The local politicians are totally missing the scope of the big problem that they'll face in they win. The entire community of Key West is rapidly changing. For years, property values rose by very small degrees and from low prices. Maybe it was the unusual island life with heat, humidity, mosquito's, and distance from the mainland that kept prices modest. Or maybe the idea that hurricanes would roar across the low-lying island and destroy what was invested. But today that is over with. One cannot buy a home in Old-Town for less than one-half million dollars. That home would be a tiny (under 1000 square feet) cottage sandwiched between neighbors. Want something bigger? Try a million bucks.
The result is feeding upon itself. Ever richer buyers hear of Key West's hot real estate market, meet up with brokers who, as if they could, guarantee that their investment will continue to climb, and buy up everything. A lot of people who have no idea of island life are buying up the homes. Neighborhoods are changing. It used to be that the price of admission to the island was whether you fit in to Key West, not whether you had a bank full of cash.
So the island is losing it's laid-back charm, it's fishing-town feel, and it's live and let live attitude. That's happened to plenty of cool and hip places. Visit NY's Soho and find a neighborhood devoid of the artists that revived the place. But for Key West this can be devastating. In this process of "here comes the neighborhood", the workforce of the island is unable to find affordable housing. Wages in Key West, like the rest of Florida, are typically low. Workers are steadily leaving the Keys leaving employers with permanent Help Wanted ads in the paper. The tourist economy probably needs five-thousand workers for it to function. In the near future, businesses will struggle to survive as the largest component of their costs, labor, becomes a rare, and therefore more expensive, commodity. Without some serious effort by local legislators and those up in Tallahassee, the local economy is doomed.
And why did this happen? It wasn't just the low interest rates. Or that American's tired of the stock market, or that bank have gotten very free with their lending. What is destroying the communities and the future economy of the Keys? It's ROGO: the rate of growth ordinance. In response to the Keys being designated as an area of critical concern, the state created this ordinance to control the number of building permits that can be issued in the county. Obtaining a new building permit is nearly impossible without a large pile of cash and years of patience. As a result, with less supply available, the demand has artificially driven up the price of homes. Actually, it's caused a bit of a feeding frenzy. Bull markets don't end at a point of fair valuation. They usually go well beyond that before correcting. The sad and funny thing is that ROGO does nothing for the environment. It doesn't clean anything up, and it doesn't encourage people to come up with new and innovative ways to build without ruining the environment. All it's done is cause sky-rocketing inflation in the county. The affordable housing issue could be fixed easily. The solution is to build. There is plenty of room. But the powers at be are big property owners. Nothing has made them happier than to see their pockets swell. Can't blame them, but they don't seem to appreciate the scale of the problem that a worker shortage creates. Say goodbye to the tourist economy. The new owners of Key West, the uber-wealthy, are on the way to creating another Aspen.
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