Photo found in my old shoebox taken in the 1970s from the White Street Pier in Key West - before the condominiums and town homes were built along South Roosevelt and Atlantic Boulevards.
It is that time of the year to look back at calendar year 2017 to see the sales prices for single family homes in Key West and to compare those sales to an earlier time to glean a sense of the direction for sales in the near future. This year I decided to compare 2017 real estate sales to 2015 for the simple reason a little distance in time may reflect a trajectory rather than show a spurt or a drop.
According to the Key West Association of Realtors MLS a total of 416 single family homes sold in calendar year 2015. I excluded all sales east of Shark Key (a total of 34 sales) to Stock Island from the analysis as I feel those houses are not located in areas my readers would consider as suitable for a for a new full time residence or as a second home. The revised number for 2015 shows 334 single family homes which sold between $200,000 to $5,000,000.
In 2017 I used the same search parameters and determined there were 301 single family home sales. The lowest priced single family home sold for $230,000 (on Stock Island) and the most expensive listing in Old Town sold for $5,000,000. While the price paid for the lowest priced home increased by $30,000, the price paid for the most expensive home remained the same - $5,000,000. The total number of sold single family houses decreased by 22% from 2015 to 2017.
Let's look at the two most important areas of home sales, Old Town and the Casa Marina areas. These are the two prime sales areas that drive a good portion of our economy. These are the areas where most second home buyers and buyers looking to purchase a future retirement home (full time or part time) want to buy a house. My experience has been that most of these buyers will resist even looking in the Meadows area or on the "other side of White Street" which I often refer to as Casa Marina east. A lot of the homes in these two areas are equal to or better than many similarly or higher priced homes in Old Town or the Casa Marina. But if buyers won't look, the house may go unsold or the seller may be forced to reprice the house to attract buyers.
There were a total of 88 single family home sales in Old Town in 2017. (I went thru all sales and strictly selected houses located on the west side of White Street to the water's edge west of Truman Annex. I did not include anything on the east side of White Street - period. I included all sales from the Gulf of Mexico south to the north side of South Street. The least expensive house that sold was located at 1016 Varela Street B and sold for $325.000. The most expensive home was located at 707 South Street and sold for $5,000,000. The average sales price per square foot was $726.00. The average sales price was $1,132,955.
I then checked single family homes sales priced between $1,000,000 to $2,000,000 in Old Town. There were 27 sales where the average price paid per square foot was $758.07. The average price paid was $1,311,346.
I did one final check to determine the number of single family home sales located in Old Town which sold between $2,000,000 to $3,000,000. There were 11 such sales. There were four sales of houses priced between $3,000,000 to $5,000,000.
I then set out to see how the Casa Marina single family homes compared to Old Town. There were no sales under $1,000,000. None! Nine houses sold for prices between $1,150,000 to $1,850,000 with an average price paid of $724.72 per square foot.. The highest price paid on a per square foot basis was for 1105 Washington Street which sold at $1,500,000 or $924 per sq ft. It was a very lovely mid-century modern totally updated with pool and guest cottage added. We had five sales priced between $2,350,000 to $3,650,000 with an average price per square foot of $876.39. But keep in mind these homes are larger in size than those in Old Town and sit on larger lots. The higher priced sales have increased by about one million over the past five years.
I next revisited all Key West single family home sales in 2015. 46 homes sold for $1,000,000 or higher. The median sales price was $1,612,357 at an average of $683 per sq ft. In 2017 the number of single family homes sold in Old Town and Casa Marina (strictly enforced border patrol Mr. Trump) increased to 52 with an average price per square foot of $878.25. The median sales price was $1,525,000. The average sales price per sq foot was higher - $2,018,756.
Buyers who were previously unwilling to look in the mid-town and new town areas are now looking there. Sales prices on a per square foot level are reduced. However, many of these homes are now over fifty years old and are in need of repair or renovation which then gins up the renovation costs. Remember the $300 per square foot price quote many contractors give to buyers. And there are rules which restrict the amount an owner can spend on a home and limitations of the size to lot ratio. These governmental impositions are spurring many new owners to take down existing structures to build new and larger homes with cost saving features such as hurricane impact windows and Hardi plank siding which dramatically reduce annual insurance costs.
The 2018 sales season has just started. As of January 4th there are 181 active single family homes listed for sale priced between $365,900 to $15,850,000 in Key West and Stock Island. Seven of the highest priced homes are offered between $5,000,000 to $6,950,000. There are already 49 single family homes under contract priced between $398,000 and $1,795,000.
The most telling thing I continue to see on a daily basis is the reduction of asking price on properties in all areas of Key West. While we have 21% of the existing listings under contract, we have about 147 days left of our selling season to sell the 181 active listings. We will need to put more than one house a day under contract. I hope we have a lot of million dollar buyers headed down to Key West looking to buy.
I am a buyers agent and a full time Realtor at Preferred Properties Key West. Please call me, Gary Thomas, 305-766-2642 or email me at kw1101v@aol.com. Let me help you find your home in Paradise.
6 comments:
Thanks for your sales reports. I always find them informative. I also enjoy your "projects" posts.
IMHO the best time to buy in Key West in the last 10+ years was 2010-2012. The only people who should be buying in OT or Casa now are cash buyers with a net worth > $8M. This would not be a market for stretch buyers.
15-20+ years ago there was a significant portion of the housing stock that was in disrepair. Over the last few decades that housing stocking has been significantly upgraded faster than old homes have been neglected. Ergo, the lower end housing market is essentially gone, arguably forever. While buyers could potentially move up the keys, comparative housing exists in other areas of Florida that are higher quality and less costly.
I really think that, aside from the top 5% richest people, most other buyers will need to wait for a significant downturn for any opportunity to enter the Key West market. Do you agree?
dear Anon,
The only people who should be buying in OT or Casa now are cash buyers with a net worth > $8M.
I disagree. I know our pricing is very high. Every once in a while I go to Zillow to see what housing costs are in other areas of the US. There is only one Key West while there are a lot of big cities, small towns, and resort destinations.
I think the city allowing "vacation rentals" has caused much of our available housing inventory to be diverted to long time and long term stability in ownership and pricing. The ability to rent has enhanced the ability to pay for these houses. In reality an owner does not make that much money but they fool themselves into believing they are making money so they go along with the con game to justify their decision to buy.
I don't think we are overpriced in relation to a lot of the more dynamic places in the US. Our prices are comparable to those you see quoted on Million Dollar Listing LA. We are not a glam, our places are not as large, but we are certainly in demand.
There may come a time when our desirability will wane, but I think that will be because of over commercialization and loss of our charm more than it will be a cost of a night in a hotel room or the cost of a house.
I do not think the market is over-priced as a whole I think there are a lot of greedy people wanting absurd prices for inferior houses. Selling to greedy heirs is the worst experience. They can be so demanding.
Gary
Good points, I appreciate your knowledge and expertise. I don't disagree.
wasn't the storm a factor for the sales in the last months of the year? how about insurance costs as an issue for future demand?
Dear Cody G, I know there was a concern that pending sales might crash after Wilma, but that was not the case. Key West did not suffer building loss or major damages like Big Pine and Marathon. So those sales closed. My broker put a major house on Sugarloaf under contract very soon after IRMA and closed in early November for over $3.7 million.
Soon after the storm I started getting emails and phone calls from potential buyers who wanted to come down to buy damaged homes in Key West of the nearby Keys. They seemed disappointed when I told them we did not have any damaged houses in Key West. I was not going to go up the Keys looking to find someone else's misery. As a matter of fact the housing sales east of Key West soared as people who were impacted by IR<A bought other houses there (as well as in Key West). This is where there folks lived. They did not lose their life, they bought a new house. They did not leave. This is not Puerto Rico. Thank God. I feel for those people.
As for insurance, that has been a problem for a long time. Even though flood insurance is required by federal law across the country, it is not enforced like it is in Florida. Our costs are high because we live near the water. If you see all the ice blockages on TV in the past few days, you will soon see homeowners crying about not having flood insurance and wanting the government to pay for their loss. Wind insurance is also required if you have a mortgage. The cost can be reduced by 30% if the homeowner has an approved roof system and storm shutters. Fire and liability insurance is not that expensive. Because of all the sales tax revenue generated by tourism, our property taxes are lower than other parts of Florida - about 1 percent of the assessed value. That's really cheap compared to what they pay up in New Jersey.
Gary
Post a Comment