I have become more and more pessimistic by the ever-increasing cost of housing in Key West. My business is down as there are fewer buyers for reasonably priced second homes. The fewer listings has made some sellers less willing to bargain.
Several months ago readers of my blog invited me to listing their house for sale. I knew the property because I wrote a blog about it when it was then for sale and showed it to several potential buyers. It had a few "issues", but it also had a terrific location and all that charm so many buyers want. The current owner bought the place and did a thoughtful and stylish renovation. I the asked the gent if he had a price point in mind. He deferred and asked me what I thought. I don't dillydally. I reminded him he paid top price per square foot when he bought the house and replaced things all houses have. I told him my suggested price which was a bit more than the average ten percent appreciation houses achieve year over year in Key West. He thanked me for my time and said they know the market and think their renovation commanded a higher price. That "seller" then listed the house with the agent who sold it to them. The price was in the stratosphere. The house did not sell and the listing was cancelled after a couple of months. This "seller" is not a lone wolf. There are a lot of sellers like this in this market right now or who cancelled their listings rather than sell at a discount to their perceived value of their property.
I performed a simple search of single family home sale in the Old Town and Casa Marina areas by number of units sold, average price paid, and price per square foot for the seasonal time period of January 1 to June 1 for each year starting in 2013 through 2018. I knew prices had risen dramatically but suspected sales would there would be fewer sales in each area in 2018.
CASA MARIA
| Year | No of Sales | Avg Sale Price | Price Per Sq Ft |
| 2013 | 7 | 1594687 | 581 |
| 2014 | 11 | 1660785 | 657 |
| 2015 | 8 | 1452000 | 704 |
| 2016 | 8 | 1591875 | 711 |
| 2017 | 8 | 1804000 | 693 |
| 2018 | 7 | 1413333 | 728 |
Current Inventory of Unsold Single Family Homes on the Market
8 1786250 858
OLD TOWN
| Year | No of Sales | Avg Price | Price Per Sq FT |
| 2013 | 62 | 688 | 479 |
| 2014 | 45 | 984 | 601 |
| 2015 | 73 | 952065 | 633 |
| 2016 | 38 | 926 | 660 |
| 2017 | 46 | 992965 | 700 |
| 2018 | 40 | 1257904 | 789 |
64 1659347 836
I wondered what happened in 2015 that may have attributed to the higher than average sale. I went to Google which led me to a Washington Post article. One item stuck out:
The Fed raised interest rates, marking the end of an era
The Federal Reserve's rate hike in December was notable not for its size -- the federal funds rate increased by a tiny one quarter of a percentage point -- but for its symbolism. It was the first rate hike in more than a decade and a sign that some of America's most prominent economic thinkers believe the economy is once again sound, roughly seven years after the onset of the global financial crisis.
I added the emphasis at the bottom of the above paragraph. Remember during the 2008 presidential campaign when the US and world economy took the huge tumble. The Key West market was hit very hard because a lot of our houses are second homes. A lot of the sales preceding the 2008 tumble were financed with little money or no money down. Those owners/buyers had no substantial stake in their "investment" property in Key West. Many of those owners abandoned their properties which were then sold at a discount to prior year cost. Buyers who bought homes in Key West during the next few years should have received substantial appreciation on their properties. Later the FAKE NEWS about the BP Oil Spill spewed from CNN and the Weather Channel. The spill happened, but it did not affect the Keys. But the noise impacted our tourist and real estate market for two years. Our local economy steadily recovered as did the national economy. Unemployment decreased, the stock market and optimism increased, and America was back on the right track again.
Realtors gossip just like everybody else. The honest ones will tell you their business is down from prior years. I am doing okay, but not as good as I did in previous years. Also, nearly every buyer asks me about Irma, flood elevation level, and the cost of flood and wind insurance. There is a constant pessimism over the risk of buying here.
Before I moved to Key West I had thought of buying a place in Laguna Beach. I love that little town.
I was staying at the Newport Hyatt in June 1992 when the 7.3 magnitude earthquake hit. The building shook and shook and shook. About an hour later I was sitting on the balcony with my legs up on the railing when a huge aftershock occurred. It was so strong that I fell on yo the floor. That sounds funny now but it wasn't then That quake caused me to re-evaluate any thought of moving there. It was my Irma moment.
There will always be earthquakes in California and there will always be hurricanes that hit someplace in the United States Some are worse than others. And New York City and surrounding areas will be freezing cold in the winter and hotter than hell in the summer. This is life. Where you decide to live it is up to you. I prefer living on a little island out in the middle of the ocean The sales numbers don't affect me as much as the traffic.
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