Florida Keys Business
Sunday, January 27, 2013
Home prices up for 2012; increase was first for Upper Keys since 2007

FLORIDA KEYS -- Home prices were up throughout the islands during 2012, and the Middle and Upper Keys also experienced an increase in sales.

Last year's Keyswide median home price rose 4 percent to $335,000, while the average price jumped 7 percent to $451,000, according to Multiple Listing Service data compiled by Coldwell Banker Schmitt Real Estate.

The median price -- the number at which half of the residences cost more and half cost less -- took its largest leap in the Lower Keys, jumping 10 percent in 2012. The increase was 5 percent in the Upper Keys and 3 percent in the Middle Keys.

MLS data does not capture homes listed by owners, nor does it include homes sold inside the gates of the Ocean Reef Club in North Key Largo.

The annualized price increase in the Upper Keys was the first significant rise since the housing market began its major retreat in 2007, according to statistics posted on the website of Key Largo Realtor Glenn Hoover.

William Hardin, director of Florida International University's Hollo School of Real Estate, attributed the price increases to three factors: the growing economy, low interest rates and the fact that the stock market is near a five-year high.

That final factor is especially important for many of the second-home buyers that make up a major part of the Keys market.

"The top 5 or 10 percent, their decisions to consume and buy leisure are determined by what their wealth is, because in many cases their wealth exceeds their income," Hardin said.

While prices made their greatest strides since the crash, Keyswide residential closings bumped upward as well, increasing 5 percent to 1,811. The Middle Keys saw the largest increase, with 17 percent more sales than last year. The Lower Keys, on the other hand, saw a 10 percent drop in residential closings. The Upper Keys saw a 2 percent increase, the smallest since the number of sales begin rising in 2009.

Nevertheless, Russ Post, owner of Ocean Sotheby's in Islamorada and Ocean Reef, is bullish about the future.

"Even though people, Democrats and Republicans, aren't happy with what's going on in Washington, they've decided that this is the way it is, so they're not going to postpone a quality-of-life issue any longer," he said. "Also, I think people are more comfortable having a greater portion of their capital in assets, because they anticipate at some point we're going to have inflation."

In the Middle and Upper Keys, the final quarter of 2012 brought a strong increase in closings, supporting Post's optimism. From Duck Key through Key Largo, there were 148 closings between October and December, according to Realty World Freewheeler, 28 percent more than last year.

The fourth quarter increase in Islamorada and Key Largo closings came mainly from open-water homes, where 19 sold compared with nine in 2011, and from dry-lot homes, where closings increased from 30 to 39, according to data prepared by Tracy Larson of Century 21 Schwartz Realty.

Canalfront sales also increased slightly during the last three months of 2012, but condo sales plunged to 23 from 35 in 2011. Average prices, nevertheless, rose across all sectors of the market.

Distressed homes continued to be a major player in the Upper Keys market last year, accounting for more than 28 percent of sales, according to Hoover. But that's still a significant improvement from 2011, when foreclosure and short sales made up 39 percent of closings.

FIU's Hardin said he expects Keys real estate prices to continue a steady rise in 2013, perhaps increasing by 5 or 6 percent.

Hoover too said signs are pointing toward stability in the local housing market, noting that the amount of time homes took to sell got shorter in 2012. But he also injected a sober note into his analysis.

"How the sputtering global economy and erratic financial markets affects this stabilization remains to be seen," Hoover wrote.


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