I live in a giant condo with 218 units. Since living here, I've watched as more of these condos empty due to foreclosure, walkaways, or the landlord is unable to attract new renters.
A few years ago, Sally O' Boyle, a Realtor who now lives in Costa Rica but who keeps her rental management business going via cellphone wrote some of the best advice I ever read right as the Housing Bubble was beginning to burst. She said, and I'm paraphrasing here, "If you want to sell your home quickly, here's what you do. Drop your price $10,000 a week until your phone starts to ring off the hook."
Earlier this morning I found several examples of sellers here in Key West who seem to have adopted Sally O' Boyle's method of finding the "right price" which generates action from possible buyers.
Example 1In our first example, a condo seller has been dropping his/her price by $5,000 every week. Here's the scoop:
MLS #111141
This is a 2 Br/1 Ba Santa Clara unit.
Listed 1st week of July, 2009 for $179,000
Price Change 7/9/09: $174,000
Price Change 7/15/09: $169,000
Price Change 7/21/09: $164,000
Price Change 7/27/09: $159,000
And by the way, the owner of this reverse auction unit paid $162,500 for it on 5/1/02 . . . so the seller is trying to sell at a lower price than what they paid for it seven years ago. We'll keep our eye on this one and see if it falls another $5,000 next week.
Example 2MLS #110290
It's a 3 Br/3 Ba. Punch in that MLS number on my favorite Key West MLS website and look at the photos. This is a gorgeous house in a most desirable location in Key West. This is a dream home.
Anyway, the place first listed at the following price. As I was not aware of this place until the price changes started, I don't have the exact day it came on market, but the Key West MLS website claims it has been on market 161 days, or half a year. Thus, I probably missed a goodly amount of price changes before I started picking up on this one in my personal Excel spreadsheet:
List price: $1,495,500
Price change 6/15/09: $1,205,000
Price change 6/24/09: $1,155,000
Price change 7/6/09: $1,100,000
Price change 7/13/09: $1,175,000
Price change 7/27/09: $1,150,000
So, since the middle of last month, this property owner dropped the price by the following increments: $50,000 . . . $55,000 . . . $25,000 and $25,000 yet again. Those drops are much faster than $10,000 a week which Sally recommends, but with such a high priced base, this homeowner probably get's fewer calls due to the shrinking pool of millionaires who can afford this type of manse.
Oh, and let's see when this current owner bought this place . . . and for what price:
Last Sale 9/26/06: $1,020,000
So the current owner is $130,000 to the plus side if they can sell this mansion today at $1,150,000.
Will he the seller get this much? I hesistantly doubt it when large price changes are happening this quickly. Think about the larger picture, the seller has shaved off $155,000 in just six weeks? Wow, that's a major crew cut.
Secondly, notice when he bought this place: September 2006, or right around when Case/Shiller were announcing Real Estate was finally topping in the USA. (And a year after I had announced the top in Key West Real Estate.)
However, and this is a big however, the owner has recently made renovations. According to the MLS entry:
Old Town living at its best! This is a charming 3/3 that has been recently updated and renovated with new kitchen with granite and stainless GE appliances, Dade County pine and heart pine flooring, tankless hot water and much more. There are two bedrooms and two bathrooms on the first floor with living room and a wonderful kitchen set off from the pool area. Upstairs there is a third bathroom and a large great room that's built for entertaining as well as two lofts that serve as bedroom/study. The great room leads to a large private rooftop garden overlooking the pool and a delightful porch overlooking the street. Great location just a few blocks from downtown.
If you open up that MLS entry, you can look over the photos of this beautiful home.
Secondly, and most importantly, this home is one Gary Thomas, my favorite "value" Realtor in Key West, has covered on his blog. Click here to see what Gary said about this home a few weeks ago.
Gary is one of three Realtors in this town that I would ever entrust my hard-earned money to. You can tell, if you've read his blog for just a few months, he really has an eye for the high end market that I am priced out of. I respect his views on Old Town "Value Buys", but I love differing with him.
Gary liked this one a few weeks ago and I have to defer to his knowledge about luxury homes newly renovated, but I still have this feeling this one is going to sell at a lesser value than today's asking price.
Needless to say, this is going to be one of the most interesting expensive homes we (both Gary and I) will be covering if and when it sells.
Let's look at one more before I go:
Example 3This next one is in the 300 block of Olivia, just south of Whitehead Street.
MLS #111005 (and MLS #111955) . . . no reason given why it holds/held two MLS numbers . . .
List Price 6/10/09: $475,000
Price Change 6/16/09: $465,000
Price Change 7/7/09: $449,000
Price Change 7/14/09: $439,000
Price Change 7/21/09: $429,000
This home seller is now doing exactly as Sally recommended. So, unless this thing has gone under contract, we'll be looking for another price reduction in the next day or two on the local MLS.
Oh, I forgot to mention when the current owner/seller bought this place and for how much:
Last sale 5/13/04: $609,000
So this seller is already upside down to the tune of $180,000 after owning this home for five years. I'd say there's a fire lit under this seller, wouldn't you?
Caveat Emptor,
Rock Trueblood
17 comments:
I read your posts with interest. Yesterday my husband and I had a good laugh over the ability to make statistics say whatever you damn well want them to say... I am sure you took note of the highest ever home sales increase in June! Ever, ever! Then, later in the stories, it would be noted that even with the HIGHEST EVER HOME SALES INCREASE IN JUNE!!!!!!!, sales were still down something like 21% in volume and I don't remember how much in price over June 2008.
Ah, how I long for straightforward truthiness. Keep up your good posts.
Diana
Just out of curiousity, who are the other two realtors, you would
"entrust my hard-earned money to"???
Diana posts on Gary Thomas's blog quite a bit Rock. I know, I see her posts there. I would say she is trolling the boards, not wanting to 'buy' in Key West but just yanking the chain of several in town. Great job by the way, keep it real.
Just out of curiousity, who are the other two realtors, you would
"entrust my hard-earned money to"???
Let me say this upfront: there are probably more than the three Realtors I'd trust but whom I do not know. It's just I've had a bad run with greedheads in the Realty Biz . . . and the mortgage loan biz . . . and so on and so forth.
And beyond my personal experience with dirtbag sociopaths in the Key West FIRE Economy, I keep listening to my friends and associates. I keep hearing the same names over and over from brothers and sisters in the Hospitality community who got burned listening to the "sage" advice of modern day hucksters who could care less about the welfare of their clients.
What I look for in Realtors is honesty up front, people who were/are willing to take a stand ahead of the most obvious and whose business was harmed by being honest. (I look at whistleblowers with the highest esteem, not the lowest).
I love people who are actually willing to say, "My name is so and so, this is what I believe," and who don't waffle and repeat their vested interest's talking points.
I love critical thinkers, not Pablum regurgitators.
Take Regina Corcoran of the Key West Citizen as one of the latter. There's a woman who was dangerous to your wealth. Her advice during the 2003-2006 Housing Air Bag Blowup is now known by most locals as some of the worst RE advice to have ever been printed. If you took her advice then, you're looking stupid now. You're either short selling, walking away, or foreclosed upon. Period.
And yet, her bad advice legacy is still there online to read. She has outed herself. You cannot be angry with a woman who signs a column of bad advice for so many years in a row. You can only be angry with the Key West Citizen for giving her, Jack London, and that latest eunuch (ex-big shot) from the school board) such prominence on their pages when people at the Con Leche stands were already going, "How in the "F" can this person still be printed in the paper as some knowledgeable person?"
Just once, I want to walk in and shake the Editors by their necks and ask, "Do you know how much the non-brain dead thinkers in this community think of your paper for printing such smack?"
I will say this about R.C.: she's probably not a bad person, she simply was a good person who bought into the bullshit put out by her peers and social clubs. She really is someone who has been manipulated by her peers, IMO.
The second Realtor I'd trust inherently is Sally O' Boyle who was writing about the "Bubble" way before people in the local FIRE Economy made her husband, Hal, and herself to be nutjob alarmists.
Sally and Hal took stands, warned customers and readers about the coming Crisis, and were mocked for being doomsayers.
Sally was right as rain turning away Real Estate buyers by telling the truth, unless they were Real Estate Crackheads in 2003-2006 who absolutely, positively had to have a piece of overpriced Key West, screw the O' Boyle's many warnings.
(I'll add to this in a sec)
The third Realtor is someone who is new to me. She was wrong, deadly so, about Real Estate in Key West during the 2001 - 2006 insanity. She now understands Real Estate anywhere cannot be divorced from Marco-Economics, that Real Estate was the moving force behind the current Credit Crisis.
She confessed her ignorance in front of me and her husband one night about two years ago.
The third Realtor shall remain anonymous for now. She's embarrassed enough that she believed in the b.s. put out by her own office and the local NAR.
She has also taken enough heat from former clients who got burned buying 2003 - 2007.
She's only helping buyers buy what she thinks will go down least from here on out. She, like others who can read "shadow stats", believes there is another leg down in Real Estate.
That should also be a comment on where Real Estate is likely to go from here in Key West: One of the most pre-eminent sellers in RE from the early run up in the Bubble is now embarrassed she believed what the NAR, the local NAR, and her Associates were exclaiming throughout the worst Real Estate crash in Florida since 1928..."There's never been a better time to buy a home!"
She, and her husband, now understand the necessity to read real data unadulterated by government pogues and FIRE Economy sychophants. She and I and her husband have met and talked about "Shadow Statistics". We've talked about "Shadow Inventory". We've talked about manipulation of the MLS.
Her husband, who is much the man, tells her to risk going public, to risk her and his name, to tell people, including me, things she knows are being manipulated in the interest of propping up prices so that Realtors and homeowners will capture bigger commissions and unsupported home prices. So far, she cannot look herself in the mirror and be strong enough to tell the truth. (And if you are reading this, you know I and your husband love you. You are steps away from freeing yourself from "fear of upsetting the status quo".)
Strong responses, Rock. One of the reasons I find your blog helpful.
We started looking, following real estate prices in 2004, thinking about moving down to the Keys from where we are north of Tampa-ish. In hindsight, I realize we were caught up in the if-we-don't-buy-right-now-we-will-never-be-able-to-afford-it craze. The realtors we met with told us that, too. And told us all about no-doc loans in case we wanted to "stretch" to buy something a bit more expensive... And how we could easily get another mortgage to buy something before our house here was sold. I am very thankful we never got our act together enough to get our house on the market then. And houses were selling here for insane prices, too; I'd have made a fortune if I'd sold. Of course, we'd have then turned around and bought something for an obscene price in KW, and the rest would be history...
But, to Anon., yes, we are tire-kickers, and find Gary's and this blog, as well as Conchcscooter and a few others, to be quite helpful in learning long-distance, in between our physical visits. We are actually ready to list our house here and it will hopefully sell in a reasonable time frame. I told my hubby that if it didn't sell quickly, we should drop our price $10k a week until it sold. He almost choked. If all goes well, we will be in a position to move to KW relatively soon and RENT for a while while we search for the right house in the right place at the right price. If all the stars come together, I won't have to wince when I read posts about how the housing market continues to drop significantly after we buy...
Diana
Hope you have deep pockets or a tidy retirement sum to rely on Diana. Remember - not only do we have a depressed housing market but we also have a depressed job market here as well. Unless you have a job lined up NOT in the service industry (where less-than-minimum wage is regarded as the norm) I would suggest you stay put.
Also, property taxes and insurance are higher here than Tampa. I know - I lived in Clearwater before Key West and I was shocked by the adjustment. Just letting you know.
Key West is a dream a few get to realize but reality can be a harsh blow. Living here is a whole lot different than visiting. Rent, yes, but with the understanding that homes are smaller. Want water access? Not in Key West (unless on base) so move to the Lower Keys, from Big Coppitt to Big Pine Key.
Like nightlife? A regular party animal are we? Don't need a place to park your vehicle (street parking is scarce) then move to Old Town but remember you will hear ALL the bar noise and loud drunks walking the neighborhood till 4 am and the trash trucks arriving at 5 am.
Also, check out the crime reports lately. Key West has, per capita, quite a high rate of crime and you need to be aware of your surroundings. And remember, we are at the end of the road so expect to pay more for the little luxuries of life like gasoline, food, utilities, etc.
Remember, don't dream it but do it; however, as many here will say, Key West just isn't paradise anymore. Ever been to Hawaii?!
Thanks for the kind words, Rock. It's interesting seeing our old 'Dutch Auction' method coming back into vogue. It sprung from a great faith in the market to determine the market price, and our experience that 'the good deals sell first.'
Sally and I never forgot the words of Key West's real estate Yoda, Curtis H. Wild: "There is a price at which that house will sell today."
That price is by definition the market price. In a rising market the seller's fantasy price would eventually be reached even if it took years. In this falling market, finding the right price quickly is a good deal more urgent.
That market price will most likely still not be the number in the seller's head,(it almost never is) but it will surely be lower than any price paid during the frenzied bubble years of 04-06.
It's good to see at least one of your readers has caught on. I refer to the tire kicker. She appears to have figured it out. Sell now at what the market has to offer and rent until prices realign with the reality of the value of housing.
But she better hurry, bubble markets are generally symmetrical, that is to say, a graph of bubble prices goes down as fast on the back side as it went up on the front. I recall something like 30% a year was the climb rate in the last few years.
As long as we're on the topic, I believe it's time for an OFMP (O'Boyle's Fearless Market Prognostication) about where the market will bottom.
It is impossible to predict what the dollar values of housing will be simply because the dollar is a meaningless unit that changes at the whims of bankers and politicians. We must therefore, look to the traditional ratios to do our analysis.
The real estate Price/Earnings ration has been a reliable number for as long as people have bought and sold real estate. That is the ratio of rent a property can generate to the price of the property.
For many years in Key West the ratio stood at about 100 months' rent. That is to say, a house that rented for $1000 a month would sell for about $100,000. Of course there were variations from sale to sale, but rarely more than 5 to 10%.
Early in this decade that ratio started to change. By mid 2005 or so, which I reckon to be the peak, with a dancer on every table and a lampshade on every head, houses were going for over 500 month's rent.
Prices now are well below that, and rents are also falling.
In order for the market to return to the 100 month mean, the ratio will have to overshoot on the down side for a number of years.
Here's the OFMP: at the bottom houses in Key West will be selling withing spitting distance of 50 months' rent.
Other indicators of a bottom will be that no one will talk about real estate anymore, and if you tell someone you are going to buy a house they will assume you've lost your mind.
Thanks, Anon., for your words of wisdom. We're trying to do due diligence, as much as possible, and believe we are about as prepared as we can be when the moment comes. Of course living somewhere is different from renting, but we've only one life. Property taxes are no concern to us - well, they are, but I mean I the sense of how much they are in Monroe County. We pay well over 23 mils up here and prop. taxes are much lower than that in the Keys, plus there is the homestead exemption carryover if we purchase. We pay coastal high-hazard insurance rates here and they are fairly comparable to Keys rates. Noise is a factor, so location plays in. Smaller house size means less cleaning and utility costs. (yea! from the one who does the cleaning!) Won't need all our cars - less gas, insurance, more walking, etc. Crime is crime and one prepares as much as possible. Job is not a major issue at the moment. And so on. We're really trying to think through everything - and, yes, I have suggested Hawaii, but DH won't move that far from family! So thank you for pointing out "paradise's" failings for us to consider. What draws us is that Key West is a microcosm of society. Arts, entertainment, water activities, educational opportunities, music, many cultures, great food, and so on, all mixed in a small town. Key West reminds me a lot of Brazil, which is very appealing to me as well.
Anyway, I am delighted to hear as many perspectives as possible to fill-in-the-blanks of living vs. visiting. Rock Trueblood, thanks for having this blog!
Diana
Don't count out cars in Key West - just how do you think you will get off the island if you need to evacuate? And just where do you intend on doing your grocery shopping in Old Town? You will need to go to New Town for Publix, Albertsons, Winn-Dixie, Walgreens, Home Depot, etc. I know of NO ONE who can get away without a vehicle in Key West (unless you plan on staying on the rock all your days). And auto insurance is MORE expensive here and so is gasoline than in the rest of Florida. Don't get blinded by this island - there are A LOT of issues you are missing!!!!
Great food? HA! Laughable. Great arts? Debatable.
Water sports? NOT IN KEY WEST! Get realistic - you will need to be in the islands of Big Coppitt and up as the BEST WATERFRONT PROPERTY IN KEY WEST IS OWNED BY THE US NAVY WITH NO ACCESS FOR CIVILIANS! Us lucky folks get that advantage
Great education? Guess you haven't read all the issues facing FKCC - which, as someone who has spent many years in higher education - is a total joke.
And do remember - KEY WEST is very class divided society between the haves and the have nots. To us who live here, the 'one human family' is a nice thought but not executed.
Take a moment and put down the rosy glasses and think long and hard. From what you say I think you are believing the myth. Remember the old saying 'a woman's paradise is really a fools paradise'.
Anon., thanks for more comments. I did not mean we won't have a car; rather that we won't need all the cars we currently have. But your points are valid - the dream, the vision, is always different than the reality. I have been religiously following the news of the schools, FKCC, the assorted government shenanigans, etc. We are doing what we can to prepare, and then at some point, one must make a decision to try, or not. We think that we are going to try. Whether it's Key West proper or up the Keys is still a question we haven't answered. But I do appreciate your perspective.
Wow, some excellent points made from both sides about Key West.
Listen to what Hal said about the Rent/Own ratio being abnormally wrongsided even with 2 1/2 years of falling prices.
Renting makes way more sense. And like Hal, I firmly believe housing prices will overshoot . . . through the median trendline of Case Shiller. Meaning I too believe we'll get back to housing being cheaper than renting BUT it might take years, not just another year or two, before we get there.
One more point which maybe Sally, Hal or Gary (or anyone here for that matter) might want to take up is this: if you move up the Keys where you don't have sewer lines run to the house you might want to purchase, you will be spending extra money in the future for those lateral extensions from the Federally mandated sewer lines.
That's a cost many buyers from up North are not aware of yet.
Another point made by several readers here: pockets of downtown are tough for parking. And if you're on a main thoroughfare, the nosie can get to you. (Gary Thomas just made mention of the noise on a very cheap Eaton Street fixer upper which is at the corner of Eaton and White . . . talk about traffic right at your door!)
So, yes, there are many facets to consider if you're new to Key West. I think renting would be best for Anon the Tire Kicker. Come down, get the lay of the place.
Like anywhere, there is good and bad. Right now theft is on the upswing as are violent crimes, but on the other hand, it's like that everywhere in the USA due to the Economy.
P.S. I highly recommend Hal's blog too. I'm not quite the Libertarian he is, but I admire his grasp of History and Economics none the less. And anybody who loves Ron Paul's grasp of the Federal Reserve is A-O-K by me. Here's his latest:
http://www.haloboyle.com/
And by the way, he and Sally's blog links can always be found at the bottom of this blog.
If any of you have sites I might need to add to the list, let me know.
One more note: Hal, I just sent your excellent piece about "Free OFMP..." to Patrick at www.patrick.net.
He's gone for the weekend, but I would not be surprised if he posted a link to your piece next Monday.
By the way, I just left the same comments on your blog. Didn't know when you might see them.
[url=http://vioperdosas.net/][img]http://sapresodas.net/img-add/euro2.jpg[/img][/url]
[b]medical office software, [url=http://sapresodas.net/]filemaker pro 10 bible[/url]
[url=http://vioperdosas.net/]cheap downloadable oem software[/url] kaspersky online scan adobe software trials
adobe photoshop cs4 extended for mac serial number [url=http://sapresodas.net/]software for academic[/url] office software price
[url=http://vioperdosas.net/]software from canada[/url] buy dreamweaver in
[url=http://sapresodas.net/]download acdsee pro free[/url] selling software to
oem software price [url=http://vioperdosas.net/]innovative educational software[/url][/b]
I am reading this article second time today, you have to be more careful with content leakers. If I will fount it again I will send you a link
I would appreciate more visual materials, to make your blog more attractive, but your writing style really compensates it. But there is always place for improvement
Good day!
The name's Dennis, though most people call me 'Freaky'. :P I'm in my "teens" and kinda lost in the world at the moment...however, I've found the hippie "culture" and discovered that it fits me very well...I'm not trying to fit into it, it just kind of fitted onto me.
I have lots of questions, which hopefully some of the older and wiser people on this board will be able to help answer.
Here's to hoping this board will be able to help me discover more of myself and fuel my beliefs.
Peace out, Dennis from [url=http://www.myonlinepayday.com]Payday Loans[/url] website!
Post a Comment