The Term Real Estate Bubble Doesn't Apply
I need a new word for "bubble"- as in "real estate bubble." A bursting bubble falls back to the surface from which it rose in the first place, but I don't think that applies to real estate values, at least not in Charlotte County. I don't think property prices here are likely to fall back to pre-2002 levels.
The surge in property values over the past several years isn't just a local phenomenon felt only in Southwest Florida. Prices from Miami to Atlanta don't seem to be faltering; instead, they continue to climb, especially along Florida's Gold Coast.
Then why are we seeing a seller's market turn into a buyer's market here in our little comer of paradise? The reasons are a matter of almost daily articles and columns by highly qualified real estate professionals. I am just a property owner and an interested observer. Maybe that's why I need a new definition of the word "bubble."
"An economic bubble occurs when speculation in a commodity causes the price to increase, thus producing more speculation," according to www.investordictionary.com. "The price of the goods then reaches absurd levels and the bubble is usually followed by a sudden drop in prices, known as' a crash."
I don't think we will see a crash in property values here, although sales prices seem to have leveled off and may even have adjusted slightly downward. After reading about the real estate boom in Georgia - thanks to large forest tracts being sold off by Weyerhauser and the soon to be completed largest Georgia land sale ever by International Paper Company - I can't help but think development companies are setting the stage for another round of price increases for residential properties throughout the south.
Middle to northern Georgia is being subdivided at an astounding rate. While the areas north of Macon all the way to the North Carolina mountains are beginning to look like the next big areas of growth, especially for "halfbacks," Southwest Florida will always be attractive to northern retirees seeking relief from the relentless northern winters. The issue will be whether or not they can afford property in Florida.
"Halfbacks," by the way, are folks who moved to Florida from up north, then decided to move halfway back home for whatever reason, ending up in the mountains of North Carolina or Georgia. These aren't the land speculators who have left here after hurricane Katrina and descended on Mississippi and Louisiana; these are mostly retirees escaping our burdensome taxes and the spiraling cost of home ownership or the threat of hurricanes.
I don't doubt real estate bubbles exist, I just don't think the term applies to property values in Southwest Florida today. But then again, if property values fall 800 percent in 2006, I could be wrong.
George Mindling © 2005