Happy New Year Key West
December 27, 2024
The New Year is close but we remain full of Christmas cheer in Key West—it doesn’t hurt to be grabbing shorts instead of snow shovels with temps in the mid-70s. It has been a fun holiday season, with young and old, visitors and locals alike enjoying all that December in paradise offers.
Festivities Afloat
The Key West Harborwalk area was full of music and cheer, and everything came out bright and beautiful on a pleasant evening that was enjoyed by all on land and sea as the 33rd annual Schooner Wharf Bar Lighted Boat Parade went off dazzlingly on Saturday evening December 14. The SV Schooner America 2.0 cruised through the Key West harbor and past the judges stand to a first-place finish in the friendly and creative competition. The schooner’s graceful lines and blacked-out hull and rigging served to accentuate a nature-themed display featuring birds, butterflies, a ladybug, a spider in its web, green plants, and flowers, all picked out in super-bright LED lights.
Second place went to the M/V Izzy Rose that boasted décor usually seen in landlocked front yards including a giant snowman and Santa in his sleigh on the cabin rooftop. However, the big rooster on the bow gave away the Key West lineage of that display. Our own U. S. Coast Guard Station Key West took home third place with larger-than-life illuminated reindeer, a flat-screen display of colorful seasonal themes, and a crew of live Santas greeting the crowds.
With the lighted boat parade, our fabulous Key West Hometown Holiday Parade, belighted bike ride, Christmas markets, concerts, and fun at the Winter Wonderland skating rink mostly behind us now, another Key West holiday season is ready to be wound up with a bang on New Year’s Eve. Red shoes, conch shells, a pirate wench, classic Pan Am flight attendants, and who knows what else will all drop at midnight on December 31 as crowds of revelers fill the streets of Key West for what has to be one of the country’s best New Year’s Eve Parties.
Sure, New York’s Times Square Ball Drop is classic, but did you ever notice how the celebrants there are bundled up and often fighting rain and sleet? On a Key West New Year’s Eve, the coldest thing is going to be your cocktail glass.
A New Year in Key West Real Estate
This calm period between the Christmas parties and New Year’s Eve is a good time to take a sober look the Key West real estate market and ponder some possible directions that things might move in 2025. As noted last month, 2024 has been a standout year for Bascom Grooms Real Estate and very solid for the Key West and Lower Keys property markets in general.
The Key West market is closing out the year with 625 sales posted, a 2.8% increase from 608 in 2023, with the close sales numbers signaling the stability and consistency that is prevailing in our unique market. Average sale price is running a similar trend, at $1,170,466 up 2.4% from the $1,143,233 set in 2023. While Lower Keys sales numbers are off 10.8% at 406 sales as compared to 455 in 2023, Lower Keys average sales price shows a very solid 16.1% gain to $1,005,763 from $866,092 in 2023.
On the macro level, for 2025 we are looking at a definite change in the American political weather, ongoing global disruptions that may or may not respond to the incoming president’s promises to bring calm, and a U. S. economy that is still suffering under the burden of inflating prices for daily necessities. Numbers from the Bureau of Labor Statistics show the Consumer Price Index (CPI) rising 2.9% during the 12 months ending this month, December 2024, up from the 2.7% posted in November. Significant inflation drivers include a 4.4% increase in gasoline prices and 0.3% rise in electricity costs.
The pandemic effect appears to be nearly fully worn off where residential real estate markets are concerned, with many enterprise leaders including Elon Musk calling for an end to work-from-home and a return to offices. Nick Gerli, Founder of the real estate analytics firm Reventure Consulting and creator of the useful reventure app, points out that the U. S. housing market is bifurcating, with a downturn happening in Sunbelt areas that became boomtowns during the pandemic, while home prices are still rising in the cold weather zones that everyone left. As an example, Gerli cites the disparity between active listings in Texas and Florida as compared to the nine-state Northeast region.
In Gerli’s view, Sun Belt markets are rapidly losing momentum due to affordability challenges arising from elevated mortgage rates and high home prices. Existing home sales have hit their lowest level since 1995 while new home supply is reaching a 17-year high, with high prices having a more significant effect on sales than elevated mortgage rates.
In fact, at the December Federal Open Market Committee meeting, the Federal Reserve instituted a 25 basis point interest rate cut, lowering the target interest rate range to 4.25% – 4.5%. The Committee’s median projection was for two cuts of 25 basis points each in 2025, clearing the way for federal funds rates in the 3.25% to 3.5% range by the end of 2025. This is not as drastic of an overall cut as was formerly projected, but it still indicates a climate of falling mortgage rates.
As for Gerli’s summary of the situation, more important than mortgage interest rate cuts, nationwide inventory levels need to rise enough to force prices down and bring buyers back into the market, something that is not currently happening in the Northeastern states at least.
Cutting to the Key West Real Estate Chase
As regular readers here know, Key West and the Lower Keys constitute a highly specialized real estate market that is to some extent insulated from economic forces that can have major effects in other regions. A large portion of sales here in America’s Caribbean paradise are closed on a cash basis, making mortgage interest rate levels a moot point. And although listing numbers may fluctuate—Key West listings stood at 321 as of this month compared to 265 last year—real inventory in the Keys is by necessity permanently tight and in effect, capped.
Still, Key West real estate is not completely immune to wider market trends and the doings of politicians and bankers up north, and interest rates along with price levels most certainly effect buyers and sellers in the middle ranges of our market where many family homes are found. It is possible that “the Sunbelt Effect” pointed out by Gerli and highlighted in the chart above may touch the Key West real estate market, and that might open some brief windows of opportunity for buyers looking to get into a market that has recently been on a stratospheric trajectory price-wise.
If the idea of owning a home in Key West or the Lower Keys is intriguing, and you need a team of local experts to keep an eye on things for you down here, contact us any time. You can explore the beautiful island homes featured on our website, enjoy virtual home tours with a Bascom Grooms team member as your guide, and take advantage of the expanding airline connections to the island to get down for a closer look and a nice Key West vacation. Make Bascom Grooms Real Estate your local Key West real estate resource.
Bascom Grooms Real Estate—1110 Truman Avenue, Key West Florida—(305) 295-7511—info@bascomgrooms.com
