I grew up in Ft. Lauderdale, FL, and as a youth it seemed like construction was as much a part of the natural order as sunup and sundown. Immense new neighborhoods were developed one after the other, and it went on for decades. The builders would drain water from the cheap swampland they purchased as they moved west from the ocean, but that didn't slow things down. People kept coming. The new Floridians bought houses as fast as the developers could erect them.
In 1950 Florida had 2.7 million residents and wasn't even in the top 25 states by population, but the promise of mild winters, inexpensive homes and air conditioning changed that in short order -- call it the Psychology of Sunshine. With nearly five million residents in 1960 Florida was the tenth most populous state in the United States. By 1990, Florida's population was 12.9 million; only California, New York, and Texas had more residents.
Yet the migration only accelerated. From 2000 to 2006 Florida added 2.1 million residents, which amounts to 29,167 people moving to the state every week.
By 2008 Florida's population had reached 18.3 million. The U.S. Census Bureau's 2008 Statistical Abstract says that, based on a "mathematical projection model" which includes certain "state-specific trends," Florida will have 28.7 million residents by 2030 and rank third in state population...
...But here's the rub: the great weakness of mathematical projection models is that they fail to account for very large changes in trends, including trends that are state-specific. And I assure you, dear reader, that a very large trend change is now unfolding in Florida. Journalist George Packer has an article in the current issue of The New Yorker magazine titled "The Ponzi State, Florida's Foreclosure Disaster." It doesn't make for happy reading.
Packer reports that by 2005, "government oversight of the real-estate market was so negligent that more than ten thousand convicted criminals got jobs in the mortgage industry." There's more, but I'll get to the point about mathematical models: I heard Packer in an interview about the article, and he said that the decades-long migration to Florida had, well, stopped -- "stopped" being defined as a trickle amounting to about 5,000 people in the past fiscal year. That's around the number who moved to Florida every two days not too long ago.
Mind you, Florida still has mild winters, air conditioning, and plenty of inexpensive homes. What's different is that the Psychology of Sunshine is no more. The trend has turned in ways that are too conspicuous to miss.
The psychological change driving real estate is likewise driving the financial markets. What's next? Consider our forecasts: We use a model that
does anticipate major turns in trend.
Click here to learn more.