Thursday, October 21, 2004

Peace and Quiet

Citizens' Voice of the Day:

"The demographics of the Keys is rapidly changing. It used to be populated by artists, fishermen and other interesting people. They are being replaced by the rich folks from up north."

Fundamental to the concept of value is the theory of highest, best and most profitable use. This is without doubt the most critical aspect in the appraisal process when estimating market value. George K. Cox, MAI, SRA

The Citizens Voice comment is partly true. It isn't only rich folks from up north. It's rich folks and not-so-rich folks from just about anywhere who are buying up properties all over Key West and in the Keys. They do so for a variety of reasons, but I think that two in particular stand out from any others. One is a desire to have a pied-a-terre on a tropical island, a place to escape to when snow flies, or cabin fever sets in. A place to play, in other words. This form of property ownership can take several forms: straight ownership of a residence, condominium, time share ownership, and probably some others I haven't come across.

The second reason and, in my opinion, the real driver of the rapidly-increasing value of property here is real-estate speculation, the idea that buying a property now is a good investment, because you'll be able to turn over whatever you buy in a year or two for a quick profit in five or six-digit figures. The couple who rented this apartment before us negotiated out of their lease early (and thus made it possible for us to move back in here), and did so because they decided to buy a condominium on South Street, a tiny place with about 450 sq. ft. of living space, for a figure in the mid-$400K's. While they did move into it, they were clear that it wasn't their intention to stay there, that they are hoping to bootstrap themselves into the home they really want by turning it over in a year or two with enough "profit" to pay off some other debt and have enough left over to put some serious money down on another property.

A new friend spoke the other day of hearing radio advertising urging potential investor-buyers to explore the creative financing that would allow them to buy what they can't really afford. No money down, no income verification, interest only mortgages are all in the mix. Once again, there are probably options available that I've not heard of.

The building next door to ours has been undergoing renovation for some time, and recently was turned into three or four condo units. One of the units, a two-bedroom, two-bath, is now on offer for sale for $988,000. It may not bring that much -- but I wouldn't be surprised if it did.

There's a big industry here devoted to this investment market -- real estate agencies, mortgage brokers, banks, property managers, and a myriad of trades people, carpenters, plumbers, painters, electricians, and the like. What happens, of course, as property changes hands, is that rents rise in proportion to selling prices, properties are removed from the rental stock, and renters find it increasingly difficult to afford the cost of living here.

We thought about buying before and soon after we arrived. First it was a houseboat, and when that turned out to be impractical, we briefly considered a home purchase, a fixer-upper since we weren't in the market for a million-dollar, or even a half-million dollar property. In the end, we decided to rent here, and will probably do so in the future wherever we finally wind up if we decide to leave the Keys. Another reason is our reluctance to buy into the 'bubble' that may be forming around the speculative boom. Now, admittedly, I said the same thing five years ago when we moved here for the first time. Had we bought something then, we would undoubtedly be "wealthier" in an economic way, but wealth wasn't then and isn't now what we seek. At our ages and with our values, we seek only to be comfortable and content. We can manage that with the life style we've chosen to follow. A roof over our heads, food enough, good friends, occasional amusement, and a satisfied life, these are what are sufficient.

Michael McCloud expresses it well in his song "Peace and Quiet":

Someplace that doesn''t have winter
Someplace that I can stay warm,
Where an old man can fish,
Whenever he wish,
Except for the occasional storm.

They say I'm getting older and wiser.
God knows, I should have by now.
Think I know what I need
In this life that I'm leading,
And I hope to have it somehow.

I'm just looking for some peace and quiet,
Some place I can let myself be.
I ain't bothering no one,
And I don't want bothered.
Nobody's bothering me.

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