What if the Vacation Never Has to End? How to Buy a House in Key West

Key West, a tiny island located at the end of the Florida Keys, fuels many a big vacation dream. U.S. News & World Report has named Key West one of the top places to visit in the U.S., pointing to its plentiful water activities and interesting history.

With its warm weather, laid-back culture, and happy-hour vibe, it’s also an attractive place to live. If you want to buy a house in Key West, you’ll be in good company. Ernest Hemingway, the Nobel Prize winner, lived and wrote on the island for more than a decade.

Before you bid farewell to the mainland, it’s important to understand what makes Key West a singular place to call home, like its historic Old Town district, its regular throngs of tourists, its walkability, the termites and iguanas, the climate, and the unique architecture.

We interviewed experts like Ed Salazar, a Key West native and real estate agent, who is part of a team led by top-performing agent Bascom Grooms, another lifelong Key West resident with 22 years of experience. We also dove deep into the unique qualities of Key West’s neighborhoods and did the math to help you understand what your budget will look like if you decide to set sail.

So slide on your sandals and meet me on Duval Street. This guide will give you the information you need to brave the competition and buy a house in paradise.

Put together your Key West budget

Everything seems to cost more on vacation, and the same can be true when you live in a destination spot. According to the Key West Association of Realtors®, the median price of a sold home was $732,500 as of December 2020, well above the national median of $309,800, according to the National Association of Realtors®.

Rental costs aren’t much better. As of December 2020, the average rent for a Key West apartment was $2,461, once again well above the national median of $1,465.

Your heart might be set on owning a piece of island property, so let’s crunch the numbers. Assuming you put down 20% on a $732,500 house at January 2021 market rates, your monthly interest and principal will be $2,417.

Deciding to own versus rent is always a personal decision. Here’s an idea to consider: Many of Salazar’s clients who want to buy a house in Key West invest in income-producing property, renting it out for most of the year, with the plan to move there full time to retire. “It’s a good investment, a good place to put your money,” he says.

Perhaps it’s a strategy that can work for you? As you do the math, remember to figure in property taxes. For a house with a market value of $732,500, your Key West taxes will be about $6,400, according to Monroe County, Florida’s online tax estimator. You can reduce property taxes by about $400 if you apply for a homestead exemption.

We also can’t forget about insurance. Florida has some of the highest insurance premiums in the country. The average Florida rate of $3,643 is 58% above the national average, according to Insurance.com.

The Florida Office of Insurance Regulation put together a tool to help homeowners broadly compare rates. For a Monroe County home built in 1990, with a replacement value of $150,000, a $500 non-hurricane deductible, 2% hurricane deductible and no claims for the past three years — and that has wind mitigation features like hurricane shutters — the average premium is just under $3,000 a year.

Flood insurance is another cost you’ll need to consider, since flood damage is often not covered under home insurance policies. According to the Key West city government, there are 8,000 active flood insurance policies, each costing an average of $1,510 annually.

Get the lay of the land in Key West

Located at the very end of Florida’s Highway 1, Key West is 4 miles long and 2 miles wide, with a population of 24,500 as of 2020. Given its small size, you can sell your car and opt to bike or walk around the island instead. Chances are good you’ll be running into friendly faces in no time.

Nine different neighborhoods, each with their own character, make up Key West’s One Human Family. Grab your sunscreen and we’ll explore some of them.

Soak up the history in Old Town

Located on the western portion of Key West, Old Town is the island’s historic heart. If older homes, leisurely walks, and plentiful restaurants and bars are what you’re looking for, this neighborhood is an excellent choice, and it’s where most of Salazar’s clients are looking. “It’s like stepping back into time,” Salazar says.

“The narrow streets, the old houses, small lots, everybody riding around on bikes or walking. It has that ambience to it.”

Old Town is often divided into two parts: the areas north and south of Truman Avenue. Many of the homes in this area date back to the 1800s. Key West’s Historic Architectural Review Commission governs updates and upkeep to preserve the area’s charm. The historical charm comes with a steep price tag: The average price of a sold Old Town listing was $1,267,625 in December 2020.

Keep in mind that this neighborhood, which includes the well-trafficked Duval Street, is a top tourist draw, so you’ll have to contend with sunburned out-of-towners crowding you at the Green Parrot Bar. Even in the aftermath of 2017’s Hurricane Irma, Key West and the Florida keys attracted 5.1 million visitors, according to 2018 county tourism data.

Enjoy the quieter life in New Town

While Old Town draws the tourists, New Town houses the locals. With larger lots and lower prices ($502,223 is the average sold price in December 2020), this is where 75% of Key West residents live. If you want the island lifestyle, but also some of the suburban living amenities that make full-time island living a little easier, this is a great neighborhood to explore.

Located on the eastern part of the island, New Town includes shopping centers and grocery stores including Publix and Winn-Dixie. It’s also close to Key West High School, which rates as average compared to other schools in Florida. And if you are planning on traveling off the island regularly, New Town puts you right next to Key West International Airport.

Go upscale in Truman Annex

If you’re looking for a quiet residential spot where you can be part of Key West’s fascinating history, you might be interested in exploring the Truman Annex neighborhood. Formerly the site of a naval station, the area was redeveloped by a private investment company and completed in 1996, earning the 1994 Florida Design Arts Award from the Florida Arts Council. This upscale gated community has a mix of housing, including mansions and townhomes, and features manicured landscaping and interconnecting walkways that give it a park-like feel. Homes here tend to be larger than in Old Town, many with open water sunset views.

You’ll be close by the Harry S. Truman Little White House and within walking distance of Old Town attractions. Plus, history buffs will enjoy the proximity to Fort Zachary Taylor Historic State Park.

Know the housing in Key West

The architecture of Key West is unique. Heavily influenced by its Caribbean neighbors, the island has preserved many of the wooden structures constructed by shipbuilders-turned-carpenters.

A popular style in Old Town, where houses can be 100 to 150 years old, is the conch house. These two-story houses usually feature large verandas and shutters over the doors and windows. Other styles include shotgun houses, single-story cottages built by Cuban cigar barons for their workers, and Victorian-style homes. Many homes are painted in bright pastel colors, a nod to the Bahamian influence that still can be seen throughout the island.

In New Town, the housing stock is newer, yards are larger and prices are significantly lower than in Old Town. Buyers can find mid-century and ranch-style homes. Those with deeper wallets can find ocean-facing condos in the Truman Annex neighborhood.

No matter where you buy a house in Key West, you’ll need to factor in upkeep. A Key West home must withstand the effects of a hot, humid climate and the damaging impact of wind and rain.

“It’s definitely a lot of maintenance and a lot of upkeep to maintain it, especially one of the old ones,” says Hans Van Aller IV, a home inspector for highly rated Low Keys Home Inspectors.

And that’s what makes the home inspection so important. Some of the red flags Van Aller sees are termite infestations, spalling concrete, mold and mildew — and iguanas, which can damage both the house and the yard. An inspection should include a review of the house’s wind mitigation and the condition of the roof; both can be submitted to an insurance company to try to attain a more favorable rate.

Find a top buyer’s agent

The top 3% of Key West real estate agents handle an average of 404 properties and move them in 70 days.

Plenty of people want to live in paradise, so you can expect strong competition to buy a house in Key West, especially during the high-demand winter season. A strong buyer’s agent will help you navigate the city’s hot market, while avoiding some of the pitfalls that can make living here challenging.

There’s a rum runner waiting for you. Get in touch today and connect with a top Key West agent.

Header Image Source: (Amber Kipp / Unsplash)