During the 1920s everyone was buying property in Florida. Buildings were being built in every place you can imagine, especially South Florida. "The whole strip of the coastline from Palm Beach southward was being developed into an American Rivera"(236). People were buying land, hoping to build it up and then sell it right away. Some were even hoping to get rid of their piece of land and sell it to another person before their first payment was due 30 days later. As a result of so many people trying to buy and sell their land so quickly, the real estate market began to collapse in the Spring of 1926. There was no one to sell to anymore because everyone was buying and hoping to sell soon. This causes the famous "Florida Foreclosures". These properties all went to foreclosure. A foreclosure is a "law to deprive (a mortgagor, etc) of the right to redeem (a mortgage or a pledge)" (dictionary.com). People couldn't afford to pay for their properties anymore, so the banks took them back. Growing up in Florida, I have seen many empty houses, many signs on houses saying "foreclosed". I worked in a real estate law firm that was on the side of the banks for a couple of summers. Each summer that I came back to work, they had more and more employees. It is a sad sight to see but it is a reality.
This teaches us that history is bound to repeat itself. The history of the Florida Foreclosures has come back to us. We must learn that something has to be done in order for this not to happen again. We want to learn from our mistakes, not repeat them. Finding a solution to the foreclosure issue will help it not happen again.
This post was interesting and informative. As someone who has worked in real estate, Miriam, what measures do you think should be taken to prevent another housing bubble in the US? Unfortunately, I'm very inexperienced in real-estate and business in general.
ReplyDeleteIt's interesting how there is always someone benefitting from a bad situation. Like you said, the banks and real estate firms had more and more employees. But you knew that meant tough times for everyone else. Do you think these banks and real estate firms take advantage of the average buyer as badly as they did in the 20s?
ReplyDeleteI am a little confused when you say "Each summer that I came back to work, they had more and more employees." why is this a bad thing? Like Helen, I am not well informed in real estate, but to me this would seem like a positive thing as more employees means more jobs and means the company has demand so they need workers.
ReplyDeleteI know really little about real estate but I know Miami. My family bought a condo in the late 80's when real estate was big. We used to go to Miami every Pesach/Passover, all the Jews would be there. The place to be was The Saxony, right on the beach, close to South Beach but far enough away from the loud parties. Today, the value of the condo has plummeted! The Saxony went out of business about ten years ago I think and has since been "under construction". It's such a sad sight. But I think that the Florida real estate will bounce back, just like it did after the 20's. A lot of the hotels are doing better. I hope history repeats itself to that extent, especially on winter cold days like now. But I hope that before the next real estate crash, and market crash, we should be able to pick up on the signs before hand and better prepare ourselves.
ReplyDeleteI agree with Jenny. The number one thing America needs more of is job creation, isn't that right? Isn't that the key to boosting the American economy?
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteMiriam, the concept that you brought up about how history repeats itself is but a sad one. Most people that live in the United States has had some sort of education in history. Through the study of history we see how so many things are being repeated or on the verge of happening again yet we are so caught up in our lives to try and stop it. Since we know what led up to the "Florida Foreclosures" in the 1920's (and the unfortunate outcome) don't you think that the government would try and put a stop to it when it was happening again in the 20th century? Personally i don't think that people put enough emphasis on history and tend to ignore it or fail to relate the situation to it, which is why it repeats itself so often.
ReplyDeleteWhile I agree with everyone that history is bound to repeat itself, I wonder if there is any real possibility that we'll look to the past as a source of information for the future. It seems that with all of the horrendous mistakes mankind has made, it would be logical to try and gain some insight into the future by looking at our past. I wonder though if mankind as a whole has ever actually done that.
ReplyDeleteWe obviously acknowledge the value of looking to the past, but when we attempt to truly learn do we say things like the past is old and we do things differently now? Are we so positive that because times have changed and technology has advanced that we can't be sucked back into the black hole that is history?
Everyone says that if we don't learn from what we've done we're bound to repeat the same mistakes but is that, perhaps, our tragic flaw? Maybe, because we seem to constantly repeat the bad things that happen, we do not know how to change our actions for the better.
The people making decisions at the time were thought to be the brightest and most knowledgeable of the time. If we pair the past geniuses and the present/future ones will anyone come up with an original thought and change something or are we fated to continuously repeat ourselves?
Hele, I'm not sure what measures I would take to prevent this as I only worked on the very outside of cases. I was the person who floated around and helped everyoneone who needed assistance. I was the secretary and assistant. But I would suggest lowering housing coststo what people can afford as a start.
ReplyDeleteIn response to Jenny and Aliya: when I said that "Each summer that I came back to work, they had more and more employees", tis considered a bad thing for the people. Working for a firm thatis on the side of the banks and when Icome back to work there are more each year means that they need more people to work to helpforclose people put of their houses. More employees means more forclosures. On the other hand, it is great for the firm.
Regarding Miriam's explanation of why the firm hiring more employees is bad, seems to me like a cycle. If more employees are hired they will be able to bring home an income to prevent foreclosing their homes. This will lead to less foreclosures. I also know firsthand about the situation in Florida as I have grown up there. In Boca Raton, where I am from, there is even a Starbucks that has yet to open. It was built before the economy fell and now it just sits, barren. If a chain such as Starbucks can't open a store, you know that things are really bad. I hope the government not only finds a solution to the problem now, but will be able to prevent it from happening in the future as well.
ReplyDeleteMiriam and all of you commenting in this thread bring up some important questions: what can be done to prevent future economic "bubbles" that wreak havoc on the economy? Must history repeat itself? Is there ever really any progress?
ReplyDeleteMany people who feel that history only repeats itself talk about history as if going in a circle. I disagree. We definitely have progress on some things. We are a less racist country than we used to be, for example. I believe things move forward as a whole, even as some specific things, like economic bubbles of investment bursting and crashing stocks, do repeat. For these reasons I prefer to think of history as shaped more like a spiral, with a line that advances slowly even as it goes round and round.
I wonder if the real estate roller-coaster in Florida has anything to do with people still thinking of Florida as purely a luxury and a vacation cite. Maybe, when the economy is bad, real estate in Florida is the first to go because it's considered excessive and unnecessary. I know my parents think of it that way. They're actually going down to Miami this weekend together to get away from the house.
ReplyDeleteFlorida, especially South Florida gets one of two reviews. Either a great vacation spot or a retirement home. In terms of history repeating itself, I believe that it does but each time it does, there are improvements from what happened before. In this case there was a major foreclosure problem in the 1920s, There is also one now, much it is being handled much better.
ReplyDeleteI think Racheli's comment is very insightful as Florida is generally seen as purely a vacation spot. I know my family bought some real estate down there, hoping to sell it, and it has proved difficult to make money on in light of the economic times. Furthermore, one of my relatives from Florida explained that because Florida is a vacation hot-spot their economy is rooted in tourism. Thus, if people are not traveling as much due to economic decline Florida suffers greatly; as their economy depends on tourism. I think this really shows the interconnectivity of society, if even one element falters it has a wide-ranging effect.
ReplyDeleteWould it make sense for the banks to put a freeze on buying properties when they see that so many people are trying to buy and sell? Miriam said "As a result of so many people trying to buy and sell their land so quickly, the real estate market began to collapse in the Spring of 1926. There was no one to sell to anymore because everyone was buying and hoping to sell soon." if the banks had put a halt on buying, then perhaps the market wouldn't collapse?
ReplyDeleteGood point Gila, I think that would be a good idea. Someone should get on that.
ReplyDelete