My landlord died two weeks
ago.
There are 4 apartments and 3 rooms renting in an old decrepit
building he owned.
He had it on the market, For
Sale By Owner, for $2.8 million.
Last Thursday, his son came down to take care of his estate.
The price dropped to $1,950,000.
I know the attorney who is
working with the son.
The price will soon drop to $1,800,000.
Across the street, a former
homeowner took a similar sized house to the one I am living in.
He spent hundreds of thousands to subdivide it into 3 condos,
the cheapest was $900,000, most expensive one was $1.3 million,
the third unit went for $1.15 million.
Those three condos were on
the market for over a year. Four months ago, some guy finally
bought one of the two more expensive condos. I found out yesterday
that this new owner had already folded his tent. He couldn't
make the second or third payments on his new condo. He sold his
condo for an immediate $400,000 thousand loss.
Now he doesn't have a place
to live in Key West and he still owes some lender $400,000. Wow.
Shades of buying on margin in year 2000 and having the brokerage
wipe out your account and calling to say, "Hey, you owe
us more!"
Next door, there are five condotels.
They were formerly part of the great White Street Inn, which
stayed fully occupied most of the year.
Well the White Street Inn owners
wanted one grand big kill. So they closed down the nightly rentals,
renovated the place into 5 condos and opted for the condotel
designation which meant renters had to rent for a week. But the
benefit is the new owner of the condotel had to pay no bed taxes
to the city for infrastructure in return for not renting the
place out nightly.
A funny thing is happening
to all of these condotels: they are not occupied more than 25%
of the time. Most of the time, they are dark and vacant.
Those units initially sold
for $1.2 million.
Two of those units are on the
market now, today, for $750k and $800k respectively. We can only
speculate that the sap investors who were assured "Key West
is HOT, HOT, HOT and you'll never have a problem keeping this
place rented out," are now so deep underwater carrying mortgages
that their sparse rentals can't possibly cover, they were forced
to drop the prices on their places to meet new realities.
Anybody buying a house in this
town at this time is trying to catch a falling guillotine.
Wait. There's one more statistic
which news reports won't speak about especially if you are a
realtor being quoted for the paper.
I think I told you about the
young respected realtor in Key West who last year this time was
quoted as saying, "You will never see another house in Key
West sell for less than $600,000 again." His reasoning,
like most of the Realtor herd: Key West is a very tiny island,
land is at a premium, real estate prices are finally catching
up to "Realtor Vision": real estate will continue to
double every few years."
Last week, the newspaper resurrected
his quotes. There are houses not only under the $600,000 mark,
but at this moment there are 11 houses in Key West under the
$500,000 mark.
I looked at two of them yesterday.
One was a "cottage, 284 sq. feet", the other was a
"cute little condo bungalow" of 300 sq. ft. These two
"investment properties" listed for $390,000 and $395,000
respectively. In former years, they were basically tool sheds.
Those two tool sheds will be back to reality before this is all
over.
The MLS listings down here
do not include "For Sale By Owner" signs which have
sprung up everywhere in Key West. All these homeowners upside
down on fast depreciating homes are now trying to save the commissions
the realtors would have gotten by doing it themselves.
If you averaged in the "For
Sale By Home Owner" prices, the fastest falling on the island,
prices have easily fallen over 25% in 6 months. But the MLS only
averages the MLS listings. They don't want to mess up the cartel
pricing with reality. That could cause a bigger rush to the exits
than what is just beginning now.
Things are much worse in Key
West real estate than the Real Estate cartel, i.e., realtors,
appraisers, mortgage shop owners, builders, et al, are letting
on.
If you want to buy a Key West
home, here's what you do: keep working. Save your money. Come
down here several years from now. Buy while there is blood in
the streets.
This cartoon has just begun.
