Kelly and Terry McMurtrie were already fed up with life on Big Pine Key when their windstorm insurance bill came in the mail: A $5,000 annual premium for a house insured for $149,000.

PRICED OUT: Steep increases in the cost of living are driving families out of the Keys. Home prices in Key West average $1 million. Meanwhile, Monroe County homeowners pay the highest windstorm rates in the state.

Kelly is a union pipe welder whose work takes him around the country. He and his wife, in their 40s, can live wherever they wish. In 1997, they bought their peach-colored home on stilts for $117,000 in what they thought would be paradise. But like many others who move to the Keys expecting life will be as laid-back as a beach chair, they were in for a surprise. "Paradise is great for vacation," says Terry McMurtrie. "But to live there every day is a very hard life."

Today, the McMurtries' canal-front home is up for sale, for $489,000. They've moved to Homosassa Springs on Florida's west coast, where they bought a cozy block home on three acres for $84,000. They're thinking about farming blueberries.

TURNING OVER THE KEYS:
Bruce Irwin is a lobster and stone crab fisherman whose family has lived and fished in the Keys for 125 years. But he and his wife, Letty, say skyrocketing costs are forcing them to leave monroe county. "There's the high cost of living and the rising cost of doing business, but the lobster prices are not keeping up," he says. "It's hard to find employees because all the trailer parks have been turned into condos -- there's no place for working people to live." The Irwins put their Marathon home on the market for $739,000 in January. When it sells, they may move near Gainesville, where two of their kids go to college. "We'll just keep the house on the market and keep going about our business until it sells," Irwin says. "It may be a few years, but when it does, we'll get the hell out of here. Hopefully, the big one won't hit before then."

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Keys natives -- "conchs" -- are used to seeing people like the McMurtries come and then leave, expectations unmet. Historically, they know, a new wave of residents will wash ashore to replace them. But since 2000, the population of Monroe County, which encompasses the Keys' 822 islands -- 30 of them inhabited -- has dropped. Monroe is the only one of Florida's 67 counties where the population has fallen every year since 2000, according to the U.S. Census Bureau. In that period, the number of residents declined by 4.1%, to 76,329.

Meanwhile, almost every other coastal county in the U.S. continues to grow, even with less land available for development and the threat of hurricanes. On Florida's east coast, Flagler County saw the most significant population increase in the nation during the same period, growing by 53%.

Monroe County Mayor Charles "Sonny" McCoy, a third-generation conch and former mayor of Key West for five consecutive terms, says some of the depopulation is by design. Since 1974, growth in the Keys has been tightly controlled. Under the state's "Area of Critical State Concern" designation, the governor and Cabinet must approve all land-use decisions. Building permits are strictly limited; only about 250 a year are granted in a county with some 15,000 vacant lots. Some say these controls have helped the Keys keep their lowrise charm and avoid the condo towers that loom over other coastal counties.

"The state very much wants us to cut down on the population of the Florida Keys because the ecosystem is so fragile," McCoy says. "That's what we want, too. We're not overly thrilled about having too many people here. We want the right people, who love this type of lifestyle, love the water and respect the environment we live in."

But McCoy, who has children and grandchildren in the Keys, admits, "I do hate to see the children move away."

Indeed, many fear not a smaller population, but a homogenous group of rich retirees rather than the diverse mix of incomes and families that has defined the Keys. Monroe County Schools Superintendent Randy Acevedo says that 10 years ago, the school year began with 9,000 students; this year there are 8,000. Acevedo has to figure out how to close one of Key West's six schools. There are no longer enough children in the community to support that many.

Hurricane Wilma was the last straw for many Keys residents. The storm marked the sixth evacuation for residents in two years.

Most everyone agrees the primary reason families are leaving is the cost of living. Home prices along the 110-mile archipelago average $780,000, according to Coldwell Banker Schmitt Real Estate. In Key West, the average is $1 million. Buses run maids and other service workers back and forth from Florida City each day to work in Marathon, 80 miles one way, and Key West, 125 miles one way. Increasingly, police officers, managers and other professionals commute up to three hours from Miami.

While affordability defines the big picture, many residents say Hurricane Wilma was the final blow. Last October's Wilma evacuation was the sixth in two years. Locals who rode out the storm in Key West were stunned when the surge from the Category 1 hurricane flooded their island from both sides -- destroying 1,000 cars and flooding 4,000 homes, nearly a third of all homes on the island.

The storm aggravated the affordablehousing crisis because it destroyed the few low-rent trailers and apartments left, says Key West resident Joe Laino. He had retired to the Keys to live on a houseboat but in Wilma's wake returned to work as a crisis counselor for Project H.O.P.E., Helping Our People in Emergencies, a FEMA-funded project that organizes locals to help locals. Laino says some of his clients moved after landlords did not fix rentals; others left after they were unable to reopen small businesses that depend on tourism; and some "decided to move closer to family -- it took a tragedy like that to make them realize they were too far from support systems."

Keys municipalities, the county and the school board are working on programs to increase the amount of affordable housing. Meanwhile, homeowners will get a much-needed break on insurance rates. Insurance Commissioner Kevin McCarty rejected a proposed 25.9% rate increase by Citizens Property Insurance Corp. for Monroe County, which has the highest windstorm rates in the state. Instead, Mc- Carty ordered the state-run insurer to lower its rates in the Keys by 32.2%.

Still, another hurricane season like the last two, says Tom Tuell, editor of the Key West Citizen, and the steady trickle out of the Keys could become an exodus. A few more summers like this one -- relatively hurricane-quiet with a 10% increase in hotel occupancy in Monroe for the first half of the year compared to a year earlier -- and the Keys could draw another new crop of McMurtries.

Waxing, waning

This isn't the first time the Keys' population has ebbed. In 1918, the end of World War I dried up federal military aviation contracts, and a September hurricane lashed the island. During the 1920s, Key West's population dropped by 5,000, or about 25%. Historian Maureen Ogle, who chronicled those years in "Key West: History of an Island of Dreams," sees the current population decline and real estate market conditions as portents not only for the Keys, but other U.S. coastal regions. "You can't help but wonder if this is the canary in the mineshaft," she says.

But Brian Schmitt, broker for Coldwell Banker Schmitt, the real-estate company his father launched in 1955, views the current trends as part of an organic cycle. While history hasn't recorded anything like the recent years' run-up in real estate prices, he says, "overall it's been an up and down market since 1955." Schmitt vividly recalls various hurricanes; tanks running up and down the Overseas Highway during the Cuban Missile Crisis; the Navy's devastating pullout of Key West in the 1970s. The real estate market rebounded after each crisis.

While the market has flattened, with a 2% annual increase in 2006 rather than the 3%-a-month appreciation seen for the three years prior, Schmitt says he hasn't seen any panic selling. "After all the traumas of the past, we've never seen the market go significantly backward," he says. "The Keys have always been a little out of step with the rest of the state," Schmitt says of the population decline. "That's probably part of the appeal."