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Published Sunday, April 4, 1999, in the Miami Herald

Owning a home out of reach
for many in the Keys

Herald Staff Writers
Photos by Matthew J. Lee

The cost of paradise
Unable to save enough to buy a moped, 52-year-old Carl Hagensen rides his bike to work.
Possible solutions to ease the affordable housing shortage
After bills are paid, $50 is all that's left
Previous Special Reports
The Housing Squeeze
Working families find housing costs outpacing paychecks
Luxury homes rise after cheap abodes razed
Cities find ways around affordable housing rules
Safety features, regulations drive up construction costs
Poorest of the poor can't afford upscale 'affordable' rentals
Herald Editorial: There's no place like home...if you can afford one
KEY WEST -- The Florida Keys are successfully sold as a land of flip-flops, sunsets and rum drinks, but the reality is different for those who live and work on the islands.

For the desk clerks, divemasters, waitresses and shop clerks who are the ground troops of the tourism industry, the Keys are a land of leaky roofs, skyrocketing rents, low-paying jobs -- and little hope of owning a home.

Recognized as a problem for more than a decade, the lack of affordable housing in the Keys has now reached such a crisis that a recent task force on the issue found ''our entire economy is in jeopardy via the inability to attract service-sector employees to take care of the needs of the tourists.''

The Keys are caught in a spiral, created by their beauty and their economic dependence on selling that beauty. More people visit the Keys and some buy homes for vacation or retirement. Other homes are converted to tourist lodging. New businesses open, creating jobs for more people. Growth controls and environmental restrictions, intended to protect the islands from the ever-increasing use, limit new building. Rents go up. Home prices soar.

Mainlanders dreaming of a getaway beach house in the Keys should start saving heavily or playing the lottery. Owning a home in the islands -- or even renting one -- is increasingly out of reach for ordinary working folks. Average price for a two-bedroom home in Key West is nearing $300,000.

The Keys have long led the state in cost of living, over Dade and Broward. It's not only housing -- daily necessities including food and gas also cost more in the Keys.

But the crunch is most severe in housing.

Last year, the struggle to find an affordable place to live got a lot harder with the one-two punches of Hurricane Georges and Tropical Storm Mitch pummeling mobile homes in the Lower Keys and Key Largo. Before the storm, mobile homes made up 20 percent of the housing stock in the Keys, and virtually all of the liveable homes that sold for under $100,000.

Georges also washed out many downstairs enclosures, built under the stilt homes that have been required in flood zones since 1974. The Federal Emergency Management Agency says those units are illegal and has threatened to pull its subsidy of flood insurance in the Keys if the county does not crack down.

Last year, the county agreed to do just that. And the county is also starting enforcement of its long-time but little-noticed regulation against keeping a camper in most Keys RV parks for more than six months.

All told, it's a quiet catastrophe for the working folks of the Keys, the employers who must constantly retrain new staff, the schools dealing with high turnover. The expense of housing here is as real and permanent as the Seven Mile Bridge.


  •  Key West is the fourth most expensive housing market in the nation. Only San Francisco, Honolulu and San Diego are pricier.

  •  Using the ratio of average income compared to average home price, Key West is the priciest city in the nation.

  •  The average home sales price in Key West in February was $278,500 for a home with two bedrooms or less. Three bedroom homes averaged $380,000. For four bedrooms or more, the average price was $1.1 million.

  •  Prices are lower in the rest of the Keys -- but not much better. The average price of a waterfront home in Marathon with two bedrooms or less was $293,000. Non-waterfront of the same size was a more reasonable $109,600. In the Lower Keys, waterfront homes of that size averaged $201,700; off the water, the average was $127,400.

  •  Studio apartments routinely rent for $900 a month -- not necessarily including utilities or parking.

    Despite the prices, new arrivals keep on coming -- drawn by the warm weather and casual local culture where shorts and T-shirts are the accustomed attire.

    Donna and Michael Devlin moved to the Keys last September, fulfilling Donna Devlin's longtime dream of returning to the area. She had lived on a sailboat off Key West in the mid-1980s and had never gotten the Keys out of her system.

    The Devlins -- Michael, a mechanic, and Donna, a nurse out of work on disability -- found a mobile home on Cudjoe Key and leased it for $650 a month. They put their savings into renovating it and moved their belongings from Philadelphia.

    Ten days after moving into their new home, Hurricane Georges struck. A seven-foot storm surge swept away the Devlins' new life. They were left with their pajamas, two lawn chairs, a grill and a couple of family heirlooms.

    They began their search for housing again -- but after the storm prices were higher and choices were scarcer.

    The Devlins now pay $850 a month for a three-bedroom trailer. A leaky roof has led to water ruining some of the few belongings they bought since the hurricane. Wet spots on their ceiling and bulging patches on the wall are growing.

    The couple considered buying a house, using a FEMA loan as a down payment. But they were discouraged after checking out a home listed for $80,000.

    ''From the outside, you could see in,'' said Donna Devlin. ''It needed to be totally rebuilt. It needed new wiring, new windows, a new foundation . . . .''

    Tourism creates need
    for workers' housing

    How did the Keys get this way?

    Like resort areas all over the country, the Keys are a victim of their own beauty. Since the early 1980s, when a new, wider Overseas Highway made the drive down the islands safer and more pleasant, the juggernauts of tourism and development have been sending more and more people to the nation's southernmost point.

    Now more than 4 million people a year come to play in the Keys, filling hotels, restaurants, gift stores and snorkel boats -- all of them needing employees.

    In Key West, the drive for tourism has led to the conversion of large old Conch homes into guest houses. Once, many of those old homes were broken up into apartments, rented by waitresses and fishing guides and hotel desk clerks.

    These days, a room in those homes goes for $200 a night. And up.

    Concerned about the prospect of intense development on the subtropical island chain, the state has imposed strict growth controls on the Keys -- only 204 building permits a year outside of Key West.

    The system for divvying up the few new home permits rates applications with points. Would-be builders gain points by adding environmentally friendly features and buying vacant land for conservation. Critics say it has made building a new home in the Keys possible only for the wealthy.

    Twenty percent of those new homes are set aside for affordable, or moderately priced projects. For 1999, the house cannot cost more than $1,470 a month -- hardly within range of a $7-an-hour desk clerk. The affordable housing task force proposes changing the ratio so at least 60 percent of new homes are affordable.

    While building new homes gets more expensive, existing homes are snapped up as vacation and retirement retreats by wealthy people from elsewhere, driving prices up even more.

    Carl Hagensen knows the story behind the tourism boom's effect on the housing market first hand. He has been kicked out of three apartments to make way for their conversion into tourist lodging, either as guest houses or vacation rentals.

    He's got nothing against tourists -- he makes his living taking their photographs as they get off the Conch Tour Train near Mallory Square.

    But he was fed up with the city's policy of allowing housing stock to become tourist lodging and helped lead a charge to ban most short term rentals (of less than a month) in the city.

    Hagensen now lives in a duplex. ''The guy who lived here before me paid $500. He moved out, and I pay $750. And I'm happy to have it,'' said Hagensen, who grew up in Key West.

    ''That's how bad it is here,'' he said. ''You've been beaten up and you are looking at a hole in the wall that costs $750 a month and you are jumping on it.''

    Hagensen works 60 hours a week, eking out a $21,000 salary, including commission. After rent and other expenses, he says he's left with about $150 a week for food and entertainment. Unable to save up enough to buy a moped, the 52-year-old rides his bicycle to work.

    But Hagensen says he's not about to give up on Key West.

    ''I'm not leaving,'' he said. ''I'll just stay and be a thorn in their fanny.''

    Fed up with costs, some
    service employees leave

    Unfortunately for Keys business owners, not all employees have Hagensen's defiant attitude and willingness to live without a car. They can't afford to, says Paul Tripp, a Key West restaurateur who employs 300.

    He's seeing a new disturbing trend: long-time staffers getting fed up and leaving.

    ''Lately we've had people in middle management leaving, even when they are paid good salaries,'' said Tripp, owner of such Key West waterfront institutions as the Half Shell Raw Bar and Turtle Kraals.

    Tripp says he's currently trying to hire someone with a couple of kids at a starting salary of $40,000. But he's dubious about whether he'll succeed.

    ''Why would he want to come here? To have nothing left at the end of the year? And never even have a chance or a future to own his own home here?'' Tripp said.

    Employers in the Keys can get creative. Marathon motel owner Richie Moretti advertised for two chambermaids after Hurricane Georges. For six weeks, he ran ads in the local papers, offering an above-average wage of $9 an hour.

    No luck.

    So he advertised in the Orlando Sentinel and threw in what he considers an essential: The workers could live on a houseboat, the Miss Marilyn, in the marina at the Hidden Harbor Motel.

    He found two people instantly.

    Housing crisis
    15 years in the making

    Business owners and public officials in the Keys have been aware of the growing crisis for some time -- at least 15 years, according to the report this month by an affordable housing task force.

    But after dozens of studies and task forces and proposals, they have been unable to break the vicious cycle of affordable housing that is far from unique to the Keys. One proposal called for new boarding house-style housing for workers, a concept that did not fly with the public.

    Other proposals have called for requiring builders of new stores and restaurants to provide housing along with their businesses. Both the city and county have set aside part of their new building -- 30 percent for large developments in the city, 20 percent of new homes in unincorporated Monroe -- for affordable housing.

    But with wealthy baby boomers buying second homes and planning to retire in the Keys, the supply of affordable housing still seems to dwindle.

    ''Real estate tends to rise faster than people's incomes,'' says Ed McKenzie, an affordable housing consultant who is working with Key West's Bahama Conch Community Land Trust. ''If you can't afford to buy today, you probably can't afford to buy tomorrow. People of a certain income range are pretty much guaranteed facing a lifetime of renting.''

    At all price levels,
    demand exceeds supply

    A study of Key West's real estate market by KPMG Peat Marwick said the best description for the island's housing stock is ''out of balance.''

    ''Demand exceeds supply at practically every price level, with the imbalance particularly severe at lower price levels,'' the study found.

    By traditional measures, the island's economy is thriving. Unemployment is low -- but most of the job growth is coming in retail and service-sector jobs, paying between $5 and $8 an hour at entry level, up to $12 and $17 an hour for employees with longer tenure or more skills.

    Applying the 30 percent of income test for affordability, a household with a $30,000 salary can afford a home priced between $65,000 and $70,000. In the Keys, such a home is as rare as the flash of green seen when the sun sets over water.

    In fact, such a home is a fantasy -- as much a fantasy as the island dreams sold so successfully by the county's Tourist Development Council, which spends millions each year on advertising to entice visitors to the Keys. In the world of those ads, Keys life consists of lying in hammocks, sipping tropical drinks.

    The Keys have become famous as the place to escape from real life, with options from roadside mom-and-pop motels to $800-a-night resorts like Little Palm Island.

    One of the best known is Holiday Isle, headquarters for Keys hedonism. Tourists flock by the thousands to the Islamorada resort's tiki bar, eager to guzzle $5.25 frozen drinks and staple everything from their business cards to their underwear to the bar roof.

    Over their heads, a sign reads ''Over 27 Million Rumrunners Served.''

    ''It's said that for the last 10 years,'' chuckles bartender Steve Stewart, a 15-year Islamorada resident. He is well aware of the difference between the myth sought by his customers and the reality of every day life in the Keys.

    ''The living isn't easy down here,'' Stewart says. To make his ends meet, he works as a bartender and photographer.

    For many Keys residents, the struggle to stay is all they can manage. The idea of owning is a fantasy straight out of a tourism ad or a Jimmy Buffett song.

    Ruth Maggi, 46, a Wendy's manager in Key West, laughs at the idea of owning a home. The last house she owned was a five-bedroom home on a double lot in Concord, New Hampshire. In the 1980s, it was worth $32,000.

    ''That would be a down payment down here,'' she said. ''I'm not even thinking about it. If I buy, it's not going to be here in the Keys. Normal people just can't afford housing here.''

    Maggi's husband is talking about moving to Tampa, where prices are more reasonable.

    ''The Keys are beautiful, absolutely gorgeous. If people could earn a decent living down here, I would never think about leaving,'' she said. ''It's beautiful weather. I don't have to shovel snow. It could be paradise if it wasn't so expensive.''


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