FL Real Estate Situation Eerily Similar to 1920s, Hurricanes

[gtalum]

Property values will decline some, but I don't foresee a 1920's style collapse. As has been mentioned, Florida is packed and getting more packed every day. Those people all have to live somewhere. Remember that in the 1920's it was hard just to get to Florida.

[hookemfins]

I was going to say the same thing Recurve. I know after Andrew my condo went up nearly 50%. Look at Homstead and Florida City today, it's built up and land prices are astronomical.

If one area suffers other surrounding areas will pick up the slack. Florida is build up enough where there may be a short term problem but it will come back better. I bet New Orleans will be stronger than ever.

[gatorcane]

Well, here's another thought: Florida in 2006 isn't Florida in 1925. This is now the fourth-most-populous state in the USA. The gross state product of Florida in 2003 was $550 billion. The '20s boom was fueled by land speculation, a lot of it on land that wasn't worth speculating on. The real estate boom now is from actual need for actual housing on actual dry land, of which they aren't making any more. People aren't buying swampland sight unseen. People do want to retire where it's warm, people want to live where it's warm, people want to vacation where it's warm and they can go deep-sea fishing and diving and drink margaritas by the beach in winter. People want second and third homes where it's warm. Florida is leading the nation in job creation. Florida has no state income tax, and Florida now has some of the toughest building codes in the country. Yeah, there's hurricanes, but there are no icestorms, no real tornadoes, no mudslides, no earthquakes, no volcanoes, no blizzards.

Insurance is a problem, affordable housing is a problem. But this is not a land-speculation bubble waiting to burst. This is a state bursting at the seams, and a little slowdown in the rate of growth will only stabilize things, not result in any kind of bust. For every person who leaves because they can't take hurricanes any more, there's 10 waiting to get here because they can't take winter anymore. When I can go sailing in January in Chicago, I'll move. And if you think Florida real estate is expensive, try to buy a nice house on Lake Shore Drive

That was really well said I have to admit. I do agree with you. Also the building codes are obviously stricter than the 20s. It wouldn't be as bad but here is the flaw: most people are still under the impression a major hurricane into FL is a once in a lifetime event. Also, there is a sense of victory from the three ladies (Frances, Jeanne, Wilma) because they weren't even major. Wilma with CAT 2 sustained winds knocked power down here for 3 weeks. It's ridiculous. A CAT 4 would be so much worse. If FL keeps getting hit year after year, throw a couple of majors in there, and the story will be different. Remember, the FL population boom began in the 1960s right after the active time for FL. Since then FL has been in a lull with only a couple of exceptions. We are being tested now, to see how much we really like it here and is our home getting ruined every few years really worth it.

[tronbunny]

I can't hold my piece any longer on this subject...
Real Estate values in Florida are over-inflated.
As much as I like the thought that the value of my home has more than doubled in less than 10 years.... I'm a realist.
When I see greedy developers buying up large parcels of land that are mapped by FEMA as A1 flood zones, next to well established subdivisions that are built specifically to avoid those areas, I get mad!
These developers truck in thousands of tons of fill to raise their land above the natural flood plain, and sell homes to buyers that see, "oh, this isn't a flood zone, because of elevation", but don't know the geologic/topographic history!
The natural runoff has to go somewhere!! In periods of increased hydrologic activity, homes that were once 'safe' are now at higher risk.
If development changes the landscape, the accuracy of those flood maps goes out the window, especially in seasons of unprecedented activity.
In my humble, amateur opinion, we're gonna see another situation worse than the mid-west floods in the early 90's... all over the southeast and gulf coasts. and once again, the running joke of buying "swampland in Florida" will have basis in reality.

[Deb321]

I agree Florida is a great place to live and I didn't sell my house to get away because of hurricanes although I was hit by 3 of them in 13 months and had damage with all 3 but because my husband was transferred. I am still in Florida but in the NE corner and still consider myself in the path although maybe not as much as before {JAX} but I must say for me getting hit 3 times in such a short period of time did take some of the glamour of living in Florida away for me. You are correct though for every one wanting to move out there are probably 3 wanted to move in. Every place you live has it's issues, here in JAX the crime is bad almost 40 murders since January but when you have such a large population it is kind of expected

[gatorcane]

I can't hold my piece any longer on this subject...
Real Estate values in Florida are over-inflated.
As much as I like the thought that the value of my home has more than doubled in less than 10 years.... I'm a realist.

When I see greedy developers buying up large parcels of land that are mapped by FEMA as A1 flood zones, next to well established subdivisions that are built specifically to avoid those areas, I get mad!
These developers truck in thousands of tons of fill to raise their land above the natural flood plain, and sell homes to buyers that see, "oh, this isn't a flood zone, because of elevation", but don't know the geologic/topographic history!
The natural runoff has to go somewhere!! In periods of increased hydrologic activity, homes that were once 'safe' are now at higher risk.
If development changes the landscape, the accuracy of those flood maps goes out the window, especially in seasons of unprecedented activity.
In my humble, amateur opinion, we're gonna see another situation worse than the mid-west floods in the early 90's... all over the southeast and gulf coasts. and once again, the running joke of buying "swampland in Florida" will have basis in reality.

Good point, do you really think those developers are complying with building codes?

[hial2]

[quote="boca_chris"]I can't hold my piece any longer on this subject...
Real Estate values in Florida are over-inflated.
As much as I like the thought that the value of my home has more than doubled in less than 10 years.... I'm a realist.


In my opinion, as long as there is political turmoil in latin america and those with mega-bucks leave their country for the Miami area, land prices will continue to rise..South Florida is not your typical America..

[gatorcane]

The introduction to the 1928 Memorial on the NHC Website is eerily similar to what is going on right now with real estate and the CAT 4s and CAT 5s returning closer to home (e.g. the 1926 hurricane can be replaced with Wilma). The real estate market in South Florida is fading as we speak...but new condos, house, and condo converstions continue...

In September, 1928, only about 50,000 persons lived in South Florida. The land and real estate boom was already beginning to fade, although many subdivisions and new communities were still being built. The devastating Great Miami Hurricane of September, 1926, had already sounded a loud alarm to the new residents about the vulnerability of their new homes to tropical cyclones. However, most of the damage from that storm was in Dade and Broward counties. Even so, a bellwether of what was to come occurred with the Great Miami Hurricane of 1926 as flood waters from Lake Okeechobee were swept by that storm into Moore Haven, the county seat of Glades County, killing over 100 people

[Recurve]

I'll add some more comments. In the Keys, many long-time residents are leaving, and the economy and culture is changing rapidly. We only got swiped by Katrina, Rita and Wilma, but it was enough for people to realize how vulnerable ground-level homes are to flooding, and how difficult it is to evacuate boats and people four or more times in one season. Obviously, in the quiet 80s and 90s, people weren't thinking, "I've got to get out of here, the hurricane stress is too much." Now some actually are thinking that.

Building practices here are sensible, too. I looked at plans yesterday for a friend's planned new house, they are building to 175 mph wind load -- higher than code, higher than previous practice, for two reasons: They get extra points toward getting a building permit (there is a complicated allocation system, only about 250 new homes allowed in the entire Keys each year), and because they may go without windstorm insurance if they are confident the home can withstand almost any storm. They are also including a cistern, metal hipped roof, and other features that make sense because of the hurricane threat.

[gatorcane]

I'll add some more comments. In the Keys, many long-time residents are leaving, and the economy and culture is changing rapidly. We only got swiped by Katrina, Rita and Wilma, but it was enough for people to realize how vulnerable ground-level homes are to flooding, and how difficult it is to evacuate boats and people four or more times in one season. Obviously, in the quiet 80s and 90s, people weren't thinking, "I've got to get out of here, the hurricane stress is too much." Now some actually are thinking that.

Building practices here are sensible, too. I looked at plans yesterday for a friend's planned new house, they are building to 175 mph wind load -- higher than code, higher than previous practice, for two reasons: They get extra points toward getting a building permit (there is a complicated allocation system, only about 250 new homes allowed in the entire Keys each year), and because they may go without windstorm insurance if they are confident the home can withstand almost any storm. They are also including a cistern, metal hipped roof, and other features that make sense because of the hurricane threat.

Great comments. Thanks. I didn't know what the sentiment in the FL Keys was but you guys have certainly been lucky. It is only a matter of time. I am glad there are very strict building codes happening down there. I wouldn't have property there unless all building codes were met. Hopefully they pass the test when it happens.

There is an interesting sentiment going on in mainland South Florida... from the realtors I have spoken with - I think people are really thinking about the fact that hurricane season is coming now when purchasing real estate - also interest rates are climbing slowly. I see alot more real estate for sale. Personally, part of it is that people want to dump their property before hurricane season begins, of course another part of it is that they are trying to get out since the boom has ended.

I think a third consecutive bad season here and it will be enough to slow real estate down for the rest of 2006 and 2007 - if not even lower the value of property here. People have a tendency to forget easily but it is harder to forget with 2 consecutive bad seasons. A third and it will be very difficult to forget

[louise_l]

I bet New Orleans will be stronger than ever.

I hope you are right. Undamaged homes in the dry parts of New Orleans (such as the Uptown neighborhoods) seem to have gone up in price considerably, but that could be temporary. As more housing is rebuilt, demand might lessen.

I wish I had a crystal ball and could predict what will happen to real estate prices in my neighborhood in the New Orleans suburbs. There are just too many factors to weigh, including whether or not we experience another hurricane this summer and whether or not one's house is specifically affected by it.

As for Florida - - my understanding is that parts of Florida endure a huge and continual influx of northeasterners seeking sun and the good life. Perhaps that may prop up the market in those locations. I know that whereas I had thought of perhaps retiring to Florida one day, now I no longer want to retire in regions subject to hurricanes. But northeasterners may not feel that way.

[johngaltfla]

Wow! I beleive that very same thing can,or will,happen to Florida.Its only a matter of time. I was surprised when prices didnt fall after 04,after 05,come on!!! Would you want to live here,if you didnt ?? I love Florida,,but my care free demeaner goes away during storm season!

ABSOLUTELY!!

In fact, I'm moving to Madeira Beach in about three weeks!! Florida is, without a doubt, the paradise of the U.S. mainland!!

Madeira Beach? Obviously you haven't seen the USF storm surge computer animated presentation.....

[johngaltfla]

Property values will decline some, but I don't foresee a 1920's style collapse. As has been mentioned, Florida is packed and getting more packed every day. Those people all have to live somewhere. Remember that in the 1920's it was hard just to get to Florida.

As a native, trust me. The "greater fool theory" is in full force here.

And it can happen. One more Cat 4 or 5 hit on our state and it's over, especially if the Miami or Tampa area get hit.

The insurance industry can not afford to underwrite the homeowner's insurance policies and that will kill this speculative boom.

[Cat5survivor]

You want to find paradise in Florida...Cocoa Beach is it!!!! And believe it or not we got pretty good prices on flood and home insurance. I love it here too!

[gtalum]

[And it can happen. One more Cat 4 or 5 hit on our state and it's over, especially if the Miami or Tampa area get hit.

By "it's over" I assume you mean the real estate market will collapse. I'll take that bet.

[zlaxier]

South Florida condo residents aren't going to like this. Your maintenance fees (which include insurance for your building) are going to go way, way, up.

Citizens releases details on condo association rate hike
Herald Staff Report
Citizens board agreed Thursday to go ahead with a rate increase on windstorm insurance for condominium and homeowners associations and apartment buildings and released what the rate hikes would be by region.

The state-run insurer of last resort covers 36,554 condo associations statewide, with more than half of that exposure -- 20,749 policies -- in Miami-Dade, Broward, Palm Beach and Monroe. These policies generally cover the building structures.

This rate hike covers its high-risk windstorm policies -- about 12,000 in South Florida. This is the first rate increase for this group of policies since Citizens was created, said Justin Glover, Citizens spokesman.

Although this rate request is pending, it is expected to be approved.

Depending upon where the property is located and how it is constructed, the rate hikes in South Florida will range from:

• Miami-Dade: 30 percent to 48 percent

• Broward: 51 percent to 83 percent

• Palm Beach: 71 percent to 87 percent

• Monroe: 158 percent to 206 percent

Citizens must increase its condo association rates now because the Australian company QBE Insurance Group has just begun raising its rates by an average of 38 percent statewide -- and mostly likely higher in South Florida -- and state law requires Citizens to charge the highest rates. This measure is designed to encourage consumers and businesses to shop around for a private insurer rather than turn to Citizens, although in reality private windstorm insurance is nearly impossible to find in coastal sections on South Florida.