from July 22, 2018
If I Had a Million Dollars
When I was growing up in the 1950s and 1960s a million dollars was a lot
of money. On Saturday night one of the TV stations in Denver would host
a million dollar movie - a feature that was so special that it cost
over one million dollars to film.
Years later when I first moved to Key West a million dollars could buy a
big important house - a restored home with a pool, parking, and a great
Old Town location. I have written several blogs over the years about
the continued price escalation of housing in Key West. For years the
rising prices enriched the lives of those who either inherited
properties here or who bought and renovated, or even those who bought
and lucked out as prices continued to rise.
Two events changed things in the past thirteen years. The national
psyche was traumatized in 2005 by TV death and devastation caused in New
Orleans by Hurricane Katrina. A few weeks later Key Hurricane Wilma
swamped the eastern side of the island of Key West. I think a lot of
people assumed what they saw in New Orleans also happened in Key West.
That was not the case, but people believe all kinds of nonsense these
days. Second, the Great Recession started in 2008. The stock and real
estate markets tanked simultaneously across the country. Short sales and
foreclosures became the norm in Key West as many of the homes and
condos here were "second homes" owned by folks who came to Key West and
fell in love with the island life. Both the price of homes and real
property values decreased. It took several years before the Key West
real estate market corrected. Old Town and the Casa Marina area
recovered quicker than other areas because those areas are the places
most tourists and second home buyers frequent.
Between the time the Recession started and eventually corrected, the
buying public was divided as to the efficacy of buying or selling,
holding or acting boldly. Those who bought in 2009 thru 2012 made out
pretty well. One of my buyers spent two million dollars in cash to
purchase nine units at the Key West Golf Club which he then rented. The
rents have doubled but more importantly, the value of each place has
doubled as well. Those who sat on the sidelines waiting for the end of
the world lost out. I have told this story before. But here's the twist
today.
I have been working with several would-be buyers over the past several
years who missed the opportunity to buy when the market was at its
lowest. One couple had kids in school; another had a small investment
company and needed his cash to fund his company; a university professor
made ridiculous offers when the market was lower and now does not have
enough money to meet the current price point demanded. Within the past
six months I learned the couple with the kids bought a place in
Pensacola. The investor bought a large house in Charleston for $1.3
million. Another couple who owned in Charleston who wanted to move to
Key West ended up buying a place in Santa Fe, New Mexico. These three
buyers bought quality homes for less money than they would have to pay
in Key West. The professor appears to have given up. The Key West
economy has passed him by.
I am a risk adverse person. I went to Las Vegas a couple of years ago
and came back a bit richer than I went. I made about $60 playing slot
machines. That was it. Money is too valuable to throw it away.
If I had a million dollars, I would buy the best property I could find
in Key West and buy it now. Key West is a little island out in the
middle of the ocean. The land mass cannot be increased. Key West is
restricted from adding new housing by law. What we have now is what we
will have in the future. As crazy as the world is right now, most of the
people are not crazy. They want the same things - food, shelter, peace,
a good place to raise their kids, a nice place to retire too, things
like that. So no matter what goes on up north in America, life down here
will probably stay the same as it has for years and years. The weather
will usually be spectacular. The drive from the mainland will be
beautiful. The cost of housing will continue to rise.
If you are thinking of buying a place in Key West and are not working
with a Realtor, please consider working with me, Gary Thomas. I am a
full time Realtor at Preferred Properties Key West.
June 24, 2921 Update. The was written pre-covid.