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The Price We Pay (for living on an island)

           By John V. Gallant


Living on an Island (really it’s just a big rock), nestled between The Everglades National Park and The Atlantic Ocean, is veryappealing to people. Some of them choose to turn their dreams of cool ocean breezes and tropical

cocktails at The O.V. into a long-term adventure. Knowing this community, and the people in it, who could possibly blame them? The upper keys are, most certainly, a fantastic place to live.

Living on an Island

However, the attraction of so many people to this area can be problematic. We have a finite amount of land; and added people equates to more consumption, more rubbish, more pollution, and higher prices. I am reminded of a Joni Mitchell song about paving paradise and the resulting pink hotel with its appurtenant parking lot. It may sound alarmist, but examples exist throughout Florida of smaller towns that have been irreparably damaged by over-development.


As someone who has had a love of economics, as well as a specialty degree in economics from The University of Florida, and a real estate brokers license; this type of disparity leads to questions, theories and opinions, and then usually many more questions. After all, economics is a social science that studies how individuals, governments, and firms make choices in the allocation of resources to satisfy their desires. (hint: sometimes the decisions made are not in anyone’s best interest!)


For those who are looking to purchase


Because of higher demand, and a restricted supply, the median sales price for homes in the upper keys was recently reported as $566,541 in February 2016. Using standard affordability calculations, the household income recommended to purchase a home in this price range is over $110,000 per year, while median household income in The Florida Keys, is $57,887. Painting with a broad brush, this means that people earning a median income make $52,113 less than they should to purchase a home in the area. Obviously this doesn’t take into account a number of factors, but it does explain why many of us have 2 or 3 jobs.


And while the cost of purchasing a home here is not for the faint of heart; the additional cost of insurance, taxes, and maintenance only makes living on an island worse.


It also illustrates a larger problem for those who are not independently wealthy, because buying a home has traditionally been a good way to save and store wealth, and can be integral to a retirement plan.


For those looking to rent long term


There isn’t much to rent under $1000/mo., and what is available at that price would most likely not be considered comfortable for more than one, possibly two people. Finding accurate statistics for rentals can be challenging, but a good estimate for median rental price of a two-bedroom home, on a dry lot, would be in the neighborhood of $1900 per month, when you can find one.


A small note about Netflix


Any discussion on long-term rentals, without touching on the impact of Netflix would be disingenuous.


If you were not aware, Netflix has been filming a television series entitled “Bloodline” in South Florida, mainly within the keys.  They offer their workers a generous stipend for housing, which is a nice thing to do for your employees, but has some negative unintended consequences in a confined space. Available long-term rentals have been difficult to find, and what is available has risen dramatically in price.


It is important to recognize that the film industry has been subsidized with taxpayer dollars in Florida, and a change to this seems imminent. The tax incentives are set to expire July 1st, 2016, and it will make it more expensive for Netflix to continue filming in the area. Should Netflix decide to not produce another season, due to this change in policy, it would most likely reduce the price of rent, and make long term rentals more available.


Vacation Rentals/Property Management


Florida Keys Vacation Brokers Islamorada

One of the ways that non-resident owners offset the costs of ownership is by renting their properties during periods it would remain vacant. This can be a great way to mitigate the higher costs of ownership an owner faces. There are a number of challenges to this, and I highly recommend seeking out the assistance of a professional (like myself) to ensure compliance with the numerous and complex laws and municipal codes. Using a professional should also help you increase the number and quality of your guests. We have a vacation rental arm of Blue 9 Realty, Florida Keys Vacation Brokers.


There are a number of laws pertaining to renting, including; The Fair Housing Act, The Americans With Disabilities Act, etc.. The Village of Islamorada and Monroe County also have rules governing rentals. I would urge you to familiarize yourself with these laws and codes, and ensure your rental agent is well versed in this area as well.


Islamorada Vacation Rentals


If you are planning on renting an Islamorada Vacation Rental for a period less than a month, you will need to obtain a Vacation Rental License. Currently, the cost to apply for this license is $1,000, and there are some qualifications that a property must meet.


Properties must meet a minimum value as appraised by The Monroe County Tax Assessor. Speaking in very general terms, condominiums must have a value that exceeds $375,000, and single family homes must have a value that exceeds $571,000. This applies to 2015-2016, and the values may change annually based on a metric using the median family income published by The Department of Housing and Urban Development.


Properties that pass the test of value must also pass a fire and life safety inspection of the home and grounds. The inspection requires a number of items a normal home might not have, including: smoke detectors capable of communicating with each other, annually certified fire extinguishers, a land based telephone line, railings that meet current code, and a barrier, if the home has a pool. A requirement being enforced more recently, has been the availability of a hearing impaired smoke detector for guests who are hearing impaired.


A good property manager will be able to process the application and work with the inspector for around $500, not including costs associated with compliance issues.


Monroe County Taxes


Any property renting for 6 months or less are subject to a special tax called the Tourist Development Tax, which is an additional 5% of the gross rent for each rental period. The application is available on the Monroe County Tax Collector’s website.


How to Help, Rather than Hurt


Aside from the obvious answers of don’t pollute, don’t overfish the waters, and don’t make a general mess of the place; there are some steps you can take to help keep our little slice of paradise from becoming just like ‘everywhere else’. Try to support local businesses whenever possible.


Avoid larger corporate names whenever possible. It sounds cliché, but when you buy from a local business, you are most likely supporting a family and contributing to the local economy. When you use a franchise or larger corporation, much of that money leaves the area. It also signals to that large chain that they should increase their presence into the area, which can squeeze out even more small businesses that are standing by, ready to serve you.

If I can be of assistance, please reach out to me at:

John Gallant

[email protected]

(305) 587-3663

(I’ll most likely still be living on an island)