For Those Who Want to Stay Longer…

It’s not just Key West real estate. If you’ve been following the real estate news lately, you no doubt already know the volatile nature of market prices for property, whether it be located in the woods of Wisconsin or the sunny coast of Florida. Of course, Key West real estate is no different, although prices seem to hold a little steadier here, since living in Key West will always be desirable for people with lots of money, no matter what is happening to the economy or the lending industry. Homeowners will always be paying a premium to be living in the United States’ very own tropical island, so close to home. Key West Real Estate will always hold some premium value, simply because it’s a sub-tropical island.

The real estate boom hit in full force in Key West, just like everywhere else in the country. The difference was, this is a luxury home market, so prices became even more outrageous. in 2005, the average home sale price in Key West was almost $950,000.00 That’s just $50,000 short of a million dollars. Keep in mind that almost nobody in Key West has much acreage, since it’s a four by two mile island. There’s just not much room on this tiny island even for the extremely wealthy to have a sprawling lawn. A Conch house on a quarter of an acre in Old Town would sell for the range of a million bucks in the full swing of the housing boom, when mortgages were easy and cheap and it was a sellers’ market. Families who’d lived in the Florida Keys for years found it too tempting to sell their homes for multiples of the original price they’d paid. They sold and moved to mainland Florida, in some cases. In other cases they sold and bought another house in the Keys or Key West, but smaller and with a bigger mortgage. Proptery taxes rose and rose, along with the prices of homes in Key West. It was getting more and more expensive to own your home even if you’d bought it well before the real estate boom. Then the hurricanes hit. Back in 2005, the average home sale price in Key West was almost $950,000

The hurricane seasons

 

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of 2004 and 2005 brought devestation to southern Florida and Key West. Hurricane Wilma, in particular, hit Key West hard, causing a storm surge from the Gulf side to wash over the island. Only some parts of Old Town, which are higher in elevation, were spared flooding. Cars everywhere were ruined by the salt water that ran through their electrical systems and engines. FEMA was here. Water was handed out, people lived without electricity, but only for a day or two, thanks to the hard work of the line crews. Damage to ground floors in dozens and dozens of homes in Key West occurred, and insurance claims began to be filed. Insurance companies have since raised rates through the roof, and this has become a whole new story in itself, throughout Florida at first, then reverberating through other coastal areas in the U.S. Insurance companies raised rates in some cases, and in other cases pulled out of Key West and Florida altogether. Key West real estateowners saw their policies being picked up by the state insurance compay, Citizens.

Now, the bursting of the bubble, caused by trouble in the mortgage industry, along with the unattractive costs of insuring a home in Key West, along with high property taxes, make home ownership less desirable here. Real estate listings have grown, as fewer people are able to sell their homes, and they just sit on the market. Some lower their prices a lot, but it’s still above what the price would have been 10 years ago, even adjusted for inflation. Prices have a long way to go before they seem reasonable again, if that happens. Key West is so desirable a location, perhaps prices will hold here, but nobody knows. What we do know is that now we see more property being sold at auction. We see unsold new condo units. We see prices coming down a bit in some cases.

Bottom line is, if you want to purchase property in the Key West real estate market, holding out for the moment may be a good thing, since prices still have a ways to fall before they seem right for the market, even considering it’s Key West real estate and you’re always going to pay a premium. Keep an eye on the MLS, and for homes being sold by the owner with no real estate agent involved, since you may save lots of money this way. That 6% cut realtors take really takes a huge bite out of the seller’s profit, so selling by owner (FSBO) could mean the seller takes that much off the price, with no realtor fee to pay. Also keep an eye on foreclosure properties, since more and more are popping up in Key West these days. If you keep an eye on things, which is made easier via the internet, (just search on “Key West MLS”) you might eventually find the perfect piece of property that’s within your range.