One of History’s Biggest Crashes 2021: Florida Real Estate Bubble
Jaw-dropping financial scandals, massive stock market crashes sweeping the markets, economic balloons In the case of and many more, the most typical examples are found in the USA, where capitalism is often rewarded, sometimes severely punished. One of these examples is the Florida Real Estate Bubble.
Most typical known real estate bubble One of its examples, the Florida Real Estate Balloon, appeared in Florida, a US state, in the early 1920s, and this bubble significantly damaged the state.
So how did the Florida real estate bubble start, how did it explode and what were the consequences? Here’s what you need to know about the Florida Real Estate Bubble, which is one of the most well-known real estate bubble examples.
The Rise of Peace and Prosperity: America in the Early 1920s
The 1920s were a period when peace and prosperity were on the rise in America. Many talented and educated Americans held jobs for which they earned many benefits, including holidays and retirement bonuses.
Also in these years, the American stock markets were rising very rapidly and again, things were going very well for many investors. In the same years, Florida had become a popular destination for wealthy vacationers who prefer warm weather.
As Florida began to be recognized and spread from language to language as the “playground for the celebrities and the rich,” illegal casinos and drinking entertainment surrounded the state’s second largest city, Miami, day by day.
How Did The Real Estate Bubble In Florida Emerge?
Vacationing in Florida was the choice of not only the wealthy but also middle-class Americans in the 1920s. As such, Florida’s tourism industry was on the rise, causing land prices to rise at the same pace.
As Florida’s population continued to grow exponentially, the housing supply in the state was not meeting the growing demand. As Florida’s economy developed, cheap credit became so abundant that practically anyone could invest in real estate independently of their income and assets. Those times Miami Herald “Almost everyone in Florida looked like either a real estate investor or a real estate agent,” says a local newspaper.
Americans living in Northern states such as New York and Massachusetts, where wealth spreads more, flocked to the state when they heard that real estate prices in Florida were still cheaper and would increase further in the future. Florida’s real estate market had raised an incredible amount of capital after the impact of this snowball.
Swimming pool mansions, villas, resorts, and golf clubs were now scattered across Florida.
How Did the Florida Real Estate Bubble Blow?
The real estate bubble burst in 1925 in Florida, which started in the mid-1920s and gained momentum and in a short time real estate prices quadrupled. Until this year, property prices in Florida have risen considerably. Prices, which eventually started to be heavy for people, broke the interest of potential investors.
Of course, existing investors started to sell their assets to put their profits in the vault. So panic spread quickly. As demand fell, prices also dropped, making it difficult to find buyers around. As investors began to suffer losses, many people either had trouble repaying their mortgage debt or were not able to pay it out of bankruptcy.
Natural disasters were added to these. A hurricane that hit Florida in September 1926 devastated the state. After the hurricane, a strong tidal wave hit the towns of Moore Haven and Belle Glade. More than 13,000 homes were destroyed, and these natural disasters killed more than 400 people. Finally, the Mediterranean fruit fly invasion has virtually destroyed the citrus industry so important to Florida’s economy.
The Florida Real Estate Bubble started in the early 1920s and ended in late 1929, but it took much longer for the state to fully recover.