More Proof Key West's High End Housing Is Crumbling Into Negative Equity

Two weeks ago on June 1, 2009, a luxury condo in Key West's Harbour Place sold for $887,500.

It was marketed with these comments:

Sensational Key West Corner Condo in Harbour Place, on the top floor of one of the most prestigious buildings. Sweeping views of the Gulf and Pool area. 2/2 renovated Kitchen and Bathrooms. High ceilings, Crown moldings, recessed lighting, tile floors and Central Air. This unit comes with a transient License and a deeded covered parking space.

Original MLS Listing # 107706
Address: 113 Front St 308
City: Key West
Mile Marker: 0.0

Original Price: $1,495,000

Listing Price: $1,195,000

Selling Price: $887,500

Sale Price/List Price: 74.27

Price Per Sq Ft.$669.81
Listing Date: 1/28/2008
Days on Market: 479
Interior Sq Ft. 1,325
Lot Sq. Ft. 0
Year Built: 1992
Bedrooms: 2
Full Baths: 2.0
Property Type: Condo

What isn't mentioned in the specs/info list above is this: the seller of this condo in 2009 is taking a major bath. The seller bought the condo at a price of $1,137,500 on April 4, 2004.

When the condo owner first tried selling their place 479 days before this sale on June 1 of this year, they were asking $1,495,000 in early 2008. Had they been able to sell at that price, they would have made some good money.

Doing the math:

$1,495,000

-$1,137,500

__________

$357,500 gain on sale plus equity from principal payments over 5 years

Assuming these particular owner(s) never used a HELOC loan, they would have walked away with over $400,000 had they been able to sell at $1,495,000 when they put this condo on the market 479 days before they finally sold it.

However, that is not the case.

This condo finally sold two weeks ago for just $887,500.

Now to make this seem less harmful, the local National Association of Realtors make it seem as though the seller only took a 25.73% fall in "listing price" versus what it actually sold for.

(That's just one of the neat little tricks the Real Estate cartel use to take your mind off the real fall in Key West Real Estate prices: when a local Realtor member posts "Good Deeds" in the Key West Citizen every Sunday, they no longer post the "original price" which would have shown a much more drastic cut in price.)

So let's look at what this condo's fall in price really was.

The seller's original asking price was:

$1,495,000

The seller finally sold the house June 1, 2009 for only:

$887,500

That's a 41% drop between what the seller wanted and what the seller had to settle for.

But wait, let's have a closer look at what is really lost: equity.

The seller bought this place in April 2004 for:

$1,137, 500

The seller finally had to let the upside down mortgaged condo on June 1, 2009 for:

$887,500

How much equity was lost, how upside down/underwater had the 5 year old mortgage from 2004 become valued in mark to market terms in June 2009?

Divide $887,500 by $1,137,500.

Thus, we find this condo in 5 years time really lost 22% of its equity, and possibly more had this seller taken out a Home Equity Line of Credit (HELOC) to finance a vacation around the world, a remodel of their condo, a new boat, etc.

The proof is here for all to see: some Key West high end housing is now cheaper than 2004 prices and has much further to fall.

As always, Caveat Emptor and Carpe Diem,

Rock Trueblood