Florida Keys Real Estate Market Thrives 16 Months After Devastating Hurricane
Interest in high-end homes has returned, with buyers coming from nearby tropical cities
When Hurricane Irma blew over the Florida Keys in September 2017, killing 14 people, damaging or destroying more than 4,000 homes and closing portions of the only road out, no one had an inkling when normal life would resume. It was also uncertain when interest would again return to million-dollar homes on—as buyers were now reminded—a vulnerable island chain.
Less than a year later, the market was back.
“They were predicting that it would take us two years to recover, so we were really kind of surprised,” said Kelly Shaw, a Christie’s real estate specialist with American Caribbean Real Estate in Islamorada in the Upper Keys.
In fact, Ms. Shaw said, 2018 was a “phenomenal year” for two upscale areas that escaped the worst of Irma and sustained the least damage, specifically the village of Islamorada on Plantation Key and nearby Key Largo. “There have been 17 closed sales over $3 million in 2018, which is very active for our market in a single year,” she said.
When Irma made landfall on Sept. 10, 2017, on Cudjoe Key, about 25 miles northeast of Key West, it brought with it 12 inches of rain, a 10-foot storm surge as well as winds as high as 140 miles per hour, before weakening and moving north over mainland Florida, Georgia and North Carolina.
Irma caused $50 billion in damage, according to the National Hurricane Center. Last November, the Florida Office of Insurance reported nearly 900,000 claims of residential property damage had been filed as a result of the storm, with private insurers having paid out more than $11 million at that point.
The Middle Keys Hit Hardest
No part of the Keys was spared damage, but the hardest hit were the Middle Keys, around the city of Marathon. The city of Marathon, for instance, suffered widespread damage when the Category 4 storm made landfall on Sept. 10, 2017. Even so, the market is now strongly rebounding, with listings up 23% through December compared to a year ago, as houses are rebuilt and restored. The average sales price was up 7% last year, increasing from $569,615 to $614,076.
Throughout Monroe County, which encompasses the 113-mile string of small islands from Key Largo south to Key West, sales of million-dollar homes were up 13.3%in 2018 over the previous, storm-disrupted year. And while prices dropped slightly, according to Realtor.com data, Monroe County still ranked as the most expensive in southern Florida with a luxury entry point of $1.75 million, tied with Collier County, home to Naples.
Russell Post, president and broker/owner of Russell Post Sotheby’s International Realty in Key Largo, said he’s cautiously optimistic about 2019, barring some unforeseen circumstance, such as a catastrophic world event, or another hurricane.
“It’s shaping up to be a very nice year—lots of activity,” he said. “Normally this is a time of tire-kicking, through the holidays, and then the selling starts in earnest in February, March and April. But we [were] actually writing contracts through the holidays, so it’s encouraging.”
“Some people are hesitating,” Mr. Post added. “But at the luxury level, many people have taken wealth out of the markets and are going ahead and making their moves. It’s a quality of life decision, and if they can afford it, they’re going right ahead.”
In an unusual twist, Irma’s devastation is said to be a factor behind the strong demand in the Keys, mostly for second homes. Ms. Shaw and her realtor son, Trent, include among their clients many who lost homes in the Caribbean to Irma and the other powerful hurricanes of 2017 and now want the security of the U.S. in the event of a storm.
“It has a lot to do with the hurricane, and they realized how vulnerable they are out there,” said Trent Shaw, who is also a Christie’s real estate specialist at American Caribbean Real Estate in Islamorada. “In the Keys, you have the island atmosphere and the island feel, but you’re still connected, you can still get up to the mainland.”
Buyers Head to Key West
Key West, Florida’s southernmost city, felt its own Irma effect. The island-city of 25,000 emerged from the storm basically intact, attracting buyers who might have been looking for homes in Marathon and other heavily damaged areas, said Will Langley, principal broker at Berkshire Hathaway Knight & Gardner Realty in Key West and Berkshire Hathaway HomeServices in Marathon.
“Our market stayed pretty solid,” Mr. Langley said. His firm posted double-digit gains in sales for the year. Total sales in Key West were up 8% in 2018, while the average sale price increased 4%, from $757,000 a year ago to $790,000 now, he said.
Mr. Langley said the entry point for the luxury market is about $1 million. New construction is hard to come by in the city, which strives to maintain its historic character, but a condo in the recently completed Old Town Villas, a block from legendary watering hole Sloppy Joe’s on Duval Street costs around $2 million. Mr. Langley said most of the high-end homes fall under the $5 million mark, even the lushest of the pastel-hued cottages for which Key West is known.
At the eastern end of the Keys, the luxe market opens at around $3 million, which will fetch a newly built, six-bedroom home with a pool and dock on a deep-water creek on Lower Matecumbe Key in Islamorada. Nearby, a six-bedroom, oceanfront home with a gated entry off the Overseas Highway, the Keys’ main drag, costs $5.5 million.
At Key Largo’s private Ocean Reef Club, which has 11 restaurants, a highly regarded golf course and its own airport, buyers pay $5 million to $9 million for a condo in the new 121 Marina complex, and up to $16 million for single-family oceanfront home.
A Place for ‘Family Time’
Besides hurricane-weary returnees from Caribbean islands, who is buying in the Keys?
“The Keys generally attract entrepreneurs who want really good family time under the radar,” Mr. Post said. “It’s a lot about being out on the water, being outdoors. If you’re at Ocean Reef, there’s lots of good golf.”
Mr. Langley described the typical Keys buyer in a similar fashion. “The characteristic they mostly all have is that they own their own business, so they have a little bit of freedom to be able to spend time down here,” he said.
Which brings up an oft-cited reason behind Florida’s strong real estate sales.
“A lot of our buyers, they love spending six months and a day down here because it’s good to be a Floridian citizen when it comes taxes,” he said, noting the lack of a state income tax for legal residents. “It’s more than just the sunshine.”