100 years after the start of the land boom, what’s to come?

Written by Michael Lewis on August 10, 2021
  • www.miamitodayepaper.com


100 years after the start of the land boom, what's to come?

Exactly 100 years ago this month, Florida’s great real estate boom took off, ushering in our unofficial state bird, the construction crane, which still thrives in flocks in Miami.

Real estate had been the economic engine of Miami before the 1920s land boom was the shot heard around the world. Despite Miami’s current global ties in commerce and finance, its worldwide fame as a visitor hub, and now perhaps a new tech star, from the very beginning, real estate has been our flagship business. .

“Probably less than 10% of the people of Florida, on the day of November that I write these lines, did not come to buy land for their own use or for speculative purposes”, writes Charles Donald Fox in his book of 1925 ” The Truth About Florida. “

“At least 90% of the people of Florida are currently focused on land speculation and are buying property in Florida for the sole purpose of reselling it for a profit,” he wrote. “Land that has resale value immediate – a pitch that will produce a profit overnight – that’s what the crowd is looking forward to. ”

This land and the structures within it underpin nearly every business in Miami. Of course, they bring considerable sums to the community and trigger expenses.

Greater Miami as a real estate market was first built on Mr. Fox-style hyperbole. The first real estate dealers exaggerated the virtues of the region without a single provable fact.

Doc Dammers is auctioning off property in Coral Gables in the back of a horse-drawn wagon.

Take the Coral Gables sale, which began in November 1921. As author Christopher Knowlton describes in his current book “Bubble in the Sun”, chief salesman Edward “Doc” Dammers, who would later become the first mayor de Gables, will begin his pitch, this way: “What, I ask you, makes our citizens different? More beautiful women, more dashing men, more daring undertakings, while the song of the bird, the color of the flower, the smile of little children are all ablaze and have for them a charm, a divine thrill without equal in the world.

Difficult to prove it – or to disprove it.

Compare that with a 108-page report filled with statistics released last week by Berkshire Hathaway HomeServices / EWM Realty which has the same real estate sales target as Doc Dammers. But President Ron Shuffield, also based in Coral Gables, takes a much more subdued tone when discussing what he also sees as sustainable real estate values:

“As we enter the third quarter of the year, there is no doubt that the South Florida residential real estate market… is on fire. That said, we are seeing signs of “market stabilization” which is good news for a market that has set all-time sales records over the past 12 months….

“… Even compared to a more stable market, we still experience one of the strongest residential real estate markets in the history of our South Florida market. The three-digit percentage increases in the number of sales for most price ranges, with the exception of single-family home prices under $ 500,000, turn our reports of previous years upside down.

“… We believe that the stabilization process has started and that it will not be a sharp fall, but a smooth return to a more balanced market….

“As we slowly get past the pandemic, the return to normal will continue to strengthen our market for many reasons – including the fact that a seemingly higher percentage of buyers today are using their newly purchased home as their residence. main. Having more full-time residents will encourage more economic activity in all industries….

“One of the most compelling factors in our growth over the past year is the fact that it has occurred despite a dramatic drop in the number of our international visitors, who have been the backbone of our residential real estate market. since the middle of the year. 1970s. Once they return to pre-pandemic levels, we will see further absorption of existing and new condominiums to be built.

“We see no decline in the popularity and appeal of Florida as a whole, particularly the South Florida market.”

It is indeed difficult to see a relaxation of the attractiveness of this market. Doc Dammers and the others who sold this community 100 years ago have also seen no slack. But Mother Nature can always be a factor.

Miami properties were at their peak on September 17, 1926, when an unexpected hurricane struck. As Mr. Knowlton writes, the next day’s headline in the distant Paris Herald Tribune read: “South Florida was destroyed by the hurricane. The place where Miami Beach once stood is now a desert of sand. Hyperbole that matched that of Doc Dammers, of course, as the damage report was exaggerated, but the hurricane caused such a real estate storm that prices in downtown Miami only returned to their 1926 highs in the 1950s.

Nature can cut in two ways, of course. The Covid-19 disaster helped fuel the real estate buying frenzy in South Florida last year as residents of the Northeast (and others) confined indoors for reasons security forces fled to newly purchased residences in Miami to weather the pandemic in the comfort of the outdoors.

On the other hand, some people are concerned that sea level rise could encroach on South Florida during their lifetime, affecting the shopping climate.

Other than the climate of nature, consider the political climate. Could decisions by the governments of Florida and Miami-Dade make this community even more appealing to new residents – or less appealing? The Berkshire Hathaway report shows that 661 people move to Florida every day without income tax while residents leave the states with high taxes. What if Florida also had an income tax?

There is absolutely no allusion to it, but there was also no hint of the 1926 hurricane. And Florida has an old saying: nothing is certain when the Legislature is in. session.

You know the long-term outcome of our land boom: Mr. Shuffield’s message is a good summary. Everything was much rosier than the flowers Doc Dammers peddled. Even during the pandemic, the construction crane still flies high.

It is always good to remember the saying of another sales group, the stockbrokers: “Past performance is no guarantee of future results. Yet over the past 100 years, the Miami real estate trendline has been steadily rising. In the long run, I wouldn’t bet against it.

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