Boom, Bust, Repeat

Once again, Florida is at the center of a housing meltdown. Haven't we heard this tune before?

Before the renovations of the Cracker house in 2005.

We heard barking as we approached the four-bedroom bungalow on a tidy suburban cul-de-sac near West Palm Beach. A 30-ish white man with sandy brown hair opened the door. “Is there a dog?” my mom asked with her Caribbean lilt.

He caged the dog. We stepped inside, and my mother delivered the grim news: She was a real estate agent representing the bank that now owned the house. He, his young wife and their four sons, none older than 12, had to go. Taken aback, the couple explained that they were always on time with their rent. But it was not about them; the landlord had gotten in trouble and didn’t bother to tell them. It was up to my mom to do that. They would like to buy the house, they pleaded. Could she talk to the bank about that?

She nodded sympathetically and agreed to look into it. If they moved in the next three days, though, she was authorized to give them $400 for moving expenses. That week in November, they left the quiet neighborhood behind.

As President Obama touched down in Florida this week to sell his stimulus plan, I thought about that family and similar scenes playing out all across the Sunshine State. As I read about the crisis and hear my mom’s war stories, I am struck by the realization that in Florida real estate, the swirl of history is stuck on rotate.

When my mom abandoned her career as an accountant to become an agent a few years ago, it was just as the air was going out of the Florida housing market. Economists began to sound the alarm over the rampant speculation.

She mostly ignored those reports, inspired partly by my family’s own adventure in Florida real estate. My extended family bought a 1926 vernacular frame and carriage house that was once owned by a wealthy black man named James Jerome “Cracker” Johnson, whom the local history books call the “King of Black West Palm Beach.” At the time of purchase, we were more concerned about another kind of history repeating itself: One of black people being pushed out of the nicest parts of Palm Beach County, as I wrote in an article in the NAACP’s Crisis magazine.

But more significantly now, I realize that at the time Cracker Johnson built the house, Florida was in the middle of a growing real estate bubble. Nearly a century before cable television urged viewers to Flip This House, Florida lots were bought and sold for double their prices in a matter of a week as an article in American Heritage noted:

Then options on lots were traded, and options on options were sold. Fabulous stories abounded, like the one of a cabdriver who took a couple the thirteen hundred miles from Manhattan to Palm Beach and, with his fare and tip, invested in real estate and made a million dollars.”

But then as now, members of the media, Forbes magazine in particular, eventually began to sound the alarm about the state’s overheated housing market and rampant speculation of the 1920s. Eventually the confidence game ran out, and the market hit rock bottom around 1925.

Then, maybe to accentuate the point, a deadly hurricane hit South Florida in 1928.