Tuesday, March 13, 2007

The Glut of Key West Residential Properties Continues to Grow

Last month 2% more residential properties were offered for sale in Key West - further depressing the falling prices.

According to local Key West realtor Bascom Grooms, 1070 residential properties are now on the market in Key West - a huge number in historic terms.

Speculators, many of which are responsible for the ridiculous housing bubble, are now sweating and slashing prices hoping to avoid financial ruin.

On top of the local housing "crash" is the bleak national picture. Massive losses are working their way through the mortgage market - especially subprime lenders (there is a real and growing fear that the subprime meltdown is spreading to higher quality borrowers). In response, banks and lenders are cutting back on subprime and no document loans. This will remove many buyers from the real estate market - many who would have never been able to buy property if not for the lax and irresponsible easy lending practices of the mortgage industry. As a reminder, more sellers than buyers equals lower prices.

Further national problems for the real estate industry are evident in new home sales and the companies in that business. According to DR Horton, one of many suffering builders, the upcoming year will "suck". Their sales, cancellations and defaults have spiked higher.

With plenty more units under construction in Key West and due to enter the market, the bad times for the Key West real estate market are far from over.
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Dakota said...

you sound close to glee over this....why, I don't know, but it comes through in all your posts about the housing freefall

Cayo Dave said...

dakota -
Let me explain my apparent glee over the "housing freefall".
Key West is most vibrant and interesting with its diversified community. Further, the island has more character when people actually live here.
The real estate frenzy of the past 5 or so years has dramatically changed the island. Workers are scarce - since there is no where for them to live.
Businesses are unable to find workers and service deteriorates.
The city and county are unable to find workers - and the cost of paying them what it actually costs to live here would mean taxes would go through the roof.
My neighbors don't live in their houses, visiting once or twice a year - most as dedicated to the island as to their other investments.
Artists move to other places, along with all the creative people who didn't buy in before the bubble. Think SoHo in New York City. As for artists' communities, they are about as vital these days as Disney World.
Advertisements in the local Key West papers advertise & celebrate gated communities, exclusive residences, and housing only for the priveledged few (seriously! I'm quoting some of them).
The city of Key West seems unable to make any meaningful affordable housing initiatives. Since they are failing us, our only hope is that the market corrects this.
I predicted this on this blog 2 years ago, and I will say it again: we may go from a housing shortage to a housing surplus when all the forclosures, unsold condos under development, and the growing current listings have their full impact on prices.
This is probably not over. Market directions usually change with a sharp spike in prices. On the way up, the peak is feverishly rising. And on the way down, the bottom is not reached before a sudden downward price drop and panic.
We have not reached that point yet. And even when we do, prices are not likely to go back up. Banks are not going to freely lend money on overinflated properties - especially to marginal borrowers. More likely real estate prices will be in a sideways market for at least a decade. And that can be as difficult for speculators to survive as anything.

Anonymous said...

Add me to one of the US citizens expressing GLEE over this and I am and always will be a compassionate person, and one who has worn a hidden microphone during a filmed documentary on foreclosures. The damage has been inflicted on the poor and middle-class homeowners already in the form of equity stealing home improvement loans and home equity loans designed not for repayment but the taking of their homes. AMEN, may it come to pass for the Wall Street Greed to bite those who fed it.

Anonymous said...

Since you're not a home owner why you are so gleeful. I'm sure that you be equally gleeful when taxes are increased as the real estate assessments go down since you also don't pay any property tax.

Cayo Dave said...

To the previous anonymous commenter who wrote:
"Since you're not a home owner why you are so gleeful. I'm sure that you be equally gleeful when taxes are increased as the real estate assessments go down since you also don't pay any property tax."

No I won't be gleeful when the property taxes increase - which I think they inevitably will, and to a large degree. Rising taxes will further harm the middle class here in Key West - and that is the last thing I'm hoping for. I do hope that the real estate crash sends people with attitudes like yours to some gated community on the mainland. There, you and your insensitive comrades can bitch and moan that their homes are not going up in value quickly enough. Oh, and thanks for visiting my blog. I really appreciate your comments.

Anonymous said...

whatsamattayou? Once again censoring a response? Oh well, another "It's my opinion and it's very true". You guys ought to form a mutual admiration society if you haven't already.

Cayo Dave said...

I'm not sure what comment the previous anonymous commenter is upset about. I try to publish every comment, even the ones I do not agree with. However, I do not publish comments that are spam, libelous, or harmful. All comments are moderated and are not published until I approve them.
I appreciate commenters and dissenting opinion - so thank you for your comments. Feel free to repost your comment if you think it was deleted in error.

Anonymous said...

Much of your own blogs fit into the libelous and harmful list. (ie. calling others s***heads and d***heads). Who moderates you?

Cayo Dave said...

Anonymous wrote:
"Much of your own blogs fit into the libelous and harmful list. (ie. calling others s***heads and d***heads). Who moderates you?"

That is not libel, jackass.

Anonymous said...

What a troll you are!

Cayo Dave said...


Anonymous said...

I am in glee, over the falling home prices

I am a middle class person with a decent income who is good at saving money, and I thought for awhile actually owning a house in the Keys would be forever out of my price range.

Now it probably will be, I love it here, the water , the islands etc. I want to buy to live here not for investment purposes.

kw john said...

i have lived here for 29 years as of this month and in the same home.
may the property prices return to the 80s levels and the local gooberment be 'culled' accordingly right along with the tax base.
kw really needs a toilet type clean 'flush' from speculators and honky tonk operators.
kw john