The Key West Riviera

I finally moved to Key West just a few days before Christmas in 1993. And a few days after Christmas I went on the Old Island Restoration Foundation's annual Christmas House tour. One of the homes was located on The Key West Riviera--actually Riviera Drive at the far eastern end of the island of Key West.

I needed directions to find the house since I had never even heard of the area. And was I in for a huge and very pleasant surprise. The house was on the north side of the Riviera Canal so the backyard of the house bounded the canal. But it was what was on the opposite side of the canal that amazed me: nothing. Nothing that is but mangroves. It was like being in a house in the wilderness. It was so peaceful, serene, and bucolic. I did not know that any such type of house existed in Key West. I thought every house was either old like the conch houses in Old Town or suburban like the cracker boxes in New Town. But the houses on the Rivera Canal were just amazing.

Key West also has homes on the Sunrise and Flagler Canals. And the prices of the homes on all three canals vary from affordable to very, very pricey. Most of the homes have docks so the owners can navigate their boats to sea for an evening cocktail cruise.

The pics on this blog are of a home located in the 3300 block of Riviera. It is a 3 bed, 3 bath home built in 1958 with 1891 square feet of living space on a larger (7375 square foot lot). It has a dreamy kitchen, a pool, two boat lifts, and a killer view of the wildlife preserve across the canal. There will never, ever be a house or condo across the canal. No noisy neighbors or prying eyes. Just the little animals, birds, and fish. And the price isn't all that bad: $1,499,000.

CLICK HERE to search for your new home on the Key West Riviera and then give me a call at 305-766-2642 to set up a private showing. I suggest we take the first peak around sunset. You won't believe how truly beautiful the setting will be.

There's No Place Like Home--if you live in Key West

I was in Atlanta last weekend buying fixtures for my soon to be remodeled house in Key West. During the ride in from the airport the cab driver told me that greater Atlanta now has about 5.5 million people. The next day I took a cab to the Buckhead area for dinner. There was an accident and traffic was backed up for miles. The next night another cab ride to the same area. Another accident knocked out traffic on I-75 for more than 24 hours.

The buildings in Atlanta are huge. The streets are congested. And there are so many people. I was in culture shock. I am not used to all that commotion. By contrast the buildings in Key West are in scale to our little island. The Hotel La Concha is the tallest building in Key West and it only has six floors. Some of the hotels on Roosevelt Boulevard have three floors, but most of the rest of the commercial and residential properties in Key West are either single or two story structures. The City of Key West adopted an ordinance a few years back limiting the height and density of new construction and it seems to be working quite well.

Some developers have been litigating the restrictions imposed by the city ordinance. And most of the lawsuits have been adjudicated in favor of the developers. But I think most of the residents of Key West really appreciate the height restrictions. We want to keep our little piece of Paradise pretty much the way it is. That does not mean we don't want to grow, but we want to keep growth in proportion.

Our major streets get congested during season and on busy weekends such as this one--it's Poker Run weekend. But most of the time you can drive your car or scooter just about anywhere without delay except if you go by a school or during our 5:00 PM rush hour (that lasts about 5 minutes).

And as for people, we have around 25,000 full time residents and depending on the day and time of year we could have 10,000 visitors such as are expected this weekend. This summer has been relatively quiet as compared to prior years in part, I think, because many visitors grew wary of mandatory evacuations imposed by over-zealous county or city officials fearing hurricanes over the past few years. Upper Duval has been especially quiet this year. And lower Duval has experienced some financial woes as well. Fast Buck Freddies has a huge Summer Sale sign in its windows. Fast Bucks never has a sale.

We make choices in life and there are a lot of us 25,000 full time residents who could live somewhere else and do what we did before we moved here and make more money in the process. But then if you are just living in the process as opposed to living your dream, what is the point. You could be tied up in traffic congestion in a city like Atlanta, Miami, Boston, or any other larger metropolitan area. You could have 5.5 million "neighbors" if you live in Atlanta. You could live in a co-op way up in the sky or live in a five story walk-up in SoHo if you live in New York City.

If you are tired of living in the process and want to live your dream, CLICK HERE to checkout all of the current mls listings for the Key West area. Then give me a call at 305-766-2642 for more information. There is no place like home if you are fortunate enough to live in Key West.

I

So-Old! Congratulations

The commercial building pictured above is Key West's first hospital, the Gayley Hospital. How fortuitous for gay Key West... For the last 30 or so years it has been the law offices of Nathan Eden and various attorneys. It is located one half block off Duval at 415 Eaton Street. And it is just a block walk to the Monroe County Courthouse complex on Whitehead Street. But it is just around the corner and backs onto the grounds of the Southern Cross Hotel located at 326 Duval Street.

The owner of the Southern Cross Hotel contacted me in January 2005 about Eaton Street property. It was then listed with another Realtor at $1,800,000, and we began the dance to purchase the building. We made several offers and counteroffers over the next two years, none of which led to anything other than frustration. The owners of the Eaton Street property went through three different brokers in an attempt to sell the building. They even raised the asking price before the Key West real estate market crashed. My buyer would have none of it.

The Monroe County Tax Records show that the building was built in 1943, but those records are surely inaccurate. The buildings lines and the bones of the building suggest much earlier construction. There are actually three buildings that are connected. They sit on a very deep lot that obscure the size of the building which is reportedly over 11,000 square feet. And it has off-street parking for several cars. So why the difficulty in selling the building, other than price, you ask.

It is a historic building in a very visible location. The Historic Architectural Review Commission must approve any renovation to any building in the historic district, so most buyers found the HARC restrictions and building code requirements to be oppressive. And the current cost of renovation in Key West makes almost any commercial renovation a very, very costly proposition. Those factors made that building decidedly a very costly proposition for most potential buyers.

But the owner of the Southern Cross Hotel had a plan in mind. He proposes to redevelop several of the current hotel rooms into larger (more profitable ) hotel rooms and move the remaining licenses to the Eaton Street addition. He will add a pool and small restaurant to Eaton Street and it will serve as the offices and registration desk for the hotel.

I was never able to have a face to face meeting with the sellers, both of whom are attorneys. I am an attorney as well, but not licensed in Florida. But I was finally able to get them to read a lengthy proposal that I made where I demonstrated how my buyer's most recent offer got them the near equivalent to the price they were asking back in January 2005. To my surprise they finally accepted it. And we closed the cash transaction on September 11th.

That wasn't the only property my client purchased in Key West this week. He also bought 300 Front Street for $6.5 million. That is a total of $8 million in commercial property in a very depressed market. My buyer is one smart cookie. He has made a lot of money in Key West, but he doesn't buy unless the price is right.

There are some very good buying opportunities in Key West right now. Maybe you should think of taking advantage of the situation while it lasts. Prices may go down a little further, especially on bad properties in bad locations, but there are many under priced gems out there looking for new ownership. Checkout our Key West mls website and by CLICKING HERE and then call me at 305-766-2642 to schedule a showing of the properties that interest you.

Congratulations Joseph! And Thank You.

Won't You Be My Neighbor?--Part 3

I have previously written about the unique character of the many Key West neighborhoods. I live in the Casa Marina area and wrote about some of the notable commercial spots that are near me. I say "near" because the area itself does not have the little corner stores or art galleries so typical of Old Town Key West.

Casa Marina area is named for its proximity to the Casa Marina Hotel built by Henry Flagler many years ago. The hotel is on the best beach Key West has to offer. The hotel serves as a magnate for many local events annually such as the Fourth of July Picnic and Fireworks, the Key West Fantasy Fest Pet Parade, and many civic organizations. It is currently undergoing a multi-million dollar renovation. I tell my customers that the area is bounded by United Street to the north, White Street to the east, the Atlantic Ocean to the South, and Simonton Street to the west. Other Realtors may try to expand the geographic area, but they are wrong. Location is very important, and if you buy the wrong address (or area) you pay for it in dollars when you try to sell.

The area is different from Old Town in that most of the homes were built after World War II. And most of those homes have been renovated since then. The lots are typically much larger than the homes in Old Town. And most of the homes do not have sidewalks. On the other hand, most of the homes in Casa Marina have good sized yards, pools, off street parking, and are larger in size than most Old Town homes. The area is close of several Key West beaches and is much quieter than Old Town and the busy commercial areas of New Town.

I guess the home ownership in Casa Marina area is about evenly divided between people who have second homes and people who live here full time. One nice thing about having "second home neighbors" is the fact that they aren't around that much and don't make as much noise.

The photos above are of two of my neighbors' homes. The middle photo of the modern home with the large tree is that of author Judy Bloom. She has owned several homes in the area over the past few years. The top photo is of a home across the street from me on the corner. The home has a magnificent side yard that looks like a park. The tall coconut palms and green grass amaze me each time I see that house.

The bottom photo is of a home at 915 Washington and was just one block to the west of the home mentioned just above. It was just listed for sale yesterday and is offered at the price of $949,000 or $783 per sq.ft. It is a 3 bed, 4 bath home on a good sized yard with a pool and covered off street parking. Homes in the immediate area are priced between $900,000 to over $3,000,000. CLICK HERE for more information and photos of the home.

CLICK HERE to use the search feature on our mls and find your new home in Key West's Casa Marina area. Then give me a call at 1-305-766-2642 or send me an e-mail at garyethomas@aol.com so that I can help you relocate to Paradise. You know you want to do it.

August Sales Results for Key West

Some statistics for those who like to keep track of what is happening. There were 14 single family home sales in Key West (Key West to Shark Key to be exact) for the month of August. The least expensive home was a 1 bed, 1 bath 735 sq. ft. listed at $429,900 that sold for $417,500. The average home was 3 bedrooms, 2.29 baths with 1,660 sq. ft. listed at $923,329 and that sold for $815,472. The highest priced home was a 4 bed, 4 bath home in Truman Annex with ocean views. It originally was listed at $2,495,000 and was reduced to $1,895,000. It sold for $1,650,000 or $938 per sq. ft.

In August 2006 there were 13 single family sales with the lowest home priced at $450,000 that sold for $395,000 after 31 days on the market. The average home was a 3 bed, 2 bath with 1122 sq. ft that was listed at $743,608 and sold at$685,231. The highest priced home was another Truman Annex plaza located on Admirals Lane. It had 4 beds, 3 baths, 1920 sq. ft. and was originally listed at $2,499,000. It sold for $2,150,000 or $2,120 per sq. ft.

But in 2005 (two months before Hurricane Wilma) there were 21 sales. The least expensive home was a 2 bed 1 bath 756 sq.ft. listed at $599,000 that sold in 9 days for $590,000. The average home was a 3/2 1,874 sq. ft listed at $1,245,424 and that sold for $1,174,831. The most expensive home was a 5 bed,7 bath home on Sunset Key (just off Mallory Square) that was listed for and sold for $2,500,000 after only 27 days on the market. Oh, for the good old days!

In August there were a total of 4 condo sales recorded in Key West with a combined sales price of only $1,772,000. In August 2005 there were 16 condo sales with sales totaling $14,024,612. That is quite a significant drop in sales volume.

I have told prospective buyers for years that the best time to buy a home or condo in Key West is the late summer through October because sales are traditionally slower than other times of the years. Since prices in Key West are down significantly from previous years and since the demand for homes and condos is down, it will be interesting to see how many buyers take advantage of this new buying opportunity.

I was in Homestead, Florida yesterday driving around the wholesale nurseries located there. Lots and lots of nurseries up there. And the funny thing was that at least half of them have a "For Sale" sign posted out front. I asked the guy I was working with why so many of the properties were for sale and he said that many of the properties were purchased with funny money financing that had adjustable rate mortgages that were maturing. We drove for miles and miles and all I could see was "For Sale" signs. It is very frightening. Something is very wrong with our economy. Key West is not an aberration.

Read this blog next week for more info on the building pictured to the right.

The Fall of Duval

The national news is filled with stories about the woes of the real estate market. And I have been writing about the woes of Key West for some eight months. But two days ago I got a shot of reality about the really big woes of Duval Street.

Duval Street is Key West's "Main Street". It starts at the Gulf of Mexico and ends at the Atlantic Ocean. The shops, restaurants, bars and hot spots are the engines that drive the Key West economy. Duval is Key West street of dreams.

So I was shocked on Tuesday when I went to In Touch, my favorite card & novelty shop. There were signs posted on the doors and windows saying closing forever, all merchandise 75% off. I went inside and the store was almost totally vacant. There were a few remnants left on the shelves--very few. The lights were even turned off for the most part. The AC was working. And the shop's owner, Frank, was sitting behind the counter.

He said that the building had been sold and the new owner was raising his rent from $10,000 per month to $12,000 per month. Ouch! He said he had rented the same amount of space directly across the street for $10,000 so he was moving. Screw the new landlord, an Israeli. But then he told me about all of his neighbors who were also closing. Forever.

He reported that retail on Duval is for the dogs. He said nobody, nobody, is making any money. He said Kennedy Galleries is totally gone--all seven locations. He then enumerated the fate of each neighbor. But he said the misery is going on all the way up and down Duval

Later I had dinner with a friend and discussed what I had seen and heard. He said that the owner of Fast Buck Freddies had told him the same thing. Fast Buck Freddies is another Kew West institution with trendy merchandise you don't see anywhere else in Key West. But even Fast Buck has fallen victim to the Duval fall. My friend said the owner told him that Fast Buck has had to revamp is merchandising to include more schlock just to keep the cash registers busy.

Duval goes through the summer blood-letting every year, but this time it looks much more serious. I have never understood how or why landlords raise the rents so high as to drive tenants out. It has been going on for years and the practice has destroyed many an honest businessman.

By coincidence The Key West Citizen has a feature story in today's edition about the same subject, but on businesses located four blocks to the north. GO HERE to read the tales of woe for more desperate business owners.

CLICK HERE to checkout the real estate listings for Key West and the lower Florida Keys. Give me a call or email me at garyethomas@aol.com to get more information on any of the listings. Thanks.

Remains of the Gay

During my very first trip to Key West back in 1984 I was told I had to go to Atlantic Shores for Tea By the Sea. I was staying at the world famous (and it really was back then) La Te Da on upper Duval Street. La Te Da had it's own Sunday Tea Dance and I mistakenly thought that was where I supposed to go to have fun. Which I did.

I did make it to Atlantic Shores during the daytime, however. Right in the middle of Spring Break and the placed was jamming with gays, frats, locals of all descriptions, left over hippies, and nudies galore. You see Atlantic Shores was a clothing optional resort located at the southernmost end of Simonton Street on the ocean in a funky 1950's motel gone askew! There were so many people that I left after a couple of hours of people watching and tanning. It was just overwhelming.

You had to walk past the economical motel rooms from the South Street entrance then through the gravel parking lot (which served as Key West's only drive in movie theater on Thursday nights) to the elevated pool, deck, bar, and pier. Later the owners added a walk-up snack shack.

It wasn't until later visits to Key West that I actually got to go to Tea By the Sea.
Tea started at 8:00 PM every Sunday and lasted until 11:00 PM. You could hear the music for blocks around even though Key West has a noise ordinance that is supposed to forbid such noise. Sometimes the place jammed like there would be no tomorrow and other times it whimpered. Sometimes there would be a sudden drenching rain and everyone would try to gather inside the covered bar area waiting for the showers to pass.

Two of the things I remember most about Tea By the Sea was the deck bouncing up and down as people danced and walking out on the pier looking at the sky, the water, the twinkling of lights on the ocean and the stars above (I swear on a clear night you could see all the way to Key Largo or all the way past Saturn or Jupiter).

I eventually succumbed to the lure of Atlantic Shores and became a regular tanner. Like many locals I would go there daily and rent a lounge chair and bake my skin for hours every day. I would buy lunch and start cocktailing way before I should have. The place was intoxicating on many levels!

I had to stop the daily tanning when I decided to sell real estate full time. And then I stopped going to Tea By the Sea. A couple of years ago it was announced that Atlantic Shores would close and be torn down only to be replaced by luxury condos. There were some legal battles over development rights and they eventually got resolved in favor of maximum development. Surprise!

I took the two sunrise photos of the remains of Atlantic Shores today, July 26th. The sign is the only remnant left. All of the buildings and the pool and deck are gone. The gay resort is gone. Progress!

Tomb with a View

Perhaps my pun isn't very funny. This little charmer at 730 Passover Lane sits directly across the street from the Key West Cemetery and the priced was just reduced to from $695,000 to $609,000. CLICK HERE for a full description of the features of this house.

Click on the photos to see larger views of this quintessential Key West cottage. The living area is quite large features a vaulted ceiling. There are lots of windows and french doors so the entire living-kitchen-dining area is open and inviting. The kitchen is new, compact, and has lots of special little features.

The house has one bedroom that also has a vaulted ceiling. It, too, is bright and cheery. But there is also a second level loft with room for a queen size bed and that floor space is not counted in the home's square footage.

There rear courtyard has an outdoor shower, brick pavers, pond, and lots of foliage. The white picket fence at the front sets off the smart street appeal of this smart looking little home.

Now about the location. 730 Passover Lane is a short four blocks walk to Duval and three blocks to the Historic Key West Seaport. CLICK HERE for a Google Earth View of the location. The location across the street from the cemetery provides something most Key West homes do not have: lots of sunshine and uninterrupted views, quiet neighbors, and the assurance that the neighbors are not going to build something on their property.

This house is priced to sell quickly. Don't miss the opportunity. Call me today. 305-766-2642.

There's a Storm a Brewing

The conventional wisdom of Realtors in Key West has been that if we get through this summer without any hurricanes that the buyers will comeback sometime after Christmas and start buying the good supply of now reasonably priced homes and condos.

I have been following the annual and predictable rise in the Key West real estate market every year since I first came here in 1984. And with the exception of 1989-190 and 2006-2007, the market has consistently risen without fail. You will remember there was a recession in 1989-1990 that really hurt most of the American economy. But Key West bounced back more quickly than other parts of the country. I was in commercial banking at the time and we could not sell anything. It was not that there was no interest in buying, but buyers were deterred by high interest rates and uncertainty in the economy.

Fast forward 17 years to 2007. The White House says the economy is robust. Hooey! There is a storm a brewing. Many of our manufacturing jobs have been outsourced to Mexico or Southeast Asia. Detroit has lost its market edge on domestic cars in the USA. Affordable health care is unavailable for millions of Americans. Our borders are being overrun by illegal aliens. And the cost of oil and other commodities is on the rise again.

Congress has allowed market makers to create new "financial markets" that have dramatically impacted the cost of just about everything. When I was a kid in the 1950s and 1960 we had hurricanes in the USA. But the cost of gas and heating oil stayed the same for year after year. I am not an economist so my assumptions are just based on real life experience, but I think the oil companies back then just built the short term uncertainty of supply into their cost of doing business. Then about 1972 or 1973 the price of gas jumped overnight about 30% because of OPEC. I remember the cost of gas in Colorado went from $.22 a gallon to $.33 or $.34 in a week of so. The public went crazy. There were lines of cars waiting to be filled. The world was coming to an end. But we eventually got used to being hosed. Now those that high price seems so reasonable.

But consider what has happened to the price of milk. When I was a kid the milkman delivered two gallons of milk twice a week directly to our front door. I think the price was about $.45 per gallon. I know that when started buying groceries myself when I entered law school in 1969 the price was just about the same. And it stayed that way until 1971 or 1972. Then the price of other commodities skyrocketed. We were still involved in the Viet Nam War and the Nixon Administration instituted was and price controls. That eventually (in the early 1980s) led to 20% interest rates.
Fast forward to 2007. The emergence of corn oil as a bio-fuel has caused the price of corn to be as manipulated as the price of crude oil. That same corn is fed to cows and other animals, and that price increase has caused the price of milk to rise in Key West to $4.49 per gallon for MacArthur's Milk. Store brand milk is about $.50 cheaper. The price of beef and chicken is likewise higher.

Yesterday Countrywide Financial Corp., the leading US mortgage lender, said it borrowed $11.5 billion from 40 banks to boost its stressed finances, sending shock waves through the markets. Cost of mortgages and even availability of mortgages just got higher and more doubtful--especially in Key West where the cost of housing is higher than the national average.

So I guess I am doubtful that even if we get through this summer without a hurricane that buyers will return. They come down and look at property, but they have not been buying. This may be a good time for cash buyers to pick up some bargains in Paradise.

If you are feeling a little adventurous, CLICK HERE to checkout all of the current mls listings for Key West and the Lower Florida Keys. Then give me a call at 305-766-2642 or send me an e-mail at garyethomas@aol.com, and I'll gladly help you find a little piece of Paradise at a bargain price.

Flipping Out

BRAVO TV did it again. They created a new truly must see tv show with a cast of zanies that you will adore. The new show is called Flipping Out and it is the saga of a real estate professional who buys houses, re-styles them, and flips them for a profit. The difference between this show and other similar shows about house flippers is that the "star" is quite mad. In a good way. His name is Jeff Lewis and he comes across as vain, maniacal, egocentric, glib,lonely, caring, self-absorbed, funny, and sexy. He buys houses with "potential" and gives them sex appeal. His sense of style is right on.

I mention the show here because it is fun to watch and it shows the risks one takes when a flip is undertaken. Especially in the current real estate market. Granted Beverly Hills real estate is not the same as Key West. But the risks are the same only with more zeros. Watch it on Bravo TV on Tuesdays.

Key West Commercial Real Estate

Ever hear of Seller's Remorse? It is when a seller regrets having nixed a sale because he thought he could get more for the property at a later date only to find out that he was wrong. Dead wrong.

Such may be the case for the owner of a commercial condo CLICK HERE located in the same developments as our office, Duval Square at 1075 Duval Street.

The Duval Square is is a planned unit development that stretches from Duval to Simonton Street just one block south of Truman. There are several restaurants including Square One Restaurant plus various commercial businesses on the ground floor and about 22 two story townhomes on the second and third levels of the buildings. We are about four blocks from the Atlantic Ocean. Upper Duval has really changed in since the mid 1980's. Back then the world famous LaTeDa's guesthouse and restaurant were the primary commercial activity in the area. But two decades later there are many restaurants, galleries, guesthouses, and the Butterfly Conservancy that line the street.

Club Body Tech closed its doors two years ago. I was a member and the gym had been a thriving business. In my opinion the absentee owners hired a very poor manager that ran the business into the ground. Equipment got broken and wasn't repaired. The showers and locker rooms were never clean. The office was as messy as a pig sty. And the membership fees were very high compared to the level of service offered.

The condo owner has had the property on the market ever since the gym closed. The initial asking price was $1.3 million. That is $387 per square foot for the largest commercial space in the complex--3361 square feet. The first Realtor to list the property told me that the seller did have offers near the asking price but that he wouldn't budge off the asking price. Two years later the price was just reduced to $600,000 or less than half of the original asking price. The price per foot today is $178. There are three other commercial spaces also for sale and they are priced at $684 per sq ft (656 sq. ft.), $570 per sq. ft. (700 sq. ft.), and $873 per sq. ft (800 sq. ft.).

Now the owner of the former gym property bought the unit in 1996 and paid $300,000 so he will not lose and principal but his holding costs (taxes, insurance, association fees, cma fees, and debt service if any) are adding up. Two of the owners of the other units for sale bought at prices much lower than their asking price so they are alright as well. But I do think there prices are very aggressive for this market. The owner of the forth unit paid $450,000 three years ago and he must be bleeding. His space is across the courtyard from the old Club Body Tech and several different businesses have failed at that same location.

I think the owner of the commercial condo that was the Club Body Tech probably does have seller's remorse. And I think the sellers of the three other units for sale need to reassess their current asking prices. There is not a lot of commercial space for sale in Key West overall. There are, however, too many commercial spaces for sale of for lease on Duval. Duval Street property owners have gotten way to greedy for their own good. They charge exorbitant rent which causes small business owners to fail whether they lease or own the property because the lease payments or mortgage payments are too demanding. Other commercial areas of Key West seem to fare much better.

CLICK HERE to search for additional commercial properties in Key West and the lower Florida Keys. Then give me a call to help you find your next business in Paradise 305-766-2642 or email at garyethomas@aol.com.

July Real Estate Sales for Key West

I have often reported that the best time to buy a home in Key West is during the summer when sales are low. There usually is not as large a selection because sellers typically wait until late fall to list hoping to sell in a more robust market.

Key West had only ten single family residential sales for the month of July. The least expensive was a 2 bed 1 bath home with 627 square feet. It was on the market only 27 days and was listed and sold at $390,000. The average home was a 2 bedroom 2 bath with 1309 square feet that was listed at $912,709 but sold for $826,591 after being on the market 186 days. The most expensive home for the period was a 3 bedroom 4 bathroom with 2,710 square feet that was listed and sold at $2,675,000 after 549 days on the market. There were 17 sales during the same time period in 2006 and 17 sales during 2005.

Condo sales were much worse. There were only 5 condos sold during that same time period. The least expensive was a 2 bedroom 1 bathroom on the golf course with 680 square feet. It was listed and sold after being on the market for over a year. It was re-listed at $392,000 and went under contract 4 days later. It sold for full price. The average condo was a 2 bedroom 2 bathroom with 1,036 square feet listed at $656,800 and sold at $584,200 after 239 days on the market. There were 13 sales during the same time period in 2006 and 18 sales during 2005.

The National Association of Realtors reported dismal sales results last week for the period ending July 31st and that sent (and other disappointing economic news) the DOW into a tailspin. There is no mistaking it: Key West real estate is in the dumps. Here is another interesting tidbit.

The Key West rental market isn't fairing much better. There seems to be an oversupply of homes, condos, and apartments for rent. Many would-be sellers have opted to rent there properties rather than trying to sell them in this market. That means that renters for once have an advantage because the rates are down for rentals as well or the rates have not risen by 10% over the prior year as is the norm.

The houses and condos that sold quickly during the month of July were priced to sell. Not priced to see how many cobwebs could be grown. There are some good deals in the Key West market. CLICK HERE to preview all current mls listings in real time and then give me a call to see if we can find a home or condo that suits your needs. Thanks.

Won't You Be My Neighbor?--Part 2

I thought I would share some pics I took this morning of some of the sites near my house in the Casa Marina area. (Turn OFF your pop-up blocker. Click any photo to see a larger version.) Since my neighborhood does not have any commercial activity itself, I had to ride my bike about 3 blocks to the White Street corridor. White runs from the Atlantic Ocean to Eaton Street. About one mile. The US Navy and US Coast Guard own the small strip of land on the other side of Eaton that ends at the Gulf of Mexico.

But the area nearest my neighborhood stretches a whopping 3 blocks. CLICK highlighted name to see photos of the sites I am describing. One of the first scenes from the 1950 Tennessee William's movie The Rose Tattoo was shot from the old Key West High School that is now the Glen Archer School on United and White. The road back then was dirt. Today the road is paved and the front of the school is landscaped. The tiger is a favorite photo-op for tourists. Across the street is the new National Weather Service station for Key West. And across the street to the north is Dairy Queen.

Down one block on White and Catherine is my gym Island Gym. I wrote about it in January--when I was heavy. Lost it! Across the street are several small shops, art galleries, and eateries. Page's Paint is where I buy my paint. The guy's are great and you get a local's discount too. (I'm serious. I wonder how many tourists shop there for paint to take back home.) Mo's is a French Restaurant, but not the kind you would expect. Try it sometime for a meal you remember. But don't blame me if you don't like it. Not that the food is bad. It is just very strange.

Faustos grocery is across the street. It's a landmark. Everybody goes there even though the produce is usually older than St. Louis. The meat is top rate, however. And the Lotto line is always busy with Key West characters. Gotta go there for sure.

On the corner of White and Virginia you have Faustos parking lot, Dog 30 ( a new dog store--they don't sell dogs but do sell dog things.) Next door is Island City Tile one of two tile stores within the same block. The M&M Laundry and Sandy's walk-up coffee bar and sandwich shop are always busy. (I often stop at Sandy's to buy my customers coffee when we are driving around looking at homes.) And across the street is The Wave Gallery. There corner building is always a delight.

Down at the corner of White and United are two landmarks: The Chevron Station and across the street DION'S QUICK MART. Dion's is also a gas station and chicken station. Best chicken on the island.

I wonder if the guy who left the front loader in the street next to DION's knows something I don't...

So that's a part of my neighborhood. I'll post more pics later of some of the homes in the area.

If you live in Key West you already know how wonderful a place it is to call home. If you are thinking about buying, checkout the mls listings by CLICKING HERE and then please give me a call at 305-766-2642. Prices are down and there is a good selection in all Key West neighborhoods.

The Key West Antiques Road Show

Do you regularly watch Antiques Roadshow on PBS? I do. It's a great diversion from the mindless dribble that has become so much of broadcast television. It is great fun watching regular people who discover that some item they bought at a thrift store or estate sale is worth a gazillion dollars. I think we all enjoy that and wish that it could happen to us.

Almost every appraiser ends up his or her discussion of the item with a statement of its' value--as if that value is the end-all of the discussion. Depending on the value we then get to see its' owner puff-up like a peacock or feign thanks to the appraiser. But the show troubles me just a bit because the focus seems to be on dollar value of the item rather on its' intrinsic worth.

Maybe Antiques Roadshow is just a reflection of our society's obsession with how much something costs. Magazines such as Architectural Digest have regular features comparing similarly priced homes in different geographic regions. Key West Magazine and The Key West Citizen newspaper regularly have similar features. I have even done such comparisons in this blog. But I think those comparisons miss the point. Price is not the same as value.

I am remodeling my house. And I have learned a valuable lesson about what things cost--or the price of everything. Here are a couple of examples. I used to think of nails and screws as being almost free because you need so many of them to build a house. Wrong. Go to Ace Hardware and checkout the prices. We have metal roofs in Key West, and they are attached to the house by specific metal screws. And those screws cost $.26 each. Electric wire is priced by the foot and most new wiring and most re-wiring require three strands of wire (or one strand of Romex)to run each course. Windows and doors, marble and granite, glass tiles and mosaics, bath and light fixtures and kitchen cabinets come in varying quality and price ranges. Once you finish the inside you get to start on the garden and pool. And you start the spending process all over again. Palms and pools are priced by the foot, so the bigger (or more rare) the palm or the larger (or more opulent)the pool/deck;, the higher the cost. And if you are fortunate enough to live in Key West you get to pay more for every item just because of it. But that is not the point.

I have written before about what I call "staple gun remodeling" referring to cheap redo a house in order to sell it for a quick profit. There are numerous examples of homes and condo conversions where attractive but relatively inexpensive kitchens and baths are installed along with a fresh coat of paint and maybe even new windows and doors. The property looks good, but most of the improvements were done just to surface areas and not to the building itself. You get the point.

Since we have so little actual new construction in Key West, most resale homes are remodels. And it is always nice to see a real quality renovation that uses quality materials and has quality workmanship. Then when you add those qualities to mature landscaping and a great location you get to see the real value of the property.

It is really frustrating right now. I have several people I am working with that are in the market to buy a second home or a business. Each person (or couple) focus their attention on price above all. They want the best price. I get it. I do the same thing. But my recent experience in redoing my house gives me a better appreciation for the real value of some of Key West's homes. There are some real bargains available right now. The real estate market is always slow in the summer, but this summer is a killer. Some businesses have closed. There are more foreclosures than ever before. And there is the omnipresent fear of another hurricane and the dread of what could happen. Prices are down about 33% pretty much across the board from what they were two years ago. But buyers are not buying.

I think it was back in 1990 when there was talk that Citicorp which was then the first or second largest bank in the United States might fail. The stock went down to $8 per share. I reasoned that the U.S. government would not let that bank fail because the consequences for the U.S. economy would have been disastrous. So I bought Citicorp stock. It eventually went back up to over $160 per share. I knew the low price of the stock was not a true reflection of its value. Citicorp's assets were enormous. It was the market's perception of problems that had devalued the stock, but not the value of the underlying assets.

And I think that thought process is what is at play in Key West real estate right now. There are many, many high quality properties that are going unsold because prospective buyers are focusing on price rather than looking at the underlying value of these properties. Sure there is a bunch of crap in the market. A good Realtor can help a buyer avoid that--or buy it for next to nothing if you are so inclined. But the smart buyer may be the one who, like me when I bought Citicorp, sees an asset that has been beaten down.

Give me a call if you are interested in looking for a bargain in the Key West real estate market. 305-766-2642 or email me at garyethomas@aol.com. Thanks.

CLICK HERE to checkout all current Lower Florida Keys mls listings. Remember to turnoff your popup blocker so that you can see the photos.

Buddy, can you spare $35 for a haircut?

I turned 60 years old on January 1st. When I was a kid someone aged 60 was a relic. But I don't see myself that way--now. When I was a kid I did respect older people. But I don't know if young people respect older people much these days. The youth culture (defined as anyone under age 30)has pretty much taken over the way this country functions. And maybe that's part of the problem with the economy as a whole and the real estate market in this little blog.

Age and experience help teach us how to do things correctly so that we do not have to correct costly mistakes. Here is an example: I used to do commercial loan workouts. I was the muscle guy in the back office that delinquent borrowers had to deal with when they defaulted on their loans. Over the years I learned the stages of borrower default and the gimmicks they come up with to try to avoid litigation, repossession, foreclosure, or bankruptcy. Interestingly I also learned about lender misconduct in making some loans or in trying to hide a delinquency from bank management in the hope that the borrower would somehow turn his loan around or that the lender would find a new position elsewhere before the bad loan was discovered. Some very ingenious defense attorneys successfully defend cases on the defense that "the bank should have never loaned me that much money because they knew I couldn't pay it back." And that is true in more cases than you could imagine.

Banks reward young lenders that "produce" by giving fancy job titles, good salaries, and bonuses based on loan production. The more one produces, the more one makes. It's all about the numbers and the perception. Non banks like Countrywide and American Home Mortgage book loans (mortgages), repackage them and sell them to institutions like Chase, Bank of America, or Citicorp. As a lender (or underwriter) the more you produce, the more you make. Production rules.

So it is no surprise to me that we have another bank crisis on our hands. The downturn in the real estate market is now taking its toll on the some of the banks or quasi-banks such as Countrywide and American Home Mortgage. Today the Dow tumbled again on news after mortgage lender American Home Mortgage said it could no longer fund loans and was considering liquidating its assets. That reminds me of how the S&L meltdown started. What we had back then was a bunch of greedy banks doing risky deals to make a quick buck. When the U.S. economy hit the skids in the mid 1980s, the S&Ls risky investments collapsed. The problem was not that the S&Ls had lots of non-performing residential loans that went bad. Rather it was that the S&Ls risky investments tanked as the U.S. economy turned down.

I have talked to several people who have home loans from Countrywide that are in foreclosure or that are nearing foreclosure. They all report that Countrywide is consistently inconsistent and very difficult to deal with. Countrywide and American Home Mortgage are not the issue. But they may be the omen of worse things to come.

On July 27th President Bush stated "And so I want the American people to take a good look at this economy of ours. The world is strong -- the world economy is strong. I happen to believe one of the main reasons why is because we remain strong. And my pledge to the American people is we will keep your taxes low to make sure the economy continues to remain strong, and we'll be wise about how we spend your money in Washington, D.C." At the same time the National Association of Realtors was reporting dismal existing home resales and sluggish new home sales. Ten days ago the Dow was at 14,100. Today it sank to 13,200. He did not mention the "imbalance of trade" with the Chinese or how we are going to have to deal with it. He did not mention that we are eventually going to have to pay for the wars in Iraq and Afghanistan. And that repayment will come from taxes!

We went through all of this hoopla forty years ago. We were in a different war and had a different President, but the political jawboning was the same. The hawks said that if we left Vietnam that the communists would takeover all of Asia. It did not happen. The Vietnamese people reconciled after the U.S. left similar to the way the East and West Germans did after the East German government collapsed in 1989. Likewise, the U.S. military ran up a huge war debt that had to be repaid. A Cornell University study placed the overall U.S. cost of the Vietnam War at over $200 Billion. The Congressional Budget Office estimates the War in Iraq is currently costing $9 Billion per month. The numbers are so large that they lose meaning to normal people like me. But I understand enough to know that eventually the U.S. will have to raise taxes to pay the debt or that we will have to forgo something else (new roads, new schools, health care, social security reform, improvements to a failing infrastructure or some other worthy cause).

Thirty years ago (1978-79)there was a a major crisis of confidence in the dollar. U.S. interest rates were more than 20 percent in the early 1980s, leading to the deepest recession in the post war period. That was the time period when I was doing commercial loan workouts. I remember it well. But I wonder if the MBA schools teach about that time period.

I believe in the validity of the saying "those who do not learn from history are doomed to repeat it." I think the youth culture dismisses history as being irrelevant to the present. At the beginning of today's blog I said "Age and experience help teach us how to do things correctly so that we do not have to correct costly mistakes." I don't think the youth culture has time or inclination to consider the value of history.

Greed and Stupidity

Back on April 4th I wrote about a story in the Key West Citizen regarding some Key West investors that sued the Realtor who sold them units in the Santa Maria Condominiums that were under construction. CLICK HERE to read that blog. The plaintiffs alleged that the Realtor misled them about their ability to flip the condos and make a profit once the units were completed. The market in Key West declined and the buyers were forced to either perform under the contract (close on their sales) or lose their substantial earnest money deposits.

Today's Key West Citizen reports the results of the lawsuit: Judge tosses condo lawsuit. CLICK HERE to read the article. According to The Citizen "The buyers also admitted in the lawsuit that they had not read their investment contracts, but had relied on their Realtors' claims."

The defendant Realtor's attorney stated "The written contract was very clear and unambiguous," said Ed Scales, one of the lawyers representing Santa Maria. "The judge held that we didn't do anything to prevent these folks from reading their contracts. He said it was 'entirely unreasonable' for people to plop down [that amount of money] as a deposit and not read the contract."

I specifically remember the time around Christmas in 2004. People were buying up everything in sight including blue sky condos under development. Four condo developments were in various stages of development and each enjoyed hearty pre-sales,including the Santa Maria Condominiums. Another property at the site of the old Holiday Inn was demolished for a new Ritz Carlton style condo-hotel project almost sold out in about 30 days time. Again, locals were buying the units.

I remember discussing this buying frenzy with fellow Realtors at the time stating that I didn't think the market could support that many new high end condos. And it didn't. Even if the market had not cooled off in Key West, the number of high end condos was just too great to absorb so quickly. So it is no surprise that "investors" who relied on their own greed and stupidity failed to consider that the might not be able to resell their condos at an inflated price.

When I have a buyer who is ready to do a deal I suggest that he/she/they do two things: (1) get a professional inspection of the property and (2)engage a local real estate attorney if there are any legal issues (title, zoning,etc.)that may affect the property. Had the "investors" in the Santa Maria Condos hired an attorney before the contracts were signed, the lawsuit probably would not have happened because the lawyer would probably warned them that they were risking a lot of money on something that might not occur.

CLICK HERE To find your own good property in Key West's mls database. And then call me for more information. 305-766-2642.

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.

Please won't you be my neighbor?

Please won't you be my neighbor? That's the last line of the Won't You Be My Neighbor, Mr. Roger's theme song. The first line goes "It's a beautiful day in this neighborhood" and that makes me think of why I love Key West so much: it's neighborhoods.

Tourists come and go and most only see Old Town or areas visited by the Conch Train or perhaps a sojurn to the Overseas Market or Searstown. I know that when I am taking prospective buyers around looking at houses many often ask about where we buy groceries or clothes or lumber. Some just see Old Town as the center of the tiny universe that is Key West and wonder how we manage to live here. And many dream of being able to live here.

I have previously mentioned that I live in the Casa Marina area which is located onthe Atlantic Ocean side of the island. Old Town is located at the west and north side of the island. Then there is mid town located, naturally, midway between Old Town and New Town at the east end of the island. But each of these areas has its own separate neighborhoods. And that makes life here so interesting.

Take the area at the intersection of Southard and Grinnell Streets where the Five Brothers Grocery is located. Five Brothers is an institution where locals go every morning for coffee con leche and gossip. It's like Starbucks without the attitude. You will see cops and lawyers and contractors and city government workers hanging out on the street corner in the shade dishing the dish on everything Key West. Contractors meet to talk about what they are doing and where. And Key West politics is alaways the dish du jour. That little building is the anchor of that couple of block section of Key West.

A few blocks away on a not so nice location is the Blossom's Grocery. There you buyer the daily special which is advertised for everyone to see on a sign posted out front--just next to the chicken crossing sign. The area has several gay guesthouses and many apartments. The Sunbeam Grocery is located exactly one block to the south. And it has a totally different clientel and distinctly unfriendly vibe--in my opinion.

These neighborhood groceries harken back to the era before big supermarkets where locals would buy there food supplies at the corner grocery. And like I mentioned earlier, those grocery stores are the anchor for that neighborhood.

But there are other neighborhood hangouts as well. Take Page's Paint on upper White Street. If you spend 30 minutes in the store you will get a good idea about how busy the construction business is by listening to the painters buying paint and the guys in the store telling stories. Paulie, a 60-something Conch who is a paint mixologist, will give you a quick lesson in Key West history at the drop of the hat. I was there yesterday and learned about a city sewer project being constructed on Duncan Street and how much two houses recently sold for. (I previously wrote about everybody in Key West knowing everything about each other's property values.)

You may see people in a store, on a bike, walking their dog, driving in their car talking on a cellphone on a daily basis. You may not know their name, but you know their face. And you know they are your neighbors. You learn not to be rude or pushy, if you ever were either, when dealing with your neighbor. We all live on a tiny little island in the middle of the ocean. And it is a great place to live. Please won't you be my neighbor?

If you are thinking about buying a place in Key West, now is an excellent time to start looking. Prices have dropped, there is a good selection of properties in all price ranges. The remodeling business has slowed, so you may be able to engage a contractor at a better price as well. Give me a call and I can help you find your little piece of Paradise. 1-305-766-2642. Thanks.

CLICK HERE to search all active Key West and Lower Florida Keys mls listings in real time. Then give me a call.

P.S. make sure you have your POP-UP Blocker unlocked so you can see full size photos and all of the mls listings.

1009 Southard Street--Such a Deal!

The grand two and a half story home at 1009 Southard Street is another bargain looking for a new owner. The 3719 square foot home sits on one of the great streets in Key West. Just a few doors to the east is the big house that sold last year for $5.5 million. And across the street is the home of the former Vice Chairman of AOL Time Warner. (It was featured in a huge Architectural Digest piece a few years ago.) White House Chief of Staff Joshua Bolten owns the house next door to the west. All in all it's a pretty good neighborhood.

The house is presently configured as a 3 unit building with a studio apartment downstairs in the front, a two bed two bath apartment on the second and third floor, and the owners quarters are at the rear of the main level. The tenants have their own private pool, but the large pool at the rear is the domain of the owners. And the owner's guests have their own cottage accessed off Lowes Lane. Oh, and there is also a garage.

The house is in very good condition as it sits. The kitchen and bath in the owner's quarters are about 15 to 20 years old. But they are perfectly liveable as is. A new owner may want to restore the house to a single family residence. There is plenty of room to do whatever suits your fancy. This property was originally priced at $1,950,000 when it was put on the market just before last Thanksgiving. The owners want to downsize and have found a replacement home in Old Town that suits there present day needs. They have just reduced the asking price to $1,595,000. And the price at $428 per square foot is a bargain. But I believe the sellers are very motivated to sell, so I would strongly encourage potential buyers to make a strong, all cash, no contingencies offer. This is a deal in the making.

CLICK HERE to see more photos and read more about this great Old Town home. And then please give me a call to see it. I think you will be surprised at how wonderful a property this is. My number is 1-305-766-2642.