Flipping was the rage in the early 2000's as easy money and a lust for fast profits turned Key West real estate into a modern day tulip. October 2005 and Hurricane Wilma swamped Key West real estate and put an immediate crush on scores of speculators, even some realtors, whose recourse was to run away and leave the tax payer holding the bag. From 2005 to 2010, Key West home values lost 50%. Since 2010 the market has been steady up. No reset. Buying low and selling high has given way to buying high and selling higher. What role does Flipping have in Key West real estate?
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As of 1 February 2023 there were 63 Old Town Key West homes listed for sale in the MLS. I screened each of these homes for five factors:
- Last sale date
- Number of months from Last sale date to present
- Last sale price
- Percent of total price increase from last sale price to present list price
- Percent of price increase per month
Eight properties were omitted as their last transfer of ownership was within some sort of estate process or otherwise not an "arms length" transaction. Of the 55 remaining homes this was discovered.
Months since last sale
Of the 55 single family homes in the MLS for sale:
- The fewest number of months since the last sale was 6 months
- The most number of months since the last sale was 384 months
- The average number of months since the last sale was 106 (37 below/16 above)
- The median number of months since the last sale was 70 (26 below/27 above)
- Eleven homes are being sold within 24 months of their last sale
Percent of price increase
Of the 55 single family homes in the MLS for sale:
- The smallest percentile increase from the last sale price to the present list price was 6%
- The largest percentile increase from the last sale price to the present list price was 1311%.
- The median percentile price increase was 147%
- The average percential price increase was 248%
- The median percentile price increase per month was 2%.
- The average percentile price increase per month 3%.
Any Flippers?
Of the 55 single family homes, are there any with a short period of time from the last sale and a high percentile price increase per month? Yes. Four homes.
- One home located in Old Town South last sold in July 2022 and it's list price shows a 8.5% per month increase in price.
- One home located in Bahama Village last sold in March 2022 and it's list price shows a 14% per month increase in price.
- One home located in Old Town North last sold in May 2021 and it's list price shows a 14% per month increase in price.
- One home listed in Casa Marina last sold in August 2021 and it's list price shows a 16% per month increase in price.
Of the other seven homes that are listed for sale and have sold within the previous 24 months, one has a 6% per month increase in price, three have 5% increases and the rest show per month price increases of between 1% - 4%.
Conclusion
Multiple national real estate sources sources state the average homeowner changes their primary residence every seven years. Whether as a primary residence or as an investment used to balance a portfolio of investments, this 7 year time period of ownership is very consistent with Key West.
Throughout Key West, cash sales dominate. The national average for cash sales across all markets is 25%. In Key West, Cash sales have averaged 52% over the 2017 -2021 period with 2022 hitting a record of 59%. Considering the average sale price in 2022 was $1.71M, cash sales show a significant commitment to Key West and a tremendous stabilizing factor to the City's tax base.
Flipping is not without its merits. Money spent on restoration and renovation generally stays local, especially labor, reconstruction often incorporates building code-enhancements to the safety and durability of the building (and neighborhood) and the mark up in the taxable value benefits the City at large.
If you have any comments or questions, please contact me here.
Note: None of the properties shown here from Truman Annex are for sale or recently flipped.
Good luck
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