BOOM, BUST & BACK

New mansions loom over tiny Key Biscayne

 

Big custom homes supplant the 1950s Mackles as Key Biscayne succumbs to gentrification.

Key Biscayne, ZIP 33149, at a glance

• Median single-family home price $2,072,500 in 2013, up 4.4 percent from a year earlier.

• Median condo price $710,000 in 2013, up 9.2 percent year over year.

• In 2013, Key Biscayne tied for third place among Miami-Dade ZIP codes with the most single-family home sales over $5 million. No. 1 was 33139, South Beach and the islands off of the MacArthur and Venetian causeways; No. 2 was 33140, Miami Beach north to La Gorce; tied for third place was 33156, which includes Gables Estates and the Pinecrest area.

• Foreclosures are rare in Key Biscayne, affecting 1.1 percent of mortgaged homes, the lowest level in Miami-Dade and Broward counties, RealtyTrac data show.

• Median household income: $120,502

• Population: 12,389 (2010 Census)

• Education: 97.4 percent high school graduate or higher

• Share of residences with a mortgage: 51.6 percent.

Sources: the Miami Herald and Florida Center for Investigative Reporting with data from county property appraisers and the Florida Department of Revenue; RealtyTrac; U.S. Census Bureau.


mbrannigan@MiamiHerald.com

This story is part of the 'Boom, Bust & Back' series. There is an enhanced version of this story available here.

The lime green house has three bedrooms and one bath, 1,102 square feet in all. Its land-locked lot covers 77 feet by 100 feet. There is no garage.

The concrete-block home looks much like it did when the prolific Mackle brothers built it in 1950, when it would have fetched about $10,000.

The house is ordinary in all respects, except for that basic tenet of real estate: location; location; location. It’s in Key Biscayne. And it sold in March for $1.48 million.

Somebody call the authorities: Key Biscayne is on fire.

The Mackle house at 544 Ridgewood Rd. survived Hurricane Donna in 1960, Betsy in 1965 and Andrew in 1992. But it won’t survive the bulldozer that is almost certainly headed its way amid the latest boom.

“It’s a tear-down,” said John Paul Rosser, the listing agent for the seller. “I’m told the buyers want to build a new house — a spec house.”

Key Biscayne, a perennial retreat for the rich and powerful, wasn’t immune to the devastating housing crash. But like other luxury spots around Miami, it bounced back sooner and stronger than most of the region.

The longtime magnet for Venezuelans, Argentines, Colombians and Europeans is more international than ever. And while it historically welcomed a mix of wealthy and middle-class residents, home prices are effectively banning newcomers of moderate means.

For 2013, the median price for a single-family home in Key Biscayne, which is ZIP 33149, was $2,072,500, approaching its frothy 2008 peak of $2.2 million, according to an analysis by the Miami Herald and the Florida Center for Investigative Reporting. Many properties are going for record highs.

“The old knock-down Mackle houses sold for up to $1.4 million during the boom. Then we hit the skids, like everyone, and they were $850,000 or $800,000,” said Joan McCaughan, a longtime Key Biscayne resident and Realtor at Coldwell Banker. “Now you can’t find anything under $1.5 million.”

‘A throwback place’

Nostalgia is pivotal to the allure of Key Biscayne. “This place is a throwback place,” McCaughan said. “You can walk around at 2 or 3 in the morning, and nothing will happen to you.”

McCaughan’s father, Jim McCaughan, was a mortgage broker who helped the Mackles obtain financing to develop Key Biscayne. The boom has been great for her business, but she acknowledges the change sometimes makes her sad.

While many South Florida municipalities have struggled over budgets constrained by weak property tax revenue, Key Biscayne’s taxable property value jumped 6.46 percent last year to $6.15 billion. The bulk of that growth — 5.84 percent — came from the increased value of existing property, before counting new construction. The village had a surplus, enabling it to pare back its tax rate for 2013.

“We’re in a very, very good way with our real estate and how it affects ad valorem taxes,” said John Gilbert, the village manager.

A long-running gentrification of the Key has hit high gear as imposing mansions spring up on most every block, triple or more the size of the modest, older homes they replace on the tiny island.

“This is the most activity I’ve ever seen,” said Jud Kurlancheek, the director of building, planning and zoning, who has been with Key Biscayne 16 years.

Today nearly half the 1,366 single-family lots have newer, elevated structures on them. Sixty homes are under construction, and 11 old houses are tagged for demolition to clear the way for more.

Elevated to meet flood standards and often drawn in stark, contemporary lines, the houses loom even larger over their older neighbors, built in a post-World War II era before the waterfront became an exclusive province of the rich.

The rapid change is spurring mixed emotions among many longtime residents.

Bob Bristol, who grew up on the Key and heads the Key Biscayne Historical and Heritage Society, has watched big new homes go up near his vintage 1951 Mackle house.

The Mackles, who also pioneered communities in Marco Island and Port St. Lucie among other spots, targeted veterans and retirees willing to endure a drawbridge to the city in exchange for the lush, tropical feel of the one-time coconut plantation founded by William John Matheson a half-century earlier.

Bristol remembers roaming the island as a kid and hunting arrowheads around Indian mounds near the historic lighthouse. He often walked barefoot along the streets, because summer rain provoked flooding before the stormwater drainage improvements. Ditches along the swales held water, and during rainy season, “there were always tadpoles in all stages on the side of the road,” he said.

Today his home gets runoff water from the elevated neighbors, but he can’t complain too much. “I like the fact it’s made my property value go up,” he said, figuring the corner-lot house he paid $40,000 for in 1973 would command $1.7 million to $1.8 million.

“It’s also made it to where if I want to live on Key Biscayne, I have to hang on to what I have,” said Bristol, whose family ran a camera shop there. “I may be able to sell for close to $2 million, but if I sold I couldn’t buy anything on Key Biscayne.”

Oceana Key Biscayne, a luxury condominium project nearing completion on the oceanside site of the old Sonesta Beach Resort, is almost sold out at $1,300 per square foot. Pre-construction prices ranged from $1.5 million to $19.5 million.

For a lot of Key residents who bought homes in the 1980s, “it’s their 401(k),” said Buzz Vernon, a Realtor and former village mayor. Four generations of his family lived on the Key, but “It’s going to be difficult for my kids and their kids to purchase, simply because of price,” Vernon said.

The boom leaves many wistful. “A lot of people want it the way it was 40 years ago,” he said. “It’s not realistic. If it were the way it was 40 years ago, the homes would be worth $15,000.”

An island pace

Despite the changes, Key Biscayne still has some of its laid-back feel. The pace is slower than the nearby mainland, and boating and water sports loom large.

The Mobil station on Crandon Boulevard has a sign for “Bait and Propane.” Golf carts and bicycles are common ways to get about, though Lamborghinis and Porsches also are popular.

Edgardo Defortuna, who has lived on the Key since 1992, sees many charms there, not the least of which is its yesteryear safety.

“My front door lock broke, and for eight months I didn’t fix it,” he said.

Defortuna is a native of Argentina and founder of Miami-based Fortune International Realty, which markets (and now also develops) pre-construction luxury condominiums. He completed his $21 million bayfront estate on the Key in 2012, having bulldozed President Richard Nixon’s old compound from the site in 2004 with little resistance from residents.

It has 21,500 square feet of air-conditioned space.

Driving across the Rickenbacker Causeway to Miami “makes me feel like I’m on vacation every day,” Defortuna said.

Demand for custom luxury homes is robust, said Enrique Aguila, project executive for CDC Builders, which built Defortuna’s house and a host of others on the Key. CDC, owned by Key resident Jose Ortega, got its start on the island after Hurricane Andrew’s wallop in 1992. It currently has five custom homes under construction on the Key and is negotiating contracts on five others.

On South Mashta Drive, CDC is building an 8,000-square-foot custom home for a Venezuelan businessman and his wife. “The house is over-designed. It’s a bunker,” said Aguila, pointing to a heavy-duty concrete slab driveway that cost $300,000. “You could land a 747 on a slab with this thickness.’’

The rare vacant lot, which boasts wide bay views with Stiltsville in the distance, cost $6.6 million. Construction has tallied $8 million, up from the $6 million budgeted because of changes along the way, CDC said. The contemporary Venezuelan-style design has a sophisticated air-conditioning system with individual room control, a big generator, a water desalination system and smart features to adjust blinds, lighting, temperature, entertainment and security systems from an iPhone.

“It’s self-sufficient. You can live two months as an island,” Aguila said.

Speculative building

The Key is so hot, developers are building spec homes, like the new four-level, manse at 755 S. Mashta Dr., listed for $17.6 million.

The classic contemporary six-bedroom, 61/2-bath home has panoramic bayfront views, including downtown Miami in the distance. It has a rooftop garden, two infinity pools, a spa, an elevator, a four-car garage and a 40-foot dock. It’s furnished and sits on a gated fingertip of the Key.

“When people go over that bridge to Key Biscayne, it’s like they’re entering paradise,” said Jill Eber, a luxury broker and half of The Jills team at Coldwell Banker, which is marketing the Mashta property.

“It’s more of a small-town atmosphere. I think that’s what so many people love about it. You can be as private as you want, or people get to know you there. And I think people also feel safe there.” The home is 6,544 square feet, about the maximum permitted for its 13,898-foot lot.

Miami architect Ramon Pacheco, who designed the house, said a key objective was to make the most of the view. “It’s a very small lot. I was impressed we got that amount of square footage,” Pacheco said.

The village has taken modest steps to pare the size of new homes, which look even larger because of flood elevation requirements for the low-lying island.

“I notice a dramatic change in people’s reactions when I explain to them that taking down the size of the house further will affect [reduce] the value of the land,” building chief Kurlancheek said.

“We all wish it was 1952,” Kurlancheek said. “It’s not the days of Leave It To Beaver anymore.”

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