Where Have All the Buyers Gone? Key West

By
Real Estate Agent with Preferred Properties Coastal Realty, Inc.

I have been selling houses in Key West for twenty years. In my earlier life in Denver I watched and participated the cyclical market there. I have seen high markets when sellers get their way as desperate buyers try to buy before prices go even higher. I have seen and been a participant in depressed markets when sales dry up.

 

The Key West market is a bit different than the rest of the US housing market. Our community has had a stable base of full time residents for decades  That base has not changed primarily because Key West cannot expand. It cannot expand out to the suburbs because we really don't have much undeveloped land on which to build. Developers cannot build up into the sky because of height restrictions and more importantly rate of growth restrictions mandated by the State of Florida. As a result we continue to sell the same houses over and over again. Sales in Old Town, the Truman Annex, the Casa Marina and Meadows Areas drive the real estate market here. Most locals cannot afford and probably do not want to move to any of the areas I just mentioned. Those areas have out-paced the financial ability of most buyers to buy into those areas. Most but not all.

 

A few days ago I had a brief discussion with a local Key West home appraiser. I asked him "How's business?" to which he responded "We're really busy - not in Key West. Sales have dried up here. But we are busy up the Keys where housing prices are lower and buyers can get a nice place, maybe on the water, for under $500,000 or so." That may not be an exact quote, but it is the very essence of what he said. We discussed Key West in more detail. He said housing prices here are too high and buyers have stopped buying thinking prices will fall. I have been saying prices are too high and are not sustainable. But each year I see a lot of sales that prove me wrong as the buyers come back into the market at or near the end of our buying season which now ends in May. Those sales usually close a couple of month later.

 

As of mid January 2017 there are 452 houses, condos, and town homes for sale in Key West and up to Shark Key.  The least expensive place is on Big Coppitt Key and is priced at $215,000. There are 281 places for sale priced up to $1,000,000. There are 116 homes available priced between $1,000,001 to $1,800,000. Most of the homes in this price range will be sold to out of state buyers looking for a second home or a potential new retirement home which may be rented to help defray some cost of ownership. There are 55 homes priced at $1,801,000 and higher. Between this date in 2016 through today 38 homes in the $1.8 price range and higher sold which suggests that 31% of the current houses on the market will not get sold by this time next year. That number could go higher if the market responds negatively to the new government in Washington. I don't see a boom in sales if buyers fall in love with the new government. But I could be wrong. I think there is a real skepticism of our current housing prices and that the skepticism is why buyers are staying out of the market. It is real and buyers are not buying. It's like they are playing chicken.

 

I have been watching as asking prices have begun to decline on over priced houses. Some sellers who really do not need to sell probably will not reduce their asking prices. Sellers who do reduce asking prices may need to negotiate to an even lower price to sell. It's the vast group in the middle that bothers me. I am not suggest potential buyers to wait for a market correction - it could correct upward just as easily as it could go downward. Many of the homes in Key West are literally one-of-a-kind properties. Once that one property is gone, it cannot be replaced. That's why I think buyers ought to remain in the market and buy now and not to wait and see what may be available tomorrow. I don't represent a lot of sellers, but I have got to think they must be getting nervous. And if you are a buyer who let the market escape your means like the the lady in the picture above, now may be the best time for you to get back in the market.

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
Florida Monroe County Key West
Tags:
buyers agent
gary thomas realtor
key west real estate blog
preferred properties key west

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
201,094
Dennis Swartz
Rickert Property Management - Columbus, OH
ABR, CRB, CRS, GRI, CMCA, MBA...experience counts!

Its a tough spot to be in when a market has no expansion possibilities, but as long as people will buy prices will rise.

Jan 23, 2017 02:25 AM #1
Rainmaker
3,947,603
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"Franklin MA Homes"

Good morning, Gary Thomas when buyers find a property that satisfies most of their requirements, they had better make the move.... in our area, there's a shortage of listings.... prices will continue to rise....and the buyers will be finding themselves out of the market....

Jan 23, 2017 03:42 AM #2
Rainmaker
1,395,839
Sandy Padula and Norm Padula, JD, GRI NMLS#1483386
Realty One Group - Carlsbad, CA
Presence, Persistence & Perseverance

Pricing fatigue is something that many of us in this business will be feeling in the coming year as buyers just cannot afford the resulting mortgage, taxes and insurance payments any longer, particularly when they consider other, more reasonably prices homes throughout the World.

Jan 23, 2017 05:47 AM #3
Ambassador
1,234,045
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Florida has always been a timing market with fluctuations but what you describe about Key West seems to be different.

Jan 23, 2017 11:02 AM #4
Rainmaker
707,425
Gary Thomas
Preferred Properties Coastal Realty, Inc. - Key West, FL

Hi Joe,  Prices are too high at all levels. Things are not selling. We don't have enough homes priced where locals can afford to buy. We have too many second homes which are priced beyond reason.  This is not sustainable.

 

The people who waited out the market several years ago have lost out.  The buyers now are being squeezed out by prices that are too high.

 

It's a no win situation.

 

Gary

Jan 24, 2017 02:20 AM #5
Ambassador
3,066,811
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

HI Gary- I remember reading an earlier post of yours about the higher priced homes sitting for a little longer than usual.  What will happen to the worker bees who live year round in Key West?  Where will they live?? Key West has an interesting situation. 

Jan 28, 2017 11:11 AM #6
Rainmaker
707,425
Gary Thomas
Preferred Properties Coastal Realty, Inc. - Key West, FL

Kathy, Housing costs have gotten out of control in both sales and rentals.  A one bedroom aptartment in Key West will rent from (a very low) $1200 per month to $2,000.  A two bedroom apartment may rent from $1500 to $2500 or more depending on the amenities. A three bedroom will probably go for $3000 or more.

We have a huge military presence. The service men and women get a housing allowance which helps them pay of housing off base. If they share an apartment they can pool money to afford something more than a hovel which is exactly what some landlords offer at the lower price point. 

 

Last year I had an investor who was looking at apartments. He could not believe what prices landlords could command.  He wouldn't live in most places and refused to buy something that would be less than he would be proud to offer. But there are more people who look at money over principal and buy these places and charge outrageous prices.

 

Locals have no choice.  They pay. Some houses in mid town and new town have multiple sets of people who live in what are supposed to be single family homes.

 

Gary

Jan 29, 2017 01:28 AM #7
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
707,425

Gary Thomas

Ask me a question
*
*
*
*
Spam prevention

Additional Information