Vol 6 No. 4 - October 19, 2005

Anna Maria: The best of all possible worlds
By Louise Bolger

Hurricanes, red tide, over inflated prices, high taxes, rent to value ratios, $3 million condos, bubbles, increased interest rates. I’ve heard it all this month and frankly I don’t think any of the "experts" know what the heck is going on, and that’s as it should be.

World and especially local economies dance to their own drummer, and it’s the rare economist that can predict accurately how a specific region will perform. The west coast of Florida certainly has challenges since we’re one of the top most likely areas to be hit with a hurricane.

Add to the formula this year’s epidemic of red tide, off the chart appreciation rates and higher mortgage interest, and it sure looks like we’re headed for financial ruin.

Well, I for one don’t buy it. The red tide won’t be here forever, the beaches are still some of the best in the country, the hundreds of miles of boatable shoreline hasn’t gone anywhere and the state of Florida is still your best bet for keeping tax burden to a minimum. And if you’re worried about hurricanes, be thankful you don’t live in northern California – at least we get five days notice.

In addition, if we were in a different point in history, I might concede that we have the potential of a serious downturn. But, in my opinion, Florida has a better defense against real estate deflating than many other parts of the country. Baby boomers, who start turning 60 in 2006, with their jingling pockets and the desire to get away from the stress of living in northern cities, will keep our market afloat for years to come.

Every day Florida has hundreds of new residents, twice a week I read a story about another farm or orchard being sold for millions to a developer for a new residential subdivision. What we should really be worrying about is not a downturn in real estate values, but rather an upturn in population flooding our roads.

And if you don’t believe me, just look around at the construction on the Island. Somebody knows something. Big time developers with resources must have done extensive demographic studies because they are offering all kinds of money to buy out older waterfront condos in Sarasota to make way for new construction.

Residents of some of these older condos are being offered upwards of $1 million for their one bedroom one bath units, just so the land can be turned into $3 to 4 million condo units. The key issue here is all real estate is local, don’t include Florida in the broad stroke of a countrywide downturn, even if you think that may happen.

So it’s time for everyone to take a deep breath (maybe not this week), and don’t turn all this doom and gloom into a self-fulfilling prophecy. And to my northern friends and relatives, sorry, Anna Maria’s million dollar condos will never drop back to $100,000. I don’t care what you read in the papers – you all missed the market.

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