DSK wrote:
NOYB wrote:
If I didn't get an interest-only loan at the time, I couldn't have bought my
house.

In other words, you could only afford it at all under
special conditions... conditions that amount to "play now,
pay later.'



Form: http://www.stock-market-crash.net/florida.htm


Florida Real Estate Bubble
The 1920's, in America, were a time of great prosperity. Skilled and
educated working Americans had jobs providing numerous fringe benefits,
paid vacations and pensions. In addition, automobiles were becoming
commonplace for the wealthy and middle class allowing cross country
travel. This good fortune set the stage for the Florida real estate
bubble.

Starting in 1920, many Americans became enamored by the materialistic
and prosperous lifestyle of the time. During this time, the stock
market was moving forward at an extremely fast pace. Many investors
were becoming quite wealthy. Florida became a hot spot for these newly
rich people, who didn't enjoy the cold. Many whole families took
vacations to Florida. It was at this point that tourism started booming
and land prices were skyrocketing. Many astute investors took notice
and started buying Florida real estate. The population in Florida was
growing exponentially and housing couldn't meet the demand. Florida
became the "playground of the rich and famous". Illegal casinos and
drinking parlors became widespread in Miami.

At this point, almost anybody could invest in Florida, even without
much money. Credit was plentiful and soon everybody in Florida was
either a real estate investor or a real estate agent. In 1922, the
Miami Herald became the heaviest newspaper in the world as a result of
its humongous real estate advertisements. People in the North heard
about the real estate prices "doubling and tripling", causing a
snowball effect. Capital was rapidly pumped into the real estate
market. Whole golf communities were developed, such as Temple Terrace.
Resorts and retirement communities were developed almost overnight.
Mansions were sprawling in every area, as were swimming pools. As
always, waterfront property was the most desirable. Florida was seen as
a veritable Utopia.

Real estate prices quadrupled in less than one year. An elderly man
invested $1,700 in property and by 1925 the property was worth over
$300,000! It seemed you could do no wrong by just buying any property
in Florida and become a millionaire. By 1925, real estate prices had
become so exorbitant that buying land wasn't affordable any longer.
New investors failed to arrive and old investors started to sell. Panic
arrived, as it always does, and the real estate market crashed. Prices
kept moving downwards as heavily indebted investors tried to sell to
avoid bankruptcy. In most cases, no buyers arrived, and the investors
were bankrupt from the enormous mortgages.

To make matters even worse, a highly destructive hurricane ravaged
South Florida in September 1926. The 125 mile an hour winds eventually
turned Palm Beach County into swamp lands. After the storm, a huge
tidal wave crashed upon the towns of Belle Glade and Moore Haven. Due
to these horrible turn of events, over 13,000 homes were destroyed and
415 people died. Additionally, the arrival of the Mediterranean fruit
fly obliterated the large citrus industry. It took years for Florida to
fully recover, even through the highly prosperous time from 1925 to
1929. Florida was barely affected in the stock market crash of 1929 and
the Great Depression, because of its poor financial state from the
start.

Market crashes always occur in the same manner. Regardless of the
market, the same simple psychological underpinnings are always at work.
People who are caught up in a bubble never look back for historical
examples. For this folly, they become paupers.

"Those who cannot remember the past are condemned to repeat it."