Key West Condo Listing Prices Rapidly Declining

The residential real estate market continues to show worsening deterioration in the United States.

Statistics released Monday reveal that sales of existing homes dropped by more than expected while inventories of homes for sale have continued to increase. The inventory of homes is up 23.5% above the past year - and increased another 5% from April to a record 4,430,000 properties. According to the National Assn. of Realtors, this is equal to 8.9 months of supply at the current sales pace.

In the face of swelling inventories and dropping demand, median sales prices have fallen 2.1% nationally. This is the 10th straight price decine compared to a year ago, the longest stretch on record. Meanwhile, home prices in 10 major U.S. cities dropped at the fastest pace in 16 years during the 12 months ending in April, according to Standard & Poor's Case-Shiller home price index released Tuesday.

South Florida's housing market is especially suffering. Most notable is the overbuilt condo market - where developers are abondoning projects and prices are rapidly falling. Here in Key West, the condominium market is seeing huge price listing drops.

Here are a few condo price reductions listed in the current Key West listings for the past 14 days:

• 3930 Roosevelt Blvd w101 - Original Price: $325,000 - Listing Price: $215,000
• 3930 Roosevelt Blvd S-104 - Original Price: $350,000 - Listing Price: $249,900
• 3314 Northside Dr 35 - Original Price: $499,000 - Listing Price: $299,000
• 2521 Fogarty Ave 4 - Original Price: $324,000 - Listing Price: $299,000
• 3314 Northside Dr 124 - Original Price: $449,000 - Listing Price: $335,000
• 173 Golf Club Dr - Original Price: $399,000 - Listing Price: $335,000
• 3314 Northside Dr 35 - Original Price: $499,000 - Listing Price: $299,000
• 3314 Northside Dr 124 - Original Price: $449,000 - Listing Price: $335,000
• 2601 Roosevelt Blvd 307 c - Original Price: $430,000 - Listing Price: $355,000
• 11 Whistling Duck Ln - Original Price: $669,000 - Listing Price: $399,000
• 1332 Seminary St 101 - Original Price: $525,000 - Listing Price: $410,000
• 1402 Olivia St 4 - Original Price: $598,876 - Listing Price: $499,000
• 21 Kestral Way - Original Price: $815,000 - Listing Price: $550,000
• 620 Thomas St 174 - Original Price: $729,000 - Listing Price: $595,900
• 1616 Atlantic Blvd 9 - Original Price: $1,212,500 - Listing Price: $905,000
• 2609 Gulfview Dr - Original Price: $1,270,000 - Listing Price: $923,200
• 31 Seaside south Ct - Original Price: $1,195,000 - Listing Price: $1,095,000

Currently there are many more condominums in development throughout the Florida Keys and Key West, and unless demand rapidly increases, prices are likely to further suffer.

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Florida is Epi-Center of Real Estate Meltdown

Don't blame me for the real estate meltdown. I didn't create it, and I surely cannot fix it. If you have been reading this blog for a while, you have seen that I warned about this real estate bubble and its negative effects on Key West.

With that said, I think it is in the best interest to tell it like I see it - and hopefully people will gain from it. (Oh, and by the way, if you need real estate values to skyrocket in order for you to enjoy Key West, then, frankly, you moved here for the wrong reason. But, to each his/her own - its not my money you blew).

Recent statistics released by bargain.com show that for the month of May, Florida leads the nation in foreclosures.The reasons are abundant - but mainly tied to the irrational speculative activity that persisted for the past 6 years. Basically, people gambled like crazy and developers responded to this increase in demand by building like crazy.

Here are some of the stats bargain.com reported for Florida:

• 1st in the number of homes entering the foreclosure process (29, 530).


• 1st in the share of homes entering foreclosure that were either condos or townhomes (14 percent).


• 2nd in the proportion of homes entering foreclosure (1 in every 245).


• 4th in the rate of increase since April (22 percent).

Other statistics are confirming Florida as a main epi-center of the real estate meltdown.
For example, three of the nation's largest van lines moved more customers out of the state than into it last year, reversing a decades-long trend.

The bad real estate market here is taking its toll on residents and people contemplating moving here.

School enrollment is declining statewide: Public school enrollment, expected to climb by nearly 49, 000 students last school year, dropped by 3, 571, the first decline in 24 years.
And now, more Florida drivers are seeking licenses from other states compared to out-of-staters seeking a FL license.

All of this is part of the national real estate picture which is getting worse. Rates are rising (the Fed is likely to raise rates too), the glut of homes on the market continues, and foreclosures are spiking.

U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, according to RealtyTrac.
There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio.

Prices have fallen in Florida (and nationally), but more substantial declines are likely. South Florida is still vastly overvalued, according to statistics compiled by National City Corp/Global Insight. According to their data, Naples is 63.4% overvalued and Miami is 59.2% overvalued (Key West was not in their data).

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What $850,000 Gets You in Key West

How out of touch is the real estate pricing in Key West?

How far will this housing market fall? Expect prices to fall at least another 25%.

This is due to:

• the wave of interest-only loans expiring over the next 15 months
• tighter lending standards
• huge oversupply of houses currently on the market
• many more houses/units currently being developed and offered by developers
• the real possibility the Fed may raise interest rates as inflation worries bloom
• the possibility of a recession. Historically, any time there were 4 fiscal quarters that showed less than 2% GDP a recession occurred within the next 4 quarters.

Real estate values are tumbling across the United States and will continue to suffer for a long time. Depending on who you believe, the real estate market will not recover for the next two to ten years. I tend to think that in 10 years, people will be lucky to sell their home for what they paid for it two years ago.

Florida is one of the most affected states. Many homes are in "weak hands" - vulnerable to foreclosure due to the adjustable rate loans.
Key West is seeing its share of declines - but if this house is any indication - homes are still overpriced.
Here is what $849,000 will get you in Key West (this is in the current MLS):

Looks like paradise, eh?

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