I am tempted to buy distressed property in Florida, but something keeps nagging away at me, telling me it isn’t the place to be just yet. Someone passed me some quotes from writers back in the twenties and thirties. They were a trifle alarming when put alongside what is happening at the moment.
The statistics for house prices and sales are still very bad across the US. The level of bank repossessions continues to rise. There is also a very large stock of pre-repos which have still to come to market.
Not only that, but the various state entities are in deeper and deeper trouble as state after state and municipality after municipality goes ever closer to bankruptcy.
Things are getting more ridiculous (and illegal) by the minute. The New York state pension fund is borrowing money….. from the pension fund….. to pay out pensions!!!!!!!
Yikes! Not only has that got to be illegal (Dont I remember that rascal Robert Maxwell borrowing from a pension fund he controlled? He was branded a criminal for doing that?) If you borrow from the fund that means the capital in the funds is reduced. That means the fund now gets a smaller payout on its investments as there are less of them, or the fund has a larger amount to pay out because it now has to pay interest on the loan. All I can say is that I am glad my pension doesn’t rely on the probity of New York State.
From where I’m sitting, the US looks like a country slowly committing suicide. I just dont see how they can get out of this mess while they are going further and further into it.
And house-prices can come back up and power ahead someday soon? Ha ha!
Okay, let’s have a look at some of those writings from during The Great Depression.
“There was nothing languorous about the atmosphere of tropical Miami during that memorable summer and autumn of 1925,” wrote Frederick Lewis Allen in 1931. “ The whole city had become one frenzied real-estate exchange. There were said to be 2,000 real-estate offices and 25,000 agents marketing house-lots or acreage…the city fathers had been forced to pass an ordinance forbidding the sale of property in the street, or even the showing of a map, to prevent inordinate traffic congestion.”
The boom of the 1920s came to an end in 1926. Henry S. Villard, reported what he saw two years later:
Dead subdivisions line the highway, their pompous names half-obliterated on crumbling stucco gates. Lonely white-way lights stand guard over miles of cement side-walks, where grass and palmetto take the place of homes that were to be… Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death.
Florida’s property market did not recover until after WWII – 20 years later.
Hmmm. Maybe it will recover sooner this time around. Maybe not. I think the jury is out on that question. I think I’d rather wait to see what is likely to happen. After all, the rules of this property business lark are very simple. One rule says “Dont buy when prices are falling”. They are falling still.
You have checked out my rules, haven’t you? They have seen me right for over forty years, and NEVER let me down.