Three common signs of a real estate bubble

In 1925, Ponzi, a financial fraudster who had just been released from prison on bail, fled to sunny Florida and started a real estate business under a pseudonym.

Like Ponzi, there were many other heroes from all walks of life who came to Florida one after another. They all came together for a common revolutionary goal.

In 1910, Carl Fisher, the founder of the Fisher Body Company, took his 15-year-old bride on a honeymoon trip to Miami, and he fell in love with this Feng Shui treasure at a glance. Fisher pushed the local government to build highways in all directions in Florida, and housing prices along the highways immediately soared.

The famous American politician William Jennings Bryan also moved his family to Florida in order to make his wife who suffered from arthritis live more comfortably. George Merrick, a well-known local real estate tycoon, approached Brian and asked him to support his "Spanish Villa" project. Brian once ran for president and almost became president of the United States. When he was running for president, he spoke for poor farmers and opposed the gold standard. Now he speaks for real estate developers and praises the "Gold Coast." Merrick paid Brian $100,000 a year, half in cash and the other half in land.

This is the first real real estate bubble that the United States has experienced. Land prices have risen in the United States before, but mostly for rural land. This is the first time the United States has experienced an increase in real estate prices in urban areas.

During 1925 and 1926, Florida's housing bubble was at its peak. Developers hired bands and circuses to attract customers. The sidewalks were impassable because there were so many real estate agents soliciting business. Open the newspaper and all you see are real estate advertisements.

There are many "guarantee boys" appearing in Florida. They are all fit and young, wearing white suits and encouraging customers to buy "guarantees." This guarantee is equivalent to a deposit. Investors who bought the "guarantee" did not intend to actually buy a house. They would resell it and earn the difference. In the summer of 1925, at the height of the real estate boom, bonds could be resold eight times a day. Warrant receipts also circulated like currency and were accepted in hotels, nightclubs and brothels.

The real estate bubble you are talking about existed in the United States 80 years ago. Although there are many influencing factors, some unique characteristics of real estate bubbles can be seen from the Florida real estate bubble in the 1920s.

Rapidly changing real estate demand

There has never been a so-called “rigid demand” for real estate. How big a house is enough to live in? Do I have to buy a house to live in peace? However, at certain stages, real estate demand may undergo unprecedented changes.

(The above answers were published on 2017-08-04, please refer to the actual current relevant home purchase policies)

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