Water-Blogged in Key West

I was watching a new episode of HGTV's National Open House last night. The episode featured homes in Minneapolis, Charleston, S.C., and San Francisco, at price points of $250,000, $500,000, $750,000 and $1 million. CLICK HERE for more info on that episode. In the middle of the program there was a gay couple in Minneapolis that bought a home in a deteriorated neighbor hood about ten years ago. As I recall they paid somewhere around $100,000 for their home. They worked their magic on the house and made it absolutely shine. I was just amazed at what they accomplished without spending a helluva lot of money. I think the announced said that in today's market the house is worth $750,000. I may be wrong on the number, but that is not the point. The bought a good house in a somewhat bad neighborhood and turned it into a showcase that is now worth a lot of money.

The camera veered outside to show other houses on the block that were also re-vitalized. House after house had the gay flag flying. All the lawns were mowed and all the facades were crisp and clean. It made me think about what happens when gays move into an area. They play house. They build and re-build and decorate and re-decorate. Just like their heterosexual counterparts, they nest. Sometimes they just build more fancy nests.

When I bought my first house in Denver in the 1970's I decided to find one in the Capital Hill area. That part of town was the area developed after the first generation of miners settled in Denver. A couple blocks from my house you will find the Governor's Mansion and the home of the Unsinkable Molly Brown. But back in the 1970's a lot of the grand homes were split into apartments and many had deteriorated. The wealthy moved on to greener pastures. When that happened, prices went down. My generation of gay men and women did what the unthinkable in earlier times: they bought homes together. In fact the City of Denver had an ordinance which forbid unmarried people from owning homes together in specific areas of Denver. I remember looking a property one time and my Realtor told me "Gary, you know that you cannot buy here." I told her "Oh, yes, I can!" The city eventually abolished that arcane law. Denver's Capitol Hill area is now one of the toniest parts of town.

When prices were low gays moved in and bought the houses nobody else wanted and brought them back to their former glory -- just like the guys in Minneapolis in the National Open House episode last night. That made me think what may happen now that prices are returning to levels where normal people (as is not rich) can buy a permanent home or second home in Key West.

There are some good deals in the Old Town area as compared to prices from a few years ago. Prices are still high as compared to other areas of the U.S. But you cannot find the architecture or lifestyle that is Key West in Minneapolis or San Francisco. If you are gay you can find many gay neighborhoods. But you'll have to deal with other issues like having a real job, commuting, long lines, buying clothes to impress others, things like that.

I think the people that have homes on the market in Key West today really need to sell. So if you are a serious buyer and you want to buy a place in Key West you should spend some time and see if you can find a place that meets your needs. CLICK HERE to checkout single family homes in the Key West area on the water (canal to open water) that are priced between $700,000 to $900,000. You will be surprised what your money can buy today. And, remember, these are asking prices. If you see something you like call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

Retraction

On April 22nd I wrote about a bank foreclosure on Whistling Duck at the Key West Golf Club that I called a buying opportunity. READ WHAT I SAID THEN HERE. I showed the property to a client a few days later. I apologized to her for even showing the property. And my reasoning follows below.

We had looked at another listing a few days earlier of a smaller unit that was in good shape but priced comparably. I could see from the photos that the Whistling Duck property used to be very attractive when it was occupied. I reasoned that some tlc would bring back the lustre of yore and that my client could get the property for about half the price the previous owner paid for it. So more square feet and a similar price seemed rational. Wrong.

The specific
Whistling Duck property is termite infested. Many of the windows and some doors are rotted from water and termite (and/or carpenter ant) infestation. (I use that term interchangeably.) That may seem par for a neglected property in Old Town, but the town homes at the Golf Club are only a little more than 12 1/2 years old. Since the property is a town home, the adjoining property owners have to agree to have the units tented as a preventive to termite infestation. It looks like it did not happen on this specific Whistling Duck property. And because there are other properties in foreclosure that I began to wonder how many others are facing a similar fate. The units were constructed of the same materials. The windows and doors at the specific Whistling Duck unit had not been properly maintained.

This past January a real estate broker, who manages several units at the Golf Course, told me that she has had a problem with rats in some units she manages. She mentioned one specific unit that had a rat problem where the tenants had a baby. That is not good.

The Key West Golf Club Homeowners Association approved an application for a $250,000 Line of Credit with BB&T Bank at the March 17, 2008 meeting. According to Karen Hendrick of the Key West Golf Club Homeowners Association the line of credit "is for emergency use only such as a hurricane not to cover unpaid dues".CLICK HERE. The association did make a one-time special assessment of $400 per unit to cover short fall.There are many properties in foreclosure or that are bank owned. (According to Realtrytrack.com on May 22, 2008 there are 13 pre-foreclosures, one set for auction, and 3 bank owned units at the golf course.) The banks are most likely not going to pay the homeowner association assessments immediately. (I used to manage foreclose properties for banks in Colorado. We only paid what we legally had to pay. No money was paid gratuitously.) That means someone else is going to have to do it. Guess who!

A lot of other condo or homeowner associations are facing similar hard times in Key West and across the country. There is a reason prospective buyers are given a copy of the association rules and access to the minutes and financial records: to determine if there are any legal or other issues that could end up causing a new homeowner to have to pay more money in the future to correct some shoddy construction, latent defects, disclosed problems that have not been repaired, undisclosed problems, or to pay the shortfall of unpaid condo assessments. It is a growing problem and buyers need to be aware of it.

I know of a four unit property in Old Town where two of the units are in foreclosure. The association is supposed to provide building insurance including windstorm. The defaulting owners stopped paying homeowners monthly fees months ago. There are no reserves to purchase the required insurance. The foreclosing banks are not going to ante up. The two surviving owners can't pay the fees on their own. What do you think is going to happen?

My concern goes way beyond the Golf Club because it is only symptomatic of what is going on at other homeowner associations both big and small.I found a very well written blog regarding this mess CLICK HERE. He cites statistics to what I said. And the statistics are scarry. "More than 60% of the nearly 500 survey respondents said that banks and
mortgage lenders now holding title to the foreclosed units or homes are not
meeting their legal obligation to pay regular fees or other assessments to
the association. More than 40% reported mortgage-foreclosed units or homes
in their communities have been vacant for more than six months, with one in
five citing vacancies of more than one year. Respondents expressed concern
about maintenance and security issues related to vacant units as the 2008
tropical storm season approaches."


Banks are notorious about nickle and dimming customers over the smallest service issues. But banks are equally notorious about pinching pennies and refusing to pay costs to maintain foreclosed properties. I'm not talking about any one bank, I'm including almost everyone in my indictment. Banks expect Realtors to pay to have electric service turned on and maintained and to have pools maintained and other services to protect the bank's assets. The banks agree to reimburse the Realtor-listing agent when the property sells. If a Realtor has 30 bank foreclosure properties for sale in Key West, imagine how much money it would take to maintain the bank's assets each month.

Again I apologize to my client that actually looked at the specific Whistling Duck unit and to anyone who read my blog and thought about looking at it. If you are looking at purchasing a condo or town home anywhere in Key West, you might want to have your attorney or accountant review the condo docs and financial statements to make sure that you are not buying into a huge mess.

917 United Street Key West, Florida

The neat house at 917 United Street in Key West is now offered as a Potential Short Sale. A Short Sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured by the property upon receipt of less money than is actually owed. That's the hope anyway.

917 United Street is a 3 bedroom 2 bath home that has been very nicely remodeled. The house is 1678 sq ft and sits on a 6233 sq ft corner lot. This property makes extremely good use of the space and has excellent storage areas in the carport, garage and shed. It has been renovated and remodeled throughout to a high standard and has a beautiful new kitchen and bathrooms and gorgeous new tile floors in every room. There is a great outdoor area with large pool. CLICK HERE for more info and additional photos.

There are two other houses on the same side of United Street in this block. The first property at 927 United (CLICK HERE TO SEE)was just remodeled and it is as cute as all get out. And the property at 929 United is brand spanking new. CLICK HERE to seek 929 United. Good neighbors to have, especially when market values rise again.

Want to see 917 United Street and see if it works for you? Then call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com. Many short sale properties are going under contract at prices way below the asking price. So don't let the price of this property deter you from looking.

Sales in the City

I have received e-mails and phone calls from potential buyers asking about specific properties I have mentioned here as being buying opportunities. Two separate properties just closed that I had written about, so I decided to let you see how the market acted.

1103 Virginia was wild. It was a bank foreclosure and was listed at $499,900. GO HERE to read what I wrote about the property. What I did not write is that I showed it to several potential buyers, two of which were interested. I told each buyer to go to the City offices to investigate how the City would respond to certain legal issues that affect that property. The prior owner allegedly renovated large parts of the house without building permits and the City had imposed a huge fine on the property. There was also a theoretical possibility that the City would require that the covered parking be removed since it was constructed without permit and in violation of HARC rules that disallows such structures in HARC areas. I also did not write about my observation of building code violations regarding the structure itself. I'm no contractor, but there were many problems with the work the prior owner did. And I questioned how difficult it would be to obtain a certificate of occupancy given those problems.

The listing broker told me she had 5 or 6 written offers within the first few days the property was listed. The property went contingent 14 days from the listing date. It listed for $499,900 and sold for $606,500--$106,600 more than the listing price.
The sales price could be real sweet, or it could be problematic.

831 Johnson Lane is a totally different property. What a beautiful group of cottages that make up such a delightful place to call home. The property was listed at $1,295,000, reduced to $1,195,000, and just sold for $1,100,000 or $556 per sq ft. The property is not typical of Key West, yet nothing is. But the price may be a good benchmark for future sales of quaint homes with pools. Works for me. CLICK HERE to read what I wrote about the house before it sold.

If you snooze you lose. The nice houses are gonna get purchased. The dogs are gonna get purchased as well. Somebody will buy everything. For a price. Someday the market will return. And new millions will be made off of the losses of others.

Deal or No Deal

Nine minutes past noon yesterday, May 9th, the listing Realtor dropped the asking price to a fixed price of $415,000 on 1707 Leon Street in the east Casa Marina Area of Key West. By 4:00 PM two contracts had been submitted. I sent e-mails to potential buyers who have asked me to notify them of real bargains. Nobody responded yet, so I'm puting this out for any one else wanting a pretty good deal.

The property sold in May 2005 for $865,000. It got a new kitchen since then and received other renovations. The floors have be re-tiled, windows replaced, some of the French doors and exterior doors replace, new roof, and master bath updated. The owner must sell now. The yard is shaggy and parts of the house look raggedy. That's part of the reason for this low price. This is a short sale and the price shown is the price required by the seller to seal the deal. But if there are already two offers out there, how does some other potential buyer get a crack at it?

I have repeatedly suggested that active buyers have pre-approval letters from lenders so they can make the equivalent to an all cash offer. Second, offer to close as soon as possible after the lender approves the short sale. Third, limit the contingencies you as a buyer would require (but still require a home owners inspection, survey, and clear title). In this instance you might want to increase the offering price to ace out the competition. That's what I'd do.

The house is vacant so it is easy to show. It has three bedrooms, two baths, and sits on a large corner lot (5548 sq ft). And there is one heck of a pool to boot.
CLICK HERE for more info and photos of this listing. It will not last long so if you are looking for a deal this may be the property you have been waiting to find.

EVEN MORE PHOTOS HERE.

This is how the listing Realtor describes the property: "*FINAL PRICE* $415,000 Deal or No Deal? What a pool!! Recently renovated with granite and stainless 3BR / 2BA Key West Home on large corner lot with pool. Great corner lot location, with lots of privacy, one block to the beach and a short walk to the Casa Marina. Motivated Seller! This is a potential short sale that may be subject to third party approval."

Interested in seeing this house, call me, Gary Thomas, 305-766-2642, or e-mail me at kw1101v@aol.com. This is not my listing, but I can get you inside the house anytime.

728 Love Lane Old Town Key West

The charming home at 728 Love Lane in Key West is located down a quiet lane in the heart of Old Town and is an exceptional 3 bedroom, 3 bath home. The location is an easy stroll to the center of Duval Street. This residence is a must see for anyone who desires the best in location, privacy, security, top notch construction, and superb attention to EVERY detail. Some features include: Off street parking, heated, custom reverse infinity edge pool, two zone A/C, whole house back up generator, professional chef's kitchen built by a custom furniture maker with Wolf/SubZero/Bosch Appliances, spacious loft to accommodate extra guests, extensive storage, covered veranda with wet bar, ice maker and under counter refrigerator, impact windows and skylights, floor to ceiling marble and decorative tile in all baths.

Anyone who has read my blog knows how fond I am of homes located on almost any of the Old Town lanes. This particular lane has the added pizazz of being Love Lane. Now what kind if passionless and frigid individual would not want to live on Love Lane?

The owner/renovator is also a Realtor who has done several projects in Old Town. And he uses top quality materials and lots of imagination to achieve a project that is both practical and romantic.

CLICK HERE for more photos and additional info on this cute little abode. The home is 2100 sq ft and is priced at $2,250,000 or $1.071 per sq. ft. Now that is quite a bit in any market but when you consider what you are getting for your money, this house is just plain practically magic.

Let's go take a look together. Call me, Gary Thomas, 305-766-2642 to schedule a showing. If you have the money, this really is a house to consider. And if you can't quite afford this property, CLICK HERE to checkout the other homes available in Key West. Again, give me a call to help you find your new home in Paradise whether it be on Love Lane or some other charming street.

Is the Glass Half Empty or Half Full?

I was full of doom and gloom yesterday as I listened to the evening news. There was a story about good people in Minneapolis who have had their electric power turned off because of past due utility bills. A Minnesota state law forbids power companies from yanking the power cord during the winter, but now that spring has sprung, the utilities are free to act. I watched a mom fretting over what had become of her life. She works for a living, and pays her bills. And this is what her life has come to. Within minutes the talking heads on MSNBC were discussing the notion that this current generation may be the first since the Depression that will not see a future any better than already exists. That really cut deep.

I guess everyone in Key West feels a little poorer (real estate-wise) now than we did 3 or 4 years ago. Property values are down almost across the board. There are so many properties on the market that it feels like the bottom has dropped out on certain segments of the local market. And then the national news about gas prices and food prices and the threat of mega only exacerbate the matter.

My parents were old when I was born. They were young parents during the Depression and eeked out a living like so many other people did during those hard times. People my age whose parents went through the same experience probably grew up like I did and that is I learned the value of money. I learned that if you want something you have to either work for it or save for it. I knew first hand that nobody, not even your parents, can give you everything you want. So if you want it, earn it.

The current generation has had so much just given to them that I think they believe they are entitled to everything as a matter of birthright or the fact that they just exist. A year ago I was watching a reality TV on HGTV of young designers who wanted to have their own show. This 20 something girl was decimated when she got booted. She commented that she deserved the TV show because of all she had done. What? She went to college, went to some design classes, got picked to be on tv and she deserved her own show. Give me a break. But now even people who do work and save are having their lives put in total disarray. The government is not doing anything meaningful to help. Not in the short term, and certainly not in the long term. At least that I can see.

Back in the early 1990's when I worked at the RTC (Resolution Trust Corporation) we had a somewhat difficult time selling the assets from the failed savings and loans. We weren't selling houses. Instead, we were selling multi-million dollar investments in housing developments, office buildings, shopping centers, hotels, golf courses, etc. Finding buyers was hard. But it did happen. The result was the largest transfer of wealth from one segment of society to another that ever occurred in the United States. Those optimistic buyers in the 1990's who looked to the future and saw the glass as being half full reaped the benefits of their foresight. And those who sat on the sidelines and groused got nothing.

I see a corollary for what is going on now. Except this time the properties being sold are houses and condos, not shopping centers and hotels. There are some really nice homes for sale in Key West. It is sad to see so many nice people who worked hard to create some incredible properties losing their dream homes. But those loses can be a positive force for those who believe that tomorrow will be better than today. I can't wait until tomorrow, friends. Today sucks.

If you look at the photo to the above right and see the glass as being half full and you are not afraid of tomorrow and you want to buy a place in Key West, please call me, Gary Thomas, 305-766-2642 or email me at kw1101v@aol.com.

730 Passover Lane -- Affordable & Adorable!

This little charmer at 730 Passover Lane sits directly across the street from the Key West Cemetery. The home has been on the market for some time and the price has been periodically reduced from $795,000 to $499,000. That's right, $499,000. Now it is officially affordable as well as adorable. CLICK HERE for more info and additional photos.

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. Ever! I won't make any bones about it, many people would not consider a house by a cemetery. But if you aren't afraid of ghosts and you want a few rooms with a great view (I'm serious), you need to see this little house.

The house does not have off street parking and there is no room for a pool. But there is plenty of room to live a very comfortable life in great style. Want to see this charmer? Please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

Ripe for the Picking Casa Marina Oceanfront Key West

Sometimes I think I sound too pessimistic about what is going on in the Key West real estate market. I talk about prices going down instead of up. I talk about short sales where sellers potentially (Ha!) owe more money to the bank than the property will fetch at sale. I mention bank foreclosures as sometimes being buying opportunities but I know many readers are scared of a market where there are so many foreclosures already and some dumbass like me predicts there will be more. Why a only a fool would buy into that market. Or is it.

I remember Christmas 2004 and the beginning of 2005. People in Key West were giddy about real estate. Everything was selling, especially things that were not even built yet. It seemed like everybody wanted in on the action. I had this dufus that lived somewhere in the middle of the state call me incessantly about buying in to the Key West Beachside project, the Seaside Townhomes, and the Santa Marina Condominiums. He didn't have any money, however. He wanted to finance everything. I had an appointment to meet him and his wife around 3:00 PM on a Sunday right after Christmas to look at properties. We met in the parking lot behind my office. They had camped there in their camper the night before. But they were in Key West to buy property priced over a million dollars. They both wore cheap grey fleece suits from K-Mart or Target. I did not write any deals for the couple, but he later did tell me he bought two units at Seaside with no money of his own.

Around that same time I started working with a sailor at the Key West Naval Air Station. His mother had just passed away, and he inherited just under $500,000. He wanted to buy some income property in Key West. We looked and found a couple of places that really interested him on Northside Drive. He made a reasonable offer on a legal duplex, but the seller turned him down and demanded full price. I told him not to do it. I said it was priced too high. He said he was thinking of looking in Pensacola as well because some of his buddies had bought a couple of brand new condos up there for what one place would cost here. I told him that there is a huge difference between Key West and Pensacola--mainly that there are thousands of units up there whereas there is a limited supply of properties in Key West. I told him that area will continue to build even more units in the future whereas Key West has a mandated limited growth forced on us by the nature of the island and the restrictions imposed by the State of Florida. He found some realtor up in Pensacola to sell him 3 units. I really, really liked that guy. We went out to lunch a few times (his treat). He even bought me a toy replica of a 1959 Mercedes 300SL Roadster that I used to own and foolishly sold.

Several of the units at Seaside have been foreclosed upon or have been offered as short sales. Many of the units on Northside Drive have also been foreclosed upon or are being offered as short sales. I just visited Realtrac dot com's website to see how many foreclosures they have in Pensacola: 1,817. Pensacola has a population of 56,255. There are 629 foreclosures in Key West with a population of 25,478. The worst place for foreclosures in the US in just north of us in Lee County (Ft. Myers area) where there are 21,137 foreclosures.

The couple in the grey fleece outfits did not lose a dime, probably. They didn't have much more than that invested anyway. The sailor did not lose any money in Key West because I cautioned him not to buy at the top end of the market. I hope he did okay up in Pensacola. But there are a lot of other people who did buy into the exuberant Key West real estate market and the 1,817 foreclosures are proof of it.

CLICK HERE to checkout an ocean view property in the Casa Marina Area. It sits on the corner of Grinnell and Casa Marina Court directly across the street from tennis courts and just beyond the courts is the Atlantic Ocean. The property is being offered as a short sale at $899,000. The seller purchased the property in early 2005 for $1,100,000 and the property is mortgaged. It's a short sale. It will sell for lower than the asking price to someone who has some vision; someone who wants to perhaps build a new house to compliment the other multi-million dollar homes in the area. I see this transaction like buying a building lot with the right to build a new house on a 6455 sq ft lot. We don't have many ocean view properties in Key West. This one is ripe for the picking.


CLICK HERE to perform your own personal search of the Key West mls database. Remember, it is maintained in real time so all information is current as of the time you look at it. If you see something that interests you, please contact me, Gary Thomas, 305-766-2642, or e-mail at kw1101v@aol.com. Maybe you'll find yourself in Key West sooner than you think.

April 2008 Real Estate Sales Report for Key West

There were 23 single family homes that sold in April 2008 for a total of $16,442,000. The one an only short sale was at 1119 Oliva Street that I reported earlier this week. But there were three bank foreclosures that sold. All three sold for about one half of the original mortgage amount. Interesting!

Eleven condos and town homes sold during the same time period with sales totaling $7,612,900. Two of those were bank foreclosures, and both were at 1800 Atlantic Condominiums. The same bank that foreclosed on one unit financed the repurchase by a new buyer. (It was my customer and he got a great deal.)

There are a total of 59 homes, condos and town homes currently listed as contingent or pending. That means there are binding contracts between seller and buyer that may either have some condition that needs to be satisfied or that is just waiting to close. Interestingly, 46 of the properties are listed as contingent/continue to show or contingent/kick out. The Key West Association of Realtors requires that property listings be changed from "active" to "contingent" once a short sale contract has been accepted by the seller and is pending approval by a lender. It looks to me like a significant number of the contingent sales are short sales awaiting lender approval.

Our mls system does not automatically sort short sale or bank foreclosure listings. So it is necessary for a Realtor to make a search of all listings for language that denotes short sale or bank foreclosure. And some Realtors are entering erroneous information into the mls database. So our database is not exactly 100% correct. We did a manual search of the 1154 active residential listings and of those about 250 are listed as short sales. That is scary.

There are way too many properties on the market right now. Many of the pre-foreclosure properties are condos or town homes and are being listed as short sales. Many of those properties were purchased in the past three or four years and most of those were purchased with little or no money down. That means the "owner" has no money invested and no commitment to the property. Many of those same properties have declined in value and are not worth what they owe. It is no wonder that owners are walking away. That exodus is driving down the value of other similar units. Home owners who purchased their properties years earlier are unaffected by the price decline as long as their basis is at par with the current market value. They just missed the opportunity to gain from the huge price increases that occurred prior to the bubble burst.

I think we will see continued downward movement on prices overall until the remaining homes condos - town homes are foreclosed upon. I know there are many more properties that will be foreclosed upon and I anticipate more downward pressure on prices as a result.

The banks are keenly aware of what is transpiring. They are playing a numbers game. They do not have an emotional tie to their real estate assets. Their only commitment to Key West is that they either own or will potentially own a foreclosed home or condo. The goal of the banks is to recover as much on the sale of their assets as quickly as possible. That is is. A good Realtor can help a buyer find a short sale or bank foreclosure and turn a bad deal into a good deal. Not all short sale properties are good deals. And certainly not all foreclosures are good deals. Low price does not equate in any way to some piece of real estate being a "deal".

I still think that there are some very good buying opportunities in Key West, especially in the Old Town area, Casa Marina, and Meadows areas. The topsy-turvy market is driving down the asking prices of properties that are not under distress. And that creates opportunities for prospective buyers. If you are interested in buying a home or condo in Key West please consider calling me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.