Key West, A Real Estate Perspective

The Florida Keys and Key West ? A Real State of the Union ?Without a hint of irony, everybody calls it Paradise? Charles Kuralt

Let?s take a look at the current state of the real estate market in the Florida Keys, or as the locals like to call it, the Conch Republic. No area benefited more from the Florida real estate boom between 2002 and 2005 than the Florida Keys with prices escalating faster than realtors could update the MLS. During a visit in early 2006, I priced homes in Key West at nearly $1000 a square foot for a fixer upper. The median sales price for a single-family home in Monroe County was $700,000 in 2006, almost three times the value for the state of Florida. But like the rest of Florida, and the country, real estate in the Florida Keys has fallen on hard times, and supply far exceeds demand. The hurricanes of 2004 and 2005 were a direct cause for insurance rates that often doubled or more. The escalating home prices led to higher assessed values, and the continued uncertainty over property tax reform has also made property tax a major issue. Another issue, unique to the Florida Keys, has been the county wide restrictions on transient licenses. An investor must hold a transient license for the property before it can be rented for less than 28 days, significantly reducing the investment desirability of any property without the license. You add an uncertain economy and escalating mortgage rates and you find many properties being sold far below asking. Below are a few recent examples of the differential between original asking price and ultimate sale price. Key Original Sale Key West $1,080,000 $600,000 Key West $679,000 $450,000 Marathon $965,000 $887,500 Properties in the foreclosure process are at record levels with more than 250 in Key West alone. I speculate that a great majority of these foreclosures were investment properties financed with variable mortgages at initial interest rates lower far below market. The news is not all bad. People are still coming to Key West. Local retailers have reported record revenues for Fantasy Fest 2007, (the last week in October). Christmas, even at a 20% premium over seasonal rates is filling up fast. Most importantly, high quality developers have come in and are providing new construction respecting the Florida Keys architectural history and attitude. With only a few exceptions the new developments offer on-site dockage for the boaters. See many of these developments on islandandresort.com. The bottom line is if you are looking for Key West real estate, there is no time like the present.

Roger is the owner|developer of http://www.islandandresort.comthe website which is your information source for real estate and ownership in the Bahamas, Caribbean and Florida Keys http://www.islandandresort.com .