International Buyers Sustain Key West’s Luxury Market as Broader Sales Slow

Written by:

Steve Marcinuk

Date:

23 Jan 2026

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The Florida Keys luxury real estate market is entering a period of moderation as the post-pandemic surge fades. Still, the region’s unique constraints and international appeal continue to support steady demand. Despite national trends of slowing sales and price corrections at the high end, Key West remains a resilient outlier, shaped by limited inventory and strict preservation rules.

Ellen Gvili, Global Real Estate Advisor at Ocean Sotheby’s International Realty, has observed shifts in the Keys market over more than two decades. Drawn initially to Key West in 1999 by its literary history and distinctive culture, Gvili now represents Sotheby’s clients across the entire island chain, from Key West to Key Largo.

European Buyers Anchor Luxury Demand

While many U.S. luxury markets are seeing reduced activity, Key West continues to attract international buyers, especially from Europe. German, French, and English buyers now account for a significant share of high-end transactions.

“I just got a property under contract in the Truman Annex with my German buyer, who just retired and sold his company,” Gvili says. The buyer is acquiring a $7 million home in Key West after taking his company public.

This pattern illustrates how European buyers view Key West as both a retirement haven and lifestyle investment, drawn by its climate, culture, and accessibility. Direct flights from major East Coast cities, including New York, Philadelphia, Pittsburgh, and Washington, make travel convenient for both domestic and overseas buyers.

While Europeans make up the majority of international purchasers, Latin American buyers tend to focus on larger Florida cities such as Miami or Naples. Some do buy second homes in the Keys, primarily from Brazil, Venezuela, and Colombia, often due to existing ties to Miami.

Moderation and Price Adjustments Follow Pandemic Boom

After a frenzied period driven by remote work and lifestyle moves, the Keys market is settling into a more measured pace. Multiple-offer scenarios have become rare, and sellers are responding by adjusting prices to reflect more typical demand.

“In 2024-2025, we see a cooldown and sellers need to adjust their pricing,” Gvili explains. “If they’re priced right and positioned right, properties sell.”

Recent sales data show average closing prices about 8% below listing prices. However, home values are still up 20% year over year, driven by both the previous boom and the enduring scarcity of quality inventory. Gvili notes, “Price adjustments around the 4 to 8% mark, sometimes even 10% if they were already overpriced, but not a huge drop.” The market’s limited supply, she says, helps support long-term values and prevents steep declines.

Cash Buyers Reduce Market Volatility

A defining feature of the high-end Keys market is its reliance on cash transactions. In Old Town Key West, about 70% of sales above $2 million are all-cash. This insulates the luxury segment from mortgage rate increases that have slowed other markets.

“Since most buyers are cash buyers, they’re basically self-insured,” Gvili says. “They have money in the bank, and in case of damage or if they have to replace a roof, they’d rather deal with it themselves than pay tens of thousands of dollars every year in insurance.”

This approach is a response to the Keys’ high wind insurance costs, which are among the steepest in Florida. Even with strict building codes and relatively limited hurricane damage in recent years, insurance premiums remain a challenge for owners. Many luxury buyers prefer to absorb repair costs directly rather than pay for expensive coverage.

Historic Preservation Drives Market Identity

Key West’s strict historic preservation rules shape both the character and the economics of its housing market. The permitting process for landmark homes is complex and time-consuming, requiring specialized contractors and expertise. However, the result is a limited supply of restored, architecturally significant properties that hold their value over time.

“Many homes, historic properties, are thoughtfully restored and protected. It takes time to go through the permitting process and get contractors who are experienced in historic home restoration,” Gvili says. “But it adds to the charm and long-term value of such properties.”

Buyers are drawn to the authentic historic character, and many properties serve as both residences and high-end vacation rentals. The appeal of staying in a restored Victorian or Conch-style home supports rental income and builds long-term equity for owners.

Inventory Constraints Stabilize the Market

Unlike many markets in mainland Florida, the Keys face permanent constraints on new development due to geography, zoning, and preservation rules. Island size, strict zoning codes, and historic preservation guidelines sharply limit both new construction and major renovations.

“Inventory is always limited due to not only the island size but also strict zoning and historic preservation guidelines,” Gvili says. “This creates a market that is less dependent on full-time local occupancy and more driven by lifestyle buyers, seasonal residents, and international ownership.”

These restrictions prevent the overbuilding that can destabilize prices elsewhere. Well-maintained, correctly priced waterfront and historic properties continue to attract interest, even as higher rates and economic uncertainty slow other luxury markets.

Navigating Complexity Requires Local Expertise

As of summer 2025, changes to real estate commission structures will require buyers and sellers to be more informed about what services they are paying for. In a market as specialized as Key West, professional guidance is increasingly essential.

“Buyers must understand the historic district, zoning restrictions, rental regulations, flood zones, and insurance considerations,” Gvili emphasizes. “Since the rules have changed, buyers are sometimes confused regarding commissions and what they pay for. I think it’s still worth the investment to avoid pitfalls.”

Beyond the transaction, ongoing ownership in the Keys involves navigating complex rules around flooding, historic districts, and short-term rentals. Local expertise is essential to avoid costly mistakes and ensure compliance with evolving regulations.

Outlook: Gradual Recovery and Policy Advocacy

Looking forward to 2026, market participants expect a gradual improvement in financing conditions. Forecasts suggest interest rates will ease somewhat, potentially boosting buyer confidence without fueling unsustainable price gains.

“I feel optimistic about interest rates. I think they will gradually soften, which will trigger more market activity and confidence,” Gvili says. “Sellers also realize they have to adjust pricing. If properties are overpriced, they will sit.”

This period of adjustment is pushing sellers toward more realistic expectations, replacing the bidding wars of recent years with more balanced negotiations.

On the regulatory front, building codes are expected to remain strict to preserve Key West’s historic character. However, efforts are underway to address disparities in insurance costs. Local Realtor associations and homeowner groups are advocating for fairer rates, arguing that the Keys’ high insurance premiums do not reflect their strong building standards or relatively low hurricane losses.

“We have representatives from our Realtor Association and homeowners who go to Washington, D.C. and Tallahassee to fight for fair rates in Monroe County,” Gvili says. “Every new building is built to Category 5 hurricane standards, and that has been the case for at least the last ten years.”

Long-Term Stability Anchored by Scarcity and Demand

While Key West is not immune to the broader cooling seen in U.S. luxury real estate, its market fundamentals remain strong. Permanent inventory constraints, a steady flow of international buyers, and a lifestyle-driven ownership base support long-term value stability.

As sellers adapt to a more balanced market and buyers continue to seek out the region’s unique properties, Key West’s luxury market stands out as a rare example of resilience and sustained appeal within Florida’s high-end real estate landscape.