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.