subject: Speculation Real Estate And Florida Foreclosures As An Existential Crisis [print this page] A question on the minds of many economists is "Are Florida foreclosures presenting a crisis for Florida lately?" For sure, most economists would say yes, though they're really not sure how hard these foreclosures are going to impact the Sunshine State, which has been a recipient of much in the way of booming real estate and employment for years, though both those markets have gone south lately.
The Sunshine State has always been known as being a place that is open to improvisation and adaptability. It also has a population that looks at entrepreneurialism, especially in real estate, as a way of life. That entrepreneurialism has led to much in the way of property and land speculation, which is now suffering because of significant drops in property values, though.
This drop in value in homes and properties has been building up steam over the last year or so, and it shows no sign of lessening by an appreciable amount in the near term. For a while, Florida was able to avoid much of the mess California and cities like Las Vegas experienced. These areas saw home owners suffer greatly due to the burst of the real estate market bubble, it seems.
Many buyers -- not only in Florida but around the country -- over the last decade or so actually engaged in real estate speculation, though they may not have known that was what they were doing. They looked and made a calculation that they could get into a home they really couldn't afford and get out of it with a nice profit before an increase in their monthly payments kicked in.
Many banks and other lenders encouraged this practice through "no stated income" loans and the like, and they too also believed that home values had no real upper limit. As long as buyers were willing to buy, they were generally right. Nowadays? Nobody who really understands real estate can believe they fell into this fallacy of belief. Homes now are listing for sometimes less than half what is owed on them.
This can present a unique opportunity for the right sort of investor these days. One who has a good cash base from which to operate and has the backing of a finance arm such as a bank or other funding source (maybe a venture capital firm) can do well in the market if he or she has more patience than many demonstrated in the recent past down in the Sunshine State.
That's because it'll most likely be several years before property values return to their pre-drop days. Florida foreclosures have seen the state now have to face a crisis that threatens its economic well being. Fortunately, if property investors act as property investors inevitably do, much in the way of buying and selling of property will resume and the state will continue to be a place where investment money can be improved on by a savvy property investor.
