8 Things to Know Before Diving into Key West, FL Real Estate

Key West blends tropical beauty, rich history, and a lifestyle that draws buyers from around the world. But behind the island’s relaxed atmosphere is a real estate market shaped by strict regulations, limited inventory, and high demand.

Navigating this market requires insight. These eight key points will help you approach Key West real estate with clarity and confidence.

1. INVENTORY IS LIMITED, AND THAT’S NOT CHANGING ANYTIME SOON

Spanning just over four square miles, Key West is one of the smallest and most sought-after real estate markets in Florida. Strict zoning rules and historic preservation policies limit development, especially in core neighborhoods like Old Town and Casa Marina.

The Historic Architecture Review Commission (HARC) regulates much of what can be built or changed. Given this nuance, you know you’re buying into a rare and carefully protected environment.

Because the housing supply can’t grow significantly, demand stays high and prices stay resilient, especially in the luxury and second-home segments. Properties that meet the mark often sell quickly, and many never hit public listing platforms at all.

Key takeaway: Be ready to act fast and partner with a Key West, FL Realtor with access to off-market opportunities.

2. EACH NEIGHBORHOOD OFFERS A DISTINCT EXPERIENCE

Key West is compact, but no two neighborhoods are the same. Each offers its own rhythm, lifestyle, and appeal, which makes location one of the most important decisions you’ll make. Here are some of them:

• Old Town is rich in history and architectural character, with pastel-hued cottages, cobblestone streets, and a vibrant social scene. It’s ideal for buyers who want charm, culture, and walkability.
• The Meadows offers one of the most intimate settings in all of Key West. With its narrow, shaded streets and meticulously cared-for historic homes, this neighborhood feels like stepping into a quieter, more personal version of Old Town. Residents often gather on their front porches, greeting familiar faces, and creating a sense of community that’s hard to find elsewhere. It’s a peaceful, residential area untouched by heavy tourism, ideal for those who value charm, history, and neighborly connection.
• Casa Marina is known for its larger streets and bigger homes, many of which are not subject to HARC’s historic preservation restrictions. This flexibility allows for more architectural variety and personalization. Closer to the beach, Casa Marina is home to some of the island’s most luxurious properties, making it a top choice for buyers seeking privacy and refinement.
• Sunset Key is one of the most exclusive destinations in the Florida Keys, accessible only by ferry. With private beaches, fine dining, a world-class spa, and expansive estates, the island delivers a luxury lifestyle. It’s the perfect retreat for those who want total seclusion with five-star amenities just minutes from the heart of Key West.
• Midtown is a favorite among full-time residents for its central location and evolving character. Over the past two decades, original ranch-style homes have given way to elevated, modern properties designed for today’s lifestyle. The three main streets of South, Washington, and Von Phister offer a tranquil, residential feel, just a short drive or bike ride from Old Town and the beaches. While largely local, the area still allows for some monthly vacation rentals, creating a balanced neighborhood vibe.

When buying Key West real estate for sale, the best decision hinges on the balance between style and lifestyle. Can you walk or bike to yoga, tennis, or a concert in the park? Do locals gather nearby to watch the iconic sunset? Are you close enough to take a golf cart to dinner without navigating main roads? Can you combine boating access with a central location? (Yes, you can – just look at 827 Eisenhower Drive.)

One home that perfectly exemplifies this balance is 1522 Georgia Street, a newly built luxury residence near the beach and Casa Marina. With four bedrooms and sophisticated island design, it features curated interiors by award-winning designer Erin Wesner. Highlights include custom wallpaper, drapes, linens from Eastern Accents, and designer finishes throughout. Offered fully furnished, it’s a turnkey retreat that captures the essence of elevated Key West living.

3. FLOOD ZONES AND ELEVATION AREN’T DEALBREAKERS — BUT THEY DO MATTER

As with any island market, flood risk is part of owning a home in Key West. But this shouldn’t scare you off.

The island’s elevation varies, with the highest ground located near Historic Old Town and the cemetery, where properties often fall into what used to be known as the “X” flood zone. Historically, homes in this zone didn’t require flood insurance. But as of 2025, Citizens Insurance (which provides most windstorm policies in the Florida Keys) now requires a flood policy as a condition for issuing wind coverage.

For properties in the X zone, flood insurance premiums have increased. What once cost around $500 annually may now be closer to $1,200. However, if the current owner already has a flood policy in place, it’s worth asking if that policy can be assumed; doing so may save you a significant amount.

Homes for sale in Key West, FL located in AE flood zones (such as AE-6, AE-7, or AE-8) shouldn’t be dismissed outright. If a property has been elevated above its original base flood elevation, either during renovation or as part of new construction, it may still offer affordable insurance and strong storm resilience.

And here’s an important tip: All new construction in Key West must now be built to meet modern flood codes, providing added protection and long-term peace of mind. If you’re looking for a home with minimal flood risk over the next 20–30 years, consider homes built within the last five years.

4. INSURANCE AND MAINTENANCE COSTS COME WITH THE TERRITORY

The sun, sea, and salt that make Key West so special also demand a bit more from your home and your budget. In this climate, expect higher-than-average insurance premiums for wind and flood coverage, especially in older or ocean-adjacent homes.

In addition, routine maintenance is a must:

• Salt air accelerates wear on windows, roofs, and siding.
• Humidity and tropical storms require durable building materials.
• Insurance discounts often require features like metal roofs, storm shutters, and impact-rated windows.

These upgrades may cost more up front but pay off over time in reduced repairs, longer lifespan, and better resale value.

5. HISTORIC HOMES ARE BEAUTIFUL BUT HEAVILY REGULATED

The timeless conch houses of Old Town are some of Key West’s most treasured assets, but owning one comes with responsibilities.

Homes within historic districts are governed by HARC, which reviews changes to exterior elements such as roofing, siding, fences, and even paint color. That means renovations must maintain architectural integrity and often involve longer approval timelines.

While this may limit certain design choices, it also preserves Key West’s unique character and charm, which is a major reason values remain strong.

What you should know: Many of these homes are fully modernized inside, offering luxury kitchens, updated layouts, and high-end finishes, all while preserving historic curb appeal.

6. THE WATERFRONT MARKET HAS ITS OWN SET OF RULES

Not all waterfront homes are created equal. In Key West, the smallest details have the ability to dramatically influence a property’s value, usability, and insurance costs.

Consider these key questions when evaluating a canal-front or oceanfront home:

• Does the property offer deep-water access for larger boats?
• Is the dockage deeded or leased? (Deeded rights are significantly more valuable.)
• Can a boat lift be added, and is the dock structurally sound for one?
• Are there any bridges or fixed-height restrictions that may limit boat size or access?
• Has the property experienced flooding in the past 25 years?
• Is there any visible evidence of water intrusion, either inside the home or around the foundation?
• What’s the condition of the seawall or bulkhead? (These repairs can be costly and may affect insurability.)

While waterfront homes often command a premium, factors like poor water access, previous flood damage, or aging infrastructure can reduce their value and add unexpected costs.

Your best strategy? Work with a knowledgeable local Realtor who understands the unique features, restrictions, and hidden risks of waterfront properties in the Keys.

7. SHORT-TERM RENTALS AREN’T ALLOWED EVERYWHERE

If rental income is part of your investment strategy, tread carefully. Key West has some of the most complex and tightly enforced short-term rental laws in Florida, along with steep fines for violations.

Key West issues three types of rental licenses:

• Transient License (Nightly): These licenses, which allow rentals on a nightly basis, are no longer issued by the city. The only way to obtain one is to buy a property that already has it. They’re typically found near Duval Street or in commercial zones, though occasionally you’ll find a transient-licensed home tucked into a quiet residential area.
• Transient License (Weekly): Same consideration as the nightly license: existing licenses only.
• Non-Transient License (Monthly): Requires a 30-day minimum stay. This is the most common rental type in Key West, with over 3,000 active licenses. These properties range from part-time rentals to year-round income-generating homes.

Potential income can be significant. A two-bedroom cottage can command $10,000–$12,000 per month during the winter season, while a newly renovated four-bedroom home may rent for up to $25,000 per month. Professional vacation rental companies typically charge around 20% of gross revenue, plus marketing fees.

Before you buy, be sure to:

• Verify the property’s existing license type.
• Ensure the license is active and transferable.
• Understand the zoning and restrictions that apply.
• Review historical rental income, if available.

8. OFF-MARKET OPPORTUNITIES ARE WHERE THE BEST DEALS HIDE

In a market as small and exclusive as Key West, some of the most desirable homes are never publicly listed. Sellers often prefer to work quietly with local agents, especially at the luxury level.

That’s why relationships are everything.

To gain access to these off-market listings, you need a trusted agent with deep local ties, a clear understanding of your goals and timeline, and flexibility to act fast when the right opportunity arises.

A local Realtor with deep ties to the community often knows about listings long before they appear online. 

YOUR KEY WEST, FL REALTOR

The Key West market moves fast, and having the right agent can make all the difference. With over 20 years of experience and more than $350 million in local sales, Suzanne Moore is one of the most trusted names in Key West real estate.

In 2025 alone, Suzanne has closed over $60 million in transactions.

Here’s what sets Suzanne apart:

• In-depth knowledge of every neighborhood, including Old Town, Midtown, The Meadows, Bahama Village, Casa Marina, Sunset Key, and New Town.
• Insider access to off-market listings and new opportunities before they hit the MLS.
• Boutique-level service with top-tier marketing, multi-platform exposure, and a professional, results-driven attitude.

Whether you’re buying or selling, Suzanne delivers unmatched insight, strategy, and service tailored to your goals.

Let Suzanne be your guide in Key West. Call 305.797.0699 or email today.