Prices for Key West residential real estate are falling at an increasing rate. And this may mean we are closer to a bottom than the top of this wild ride. Market price trends often reverse themselves with a sharp spike. When prices are rising, the top is often marked by an even greater run-up of prices. And similarly, when the long-term trend in prices has been falling, look for a sharp spike on the downside to indicate market sentiment is about to improve.According to the chart (above) from Zillow, prices for Key West houses, condos, and other residential real estate are showing a sharp decline since November 2008. Currently, Zillow shows "market value" for the Key West residential market at $472,000 - a 14% decline since November 2008.
Oversupply, along with a list of other problems, continues to weigh heavily on the Key West market. And much of that oversupply is from distressed sellers. Here is a map from RealtyTrak showing 219 properties that are either pre-foreclosure, bank owned, auction, or govt. owned:
Here is a look at the latest numbers from the MLS:
- 922 residential (includes single family, mobile home, condo, timeshare, 3-4 units, townhouse, duplex, and other property rights)
- 417 residential single family
- 400 residential condo & townhouse
If you take a look at the 10-year Zillow chart for Key West, the long-term uptrend line would be at approximately $350,000. This translates into another 25% decline - if it happened in the short term. It is also possible that prices won't deteriorate to that level if enough time transpires to reach the trend line further to the right.
Here is the 10-year chart with a long-term uptrend line drawn in red.
But there is some good news.Housing is definitely getting more affordable.
With mortgage rates now at 5% and property starting to sell for "affordable" prices (meaning less than the so-called "affordable housing" that the local developers have put up), it now may make sense to look for a place of your own.
Take a look at these numbers:
- 165 single family, condo, or townhouse properties priced at $350,000 or less
- the least expensive is a $128,500 condo at Santa Clara Condominiums (506 square feet). With a 5% mortgage and 10% down, your principle and interest payment would be $618 per month. Add on $300 per month for condo fees, taxes, and insurance and you are buying a condo in Key West for less than $1000 per month.
- the least expensive single family home is $169,900 at 3210 Eagle Ave (1032 square feet - Bank owned). With a 5% mortgage and 10% down, your principle and interest payment would be $821 per month. Add on $500 per month for taxes and insurance and you are buying a house for the same cost as rent.
Don't have 10% to put down? Call the City of Key West. They are planning to loan up to $20,000 to workers for downpayments (20 people initially).
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4 comments:
I was looking on one of the real estate websites and it listed a condo on big coppitt selling for 50k
but it had the statistical purposes tag on the bottom so I don't know if that is a true sale
http://keywestmls.com/sold.php
The problem with statistics is that anybody can use them to prove their point. I agree that the market has continued to go down. That statement is supported by the real numbers in dollars and in percentage points.
But the biggest drops are in areas like the golf course, cheap condos by the airport, and single family homes in mid town and new town. Old Town has had its share of price decline, but there just isn't much inventory in Old Town. So I don't think that values have really declined across the board so much as that prices on recent sales in Old Town have been at lower than expected prices.
Every point you made about rates being attractive and supply being plentiful does make the present a good time for locals to buy a place of their own.
I personally think we are near bottom for Old Town, The Meadows, and Casa Marina. The rest of Key West has a not so pleasant future however.
The houses in Old Town are not replaceable. But the townhouses on the golf course or the condos at Las Salinas are. That is why owners in those locales are bailing. And that is why owners in Old Town are staying because Old Town is unique.
Nice post! I've been a follower/reader for quite a while and appreciate the knowledge you drop!
Thanks for keeping things up to date.
Rev. Scott
StL
Good post. I've been watching the market from afar, we are coming back for a visit and I'm looking forward to smelling the air there, seeing for myself what's up.
Gary, you are a smart guy. No offense, but I never knew you really. Interesting perspective that old town might be near a bottom. It has certainly suffered far less than the rest of Key West. The golf course is a mess. New town - oh, my.
I can't believe old town won't suffer a bit more, though. There just aren't that many rich people left. We'll see.
Nice to see you back, Cayo Dave! I missed you, haven't checked in for awhile. Pura vida, Sally
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