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.