Housing Bubble in Florida! The First One
By 1920 Florida was the destination of choice for those who were seeking a tropical paradise here in the U.S. Fairly swiftly, vacationers were turning into residents and as the population began to swell, housing quickly was unable to match the demand, thereby driving housing prices up by 100% to 200% in a year in some areas of south Florida. As with the formation of all bubbles, such news of a doubling and tripling of one’s investment always gets around quickly and begins to draw in speculators. The Florida Land Boom was no exception. After the passage of a few years – and in the middle of the Roaring Twenties, it seemed everyone in Florida was talking about real estate at their dinner parties. It seemed all the party-goers were themselves either real estate “investors” or real estate agents. Logistically facilitating all of this growth was Henry Flagler’s train route that connected wealthy New York with the new paradise of southeast Florida. And land and housing prices continued to go up as expected - for a while. Is this sounding familiar yet?
The home price escalation continued until around 1925. By then the population of Florida had grown 25% from 1 million to 1.25 million in just the past five years. Also at that point, new Floridian speculators from all over the country had pushed land and housing prices to unimaginable levels. Even our current housing crisis doesn’t compare to the exaggerative state of housing prices at that time. In 1925 Florida a prospective buyer would be asked to pay over $4 million for a south Florida condo-type property!!
So, before the Great Depression even began (1929), the Florida land and housing bubble had busted. Land and home sellers were abundant and buyers were nowhere to be found. The fundamental effects of supply and demand had finally caught up with Florida real estate (again, sound familiar?). Hundreds of thousands had lost hundreds of millions of dollars in the swamps and humid landscape of the sunshine state. Florida would subsequently be hit by a devastating hurricane in 1926 and a couple of years later by a fruit fly invasion that would destroy the backbone of its citrus economy. And then the Great Depression came. Florida was completely devastated by a “perfect storm” of man’s greed and nature’s untimely wrath. The Florida real estate market (and the state as an economic whole) would not recover until after World War II. Fifteen years of meaningful housing price gain lost – in good part due to the land and housing bubble.
