The truth is, it depends on what segment of the market you're talking about. A search in the MLS for recent sales statistics reveals some interesting facts.
While the price for open water homes is declining, the number of transactions closing has improved this year over the same time period last year. Canalfront homes appear to be improving, and non-waterfront homes appear to be remaining stable. Clicking on the image to the left will show you a larger version of the chart.
For those that are interested I also have a chart comparing each segment of the market by quarter, with 2010 complete and the first two quarters of 2011 complete. If you'd like to see it, just send me an email and I will be happy to send you the PDF file. It's an interesting glimpse at how the market has been rising and falling during certain time periods, including the third quarter of 2010 when the Deepwater Horizon oil spill was in full swing. Thankfully, the oil never reached or impacted our shores, but it did have an impact on our real estate market.
Rates are still down, inventory is plentiful. In short, it really is a great time to invest in the Florida Keys!