Florida: The Ponzi State

a1bion · Post by **a1bion** » Tue Feb 17, 2009 12:24 pm

It's not on-line, but if you get a chance, check out the current issue of the New Yorker. There's a feature article called The Ponzi State and it's a profile of the state of Florida. It's a pretty devastating critique of how for decades, Florida's continued growth has been predicated on continued population growth and real estate. I think it's pretty fair in it's portrayal of the state, although it tends to center around Tampa/Pasco County and southwest Florida (Cape Coral and Ft Myers).

What's weird is reading the descriptions of some of the places and recognizing your own neighborhood. One of the neighborhoods the author visits, in fact, is a couple of miles up the road from us, but it's much like our own neighborhood. We have a foreclosure across the street from us, along with I think 10-12 places in the neighborhood that are up for sale. Lots of other places up for rent. Down the street from us, there were two burglaries in the course of four days and a stolen car down the street from that. There've also been some drug issues and issues with homeless people coming off the interstate and breaking into for sale properties for shelter. This was a really nice, up and coming neighborhood when Kim bought in it two years ago. Now, if things don't turn around over the next couple of years, it could become a real ghetto.

TheTodd · Post by **TheTodd** » Tue Feb 17, 2009 12:28 pm

Thanks a1. I'll look for it.

Here is an abstract:

ABSTRACT: A REPORTER AT LARGE about Florida’s real-estate market and the economic downturn. Writer visits a number of inland real-estate developments near Tampa, Florida. Developers there dreamed up instant communities, parceled out lots, and built look-alike two-story beige and yellow houses. The houses sold to some of the thousand or so people who moved to Florida every day. Now many are ghost subdivisions. In one community, Twin Lakes, property values dropped by more than a hundred thousand dollars in the past two years. Writer interviews Angie Harris, a Navy veteran and mother of five, who says of her neighbors, “It used to be people would wave. Now they don’t.” In another community, Hamilton Park, the writer interviews a woman named Lee Gaither, whose only income came from Disability payments. She was facing eviction and planned to sell many of her possessions on eBay. Florida is one of the places where the financial crisis began. Gary Mormino, a professor at the University of South Florida in St. Petersburg, tells the writer that, “Florida, in some ways, resembles a modern Ponzi scheme. Everything is fine for me if a thousand newcomers come tomorrow.” The state depends for revenue on real-estate deals and sales taxes. By 2005, the housing market in Florida was hotter than it had ever been. Flipping houses and condominiums turned into an amateur middle-class pursuit. Writer tells about Floridians with modest incomes who made money buying and selling real estate. Mentions one case in which a house appreciated in value by almost fifty per cent overnight. According to an investigation by the Miami Herald, government oversight of the real-estate market was so negligent that more than ten thousand convicted criminals got jobs in the mortgage industry. Flipping and fraud burst the bubble. But in places like Pasco County, it was the ordinary desire of ordinary people to buy their own home that turned things toxic. Tells about Anita Lux, who moved to Florida from Michigan with her husband, Richard. Gives a brief history of Cape Coral, Florida, which was first developed in the fifties by two businessmen from Baltimore. Writer interviews a number of Florida residents who have lost their jobs or homes. A Fort Myers real-estate agent named Marc Joseph tells the writer, “Greed and easy money. That was the germ.” By last year, the highest foreclosure rate in the country could be found in Fort Myers and Cape Coral. Mentions other indicators of the economic hard times, including the closure of auto dealerships and the theft of copper. Writer visits the office of Tampa’s mayor, Pam Iorio, who is determined to build a light rail system to revive the city’s fortunes. A number of people in Florida told the writer that the state needs a fundamental change in its political culture.

G8rMom7 · Post by **G8rMom7** » Tue Feb 17, 2009 2:11 pm

"fundamental change in it's political culture"? Don't they mean "social culture"? or well, I'm not sure what that means.

I just have to say how happy I am that my parents were able to finally sell their townhouse in Fort Myers...they just broke even but at least they got out of it. Whew.

a1bion · Post by **a1bion** » Tue Feb 17, 2009 4:48 pm

Certainly social culture as well, M7, but the political culture thing is a reference to an argument he makes in the article about how politicians in Florida have been able to resist having an income tax and a number of other tough decisions for decades because they could just rely on steady population growth and the housing industry providing income streams.

Here's an interesting excerpt from the article:

In early 2007, Alex Sink attended a meeting of the Chamber of Commerce in Tallahassee, where an official from Allied Van Lines reported that the company was moving more people out of Florida than in. "That really got people's attention," she said. "It's even worse now." In the 2003-04 fiscal year, Florida's population grew by nearly four hundred thousand. The projection for 2009 is five thousand, making it the first year since the early seventies, when statistics began to be recorded, in which the net flow of migration is negligible. Residential electrical hookups show the same trend: preliminary numbers suggest a decline in 2008, the first decrease in the four decades since the Bureau of Economic and Business Research at the University of Florida has been keeping the data. The engine of Florida's growth has quit.

G8rMom7 · Post by **G8rMom7** » Tue Feb 17, 2009 5:02 pm

Maybe I'm in my tourist trap bubble but I always thought the reason we didn't have a state income tax was tourism. I didn't think it had anything to do with real estate. I do understand that they may have put all their eggs in one basket when they saw all that property tax money coming their way and instead of realizing it was just a fantasy and it would all go away, they screwed up their budgets.

But yeah, I get your point.

TheTodd · Post by **TheTodd** » Tue Feb 17, 2009 5:34 pm

Sweet...now if we could only work on sending these yankee's back home.

annarborgator · Post by **annarborgator** » Tue Feb 17, 2009 5:49 pm

LOL @ todd

G8rMom7 · Post by **G8rMom7** » Wed Feb 18, 2009 11:19 am

LOL Todd...I was thinking the same thing while driving in traffic to work. As a native Floridian I always grew up following the philosophy of "come Northerners come...come to Florida and spend your money...then go home." All the problems started when the started planting themselves here. WTF?

a1bion · Post by **a1bion** » Wed Feb 18, 2009 11:29 am

The irony is that one of the details in the article is about how the housing bust has started causing all the Mexicans to leave the state and go back home, not the Northerners.

annarborgator · Post by **annarborgator** » Wed Feb 18, 2009 2:05 pm

The yankees would rather die poor and destitute in FL than anywhere else...they sure ain't gonna go out and find jobs (not most of them anyway)...mexicans are just migrating for work because they don't have the savings of the Q-tip FL transplants I bet.

MinGator · Post by **MinGator** » Wed Feb 18, 2009 4:05 pm

Now, now. Unless you're all Native American, you're all come-lately's.

DocZaius · Post by **DocZaius** » Wed Feb 18, 2009 6:17 pm

I am a native American. I hate it when special interests redefine words.

TheTodd · Post by **TheTodd** » Wed Feb 18, 2009 7:20 pm

Yeah dat

MinGator · Post by **MinGator** » Thu Feb 19, 2009 3:06 pm

a1bion · Post by **a1bion** » Fri Feb 20, 2009 12:15 pm

The original article I referenced was brought to my attention because it's gotten a good bit of play in the Tampa Bay news, since our area gets a lot of the focus. Here's an article from this morning that seems to have been spurred by that New Yorker piece:

The Florida dream isn't dead.

But it is in trouble.

The latest evidence: In the past five years, the number of out-of-state residents applying for Florida drivers' licenses tumbled from almost 600,000 to barely more than 400,000, the Associated Press reported Thursday.

People aren't coming here like they used to. Because Florida is not what it used to be.

The recession is not just putting people out of work and making it tough for them to keep their homes. It is unraveling the very myth that drove Florida's growth: that it's an affordable paradise where people can reinvent themselves or retire in the sunshine.

The Florida dream was the American dream, only in sharp, blue-sky focus. The iconic images of the Sunshine State used to be bountiful boxes of citrus, or a pelican flying through the sunset over the bay, all in pastel-postcard chic.

Now they're sad, still photos of forlorn, foreclosed homes.

"I think Florida's at a real crossroads right now," said Gary Mormino, a Florida studies professor at the University of South Florida St. Petersburg and the author of the 2005 book Land of Sunshine, State of Dreams. "We need to step back and think about what kind of state we want to be."

http://www.tampabay.com/news/humaninterest/article977523.ece

I think I need to go spend an afternoon at the beach.