When I was growing up in the 1950s and 1960s a million dollars was a lot of money. On Saturday night one of the TV stations in Denver would host a million dollar movie - a feature that was so special that it cost over one million dollars to film.
Years later when I first moved to Key West a million dollars could buy a big important house - a restored home with a pool, parking, and a great Old Town location. I have written several blogs over the years about the continued price escalation of housing in Key West. For years the rising prices enriched the lives of those who either inherited properties here or who bought and renovated, or even those who bought and lucked out as prices continued to rise.
Two events changed things in the past thirteen years. The national psyche was traumatized in 2005 by TV death and devastation caused in New Orleans by Hurricane Katrina. A few weeks later Key Hurricane Wilma swamped the eastern side of the island of Key West. I think a lot of people assumed what they saw in New Orleans also happened in Key West. That was not the case, but people believe all kinds of nonsense these days. Second, the Great Recession started in 2008. The stock and real estate markets tanked simultaneously across the country. Short sales and foreclosures became the norm in Key West as many of the homes and condos here were "second homes" owned by folks who came to Key West and fell in love with the island life. Both the price of homes and real property values decreased. It took several years before the Key West real estate market corrected. Old Town and the Casa Marina area recovered quicker than other areas because those areas are the places most tourists and second home buyers frequent.
Between the time the Recession started and eventually corrected, the buying public was divided as to the efficacy of buying or selling, holding or acting boldly. Those who bought in 2009 thru 2012 made out pretty well. One of my buyers spent two million dollars in cash to purchase nine units at the Key West Golf Club which he then rented. The rents have doubled but more importantly, the value of each place has doubled as well. Those who sat on the sidelines waiting for the end of the world lost out. I have told this story before. But here's the twist today.
I have been working with several would-be buyers over the past several years who missed the opportunity to buy when the market was at its lowest. One couple had kids in school; another had a small investment company and needed his cash to fund his company; a university professor made ridiculous offers when the market was lower and now does not have enough money to meet the current price point demanded. Within the past six months I learned the couple with the kids bought a place in Pensacola. The investor bought a large house in Charleston for $1.3 million. Another couple who owned in Charleston who wanted to move to Key West ended up buying a place in Santa Fe, New Mexico. These three buyers bought quality homes for less money than they would have to pay in Key West. The professor appears to have given up. The Key West economy has passed him by.
I am a risk adverse person. I went to Las Vegas a couple of years ago
and came back a bit richer than I went. I made about $60 playing slot
machines. That was it. Money is too valuable to throw it away.
If I had a million dollars, I would buy the best property I could find in Key West and buy it now. Key West is a little island out in the middle of the ocean. The land mass cannot be increased. Key West is restricted from adding new housing by law. What we have now is what we will have in the future. As crazy as the world is right now, most of the people are not crazy. They want the same things - food, shelter, peace, a good place to raise their kids, a nice place to retire too, things like that. So no matter what goes on up north in America, life down here will probably stay the same as it has for years and years. The weather will usually be spectacular. The drive from the mainland will be beautiful. The cost of housing will continue to rise.
If you are thinking of buying a place in Key West and are not working with a Realtor, please consider working with me, Gary Thomas. I am a full time Realtor at Preferred Properties Key West.
