Boom/Bust Cycle in Florida especially after Hurricanes

[TravelTime]

The boom/bust real estate cycle is something that is typical in Florida since the 1920s when development really started. All of the early developers who shaped the state in Miami Beach, Coral Gables, St Augustine, the area around Flagler Street which is close to what is now downtown, and other early communities went bankrupt when the boom ended. I recently read the book “Bubble In The Sun.” For anyone interested in the early history of Florida’s development in the 1920s, this is a great book. I grew up in Florida too so I was familiar with the names of the early developers. The boom/bust cycle does not mean this is the end for Florida. The bust will eventually be followed by another boom.

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From The Economist, Oct 1, 2022

Unnatural disaster: A devastating hurricane tests the Sunshine State

Home values will probably now decline. That could stimulate demand. But the storm is more likely to halt in-migration in the short term. For people who had been considering moving to places that Ian has ravaged, “I would think this would give you pause,” says Teri Johnston, the mayor of Key West. The property boom that Florida enjoyed in the 1920s ended when two hurricanes walloped the state. When Ian clears, Mr DeSantis may find that he has to grapple with an economic storm.

 

[timsi]

This is very interesting, thank you for posting. Many properties have been destroyed by Ian so how will that impact the price of those that were not affected? Even if no new people move to Florida from other states, the ones that are still there and do not plan to leave the state have to live and work somewhere so prices may go up in some areas.

There will also be a reconstruction effort that may catalyze recovery. It all depends on how fast they can get the capital working and the infrastructure rebuilt. I am not sure a comparison with 1920 is necessarily a good one, many things have changed. You can bet though that the building codes will be even more stringent going forward.

 

[LMD]

They said on the news that only 19% of Floridians have flood insurance. My guess is that many will not be able to rebuild and will sell off for lot value. In many cases this might be more than they paid for the lot with the house on it.
It will be interesting to see what happens to the real estate market here. (I live in Naples ) and in SWFL in general

 

[PigsDad]

They said on the news that only 19% of Floridians have flood insurance.

That is a useless statistic. A statistic that would be more informative would be what percentage of Floridians that live in a floodplain have flood insurance? Or what percentage of Floridians that had flood damage due to Ian have flood insurance?

Typical lazy reporting meant to increase the "shock factor".

Kurt

 

[easyrider]

That is a useless statistic. A statistic that would be more informative would be what percentage of Floridians that live in a floodplain have flood insurance? Or what percentage of Floridians that had flood damage due to Ian have flood insurance?

Typical lazy reporting meant to increase the "shock factor".

Kurt

It might not be a great statistic but it is a good point. There will be some deals but there are many sitting on cash so prices shouldn't drop too much if at all in a desirable location like the Florida Coast, imo

I remember the last financial bust cycle in 2007-2009 where no one would finance a condo. Many distressed mortgages and not so many buyers caused prices to plunge. Cash investors came in and bought these up. In Florida, the real estate in many areas sold for bargains. Las Vegas and Phoenix were other hot spots if you had cash. We bought a condo for about 60% of what it sold for 3 years prior to our purchase back then.

Bill

 

[Sugarcubesea]

They said on the news that only 19% of Floridians have flood insurance. My guess is that many will not be able to rebuild and will sell off for lot value. In many cases this might be more than they paid for the lot with the house on it.
It will be interesting to see what happens to the real estate market here. (I live in Naples ) and in SWFL in general

I will be watching with interest in what happens as we want to purchase in Naples and I did not want to get caught up in over bidding when I knew that eventually the market would cool off a bit. I've been coming to Naples since I was a little kid in the 1970"s and look forward to purchasing a small retirement place in Naples.

 

[PigsDad]

I will be watching with interest in what happens as we want to purchase in Naples and I did not want to get caught up in over bidding when I knew that eventually the market would cool off a bit. I've been coming to Naples since I was a little kid in the 1970"s and look forward to purchasing a small retirement place in Naples.

I bet you can get a fixer-upper near the ocean for cheap right now. We bought a retirement/snow bird home in that area a couple years ago (luckily got in right before the prices started going crazy). Now we are very happy we decided on a place that was east of I-75 (about 9 miles inland from the shore), as we had no worry about storm surge and there was very little wind damage with this storm. Sure, it would be nice to be a bit closer to the ocean, but in 15 min I can be parking at the beach, so that is a tradeoff I am happy with.

Kurt

 

[pedro47]

I feel Florida is liked OBX, in North Carolina.
I'm predicting a boom in Florida new homes & remodel home construction, just liked in OBX, in North Carolina. Generation X, loved the sun & ocean front homes and the rising house costs & flood insurance will not stop them from building new homes near the water.

I forgot another a new group of population coming to Florida. Retirees from up North with huge retirement income and the sales of their old homes.
They will have maybe $600,000 or $2,000,000 in the bank to purchase a new home in Florida (From the sales of their homes).

This is my opinion only.

 

[dioxide45]

It might not be a great statistic but it is a good point. There will be some deals but there are many sitting on cash so prices shouldn't drop too much if at all in a desirable location like the Florida Coast, imo

I remember the last financial bust cycle in 2007-2009 where no one would finance a condo. Many distressed mortgages and not so many buyers caused prices to plunge. Cash investors came in and bought these up. In Florida, the real estate in many areas sold for bargains. Las Vegas and Phoenix were other hot spots if you had cash. We bought a condo for about 60% of what it sold for 3 years prior to our purchase back then.

Bill

Another big problem with the condos is that many that were sold to cash buyers were turned into rentals. Then when you have too many rentals, units in the rest of the complex may not qualify for certain mortgages. I beleive HUD has a limit on the percentage of a complex that is not owner occupied in order to qualify for FHA financing. Thus it depressed prices more because it limited the number of potential buyers and especially limited first time buyers.

 

[dioxide45]

They really need to look at the NFIP. Cheap flood insurance creates too big of an incentive for people to build in flood prone and coastal areas.

 

[easyrider]

Another big problem with the condos is that many that were sold to cash buyers were turned into rentals. Then when you have too many rentals, units in the rest of the complex may not qualify for certain mortgages. I beleive HUD has a limit on the percentage of a complex that is not owner occupied in order to qualify for FHA financing. Thus it depressed prices more because it limited the number of potential buyers and especially limited first time buyers.

There was no financing for the condo we purchased in 2008-2009. I'm not sure if there are mortgage programs now but back then no one would touch it. We did pay cash and did rent it out until we traded it for a house. In 2008-2009 a few of my friends bought condos in Phoenix and Los Vegas for very little. Most of these were flipped too.

Recently it seems like price is keeping young buyers out. Home prices in our area have increased way more than I would have thought.

Bill

 

[Sugarcubesea]

I bet you can get a fixer-upper near the ocean for cheap right now. We bought a retirement/snow bird home in that area a couple years ago (luckily got in right before the prices started going crazy). Now we are very happy we decided on a place that was east of I-75 (about 9 miles inland from the shore), as we had no worry about storm surge and there was very little wind damage with this storm. Sure, it would be nice to be a bit closer to the ocean, but in 15 min I can be parking at the beach, so that is a tradeoff I am happy with.

Kurt

Kurt,

I'm so happy you were able to buy a place before the prices went crazy....We are looking for something that is at least 6+ miles inland...

 

[PigsDad]

We are looking for something that is at least 6+ miles inland...

Smart move, IMO.

Kurt

 

[rapmarks]

I bet you can get a fixer-upper near the ocean for cheap right now. We bought a retirement/snow bird home in that area a couple years ago (luckily got in right before the prices started going crazy). Now we are very happy we decided on a place that was east of I-75 (about 9 miles inland from the shore), as we had no worry about storm surge and there was very little wind damage with this storm. Sure, it would be nice to be a bit closer to the ocean, but in 15 min I can be parking at the beach, so that is a tradeoff I am happy with.

Kurt

What’s your secret to finding a parking spot. Seriously,we have had to return home after riding around trying to find a spot

 

[PigsDad]

What’s your secret to finding a parking spot. Seriously,we have had to return home after riding around trying to find a spot

Maybe just getting lucky? I know, it can be challenging. We often like to go in the afternoon, around 2 or 3; seems like we catch people leaving that got there earlier and are heading out. We usually only spend a few hours at the beach. Just need to find that hidden beach that no one knows about!

One place we usually don't have an issue is Lovers Key, but it is a decent walk from the parking areas to the beach.

Kurt

 

[mbh]

What’s your secret to finding a parking spot. Seriously,we have had to return home after riding around trying to find a spot

I assume you have a beach parking pass. At Lowdermilk, there are multiple spots on the street, just down from the main parking lot that are only for parking pass holders. Also, if we go later in the day, we park south of 12th St. Mornings before 11 are usually not a problem anywhere, except during holiday weeks.

 

[rapmarks]

I assume you have a beach parking pass. At Lowdermilk, there are multiple spots on the street, just down from the main parking lot that are only for parking pass holders. Also, if we go later in the day, we park south of 12th St. Mornings before 11 are usually not a problem anywhere, except during holiday weeks.

Nope, can’t get one except at state park, which is lovers key, a further drive and a long walk with all your beach paraphernalia No longer allowed to get collier county parking pass. at barefoot beach, 9:00 am is too late during season.