I know Derek just wrote about how incredibly awful Florida's foreclosure problem is right now, but I thought I'd add a little more detail to better document its suffering. The real estate market there simply boggles the mind. Unemployment is also continuing to climb. So what are distressed Floridians doing? Suing whoever they can, of course.
So how ugly is that real estate market? As Derek mentioned, its foreclosure rate is at least twice as bad as any other state. According to a Bloomberg article today, real estate prices are on the verge of hitting 20-year lows. That's 1989. That was the year Tim Burton's first Batman movie ruled the box office -- the one with Michael Keaton and Jack Nicholson. Acid-washed jeans were in style. I had just bought a state-of-the-art 1200 baud modem for my computer than ran DOS.
"If you're thinking you can come here and buy and sell condos for a profit in less than five years, you're sadly mistaken," said McCabe, whose clients have included Credit Suisse Group AG and Pulte Homes Inc., the largest U.S. homebuilder. "You need a seven- to 10-year range."
Prices could fall to $100 a foot, less than half the cost of construction, and a value not seen in 20 years, he said.
In other words, if you want to build something in Florida, it would cost you twice as much as to buy existing real estate. That is to say, no one in their right mind would build anything there right now.
For a state economy so heavily reliant on real estate, the result is obvious: high unemployment. In fact, a separate report today indicates that unemployment in Florida has reached 11%. That's the highest rate since 1975. This represents just over a million Floridians out of work.
My parents, who live in Florida, are visiting this weekend. Last night my father told me that there are new commercials down there that are both hilarious and disturbing. They're for a Boca Raton-based company called "whocanisue.com." You can probably guess what it does by its name. I managed to find one of its TV ads on Youtube, in case you want to be, both, amused and disgusted simultaneously:
But this is a real phenomenon. According to the Bloomberg article I mentioned above, lawsuits are exploding in Florida:
Robert Cooper says he has found a way to make money in South Florida's real estate bust.
Cooper, an attorney in Aventura, Florida, sues for refunds on deposits in the nation's largest condominium market. In the last two years, he filed lawsuits for about 1,500 buyers against companies and individuals including the Related Group of Florida, Dezer Development LLC, Corus Bankshares Inc., Donald Trump.
More suits seeking refunds under a federal law regulating condo sales have been filed in South Florida than in the rest of the country combined, according to a search of federal court records. Fueling the litigation is a price crash that makes buyers unwilling to pour more money into bad investments -- even if they can get financing. Condos on which they made deposits of up to $1,000 a square foot in 2006 are now selling for $125 to $350 a foot, said Jack McCabe, a real estate consultant in Deerfield Beach, Florida.
The bold is mine. Indeed, perhaps the only people making money in Florida today are the lawyers. Unfortunately, with its statewide recession this deep, that might be the case for years to come.