Are the Keys overpriced right now? We have this discussion regularly with new clients interested in getting into the Keys market, and there are a lot of moving parts in the answer to this question! Here is a quick look at the current factors and trends affecting Real Estate prices in the Keys today:
#10 ... COVID. The pandemic and the shifts in remote work jump started the gold rush in Keys Real Estate (which was already trending higher prices.) Once the boss in New York said you didn't have to come into the office, the attorney says to himself..."why am I shoveling snow in New York, when I could be Zooming from a hammock in the Keys, and still getting paid?!" This trend snowballed and still is.
#9 ... RETIREES. Blame it on COVID again, "Death and Taxes" are for sure, and the huge Baby Boomer cohort moved up their retirement timelines in a nod to "life is short" and "you only live once". Covid put mortality in a stark perspective.
#8 ... TAXES. Back to "Death and Taxes". NO STATE PERSONAL INCOME TAX IN FLORIDA. More and more people are relocating to Florida pushing up demand for Real Estate, and the Keys is the "Crème de la Crème" of Florida with a true Tropical climate.
#7 ... TROPICAL CLIMATE. Who wouldn't want to live in a Tropical Paradise like the Keys? The Keys is the tropical climate of the contiguous USA that one can actually drive to, and it is a very limited area in its size and capacity. Also, there is no DEADLY RED TIDE here in the Keys like in other parts of Florida, our local friendly Gulf Stream sees to that!
#6 ... IMMIGRATION. Nearby Miami is a world wide gateway for immigration into South Florida, especially for everywhere south of the USA.. This trend has been going on for a long time, and the new population has now established themselves and their businesses in SoFlo, and have been turning their resources towards more real estate investments, and number one on that list is that weekend getaway place in the Keys!
#5 ... VALUE. Vacation rentals are super strong in the Keys, and investors have been snapping up the limited supply of these properties here. Even with the super strong price increases since Covid, the Keys are still only 50% in price compared to say Key Biscayne outside of Miami. This kind of value is not lost on the local SoFlo population trying to get into their weekend getaway second home. You can have your cake and eat it too here....use it yourself and vacation rental when you are not using the property...win-win!
#4 ... ECONOMIC STRENGTH. We hear many out of towners complaining about the economy, saying they are waiting for the next crash to get into the Keys, etc. etc. Well, sadly, the sidelines are stacked very very deep with buyers waiting to get in, but Florida is booming!! They were hoping for a crash after Hurricane Irma...didn't happen, same for after Covid hit...didn't happen. A business friendly environment is also helping so many make that decision to leave their oppressive States and move their businesses here. Florida overall has lots of room to grow! (not so much the Keys though).
#3 ... WALL STREET SOUTH. Never heard of it? Google Ken Griffin and Citadel...billions of dollars have been flowing into Florida real estate with no end in sight...it is indeed a migration of epic proportions. Griffin alone (he is not the only one) is TEARING DOWN A BILLION DOLLARS OF REAL ESTATE just to rebuild it to his own liking for his personal and business needs. This has spill over effect into the Keys, because this is where all that money wants to come on the weekends for fishing, diving, living the good life.
#2 ... THE KEYS HAVE BEEN DISCOVERED. The secret is out, and the Keys have been getting on peoples' radar as a safe place to live, do business, vacation, visit, and raise a family... far from big city crime, yet close enough to big city amenities if you want. A new customs station recently opened at the Marathon airport, Key West is expanding their airport and flight availability, and there are also 2 smaller airstrips, as well as Marathon airport. International infrastructure is keeping up with the strong International buyer demand.
AND THE #1 REASON THE KEYS ARE UNDERPRICED ... NO MORE SUPPLY AND EXCESS DEMAND! The building moratorium in effect for the Keys means that essentially what you see is what you get...no more building permits will be available for vacant unpermitted land. There are way more people in line than the few remaining permits left in the system, and those should all be allocated between 2023 and 2026 depending on where you are in the Keys. So now there are a lot of buyers sitting on the sidelines scratching their heads thinking, "now what?" or "I'll wait for the depression/recession to swoop in" (doesn't change any of the powerful dynamics listed above, will not create any more buildable land) or "I'll wait until interest rates spike and kill the real estate market" (may not make much difference here in the Keys in that so much of the buying is cash, almost 50%, still doesn't create more building permits)
Contact us and we can help you get into this very specific Florida Keys market! Or, we can help you locate in other parts of Florida as well, let us know how we can help! Standing by...