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An Information Guide to Duck Key in the Florida Keys

























Real Estate Sales : The Schmitt Coldwell Banker Real Estate Newsletter

One of the best sources of real estate market news for the Florida Keys is the "Tropical Breezes" Newsletter distributed by Schmitt Coldwell Banker Realty.


Tropical Breezes" reports that as a result of increased property listings together with the lack of sales the “Number of Properties For Sale” on March 1, 2006 was up 92% Keys-wide to 4,348. The “Number of Properties For Sale” in Middle Keys increased nearly 120%.

The newsletter counsels that while sales activity has slowed, fundamentals that support the real estate market remain positive.

1. "interest rates,inflation, and the U. S. economy remain positive"

2. "Property prices in the Keys continue to represent good value."

3. "The Keys is the only U.S. location with weather that allows year around use of the total environment – fishing, diving, snorkeling, boating, golf, & enjoying the out of doors."

4. "Keys properties provide excellent appreciation compared to other types of investments."

5. " The Keys geography, ecosystem, and existing development restrictions, mandate very restricted growth. Owners therefore benefit from the market dynamics resulting from limited supply."

The newsletter reports the real estate market in the Florida Keys over the past year has undergone similar changes to those experienced in most regions of the country.

The market change in the Florda Keys and Key West -

Real estate went from unprecedented increases in sales and real estate values with a shortage of listings and no shortage of buyers in January of 2005 to a surplus of listings and a scarcity of buyers by January of 2006.

Schmitt Coldwell Banker Realty statistics for the 4th quarter 2005 and January thru February 2006.

SALES DECLINED - "Tropical Breezes" reports that for the fourth quarter of 2005 and the first two months of 2006 overall sales declined when compared to the same period the previous year. Sales declined 43% in the 4th quarter and 49% for the January through February 2006 period. As might be expected sales volume declined due to the lower number of sales.

In and around Key West, January 2006 sales were down 60 percent compared to the prior year, and the increase in property listings was about 78 percent more than for the same period of the previous year.

SALES PRICES INCREASED - The average sales price increased by 24% in the 4th quarter, and 35% January through February 2006.

DAYS TO SELL - Keys-wide during the 4th quarter the average number days to sell reached a high of 191 days. The number for Key West was 215. During the first two months of 2006 the Keys-wide number was 150 days and Key West days to sell number was 71 days.

NEW LISTING - Listings of properties placed on the market during the 4th quarter, rose 24% over that
previous year 4th quarter. Listings rose 42% when comparing the first two months of 2006
to that of 2005. Key West experienced an increase in the number of listings of over 50%. The Middle Keys showed and increased over 20%.

Some folks blame the decline in the home sales market on the Flood surge of Hurricane Wilma and several prior hurricanes and evacuations. Others believe the cyclical nature of things and the years of explosive growth in real estate values explain the decline in sales. Real estate values in Monroe County climbed 18.4% and 27 % repectively in the last two assessment years. Higher bank interest rates and other economic trends also may be part of the cause.



The Sun-Sentinel reports that in Palm Beach, Broward and Miami-Dade counties existing-home sales were down by more than 20 percent in February. The Statewide average also happens to be down 20 percent. In Miami-Dade home sales were down 21 percent, while the median home price increased19 percent to $368,700. In Broward home sales slipped by 25 percent while the median price inceased 13 percent to $360,800. In Palm Beach County, home sales fell 22 percent compared with February 2005.

According to Florida Association of Realtors, South Florida's housing market continues to cool.

The Sun-Sentinel report shows a mix of views on the direction the housing market will take.

The paper reports that sellers and builders are starting to offer incentives such a trip on a cruise ship or a buyback guarantee. One motivated investor who hadn't sold a house nearing construction completion decided to discount the price by $41,000 prices, offer the buyer a credit on furniture, and offers a bonus on top of the commission to the realtor who sells it.

Statistics provided by the Florida Association of Realtors show that the sales and prices headed for more normal gains after five years of unprecedented growth.

The Sentinel quotes one real estate consultant, "The peak of the housing boom is over. Now we're in a stabilization period. The figures are still very good compared to historical levels. This is just a market that's cooling."

Another realtor while admitting "We're not going to see the kinds of appreciations that we're all used to," predicts that, "South Florida still will see double-digit price increases on used homes this year, but the increases will be in the low to mid teens."

"We're going back to a more normal market -- not such a crazed selling frenzy environment," another realtor said.



Some housing analysts believe the market will undergo a major correction; others are optimistic. Their predictions are all over the place.

One analyst believes condo prices could slide 20 percent to 30 percent, with home prices possibly dropping 5 percent to 20 percent over the next several years. Still other analysts believe home values will hold, with continued growth in the real estate market with sales at a slower pace but with prices increasing by 8 percent or more in 2006.

Others suggest buyers are taking a wait and see approach. Some are waiting for prices to plunge with the expectation that investors and speculators will have to unload properties. If condo builders are unable to sell units the their reasoning suggests developers could begin to sell at below-market prices and put speculators and investors in a worse situation. Conceiveably in some instances, lenders would take back the properties, and if developers can't get financing some projects will be canceled or deferred until the market changes.

On the other hand one sales group which represents dozens of condominium developers, estimate prices will be up an average 7 percent in 2006 from the prior year. Others analysts estimate 4 to 10 percent rise in condo prices.

And a number of analysts see prices flattening and in some case falling. They report the hot housing market has cooled considerably in the 4th quarter and first months of 2006. They report the problem has been declining sales in the single-family housing market, not declining prices.  And average real estate prices is some parts of the country they suggest may continue to rise.

The Miami Herald reports

". . . prices of homes were lower in February than in January in Miami-Dade and Broward counties, although both counties still enjoyed double-digit increases from a year ago." " . . . the market has begun shifting to buyers, who have more than double the number of homes to choose from than they did a year ago."

The Herald reports that the housing inventory jumped 100% in Broward and Dade Counties from June of 2005 to February of 2006. Previously house sales remained constant and the inventory of houses and condos for sale remained the same at about 20,000 units. Presently there are over 45,000 listing with home sales averaging about 3,500 a month instead of the 5000 or more which had been the monthly norm.

The Herald reports that prices were at their zenith before Hurricane Wilma and that now some owners have been steadily dropping prices, with some builders offering incentives and discounts. For other home owners

" . . . despite the market changes, some owners remain confident they can get the price they want -- as long as they are willing to wait."

Still another analyst cautions investors that they should not be in real estate now because the expenses (commissions, property taxes, taxes on the transaction, the interest incurred from holding it a year, maintenance, etc.) outweigh the gain. He counsels those that believe that real estate continues to be a good investment, to consider the Japanese experience. To the Japanese real estate looked good and was a considered a sound investment for decades until 1989 when the housing bubble burst. After that real estate values declined and fell every year for 15 years straight.



Real Estate news and comments from May 2005

What a difference a year makes.



a couple made $150,000 profit by reselling a house they held for six months

buyers who could get on a list faced months-long waiting lists at area home builders

market absolutely nuts

existing-home prices rose in March 2005 - fastest pace in two decades,

new-home sales hit another peak in the first three months of the year.

economic downsides - prices keeping buyers out of the market

Many economists warn a major swath of the market is at risk of a price correction.

Home buyers irrationally exuberant - frenzied coastal markets.

Buyers are being hurt by speculators snapping up lower-priced homes.


California prices double

Nationally, home prices jumped on average 50% in the last five years, doubling in California and rising about 80% in Nevada and Hawaii. However homes prices have not been rising uniformly. Between late 2003 to late 2004 prices rose less than 4% in Indiana and Ohio. Office of Federal Housing Enterprise Oversight (OFHEO).

On average, only 18% of the California population could afford a median-priced home in March (California Association of Realtors).

Minimum household income needed for a median-priced home, at $495,400, was $115,910 based on 5.8% interest rate and 20% down.


Builders and realtors irritated by "sky is falling" predictions.

Top 55 economists - three-fourths say housing overheated - they differed on what to expect - a gradual cool-down or a sharp drop in sales and prices.

A few economists warn of a national housing bubble, but most say countrywide downturn is unlikely, because local housing and job markets vary so much.

Concern about signs of speculative buying.

well-off baby boomers nearing retirement are buying second houses.

Investment homes nearly 25% of all purchases in 2004, vacation homes 13% of all purchases, (National Association of Realtors) .


The Salmon Run

high prices distorting the local economy

Migration from pricey areas to affordable ones, dubbed the "salmon run."

Fewer workers want employment in expensive cities.

"Like the plague in the Middle Ages, real-estate-price inflation is being spread by the people who are fleeing it"


After years of such predictions, who knows

Warning signs of a speculative market but potential buyers worry if they wait prices jump still higher.

For years folks have been saying , 'The bubble is going to burst.' and yet prices have continued to increase in value. In the past existing home costs were 2.7 times a median family income, now the raatiop is 3.5.

In hot markets ratios near the peak levels of 1981 and 1989 when market experience a sharp correction.













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