Blame Hurricane Wilma for your rarely seen Key West neighbor who is illegally renting his cottage by the week to a bunch of rowdy folks from Minnesota and other points coldly north.

Wilma surged into town in October 2005, smack in the middle of a decade of real estate island hot flashes. The Category 3 hurricane brought second-story flooding and left all but a handful of homes in the X flood plain surrounding Solares Hill, Key West’s highest point, drenched and begging for a complete gut job.

And, gut ‘em we did. Paid for with insurance money, federal and state disaster funds and whatever bank accounts and repair loans could be cobbled together, hundreds of Key West homes got facelifts and structural surgeries they never expected they could afford.

Homeowners couldn’t afford those kinds of upgrades not even in the booming real estate market that began about 2000 and continued with little more than an occasional speed bump until it crashed in 2008.

Wilma shook the market. First she scared the wits out of potential homebuyers who said no way were they going to buy in Key West. That pushed listing prices down. Then she scared loosely attached homeowners who decided to fix, sell and get the heck out of town.

cropped-KWWM_Letters.pngAnd, that opened the market to off-island buyers in search of great deals and investment properties. Wilma was no speed bump; instead she was a catalyst for continuing real estate price escalation.

By 2005 when Wilma cleared out the landscaping and made re-dos de rigueur, the prices of Key West’s single-family homes were headed upward. Prices shifted into high gear in 2006 as Wilma-renovated homes were flipped and flipped again.

The same house with a 2000 assessed market value of $202,800, was assessed in 2007 at $844,597. A property appraiser’s note on the Monroe County Property Appraiser’s website said the house had been listed for $1.29 million in 2006.

By 2008, it was in foreclosure, it’s owners unable to complete the flip before the market plummeted and its assessed market value dipped to $384,893.

And, it was then that Key West’s housing market completed its transition to a vacation rental industry. According to the 2000 Census, 49.1 percent of Key West’s housing units were owner occupied. By 2014, that number had dropped to 43.9 percent.

Key West has always been a transient community and its owner-occupied homes have long been fewer than on the mainland. But, the decade since Hurricane Wilma has seen a decrease in primary residence homes as they are pushed into the vacation rental pool.

That’s a lucrative pool, and local real estate professionals work hard to convince second homebuyers to rent their homes to tourists and snowbirds for at least part of the year.

Any home can go into the monthly vacation rental pool as long as one applies for the required permits and pays the required tax receipts, none of which are either onerous or expensive. One can rent a two bedroom, two bath cottage with a pool and parking in a good location for anywhere from about $4,000 to $8,000 a month.

Ca-ching. Even if one doesn’t get takers in hurricane season. Investors like that because it beats the heck out of a long-term rental (more than six months), which would bring in not much more than half the low-end.

But, it’s the transient rentals that make the spreadsheets tempting. Transient rentals require a city license (and they are few and far between; and no new ones are being issued). If your property has a transient license, you can rent by the day, week or any combination that works for you.

Rates on that two-bedroom above? If it were a transient licensed house, a vacation rental could expect to fork over $3,000 – a week.

Is it any wonder over the past decade that second-home buyers and investment players snapped up these homes and use them for cash flow? It’s not surprising either that illegal vacation rentals plague every Key West neighborhood. There’s simply too much potential upside cash to ignore, even today when rents are declining because of the competition.

Until earlier this year, Key West didn’t have a dedicated code compliance officer trolling for illegal vacation rentals. The city relied on neighbors to rat out code breakers. Today there is one full-time, a substantial improvement over none.

The day the announcement was made that the city would pro-actively track down illegal rentals, listings on AirBNB took a tumble. In late April the city fined a Gainesville family $30,000 for illegally renting its Key West home. It’s a start.

And to think it was all Wilma’s fault.

Linda Grist Cunningham is editor and proprietor of KeyWestWatch Media, a digital solutions company for small businesses. She is occasionally tempted to rent out her house for a month or two while she lives with her kid. But she knows her neighbors would not be amused.