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
