Posted: Mar 24, 2020
Key West Real Estate All Hands on Deck
He prayeth best, who loveth best

My second assignment as a young Navy carrier jet pilot, was to the staff of the Commander, U.S. 7th Fleet, a 3-star Vice Admiral. We were onboard the USS Oklahoma City (CG-5) homeported in Yokosuka, Japan.  7th Fleet  was and remains responsible for the largest geographic area of any US Navy afloat command, from west of Hawaii to east of Africa. The 30 officer staff, all 15 - 25 years my senior, were combat proven experts in naval aviation, surface ships, submarines, Marines, Special Forces, legal, medical, logistics, etc., and an Ivy educated Intelligence Officer. 

A Little Bit Wrong

Whether in-port Yokosuka or on extensive travels from South Korea to Australia and all points in-between, some portion of the staff worked 24 hours a day.  We were the Board of Directors for the most lethal and benevolent force on the face of the planet.


During one of the twice weekly briefings, the Vice Admiral, after receiving supplemental comments from the Intelligence Office during the briefing by one of the other officers, replied to him not quite paternally; "It is not necessary for you to tell me what I already know. It is your job to tell me what I do not know. Of all my Staff, You alone are supposed to tell me the future."  The Admiral, a graduate of the U.S. Naval Academy, continued, "It is ok for you to be wrong in your predictions; but, given the assets at your command and your God-given talents, I'm expecting you to be only occasionally a little bit wrong".


So, here goes ...


In the Key West Citizen weekend edition for March 14 - 15, there were 21 Open Houses in Key West for Sunday, March 15. This does not include eleven other Open Houses at the Key West Golf Club, Key Haven and other areas outside of Key West.


In the Key West Citizen weekend edition for March 21 - 22, there were 4 Open Houses in Key West for Sunday, March 22.  Outside of Key West, there were 3 Open Houses for Saturday and 3 Open Houses for Sunday.


A hearty pull back in the number of Open Houses when historically March is the kick off month for the three best months of sales for single family homes in Old Town; March with a 5-year (2015 - 2019) average of 16 sales, April with 17 and May with 18.


OK. You know that.

Tell Me Something I Don't Know.


A fearsome guandao has cleaved an deep fissure in our social and economic fabric. Wage earners and stock traders are a-sweat. Pools of paranoia generate ignorant stockpiling. And all this sorrow without physically breaking a single brick or bit or bolt.


Nay-sayers salivate and Opportunists abound - not wanting to waste a crisis. Forget about them. When General Quarters is sounded, its All Hands on Deck. Yea-sayers get to work -


Tysons Foods, Sanderson Farms, Taylor Farms, Cargill, Lineage Logistics, Rose Acre Farms, Domex Superfresh Growers and every farm hand in the USA is overtime and 3rd shifting.  Train lines and truck haulers are expediting farm to table produce and product leaving no shelf unfilled or pantry unstocked. The US has the most productive and efficient food production and shipping services on the planet. People don't know that?


30 Big Pharma and small bio-tech firms are racing for treatments and vaccines.  Moderna, Gilead Sciences, Bayer, AbbVie, BioNTech SE. In the last 12 days, 11 medical product companies have won the Food and Drug Administration's blessing for coronavirus test kits.  The US has the most dynamic and robust pharmaceutical and multi-faceted R&D industries on the planet.  People don't know that?

When will we close the fissure


I am planning to fly to my Mother in upstate NY for her mid-May birthday and later to watch 4th of July fireworks at the end of my street near the White St. pier in Key West again this year as I have done for over a dozen consecutive years.


Right now Key West has one quarantined virus case and unless someone carries in more, I expect we will otherwise steer clear. Closing points of access to the County will minimize the probability of this occurence. Nationwide, virus hotspots will remain as in any wild land area fire but the ongoing, two pronged strategy of public-sector driven containment, protection and detection and private-sector driven suppression and conquest should stymie major breaches into the general population.


Look to the stock markets for signs of recovery well before Capitol pundits and news readers decide their Opportunity has passed and so convert from Nay to Yea. 

Who will be buying real estate


Over the past five years (2015 - 2019), the average annual percentage of cash sales in Old Town Key West has been a steady 52%. This is twice the national average. These well-to-do and smart investor/buyers know Key West is a solid "buy and hold" real estate market. Their "money where their mouth is" confidence is the foundation of Old Town real estate.


These same savvy investors most likely went considerably to cash as the stock markets tumbled. One side of the investment coin is buy low and sell high (or buy high and sell higher). The other side is preserve cash. Preserving cash in times like this is not the same as trying to time the market. Preserving cash now is wisely preparing for the next uptrend.


As the market consolidates, forms a variety of technical formations and begins to move forward, these investor/buyers will re-enter the stock markets. This can begin as soon as tomorrow. They will re-enter the stock markets because the near-term upside for a resurgent market is well above the near-term upside for real estate - for now.  Cash buyers hungry for their Key West safe haven will tho soon enough, as they have been doing for the last 5 - 6 years, sell in to the strength of a rising stock market.  Stock-to-cash sales for summer 2020 will not be to preserve capital due to suspicions of a possible drop in stock; but, to convert a strong, managed risk stock position into a strong less risk home-in-Key-West position. And we all know How good of an investment is a property in Old Town Key West.


In some cases cash buyers may take advantage of exceptonally low interest rates. They may buy an excellent Key West property with a mortgage, before someone else gets a hold of it, and at a later date sell in to strength and pay off the mortgage with the proceeds of the stock sale. Mortgage buyers too will do their best to take advantage of low interest rates. Admittedly, the case by case nature of all buyers of Key West real estate, Old Town average sales price in 2019 over $1.2M, is difficult to predict but I am estimating their adaptability is above average


Pent-up demand for Key West and Florida Keys real estate is not going away!

When will the Key West real estate market turn around

Green constructed - 914 Williams Alley.


For instance, if you have a fantastic, 100% new, Green constructed home in Old Town Key West, wisely priced and located less than 10 minutes by walk or bike to the best waterfront parks and attractions in Key West and the property gets a true offer, the offer is accepted and it sells - your market has turned around!


If your mispriced and miswhelming property does not get an offer and does not sell - your market has not turned around.


According to the Key West MLS, ten single family homes in Old Town have Closed as of March 23rd (5-year average for March is 16 Closings). How many of the six properies shown as Pending will close in March? Two Pendings will Close in March as scheduled. Three of the other four remain on track to Close as scheduled in April and one Agent didn't care. There are fourteen Contingent sales. 


Prediction: 1st Qtr 2020 sales will end mid single digit down, 2nd Qtr most likely will base there, but 3rd and 4th Qtr sales will take up the slack and 2020 will finish between 2018 (137 sales) and 2019 (144 sales).


Pilots. Man your aircraft.


Don't forget!  I'm no Ivy educated Intelligence Officer.  I'm just a Navy jet pilot flying the ball to touchdown.


And finally -


Sailing downwind, in long repose wing on wing, is a quiet trial.  Some trials dictate otherwise; as in, "step forward there, take a peep over the weather-bow, and then back to me and tell me what ye see there. What ye see is prospect unlimited, monotonous and forbidding with a squall coming up" (1). Join me, come into the wind and Launch Aircraft.


If you have any comments or questions, please contact me here.


Good luck.  Be smart.


(1) Moby Dick: Ch 16 - The Ship: O'd Captain Peleg and Ishmael.


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