What Caused The Florida Real Estate Bubble?

The real estate market in Florida is very fast paced and property is highly sought after there. There are many reasons for this and they date back from the 1920’s when Americans started to gain material possessions through the advent of well paid jobs requiring skilled individuals. Additional benefits to these jobs included things like pensions, cars and family holidays. The stock market also took off at this time and many people began to see their personal wealth growing rapidly. These newly rich individuals and families started to take their vacations in Florida where the warm climate was appealing to them. This saw the advent of tourism in the area and the economy started to boom there. This resulted in the price of land rising sharply and wise investors saw it as a real opportunity to make money and so they quickly began to buy real estate in Florida.

The population of Florida continued to grow and the demand for housing began to outstrip the availability. However, it was still easy for anyone to invest in real estate there as credit was readily available and so almost everyone in the locality owned real estate there. The number of real estate agents was continuing to grow but the economy was able to support them all due to the ever increasing interest in property there.

It did not take long for news of the increasing house prices to reach the rest of America. Residents elsewhere wanted to have the same opportunities to double or even triple their investments and so they began to buy houses in Florida too. Businesses also recognised the potential in the city and so golf courses, retirement villages and holiday homes were developed quickly and marketed well. House prices quadrupled in one year and Florida was seen as a paradise to the rest of America.

As house prices grew, so did the price of land. By 1925 it had become impossible to afford land there or to buy existing houses. Those who had already invested began to panic. They tried to sell but were unable to as no-one could afford the prices. New investors were not coming forward and the existing ones were forced to sell cheaply. The real estate market, on such a high only months before, abruptly crashed. Saddled with exorbitant mortgages, many of the investors were forced to declare themselves bankrupt. When natural disaster struck the following year in the shape of a hurricane and subsequent tidal wave Florida became even more desolate. The Great Depression and stock market crash of 1929 had no effect on the area as it was already in poor economical condition prior to those events.

Of course, people have short memories. The same things that attracted people to Florida were still there – the warm climate, the beach and the holiday resorts. Land and homes were readily affordable again and so over time the economy picked itself back up. Over the decades, Florida became well known around the world and not just in the US. More and more people chose to buy holiday homes there from outside of the US and some even moved there on a permanent basis. The arrival of Disney and their holiday resort cemented Florida as a prime holiday destination the whole world over and the real estate market there is now booming more than it ever has before.