Season is Over. How did the Market Do?

Season is over. How did the real estate market do in Key West this year as compared to 2004, 2005, and 2006?

I did a quick search of SOLD homes, condos, duplexes, and 3-4 units from Key West through Shark Key priced over $200,000 from January 1st thru April 22, 2007. There were a total of 122 such sales. The least expensive sale was a studio condo listed for $239K and sold for $220K. The average sale was a 3-bedroom home with 1425 sq ft listed for $954,991 and that sold for $888,826. The most expensive sale was a Sunset Key home listed for $6.5 million that sold for $5.8 million.

In 2005 there were only 95 sales during the same time period. The least expensive condo sold for $287,000. The average sale was a 3 bedroom, 1706 sq ft listed at $775,000 and sold for $729,000. The most expensive home was an Old Town home on Southard Street that was listed for $5.9 million and sold for $5.5 million.

But 2005 had more sales that 2006 and 2007 combined. There were a total of 244 sales in the same time period. The least expensive sale was a condo listed for $324,900 that sold for $320,000. The average sale was a 3 bedroom 1411 sq ft listed at $982,502 and that sold for $948,271. The most expensive home was listed at $4.5 million and sold for $4.3 million.

But there is good news to go along with the above numbers for 2007. There are a total of 64 contingent or pending contracts. The least expensive is a condo listed for $250K, the average is a 3 bedroom 1550 sq ft home listed at $998,381, and the most expensive homes average $5.1 million.

I am fond of saying that statistics lie and liars use statistics. There is no doubt that the statistics I cited show that the market has taken a dramatic downturn from 2005. But 2007 average sales price appears to outshine the 2006 time period. There are currently 1160 units on the market with the least expensive listed at $239,000, the average listed for $1.090,501, and the most expensive averaged at $6.250 million. That’s a lot of inventory.

The hardest part of the market to sell is the mid range priced home. And if you go back through Key West real estate sales to 1997 you will see that the mid range priced home has always been the most difficult priced property to sell. Back then the affordable fixer-uppers in Old Town sold around $250-280K. Homes over a million sold quite easily. But the majority of homes in the $500-800K range languished. Those homes are now just priced a lot higher. And I think the pessimism or skepticism about the lack of sales is failing to recognize this fact. Doomsayers are comparing the "boom market" sales of 2003 thru 2005 to today, and they are seeing dome and gloom.

My suggestion: if you are a seller and don’t need to sell now: Don’t list your property. If you must sell now, price it correctly. If you are a buyer, now is the time to buy. The market may not have totally bottomed, but good properties will get purchased before the dregs. Get the right property at a price you feel comfortable with.

Look at it this way: Macy’s is having a clearance sale on Prada shoes originally priced at $500. The sizes vary, and the prices will drop hourly until the entire collection is sold out. Would you prefer to get your exact size for $300 or hope to wait and get it at $250 or $225? You might get it at the cheaper price. But someone else may get the last pair at $300, and you go home shoeless. I think my analogy translates across the board to what is happening in the Key West real estate market today.

If you are interested in buying one of the Key West bargains CLICK HERE to do your own search of all real estate for sale. And then give me a call at 1-305-766-2642. I would be glad to help you find your next home or business in Paradise.

Politics & Real--Estate Key West Style

A while back I mentioned the conviction of noted former Monroe County Attorney Jimmy Hendricks, CLICK HERE in US District Court. The charges were conspiracy, witness tampering and obstruction of justice. Well, this morning's Key West Citizen has a story about the arrest of 74 year old Assistant City Manager, John Jones, on two charges of "FRAUD-IMPERSONATION OF A BUILDING CODE INSPECTOR FIRST VIOLATION".
CLICK HERE to read the story.

I mention this again because the politics of how real estate gets developed is a big deal in Key West. And for some reason criminal charges (and sometimes criminal convictions) are often a direct result of the development process.


Same newspaper, same day, some of the same characters has this headline: Lawsuit, neighbors lose battle over building transfers. CLICK HERE to read the item. The paper reported about a Key West Planning Board meeting where the board approved a plan to let Pritam Singh (developer of many projects in Key West) parlay building rights from the razed Hampton Inn on North Roosevelt Boulevard into two transient rental units at 707 Simonton. Jimmy Hendrick was at the meeting acting as Singh's land-use consultant and persuaded the Planning Board the transfer is legal because a court has not ruled against the city in a pending lawsuit.

And for those who think the Key West real estate market has hit bottom, or hasn't even got anywhere near the bottom, I would suggest that you step back and consider this. Some very big players are spending a lot of money on several really big projects in Key West. The little uproar over two transient units on Simonton Street is no big deal. But the players make it a big deal because there is money to be made as a result of the issuance of transient licenses at that location. And the continued development of other projects supports the premise that there is substantial future money to be made in Key West real estate.

If you Google the term "politics and real estate development" you will find 11,600 links discussing the topic. Maybe the two items in today's Key West Citizen are among those 11,600 because in Key West politics and real estate go hand in hand (or maybe hand in pocket).

Dazed and Confused

A lot of people leave Key West with mixed emotions. They fall in love with the place and work real hard at having such a good time that they go home dazed and confused. I guess a lot of people spend a lot of time in the bars... It's like everything they did is kind of hazy. And they need to go home to rest before they go back to work.

There is life away from Duval, however. I have written about that before. I thought I would share a couple of links to where locals post comments about like on the rock.

One is an Ezboard site called Its Only Key West CLICK HERE. There are seven sub-boards to checkout. If you are in love with Key West you may want to look at
the IOW Scrapbook for some real fun old pics of Key West. You will be amazed.

Checkout the other sections as well. Read how locals refer to tourists and their driving abilities.

Another more infamous site is Pistol and Enema, a gay gossip, message, and picture board. (Caution: there are some nude pics there. Not porn.) Again it is geared towards locals, but lots of folk who are planning trips to Key West go there to help plan their vacation so they don't miss a thing.

If you are planning a trip to Key West and think you may want to take advantage of today's more affordable housing market, checkout the the Key West Association of Realtors mls website. You can search all residential, commercial, and lots/boatslips available from Key West to Marathon. CLICK HERE. Then please give me a call for more information. 1-305-766-2642. Thanks.

Is the Sky going to Fall?

I have been trading e-mails with a customer who wants to buy a big home in Key West (a third home if I recall correctly), but who has developed a few reasons why he is postponing the purchase. The current market valuation is the prime factor. He thinks the price correction that has taken place has not completed its course. And he writes that he is awaiting to see if a hurricane scrapes Key West this season. If Key West gets hit, he thinks the market will fall to where were it was five years ago.

I think he is envisioning another Hurricane Wilma, but maybe he thinks any hurricane will be devastating. Other than Wilma, the hurricanes I have experienced are very bad rainstorms accompanied by very hard winds. But I experienced snowstorms and hailstorms in Colorado that produced as much property damage as Wilma did (except for the flooding--and that was an anomaly).

But I do understand his pessimism. I went to the Wikipedia to find support for my customer's pessimism. And I found this explanation of The Sky is Falling CLICK HERE. "In the "happy ending" version, the moral is not to be a "Chicken Licken" and have courage. In other versions the moral is usually interpreted to mean "do not believe everything you are told". In the latter case, it could well be a cautionary political tale: Chicken Licken jumps to a conclusion and whips the populace into mass hysteria, which the unscrupulous fox uses to manipulate them for his own benefit."

My customer lives in a state that is pelted by tornadoes and hurricanes. (Not Florida). He is a very educated person. He is very successful. He is looking for a reason to justify his reluctance to buy now. He has lots of company...

But there are other equally well educated, successful, and financially stable buyers that are purchasing choice properties at what I think will be deemed bargain prices.
Another such example just hit the mls this morning. 911 Fleming Street CLICK HERE was listed for sale 94 days ago at $4.675 million. It went under contract this morning. Some buyer does not see the sky as falling, but rather sees a buying opportunity.


CLICK HERE to preview all current mls listings in the Key West are. Then give me a call for further information. Thanks. 1-305-766-2642.

Property Taxes

There was a story on the evening news last night about the political debate going on in Tallahassee (Florida's state capitol) over property tax reform. It seems that real property values have increased so dramatically over the past few years that there are many new home buyers that can afford the price of the house, but cannot afford the property taxes. Likewise, existing homeowners are getting squeezed by ever-increasing property values that make their taxes more costly.

CLICK HERE to read a short article in today's Miami Herald that discusses the issues concisely.

The tax rate in Monroe County Florida is set near ten mills. That means property owners pay $1 for every hundred dollars of value of the real property. A home with an assessed value of at $890,000 would pay $8,900 per year in property taxes. If the property is homesteaded, the assessed value would be reduced by an additional $25,000, so the tax would be 890,000 - 25,000 = 865,000 X .01 = $8,650. CLICK HERE for a description of Florida's Homestead Statute.

I was very surprised to learn that the tax rate is not uniform across the state. Each county sets it's own rate. And some counties apparently have very high tax rates--much higher than Monroe County. So it is understandable why so many taxpayers are feeling the pinch.

If you are looking to buy a property in the Lower Florida Keys you can use a computer tool provided by the Monroe County Tax Assessor to predict what your property taxes would be on any given property. CLICK HERE to go the the page, identify the property, enter the proposed sales price, the the County Assessor's website will show you what your taxes will be.

A spokesman for the county assessor told me that the county looks at the sales price to make sure that the price paid was bona fide (arms length transaction) and the value of improvements to the property to determine the final assessed value. I always tell prospective buyers to contact the county assessor directly and not to rely on anything I or any other Realtor tells them about what their individual taxes will be. Do your homework so you are not mistaken or mislead. Generalizations are just that.

Florida does not have an state income tax. So property tax is one of the primary sources of funding local government. Don't expect any rapid or dramatic change to the current system. But it does look like some type of reform may be in the works.

CLICK HERE to preview all current mls listings in the Key West are. Then give me a call for further information. Thanks. 1-305-766-2642.

Key West Guest Houses -- For Sale

I know something about Key West Guest Houses, because I used to own one -- Eaton Lodge located at 511 Eaton Street. Selling it ranks in the top five mistakes of my life. Buying it was one of the best things I ever did. Taking as long to buy it cost me big time. The time value of money.

I pretty much decided that I wanted to own a guest house after my first trip to Key West in 1984, but I put off even looking on that trip thinking I was being too impulsive. I had stayed in other guest houses in Provincetown and California during the four previous years and those experiences led me to believe I could be a very good innkeeper. Kind of like Bob Newhart on NEWHART.

When I first started to look at properties guest rooms were being sold in the range of $25,000 - $35,000 per room. Most recently the rooms have been sold around $300,000 per room. Quite a dramatic increase in20 years. Yet the prices pretty much fall in line with the price appreciation of single family homes in Old Town.

The reason it took me so long to buy a guest house was my failure to listen to my Realtor. I kept on insisting on over-lawyering every offer I made. I kept trying to weasel the last nickle out of every deal. And I kept not getting any deal done.

I ended up buying Eaton Lodge at a public auction conducted by the Small Business Administration. It had foreclosed a mortgage on the property and let the building sit vacant for two years. It is a beautiful Greek Revival building with mature gardens in a heck of a great Old Town location. Because of the auction, I was forced into accepting the building "as is" and without any ability to negotiate anything. I couldn't over-lawyer or nit-pick. Thank God.

I tell buyers to consider the following factors when looking at prospective guest houses:

1. Location. Once vacationers arrive in Key West, they can't drive anywhere. Pick a good location that is easy to find and that is near Duval. Many visitors come to Key West without reservations, so the better the location, the more likely you are to stay full.

2. Improvements. Every guest house that I know of was built and was used as something else before converted into a mini-hotel. And even though guest houses may be priced similarly, the fact is that each property is very different in the quality of renovation and utility for it's end use. Some buildings have more deferred maintenance than others. Others may have code violations. Or some properties may have more guest rooms than transient licenses. Some may have locational problems (noise, lack of any nearby parking, distance from Duval, etc.).

3. Book of Business. It is virtually impossible to create a new guest house out of an existing building. The City of Key West has so many restrictions on buildings that it is just easier to buy an existing business. Look for a business that is operated as a business. Request and study the business's financial records. Study the reported income for the periods of January through April. Well located guest houses ought to be near 100% occupancy during the entire period. If the numbers are not there, then something is wrong with the numbers or the operation. Some owners operate "off book"--they do not report all cash income. This can have a severe impact on a potential sale because all banks require appraisals based on the number of legal rooms (rooms with transient licenses) and verifiable income. Operations that are successful are easier to takeover than businesses that are mismanaged. Sometimes property costs more because it is worth more.

4. You are not Newhart. Many people think they will live in one of the guest rooms and live the life of Bob Newhart in his charming Inn. Wrong. You have to be rich, really rich to live on site. On most properties you would lose $200 or more per night in room income for 365 days a year. It is less expensive and easier on your mental health to live near, but not on the property.

5. Help. No, not "help me!", but how many employees will you need and how much will it cost to pay them. A mom and pop type of operation can usually handle a small guest house with 6 or 7 rooms with one or two additional employees to help as maids and relief from the front desk. But that mean mom and pop will be doing a lot of the work as well. Guest houses with 13 to 14 rooms become very profitable because you can afford to have enough employees to let you run the business and mingle with the guests as necessary. Some guest house owners use a service company that provides maids on an hourly basis, so the owner pays a flat fee to the company and that is it. The worker is not an employee of the guest house so there are no FICA or unemployment taxes to pay. However, many very successful guest houses run just the opposite. They pay their employees a good hourly wage, offer some form of medical insurance, and maybe even paid vacation. The latter businesses have employee loyalty and longevity. And returning guests know the names of those employees and come back year after year because they are treated nicely. In employee relations cheap labor can be very expensive.

A Realtor should be able to help you understand how these factors impact your potential investment in a Key West guest house.

Earlier I said "Selling it ranks in the top five mistakes of my life." After I sold Eaton Lodge I understood that I had thrown away years of easy income for a quick (real quick one time profit). Running a guest house is not an easy business, but it is not hard one either. Making the right choice and operating a business as a business and not as a hobby can provide a good and stable income and significant property appreciation.

To view all current Key West Guest Houses that are for sale CLICK HERE.


CLICK HERE to checkout all current Key West mls listings. Then give Gary Thomas, that's me, a call for more information. 1-305-766-2642.

Where do you park your Yacht?

One of the interesting things about Key West real estate is the continued development of boat slips in the Key West area. The Historic Seaport :"Conch Harbor" was re-vitalized a few years back and it looks great. It has great new facilities including pool, showers, restaurants, and businesses that meet the needs of boaters. Not too far away is the Galleon Marina that is located next to the famous A&B Restaurant. The yacht pictured to the right is located at the Westin Resort Marina. A mile or so east you will find the Garrison Bight Marina and not too far from that is City Marina and then the Key West Yacht Club.

When you cross over Cow Key Bridge and go on Stock Island there are a bunch of new marinas in existence or in the process of being built. On the Gulf of Mexico side you will find the Sunset Marina. Classy and it has deep water access. The Sunset Key Condominiums are right next door (some even come with their own deeded boat slips). And those condos are just across the street from the Key West Golf Club. You can park your yacht at your back door and drive your golf cart across the street to play 18 holes of golf.



The Atlantic Ocean side is where all of the new action is. Major development is going on there with expansion of existing marinas to the creation of new ones. One particular boat slip that may attract your attention is the 50' slip at Ocean Side Marina CLICK HERE. It is priced at $450,000.


CLICK HERE for an aerial map that shows the location of each marina mentioned above. Use your mouse and drag to get "up close" aerial images of each marina. This may help you if you are in the market for a boat slip in the Key West area.

There is a boat slip available in just about every length, and prices vary depending on location and amenities. CLICK HERE to checkout all current Boat slips in the Key West area.

CLICK HERE to checkout all current mls listings in the lower Florida Keys. Then give me a call for more information. Gary Thomas 1-305-766-2642.

Open House Sunday -- 617 Fleming Street

Please visit me on Sunday, April 15th between 11:30 AM - 2:00 PM at Campbell Courtyard, 617 Fleming Street to see
what I call a Slice O' Paradise. CLICK HERE for more pics and information on this charming two story cottage right in the very heart of Old Town Key West. It is two blocks to Duval and three blocks to the Historic Seaport. But tucked away in a quiet little island on the Isle of Key West.

This charming 2 bed / 2 bath home was recently appraised and is priced at the appraised value, $785,000. The home is an eyebrow house, and it sits at the rear of the Campbell Courtyard compound. The home is offered fully furnished as well. The home has an excellent rental history and would make an excellent investment for folks who want to buy a little place in Key West that can help pay for itself.

If the charm, convenience,location, furnishings, ability to rent the home but still use it and don't win you over, maybe this will. It also has privately owned off street parking space. Bring your checkbook. Let's write an offer this Slice O'Paradise this weekend.

Trouble (Ya Got Trouble) Fractured

ALBUM: The Music Man
ARTIST: Meredith Willson

FRACTURED BY: Yours Truly

Oh, we got trouble
Right here in Key West City
Right here in Key West City
With a capital 'T' and that rhymes with 'P' and that stands for 'Phool'
That stands for Phool
We surely got trouble
We surely got trouble
Right here in Key West City
Right here

I recently responded to a query from Solares Hill Newspaper regarding advice on listing ones home. In my reply I added my thoughts on what I see as a very troublesome matter. Key West has a bunch of brand new $2 million (and up!) town homes, condominiums, and single family spec homes being built or currently available for purchase. (I have even written about several such projects in this blog.) Key West does not enough buyers for all of these projects. In fact we don't have enough buyers for town homes, condos. and single family homes that already exist and that are far more affordably priced.

I then suggested that the developers and the bankers financing these "over-priced" projects are in for a rude awakening. I assume that there may be some pre-sales on the projects, because lenders require it. But I believe that most of the pre-sales are to insiders of the individual developers or are buyers who signed up for units a couple of years ago when the Key West market was entirely different. And only a Phool believes that the $2 million asking prices are achievable. Not on one unit and certainly not one hundred,

I think the big projects being built at the Key West Historic Seaport, the Atlantic Shores, and the Casa Marina will be built, but proably be built in phases. I predict that some of the smaller projects will finish units under construction but not commence any more units until the market rebounds.

If the asking price on existing inventory (completed or nearly completed) is not substanitally reduced, the lenders will eventually step in. I think the only reason that the local banks have not foreclosed yet is that the banks are continuing to fund the interest payments out of the construction loans themselves. One of these days the OCC (federal Bank Examiners) is going to require the banks to start writing down the non-performing loans, and when that happens the prices will get reduced.

The smart lenders will not dictate the sales price, because when the project invariably goes south (and that is my prediction for many of these projects), the lender would be setting it up for a defense of creditor interference. But if the developers do not convert the units to sales and if they are unable to pay down the construction loan as agreed, we should anticipate the bank going into ownership either through foreclousure or by deed in lieu of foreclosure.

There is just too much inventory out there. There are not enough buyers. The prices are still too high. And the sky is going to fall.

Oh, and if you think my prediction is contrary to what I have previously written about individual projects, I don't agree. Quality homes in a good location always sell for a higher price than inferior quality properties or properties in less desirable locations. The problem is not the projects, it is the current pricing.

f you are looking to purchase a home in Key West, please CLICK HERE to search the mls website for all current mls listings. Then please consider giving me a call to help you find your next home, vacation home, or commercial property in Paradise. 1-305-766-2642.

Lost and Not Forgotten

There is a story in today's Key West Citizen that locals and anyone thinking of buying a home in Key West should read and ponder. It relates to the homeless population in Key West. CLICK HERE for the article.

According to the article city officials and citizens are complaining about the homeless population. "At a meeting Wednesday, city officials pressed Police Chief Bill Mauldin to do something it. Mauldin acknowledged the issue, even admitted his staff could do a better job, and promised certain strategies to tackle the problem." Hah. That's a laugh.

A few years back Key West elected a new mayor who was a compassionate soul, but a terrible leader. She wanted to create clean and comfortable space for the homeless to congregate. Drama, drama, drama, not in my backyard, more drama. A lot of well intentioned people wanting to help people who will not help themselves. Many are emotionally disturbed--or worse.

A couple of years ago an official from the City of Key West (worked directly under the City Manager) spoke to our office regarding a variety of city issues. I asked him why the City of Key West refuses to do anything to curtail the homeless situation like locking up people who violate the law. I specifically pointed out the Palm Beach does not have a homeless population. They don't allow it. No tolerance.

He came back and said that it costs some exaggerated dollar amount to arrest anyone and hold them in our new county jail. The figure he cited was in the several hundred dollar range.

I went right back at him and said his figures were ludicrous. I said if you include the amortization on the cost of the jail, the staff of the Key West Police Department, the staff of the Monroe County Sheriff's Office, and their respective retirement plans, then maybe the cost per inmate might amount to that figure. I added that the Sheriff is renting cell space to Miami-Dade County so that our county is profiting from the out of county inmates, whereas putting our own lawbreakers in jail costs us money. Why would anybody in their right mind put away people who cost you money when you can lockup people who make you money. I get it!

The homeless of Key West may be lost, but they are not forgotten. I will now get off my soapbox.

The pic above was taken by a tourist in the Key West Cemetery. What a nice way to remember your vacation in Key West.