Key West Rents Drop Along With Housing Prices

In these deflationary times where housing prices continue to fall despite the perpetual assurance of Key West's NAR that Key West Homes "usually" double in prices "every 10 years" (Realtors were saying Key West Real Estate would double ever 3 to 5 years during the insanity of the Housing Bubble) I think it is interesting the NAR Kool-Aid drinkers are not paying attention to falling rents all over our island when they try to sell investment properties to out of towners.

Examples of Falling Rents in Key West

Last June, we (my girlfriend, Sluggo my cat and I) moved from an $1800 a month 1 BR, 1 BA cottage in a quiet 3 cottage compound because my landlord was being foreclosed upon. He originally had the place on the market for $3,900,000 and recently the bank sold the place for $1,200,000. I bolted after reading the 75 page court order "served" to me which told me my landlord had not paid his mortgage on the whole place for 7 months straight (December 2007 through June 2008).

My neighbors in the other two houses stayed behind. The new owner of this compound was "willing" to continue charging my neighbors directly next to me "only" $1600 for their smaller 1 BR 1 BA cottage, but they, like us, realized better deals all over town were sprouting like mushrooms in a cow pasture after a slight Spring rain. The moved to a newly renovated apartment, bigger in size than the cottage they vacated, for only $1400 a month over by the Key West Cemetery. Still, they only have 1 Bedroom and 1 Bath, but they, like us, got more space and better rent by moving.

Speaking of us, we left our $1800 a month rent behind for a 2 BR 2 BA condo at Las Salinas at the North end of the island. We're up on the 3rd floor. The guys who lived here before us just moved into an "Affordable Housing" deal up on Stock Island which we too had looked over and passed on. (At a later date I will cover why I do not think the affordable housing on Stock Island is any great deal . . . especially when housing in downtown Key West is beginning to break the $200,000 threshold.)

Anyway, this condo has two bedrooms, two baths, one living room and a kitchen. We bought our own stackable washer/dryer combo. The place came with a dishwasher. Free cable comes with the lower rent of only $1600.

Now I no longer walk to work. But I do enjoy the nightly motorcycle ride, 2 miles of which goes right along A1A, the road Jimmy Buffet once named an album after and which is now part of the namesake of my news blog (http://www.a1anews.com/).

The ride into work prepares me by calming me with side glances at the ocean, moonlight, sunsets, nightbirds and seagulls flying into the sun, depending on what time I go in. Sometimes, on the ride home at 4 AM, I pull over and stand at the seawall and stargaze. So the tradeoff is this: I no longer can walk to work in 5 minutes time. I spend about $10 to $20 a month on gas to get to and from work. And I sometimes get wet when it rains, but really, I don't mind.

That said, we are saving more money by not having full blown satellite TV as we have free cable. We pay less rent. Our electric bill is much less as we have a better insulated place to live. And we live on the third floor of a very well kept condo building (maintenance at Las Salinas is excellent).

Still, although we love our new landlord, we've noticed several ads for same sized condos as ours for rent here at Las Salinas for only $1400. That's $200 cheaper than what we are paying now. So if we were to stay in this building, we'd move in a heartbeat at the end of our lease.

Making this even more interesting is one classified for a Las Salinas 2 BR, 2 BA for the $1400 rent and the landlord added, "And I'll take $50 off your rent every time you pay on time."

So, rent out here has just broken the $1400 level for a 2 BA, 2 BR.

By moving into a deal down the hall with the above rent, we'd be saving $250 a month or $3,000 a year which we could save for one of our Roth IRAs.

And by the way, one condo on my hall has been vacant now for over a year with no renter at $1500 for a 2 BR and 2 BA. Look at what the owner of that condo has lost $1500 X 12 = $18,000 out of pocket. Had he dropped his rent by just $100 twelve months ago, that place would have someone like me in their paying rent.

Hence, landlords must drop their rents to keep their places rented out. The problem is too many landlords still in the grips of denial bought their rental properties at the market top and are still charging Bubble rents to help make their mortgage payments on their "investment". To which I ask, "What's better? Losing $1500 a month with a vacant property you must pay out of pocket for vs. losing maybe $200 to $300 monthly with it rented out at a cheaper price?

You think working class people are not paying attention to the panic shown in ads by landlords?


Another prime example of why it's never been a better time to rent in Key West

Recently, an apartment complex uptown on Duck Avenue fired its long time manager (she was outstanding, she used to advertise on the old WAIL 99.5 's Hoebee in the Afternoon Radio Show where I was Hoebee's producer and ad sales rep) and when the new owners took over last Summer, they started renovating every apartment in the complex.

During this upgrade (still going on), anytime a renter vacated an apartment, the new management and its maintenance team would rip out everything old and install new carpeting, new stainless steel appliances, and so on and so forth.

Interestingly enough, with all these new capital expenditures, you'd think these new apartments would command higher rents and maybe have a line of renters ready to enjoy finer surroundings? Well, it hasn't worked out that way.

You see, working class people such as bartenders, cab drivers, deejays, waitresses, clean up crews, etc., who make up the majority of renters out at this complex I'm referring to are making less money not more.

Case in point: Last week I took a cut in pay. I'm not crying about it as I realize I still have my shifts and my hours. I've watched staff members have their shifts and hours cut. I've watched owners take smaller salaries. I've watched us drop certain bands which charge above average rates. And my situation is the norm at businesses all up and down Duval Street: businesses are being forced to cut payroll and other expenditures. This is normal practice during Hard Times.

We're in a Tourist Recession, full blown, in Key West, and as I ride up and down Duval Street every single week, I see another business here, another business there, which has closed its doors forever.

That said, I ask you to think about my bar and multiply it by 100. Do the same with hotel workers whose hotels are not full occupancy like they used to be. Peruse the newspaper classifieds and look over the 10 to 25 job offerings where there used to be 100 or more.

Labor is losing its clout in Key West.

If you want a job, you will have to accept less. Fewer hours. Fewer shifts. Fewer tips. Less salary and hourly wage.

So . . . getting back to the above apartment complex I was mentioning with the new renovations going on . . . these guys have not only NOT raised their rents, they have thrown in a new incentive which tells you renters are not coming out of the woodwork to rent these updated showpiece apartments. . . one month's rent FREE!

Now I haven't called these folks, but I will. I want to find out how you qualify for one month's free rent. Do you only get it on the most expensive and biggest apartments? Or is the one month's rent FREE only good after you've paid your rent on time for 11 straight months? I do not know. But I can assure you this: apartments owned by corporations are not in the business of sprucing up the place during a Recession and giving away one month's rent FREE unless renters were fleeing the complex for cheaper rents or because they could no longer afford the rents charged by this complex.


Don't move here now without having a job lined up already and don't pay more for rent than you have to

Look, you may want to chuck your job and move to Key West. That's fine, as long as you can find work. But I'm telling you Northerners seeking the Margarittaville idle life, you might just become real idle, like as in homeless . . . not employed . . . especially during this bloody awful Tourist Recession we are suffering through.

The Post Office down here is being forced to cut 6 clerks. Government is cutting staff and running a deficit. Bars are half-full on weekends, hotels have vacancies on weekend and have dropped rates astronomically. (I'll cover falling room rates in another post this week.)

Key West is a great place to visit, right now, if you have cash. But you don't want to move here without having a job lined up.

But if you must, and you do move here, know that rents are down and falling. That's the good news.

The bad news is jobs are few, those that are out there offer fewer hours, tips are half of what they are, and certain sectors such as water sports companies and charter boats are not hiring anyone and haven't done so in months

Still, if you know the lay of this island and past rental histories, there has never been a better time to rent in Key West.