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Homeowners of Key West pushed up, up and away

KEY WEST - Like the homes of so many residents on this sought-after island, John and Kim McGee's unremarkable concrete-block house started out as a modest piece of family property.

Now the couple say they hope the 1950s-era three-bedroom home with an in-law apartment and a new pool - bought for $17,000 in 1969 by Kim's father far from the city's historic Old Town district - will sell for at least $1-million.

"The idea is to put it on the market for sale and become one of Key West's newest instant millionaires," said John McGee, who works for Monroe County. A for-sale-by-owner sign on the barely-there front lawn underscores his aspiration.

Unrelenting demand for homes, historical or otherwise, in this tiny island city has pushed real estate prices beyond what many locals ever imagined when they bought or inherited their homes.

Years later, many are cashing out in a steady selloff that threatens to alter the face of Key West while turning ordinary people into swells - at least on paper.

"They become short-time millionaires," said Jimmy Weekley, the city's mayor. "I hate to see people doing that, because we are losing our history."

The assessed value of Monroe County real estate rose 18.4 percent, to $16.8-billion, between 2003 and 2004, according to the Monroe County property appraiser's office. Since then, sale prices of homes in Key West and elsewhere in the Keys are estimated to have increased by at least a third in some locations.

There are only about 14,000 residential units in Key West, according to city estimates, and the city is mostly built out - factors that, coupled with high demand, explain why supply is so limited.

Late last week, the least expensive single-family home for sale in the city was a $599,000 one-bedroom, one-bath house with 623 square feet, according to computerized real estate listings. The lowest-priced property: a 331-square-foot condo for $399,000.

Such prices make it difficult for those who sell - particularly natives who've never lived anywhere else - to remain in Key West. Rents are also extraordinarily high. For the McGees, leasing a home that is the same size as the one they own would cost them as much as $2,000 a month in Key West. So they are looking at property in Georgia. Other local families are moving to lower-cost areas elsewhere in Florida.

Key West barber Gary Kelly, 71, and his wife, Genevieve, receive postcards from real estate agents almost every day, asking them to consider selling a five-bedroom home he bought 13 years ago for $129,000 in the city's New Town neighborhood. Now, he figures it's worth at least $800,000. He hasn't ruled out a relocation.

"I'm looking at property in Central Florida," he said.

Meanwhile, Genevieve and her siblings have already put their deceased mother's 2,600-square-foot house in Old Town on the market for about $1.7-million.

"All the old Conchs, everyone is leaving. There is like a mass exodus," Genevieve Kelly said. "I am sad that I have to sell it. It wasn't my decision."

[Last modified January 17, 2005, 01:05:20]