grinnell Street that I wrote about on May 21st. I referred to it as a half price sale. Well, it went for less than half of the original asking price of $2,750,000 because it sold for just $1,325,000 or $535 per sq ft. Statistically our two single family solds in 2008 amounted to a whopping $1,700,000 or $398 per sq ft. And condo sales were down as well. There were only two sales in Old Town that totaled a mere $1,310,000 or $724 per sq ft. Interestingly, the larger unit (at Harbour Place) sold for $396,000 less than the seller paid for it four years earlier.

There are currently only 7 single family homes in Old Town shown in our mls as contingent or pending. Several of those are short sales. And there are only 5 condo or townhomes shown as contingent or pending. To make matters worse, 3 of those contracts are for units at Harbour House (the yet to be constructed condo development at the foot of Margaret Street).

I have maintained my optimism that Old Town will recover sooner and more strongly than other areas of Key West. I believe Key West will recover as a whole much more strongly than other areas in South Florida. This is because there is still a demand for homes in Old Town. Buyers are waiting to buy the deals. They are waiting for sellers to get more realistic with the asking and selling prices. To borrow and mangle a line from "Field of Dreams" If you price it right, they will buy.

There are a few really nice properties on the market right now in Old Town. Some are priced correctly as compared to previous prices on a per sq ft basis. Some properties are priced high and some low price per sq ft basis. It is not just the price per sq ft that buyers should consider. Some of the distressed properties cost a whole lot more to build than the asking price. And some of the properties enjoy an excellent location which means to me that they will be worth more long term than other properties that may cost less now on a per sq ft basis.

Sellers who need to sell in this market ought to price their properties based on what they are worth today--not on what the sellers wish they are worth. My advice to sellers is to get an appraisal from a good appraiser. Don't list your property based on what you think it is worth or what your Realtor will list it at simply to get your listing. Don't believe the hype being spread around town that short sales and bank foreclosure sales do not count in valuing property. Those sales are a good percentage of the current sales in Key West. They count. Those are the sales that happened. Don't let your life spin out of control and end up losing your property or your equity by irrationally believing that your property is worth more than it is.