The Poseidon Adventures in Real Estate

Way back on January 4, 2007 I wrote an item on this blog about Real Estate Cycles. GO HERE to read the item in full. But the gist is that there are a series of "events" that make up a "market cycle" including: euphoria, denial, recognition, panic, hope, and finally capitulation. I think we are in the capitulation phase right now in Key West.

I have often written about the historic sales season for Key West real estate that coincides with the regular tourist season. It has always worked the same way. Sellers list their homes for sale at the start of tourist season in hopes that their property will be exposed to the widest audience of potential buyers during that time frame. Tourist season begins at Christmas and ends at Easter. The Buyers disappear after Easter. Or so it seems. So the sales season is about 120 days long and sellers desirous of getting a deal done must do his best to get it done within that time frame.

This season things are very edgy. It's like The Poseidon Adventure in Real Estate. The world as we know it has turned upside down. We know the path to where we want to go is filled with formidable obstacles and treacherous waters. If we make a mistake we stand a good chance to sink with the ship. And even if we make it through the obstacle course, chances are good that we will have scars and memories that will never go away.

At the bottom of almost every blog entry I provide a link where buyers can search the Key West mls database. Buyers can see the same basic info that Realtors get to see. And see it in real time. What you can't see are the daily entries of new listings, price reductions, contingent sales, pending sales, solds, and expirations. But I can. And the number of Price Reductions that are happening is alarming. There are not just a few. There are a lot--everyday. It's like the sellers are finally coming to the realization that we are near the end of the first month of our sales season and that if they have not been getting any positive action on their property that maybe, perhaps, probably their sales price is too high. "Duh!" to quote Homer Simpson.

Yesterday for example one Broker/Owner reduced the price on four separate over-priced properties the Broker/Owner owned and this time included language that each individual may become a "Short Sale" requiring lender approval (shorthand for loan forgiveness) to get the deal accomplished. I specifically recall showing one of these properties in the early summer of 2005 when it was priced just around $1 million. Today it was reduced to $395,000. And it isn't even worth that much. I think the Broker/Owner has finally capitulated.

Yet there are still Realtors listing properties at prices that are out of touch with reality. You will note that I normally recite the price per square foot when I discuss a particular property. That is so the reader can compare other properties to make an evaluation of the real value of the particular property I am discussing. There are a few properties that are so well located and so perfectly done that they may qualify for an astronomical asking price, but the emphasis is on the word "few".

It will be interesting to see how the asking prices shake out during the next three months. The properties that are selling right now are following the traditional Key West sales pattern for years gone by: high end, very low end, and very well located and well priced Old Town homes. The stuff in the middle just languishes. If the market cycle theory holds true more and more sellers will capitulate and that, in turn, will drive more and more prices downward.

The Key West Association of Realtors is conducting a seminar today on Foreclosures. Imagine that. I managed foreclosures for a two major Denver banks for years. It will be interesting to see how much real world knowledge the lecturer can impart in the discussion. It will be equally interesting to see what kind of crackpot questions some of the Realtors come up with. They always do.

608 Angela Street Key West, Fl

Just Listed: The Philip Burton House at 608 Angela Street in the Heart of Old Town Key West, Florida.

Situated atop the much desired Solares Hill of Old Town sits this elegant single level conch classic has been extensively renovated and enjoys a pool and off street parking. Historically significant, built 1890, and the former residence of Phillip Burton this home welcomes you with a classic wrap porch, 12 ft ceiling heights, restored original windows and Dade County Pine walls and ceilings throughout. A thoughtful floor plan with 3BD/2BA and a fabulous open living area right off the tile pool and spacious patio. Finished in fine materials including Brazilian wood floors & brand new kitchen with stainless steel Viking appliances. Truly a signature Key West property known for its original natural Cypress siding and picket fencing. CLICK HERE for additional photos and more detailed info on this classic property.

The house is offered at $1,650,000 or $974 per sq. ft. The house is 1694 sq ft and sits on a 4118 sq. ft. lot near the top of Solares Hill. Yet it is only a two block walk to Duval Street. Additional info on 608 Angela Street HERE.

If this house is out of your price range, don't fret. There are lots of good properties available in all price ranges. Do your own search of all Key West listings by CLICKING HERE. Then please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com to schedule an appointment.

523 Louisa Street Old Town Key West, Fl

Just Listed: 523 Louisa Street, Old Town, Key West, Fl. Heres the deal: Transient License! Great rental history on this cute story and one-half conch house renovated in 2000 with new roof in 2007. First floor contains open living/dining/kitchen with a bedroom and ensuite bath. Upstairs is two bedrooms with adjoining bath between. Small lagoon style, black bottom heated pool added in 2003. Turn-key property. Strong advanced bookings for buyer to start with immediate cash flow. Must see for investors.

The offering price is $1,195,000 or $1106 per sq ft for this 1080 sq ft house that sits literally just a few feet off Upper Duval Street. The property is very well maintained as you can see by viewing the additional photos CLICK HERE.

This property is less than a 5 minute walk to South Beach so your paying guests can go to a real beach without having to rent a bike, drive the car, or take a taxi. Likewise, since it is just off Duval, your guests can easily walk to all that Duval has to offer for dining and nightlife. And they won't get lost. This property is professionally managed and rents for $3200 per week during season (12-25 thru Easter). CLICK HERE to checkout the availability schedule. The numbers speak for themselves on this gem.

CLICK HERE to checkout all current Key West mls listings and then give me, Gary Thomas, a call at 305-766-2642 or e-mail me at kw1101v@aol.com to schedule a showing.

630 Eaton Street, Old Town, Key West, Fl--Commercial

Development Opportunity. Four years ago this property would have been sold the first day or so it was on the market because of the Location and Development Opportunity associated with this large property.

630 Eaton Street sits on a lot totaling 7898 sq ft on the corner of Eaton & Elizabeth in heart of Old Town. Just two blocks off Duval St. Main building is 4,750 sq ft wooden structure with 7 residential apartments. There is an additional 237 sq ft building fronting Eaton St. (A studio apartment.) Lot coverage & Floor Area Ratio (FAR) are within current limits for HNC-2 zoning which permits Single, 2 family residential units, churches, hotels, transient lodging, businesses, professional offices, and medical offices.

CLICK HERE for additional photos and more info on this development opportunity. This property has not been on the market since 1984.

CLICK HERE to search all Key West mls properties and then please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com for more information or to schedule a showing.

Awesome Describes 1236 Washington St., Key West

One word describes 1236 Washington Street, Key West, Florida: Awesome.

A remarkable renovation in the renowned Casa Marina area featuring all of the requisite assets like: copious off-street parking, large pool, expansive master suite, 2 additional bedrooms with adjacent full bathrooms (and additional outdoor showers), larger than average lot size, immaculate attention to detail in every category. Upon walking through the front door, you are drawn toward a lush outdoor enjoyment area with Brazilian IPE Decking and the heated pool. The kitchen is open to the living area and features granite counter tops, wine cooler, and stainless steel appliances. Everything in this home has been updated and improved. It now has vaulted ceilings in the living room and 10 foot ceilings throughout. This house just feels comfortable, and yet, it is a showplace. I have to add that the photos of this house do not do it justice. Pic link is below.

I really like how all of the rooms open onto the outside--even the bathrooms. CLICK HERE for a pic of the indoor-outdoor shower that is part of the master bath. What an incredible bath. And the master bedroom opens onto a private area of the pool. Imagine going for a moonlight dip just before retiring. The house has a very contemporary Key West feel, but it is not "dated". There are many, many Key West houses that are renovated using the same materials that are "in" or "chic" at a particular moment, and this house avoids the cliche`. The color palette is subdued and will appeal to a wide audience of buyers. This plaza is hot!

The house at 1236 Washington is 1803 sq ft and sits on a 5656 sq ft lot and is priced at $1,649,000 or $915 per sq ft. It is located two blocks east of White Street and two blocks north of Flagler. During normal traffic you can be just about anywhere in Key West within 5 minutes. And the Atlantic Ocean is just a short 6 blocks to the south.

CLICK HERE for more pics and info on this awesome renovation, and then call me,
Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com for more information or to schedule a showing.

Big Price Reduction: 710 Caroline St., Key West

710 Caroline Street has been on the market for quite some time. It was originally listed at $2,275,000 in 2005. It was re-listed in January 2007 at $1,795,000 and was just reduced to $965,000. That price is $420 per sq ft for this large 2300 sq ft home located across the street from the Historic Key West Seaport.

Wonderful opportunity to own historical conch classic revival style home in Old Town Key West. Just steps away from the waterfront, this home is spacious and features 6 bedrooms and 4 bathrooms, two large kitchens, two dining rooms, covered decks, furnishings. The first floor features a parlor, two bedrooms, long hallways and historical touches. The second floor includes four bedrooms, a large walk out deck off of the rear door entrance and has tall ceilings. Great location, close to everything!

This is a vacation rental type property. It is offered fully furnished and if you look at the photos you will see that is very nicely furnished.

CLICK HERE for more info and more photos. I think the price is exceptional now and this property should sell very quickly. It does not have parking or a pool, and that is a drawback. But the price per sq foot compensates for that.

Like to see this property. Call Gary Thomas, 305-766-2642 or send me an e-mail at kw1101v@aol.com.

The Sun'll Come Out Tomorrow

The sun'll come out
Tomorrow
Bet your bottom dollar
That tomorrow
There'll be sun!
Just thinkin' about
Tomorrow
Clears away the cobwebs,
And the sorrow
'Til there's none!
When I'm stuck a day
That's gray,
And lonely,
I just stick out my chin
And Grin,
And Say,
Oh
The sun'll come out
Tomorrow
So ya gotta hang on
'Til tomorrow
Come what may
Tomorrow!
Tomorrow!
I love ya
Tomorrow!
You're always
A day
A way!

I'm so lazy these days that I no longer read the newspaper, but rather get the news online or from TV. The financial news yesterday was especially displeasing because the stock market took another tumble on fears of more doom and gloom over the housing and mortgage markets. Then today I read a nifty little item in FORTUNE about how us tax payers (those that actually pay taxes as opposed to the illegal aliens and lots of others who work "off book" don't!) are going to pay for Bank of America's acquisition of Country Wide Mortgage. GO HERE and read it. It'll make your blood boil. The gist is that BofA will use the accrued tax losses of Country Wide to offset the gains BofA has so BofA gets a valuable asset without paying for it.

Then I remember back in the early 1990s when there was talk that CITICORP was going to fail. I bought CITICORP stock at $8 a share because I knew that the US government could not afford to have the largest bank in America fail. It would start a major depression. I was correct. The stock bounced back and I sold it years later with a good profit. At the same time BofA was buying a lot of the assets of failed savings and loans--the bank buildings, FF&Es, the deposits (which are technically a liability, and other cherry-picked assets. BofA turned a negative into a positive. The RTC (for which I worked) managed and disposed of the rest.

I worked in the Subsidiary Assets Division of the RTC. The subsidiaries were companies, partnerships and joint ventures that failed thrifts used as vehicles to develop or own real estate investments. We had all kinds of assets including a nursing home in Louisiana, a Burger King in New Mexico, undeveloped ground in Tennessee, Florida, Arizona, California, etc. The largest asset was a $300 million investment in a new town that Lincoln Savings had been constructing several miles west of Phoenix--Estrella.

One of the things I saw very quickly was that we had a lot of inexperienced people handling assets they did not understand or appreciate. Most were former bankers who were familiar with making loans and working in an "up" market. Then they were put in charge of liquidating billions of dollars worth of assets in a very depressed market. It was The Peter Principle in stark raving reality. There numerous instances of asset managers not understanding the basic fact that even though the real estate market was tight, the assets themselves were generally very valuable, and that either walking away from them (I'm serious!) or setting a very low sales price was the only way to dispose of the asset. There was pressure to resolve assets because the RTC was supposed to "sunset" (go away) by 1995. The assets weren't theirs so they really didn't care what happened as long as they got the deal done. Because their performance was judged on getting deals done and not on dollars recovered. (But when you had you had lunch or dinner with them, they'd watch every penny.)

It is frustrating in this market to get buyers to commit because they think the market is going to continue to fall. It may. And the cheery news like yesterday's announcement about the DOW falling again because of housing woes reinforces the fears so many would-be buyers have.

I'm starting to look now. I have a house which I don't intend to sell. But I think now is a good time to buy an investment. Key West has not been affordable for over 20 years. But the prices now are certainly better than they were 3 years ago. A real buyer with real cash as a down payment can get a 30 year fixed rate loan under 6%. Right now the return on a certificate of deposit is around 5%. You do the math.

I think the sun'll come out tomorrow and you can bet your bottom dollar that things will be better. We are going to get a new president and we are going to have a collective feeling of joy. Bet on it.

CLICK HERE to search the Key West mls database. If you see something you like, think of contacting me, Gary Thomas, 305-766-2642 or e-mail at kw1101v@aol.com to get more information on the property or to schedule a showing. Thanks.

Disparate House Buys

Do you ever watch any of the reality tv shows that compare home prices in various cities? Several networks have similarly themed shows, but they all basically just demonstrate the familiar, but true, adage about Location, Location, Location as the determinative factor in real estate valuation.

I watched one the programs the other day and the house hunters were looking for a place near New York City for $1,000,000 and I was surprised to see how little, but also how much you could buy for that price if you were willing to shift location for some other factor. I knew that already, and I tell that to clients all the time. But it was nice to see it demonstrated so neatly on TV.

So I thought I'd do my own comparison. My criteria: single family home that sold and closed between 1/1/07 and 1/10/08 any where on the Island of Key West with a final sale price between $980,000 to $1,001,000. There were seven such sales and you can see each individual property in more detail by CLICKING HERE. But note that most of the houses originally were priced significantly higher than the actual sales price. And if you are familiar with Key West you will see why houses that sold for the same price, but in different neighborhoods, looks so disparate.

The Biggest Loser (or Winner depending on how you look at things in life) is the property at 912 Truman. It was originally priced at $1,995,000 but only sold For $1,000,000. But read about it and look at the pictures. I think the buyer opted to purchase a grand Key West home in an inferior location and in exchange got a significantly high value for his money. It sold at $286 per sq ft.


The house at 314 Margaret is in Old Town, but the block is situated in a mix of residential and commercial. It is near the seaport, but with that comes lots of foot traffic and parking difficulties for full time residents. Yet the house sold in only 27 days at 90% of the asking price because it had a valuable transient license. In my opinion is the existence of that license that caused this especially disparate house buy a good deal to its new owner. It sold at $865 per sq ft.

And then there is the mystery house at 520 Angela. It was redone last year along with a cottage at the rear. (That usually means illegal apartment or phantom rental unit.) It sits about 300 feet east of Duval and across the street from the Key West City Hall. The ultra chic Gardens Hotel sits on the east end of the block. So the house would be a duck out of water if it were intended to be used as a residence. The house was listed at $1,495,000 and sold for $1,000,000. The house is small and sold at $1163 per sq ft.

There are many factors that effect the perceived value of property, and location has to be near the top. Referring back to the TV programs I recall having seen mini-mansions priced at $1,000,000, but they were located in places most people want to leave. Like Tennessee. Key West is a place people move to because of the lifestyle it affords and the weather. It isn't referred to as "Paradise" by accident. So if you are a buyer up north in America and are looking to buy way down here on this tiny little island keep in mind that there are a lot of people just like you with money in their pocket who also want to get a place here.

I think it is possible to get a good deal in Key West in this current market. As a buyer you need to be cognizant of the many factors that affect price and work with a good realtor who knows our local market. Be willing to negotiate with yourself to find a house that fits your needs and your budget. And finally, be realistic. Sellers may want to sell their houses, but few want to give them away.

There are lots of homes in all prices ranges available in Key West. CLICK HERE to checkout all Key West mls listings in real time. Then call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

1108 Southard Street Key West Florida

Just listed: 1108 Southard Street. Yesterday I commented on 1006 Southard Street one block to the west. My description of the neighborhood rings equally true on this house.

So here is what the listing Realtor writes about this house: A beautiful classic eyebrow style home in one of the best locations in the Old Town Historic District of Key West - This renovated home features a main level open floor plan with living room, a wonderful large kitchen/dining room with vaulted ceiling, guest or master bedroom and full bath. Multiple sets of French doors open to a large loggia and decked private rear yard with heated pool and palms. Upstairs is a master bedroom with French doors to private porch, a large bath with separate tub and shower, walk-in closet and a guest bedroom. The home has beautiful architectural detailing including wood floors on both levels and Dade County Pine walls. Off street parking. Owner/Agent. CLICK HERE for more info on this Eyebrow House.

The house is priced at $1,495,000 or $821 per sq ft. The house is 1820 sq. ft. and sits on a 3740 sq. ft. lot. The owner is a realtor and the listing agent on the house.

This particular block of Southard Street has some of the most impressive homes in Key West. A few doors east of this house is the former home of the vice chair of AOL TIME WARNER that appeared in Architectural Digest about 4 years ago. CLICK HERE to see that magnificent home. Magnificent home. And across the street from that house is a very large single family property that sold in 2006 for $5.5 million.

By coincidence the house down the street at 1009 Southard Sold and Closed yesterday. That house was originally listed at $1,950,000 in November 2006. And it sold for $1,280,000 or $344 per sq ft. CLICK HERE to read what I wrote about this house in 2007. I showed this house to several people including a fellow realtor from Atlanta. I even wrote an offer for an attorney from Texas and we got close to getting the deal done, but didn't succeed. Whoever got this house in this location for this price got a good deal indeed. If you read what I wrote you will understand why the price and the property was such a good deal. The seller closed on a much smaller home on a Key West lane (of course) on the same day.

I think either house at 1006 or 1108 Southard Street would make a nice second home for somebody. You cannot beat the location, the neighborhood, or the charm of either home. Want to see one or both, call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com. OR CLICK HERE to search all Key West mls listings to find your future home in Paradise.

1006 Southard Street Old Town Key West

1006 Southard Street in Old Town Key West is a charming renovated cottage in the historic district. The cottage is secluded down a shady bricked walkway. There are a bedroom and bath down and a master suite upstairs. French doors open from the bedroom, living room and spacious vaulted kitchen to a decked swimming pool. It has lots of Dade County Pine and historic details, yet it has been modernized with a new roof, well-appointed kitchen and pretty baths.

The house is priced at $879,900 or $741 per sq ft. (The house is 1188 sq ft and sits on a 2833 sq ft lot.) The house sits to the rear, not the front, of Southard Street. So you cannot see the house from the street. That adds additional privacy for the homeowner. You are a five minute walk to Duval or the Historic Key West Seaport. And you are a two minute walk to Five Brothers Grocery and Sandwich Shop where you can get your morning con leche, Michael's Restaurant
where you can get your steak fix fixed, or Mangia-Mangia Restaurant to get your pasta fazooled.

CLICK HERE for details on this little charmer and more photos as well. Note the Dade County interiors, the open and eclectic feel that this house exudes, and the utter charm of the pool and garden. You won't be spending all of your vacation time tending to fixing things and working on the yard. There is something to be said and cherished about minimalism.

This house is just a basic house in a very good location. It has its drawbacks for sure. But it also has the charm and amenities that second home owners pine for. Want to see it? Call me, Gary Thomas, 305-766-2642 or send me an e-mail at kw1101v@aol.com.