Florida land boom of the 1920s

Last updated

1922 Florida billboard promoting the sale of lots Billboard for the Sale of Subdivision Real Estate Lots WDL4030.png
1922 Florida billboard promoting the sale of lots

The first real estate bubble in Florida was primarily caused by the economic prosperity of the 1920s coupled with a lack of knowledge about storm frequency and the poor building standards.

Contents

This pioneering era of Florida land speculation lasted from 1924 to 1926 and attracted investors from all over the nation. [1] The land boom left behind entirely new, planned developments incorporated into towns and cities. Major investors and speculators such as Carl G. Fisher also left behind a new history of racially deed restricted properties that segregated cities for decades. [2] [3]

Among those cities at the center of this bubble were Miami Beach, Coral Gables, Hialeah, Miami Springs, Opa-locka, Miami Shores, and Hollywood. It also left behind the remains of failed development projects such as Aladdin City, Boca Raton (original plan), Chevelier, Fulford-by-the-Sea, Interocean City, Isola di Lolando, Okeelanta, Palm Beach Ocean, Poinciana, and Sun City. The land boom shaped Florida's future for decades and created entire new cities out of the Everglades land that remain today.

The story includes many parallels to the real estate boom of the 2000s, including the forces of outside speculators, easy credit access for buyers, and rapidly appreciating property values, [4] ending in a financial collapse that ruined thousands of investors and property owners, and crippled the local economy for years thereafter.

Background and history

In the background were the well-publicized extensions of the Florida East Coast Railway, first to West Palm Beach (1894), then Miami (1896), and finally Key West, 1912. The Everglades were being drained, creating new dry land. Finally, World War I cut off the rich from their seasons on the French Riviera, increasing the appeal of parts of the U.S. with a Mediterranean or Tropical climate.[ citation needed ]

The economic prosperity of the 1920s coupled with a lack of knowledge about storm frequency and the poor building standards used by boom developers set the conditions for the first real estate bubble in Florida. [5] [6] Miami had an image as a tropical paradise and outside investors across the United States began taking an interest in Miami real estate. Due in part to publicity stunts and deed restrictions, developers saw a large influx of Northern tourists and potential residents. [7] [8] Developer Carl G. Fisher of Indiana became famous by purchasing a huge lighted billboard in New York's Times Square proclaiming "It's June In Miami". [9] Fisher's publicity and investments along with those of concurrent pioneers Lummus and Collins correlated with rapidly rising prices, and the boom began. [10] [11] Brokers and dealers speculated wildly on commodities as well. They ordered supplies in excess of what was actually needed and sent shipments to general destinations. The result was railroad freight cars became stranded, choking the movement of rail traffic statewide. [12]

The impact of the boom would extend beyond Miami and southern Florida. Tampa saw growth during this period as well, but had a more diversified economy than Miami which included manufacturing and tourism. Miami's economy was primarily based on tourism despite failed attempts during the 1920s to diversify the city economically. [13] Jacksonville, the largest city in Florida, would not be as affected by the boom because municipal leaders had decided to work on expanding industry and commerce rather than tourism after World War I. [14]

By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any real land value. [15] The Bureau of Internal Revenue began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. To make matters worse, in October 1925, the "Big Three" railroad companies operating in Florida—the Seaboard Air Line Railway, the Florida East Coast Railway, and the Atlantic Coast Line Railroad—called an embargo due to the rail traffic gridlock of building materials, permitting only foodstuffs, fuel, perishables, and essential commodities to enter or move within the state. [12] Also in 1925, Florida began to pass laws further regulating real estate; with salesmen being required to have licenses and offices which as a result led to a boom in demand for office space. [16]

Then, on January 10, 1926, the Prinz Valdemar , a 241-foot, steel-hulled schooner, sank in the mouth of the turning basin of Miami harbor and blocked access to the harbor. It had been on its way to becoming a floating hotel. [17]

Because the railroads were still embargoing non-essential shipments, it now became completely impossible to bring building supplies into the Miami area, and the city's image as a tropical paradise began to crumble. In his book Miami Millions, Kenneth Ballinger wrote that the Prinz Valdemar capsize incident saved many people from huge possible losses by revealing cracks in the Miami façade. "In the enforced lull which accompanied the efforts to unstopper the Miami Harbor," he wrote, "many a shipper in the North and many a builder in the South got a better grasp of what was actually taking place here." [18] New buyers failed to arrive, and the property price escalation that fueled the land boom stopped. The days of Miami properties being bought and sold at auction as many as ten times in one day were over.[ citation needed ]

End of the boom

Devastation after the Miami hurricane of 1926 Miami beach2.jpg
Devastation after the Miami hurricane of 1926

Although the railroads lifted the embargo in May 1926, the boom was about to end. [12] The 1926 Miami hurricane ended the boom and the much smaller 1928 Okeechobee hurricane made certain it was extinguished. [19] [20] [21] The 1926 hurricane destroyed "whatever public enthusiasm for Florida vacation properties and real estate development that remained," as there had been little preparation for the storm. [22]

Florida's economic decline predated the start of the Great Depression. Therefore, it had fewer resources and more debt "than other regions of the nation." Large amounts of local debt financing through bonds worsened the economic situation in the state with most of it coming from the years of the land boom. During the land boom, many local governments sold bonds to pay for projects related to development. After the boom, local government did not have revenue proceeds to pay down bond debt. This resulted in widespread unsecured bond default. [23] Another contributing factor was that numerous counties in southern Florida would take out "large loans" during the boom to help build infrastructure projects to entice developers which led to these counties going into debt. [24] Doyle Carlton was elected in 1928 as governor and during his tenure he tried to put a limit on the amount of bonded debt local governments could hold. [25] He faced opposition from state representatives in northern Florida whose counties had less debt and did not want to pay for their southern counterparts. [24]

Deposits in Florida banks had increased steadily between 1922 and 1925, but then started to decline; by 1926 smaller banks began to fail because of many withdrawals by depositors and defaults on loans. Bank assets flowing into the state started to reverse. A "surplus of funds" and easily available credit also began to dry up. [26]

Murphy deeds

The collapse of Florida land values caused a severe financial crisis for the state government.  Land values had dropped nearly to the vanishing point, but the property was subject to property tax assessments far in excess of its current value.  Many property owners simply abandoned the property and did not pay the taxes.  Under state law, the state could not sell the property for less than its assessed value.  To remedy the situation, in 1937, the Florida Legislature passed the Murphy Act. [27] The Act permitted the state to sell tax delinquent property for what could be obtained.  Deeds issued to purchasers, colloquially known as “Murphy deeds,” reserved certain rights to the state.  Years later, these reservations in many cases enabled the state to acquire rights-of-way without having to pay compensation. [28]

See also

Related Research Articles

The history of Florida can be traced to when the first Paleo-Indians began to inhabit the peninsula as early as 14,000 years ago. They left behind artifacts and archeological evidence. Florida's written history begins with the arrival of Europeans; the Spanish explorer Juan Ponce de León in 1513 made the first textual records. The state received its name from that conquistador, who called the peninsula La Pascua Florida in recognition of the verdant landscape and because it was the Easter season, which the Spaniards called Pascua Florida.

<span class="mw-page-title-main">Florida East Coast Railway</span> Class II railroad operating in Florida

The Florida East Coast Railway is a Class II railroad operating in the U.S. state of Florida, currently owned by Grupo México.

<span class="mw-page-title-main">John W. Martin</span> American politician

John Wellborn Martin was an American politician who served as the 24th Governor of Florida, from 1925 to 1929. He also served as Mayor of Jacksonville, Florida, from 1917 to 1923. Born in Plainfield in Marion County, Florida, Martin and his family moved to Jacksonville in 1899. Despite only about four years of formal education, he studied law and was admitted to the Florida Bar in 1914. Three years later, Martin ran for Mayor of Jacksonville and easily defeated incumbent J. E. T. Bowden, becoming the city's youngest mayor at age 32. He was easily re-elected twice in landslide victories and served three consecutive terms.

<span class="mw-page-title-main">1926 Miami hurricane</span> Category 4 Atlantic hurricane that hit Florida in 1926

The Great Miami Hurricane of 1926 was a large and intense tropical cyclone that devastated the Greater Miami area of Florida and caused catastrophic damage in the Bahamas and the U.S. Gulf Coast in September 1926, accruing a US$100 million damage toll. The devastation wrought by the hurricane resulted in the end of Florida's land boom, and represented an early start to the Great Depression in the state. It has been estimated that a similar hurricane would cause about $235 billion in damage if it were to hit Miami in 2018.

<span class="mw-page-title-main">Carl G. Fisher</span> American entrepreneur (1874–1939)

Carl Graham Fisher was an American entrepreneur in the automotive industry, highway construction and real estate development.

<span class="mw-page-title-main">Hamilton Disston</span> American industrialist and real-estate developer

Hamilton Disston was an American industrialist and real-estate developer who purchased 4 million acres (16,000 km²) of Florida land in 1881, an area larger than the state of Connecticut, and reportedly the most land ever purchased by a single person in world history. Disston was the son of Pennsylvania-based industrialist Henry Disston who formed Disston & Sons Saw Works, which Hamilton later ran and which was one of the largest saw manufacturing companies in the world.

A real-estate bubble or property bubble is a type of economic bubble that occurs periodically in local or global real estate markets, and it typically follows a land boom. A land boom is a rapid increase in the market price of real property such as housing until they reach unsustainable levels and then declines. This period, during the run-up to the crash, is also known as froth. The questions of whether real estate bubbles can be identified and prevented, and whether they have broader macroeconomic significance, are answered differently by schools of economic thought, as detailed below.

<span class="mw-page-title-main">Barron Collier</span> American entrepreneur

Barron Gift Collier was an American advertising entrepreneur who became the largest landowner and developer in the U.S. state of Florida, as well as the owner of a chain of hotels, bus lines, several banks, newspapers, a telephone company and a steamship line.

<span class="mw-page-title-main">Card Sound Bridge</span> Bridge in Florida, United States of America

Card Sound Bridge is a high-rise toll causeway connecting southern Miami-Dade County and northern Monroe County. It is one of only two ways that motorists can leave or enter the Florida Keys. The toll for two-axle automobiles is USD $1.50 if paid via SunPass. The prior toll plaza was demolished during Hurricane Matthew and has been replaced with a toll-by-plate plaza. The toll fee will be charged by plate automatically and sent via the mail to the address on the vehicle registration. The cashless all-electronic tolling system replaced the previous staffed toll booth on October 20, 2018. The toll fee is waived upon evacuating the Keys for hurricanes or in instances in which US 1 is impassable.

<span class="mw-page-title-main">History of Miami</span>

Thousands of years before Europeans arrived, a large portion of south east Florida, including the area where Miami, Florida exists today, was inhabited by Tequestas. The Tequesta Native American tribe, at the time of first European contact, occupied an area along the southeastern Atlantic coast of Florida. They had infrequent contact with Europeans and had largely migrated by the middle of the 18th century. Miami is named after the Mayaimi, a Native American tribe that lived around Lake Okeechobee until the 17th or 18th century.

<span class="mw-page-title-main">Isola di Lolando</span>

Isola di Lolando is an unfinished artificial island in Biscayne Bay, Florida. Hurricane damage from the 1926 Miami hurricane, as well as the economic downturn that heralded the Great Depression, caused the project to be abandoned shortly after the start of construction, but pilings remain visible in the bay and are a hazard to navigation.

The history of Fort Lauderdale, Florida began more than 4,000 years ago with the arrival of the first aboriginal natives, and later with the Tequesta Indians, who inhabited the area for more than a thousand years. Though control of the area changed among Spain, England, the United States, and the Confederate States of America, it remained largely undeveloped until the 20th century. The first settlement in the area was the site of a massacre at the beginning of the Second Seminole War, an event which precipitated the abandonment of the settlement and set back development in the area by over 50 years. The first United States stockade named Fort Lauderdale was built in 1838, and subsequently was a site of fighting during the Second Seminole War. The fort was abandoned in 1842, after the end of the war, and the area remained virtually unpopulated until the 1890s.

<span class="mw-page-title-main">Hibiscus Island</span> Neighborhood of Miami Beach in Miami-Dade County, Florida, United States

Hibiscus Island is a neighborhood in the city of Miami Beach on a man-made island in Biscayne Bay, Florida, United States. Hibiscus Island lies just north of Palm Island. It is an exclusive residential neighborhood with relatively high property values. The island is accessible via the MacArthur Causeway.

<span class="mw-page-title-main">Swampland in Florida</span> Figure of speech referring to real estate scams

Swampland in Florida is a figure of speech referring to real estate scams in which a seller misrepresents unusable swampland as developable property. These types of unseen property scams became widely known in the United States in the 20th century, and the phrase is often used metaphorically for any scam that misrepresents what is being sold. Expressions like "If you believe that, then I have swampland in Florida to sell you", suggests the recipient is gullible enough to fall for an obvious fraud. Similar phrases involve "selling" the Brooklyn Bridge or nonexistent "oceanfront property in Arizona".

<span class="mw-page-title-main">Draining and development of the Everglades</span> Development of the Florida Everglades

A national push for expansion and progress toward the latter part of the 19th century stimulated interest in draining the Everglades, a region of tropical wetlands in southern Florida, for agricultural use. According to historians, "From the middle of the nineteenth century to the middle of the twentieth century, the United States went through a period in which wetland removal was not questioned. Indeed, it was considered the proper thing to do."

The effects of climate change in Florida are attributable to man-made increases in atmospheric carbon dioxide. Floridians are experiencing increased flooding due to sea level rise, and are concerned about the possibility of more frequent or more intense hurricanes.

Manhattan was a proposed city in a development that was located in northern Manatee County, Florida near the present-day town of Parrish during the Florida land boom in the 1920s. The town was intended to be the centerpiece of an agricultural community called Manatee River Park Estates.

Verna is an unincorporated area in Manatee County and Sarasota County, Florida, United States.

<span class="mw-page-title-main">Housing in Florida</span>

Housing in Florida consists of apartments, condominiums, hotels, retirement communities, and houses. Common types of housing in the state include Cracker style homes, Ranch-style homes, Caribbean style homes, and Condominiums with styles including Spanish Colonial Revival architecture, Victorian architecture, Mediterranean Revival architecture, Art Deco, Modern architecture, and Pueblo Revival architecture.

<span class="mw-page-title-main">Poinciana, Monroe County, Florida</span> Planned community in Monroe County, Florida

Poinciana was a planned community that was to be located along the Lostmans River in Monroe County, Florida. Poinciana has been described as the Everglades's "most spectacular commercial enterprise" and "the prototype of all Florida scams".

References

  1. ↑ Ballinger, Kenneth. Miami Millions: The Dance of the Dollars in the Great Florida Land Boom of 1925. Miami, Florida: The Franklin Press. p. 5. Retrieved 17 July 2021.
  2. ↑ Ellis, Guy Worthington; Lincoln Road Association; Egbert, Jane (January 1941). "Lincoln Road: The World's Most Beautiful Shopping Center". No. VII:5. The Florida Teacher. p. 18.
  3. ↑ Kleinburg, Howard; Moore Parks, Arva (October 1, 1994). Miami Beach: A History (First ed.). Centennial Press. pp. 136–137. ISBN   978-0962940231.
  4. ↑ Rapp, Donald. Bubbles, Booms, and Busts: The Rise and Fall of Financial Assets. Springer. p. 164.
  5. ↑ Library of Congress. "Devastation in Miami from the 1926 Hurricane". Publisher: United States of America. Retrieved 3 July 2022.
  6. ↑ Barnes, J. (October 14, 1998). Florida's Hurricane History. The University of North Carolina Press. p. 330. ISBN   978-0807824436.
  7. ↑ Cooke, Bill (March 10, 2016). "Remembering Miami Beach's Shameful History of Segregation and Racism". Miami New Times. Retrieved 3 July 2022.
  8. ↑ Simonoff, Harry (January 12, 1951). "Oscillation Of Anti-Semitism In Greater Miami". The Jewish Floridian. p. 3.
  9. ↑ The Beginning of the Road
  10. ↑ Lummus, J. N.; Signed Affidavit (November 21, 1949). "The Early History of Miami Beach". Clerk Archives City of Miami Beach. City of Miami Beach. pp. 1–5. Retrieved 3 July 2022.
  11. ↑ South Florida: A Brief History Archived 2010-04-29 at the Wayback Machine
  12. 1 2 3 Turner, Gregg (2005). Florida Railroads in the 1920s. Charleston: Arcadia Publishing.
  13. ↑ Jarvis, Eric (2010). ""Secrecy Has No Excuse": The Florida Land Boom, Tourism, and the 1926 Smallpox Epidemic in Tampa and Miami". The Florida Historical Quarterly. 89– via University of Central Florida Libraries.
  14. ↑ Miller, Philip Warren (1989). Greater Jacksonville's Response to the Florida Land Boom of the 1920s (MA thesis). University of Florida. Retrieved May 9, 2022– via UNF Digital Commons.
  15. ↑ Florida in the 1920s
  16. ↑ Clark, James C. (October 28, 1990). "UNDERWATER LOTS! SWAMP CITIES! $10 DOWN! WELCOME TO FLORIDA, THE LAND OF SUNSHINE, SURF AND SCAMS". Orlando Sentinel (Digital). Archived from the original on 24 May 2022. Retrieved February 25, 2022.
  17. ↑ Boulton, Alexander O. (May 1990). "Tropical Twenties". American Heritage Magazine . Retrieved November 26, 2014.
  18. ↑ Ballinger, Kenneth (1936). Miami Millions: the dance of the dollars in the great Florida land boom of 1925. Miami: The Franklin Press, Inc. p. 139.
  19. ↑ McIver, Stuart (September 19, 1993). "1926 Miami: The blow that broke the boom". South Florida Sun-Sentinel. Retrieved 3 July 2022.
  20. ↑ Barnes, J. (May 21, 2007). Florida's Hurricane History. The University of North Carolina Press. p. 330. ISBN   978-0807858097.
  21. ↑ Evans 2011, pp. 2–6.
  22. ↑ Evans 2011, pp. 4–5.
  23. ↑ Evans 2011, pp. 5–6.
  24. 1 2 Pearia, Alicia A. (2007). Preserving the Past: Library Development in Florida and the New Deal, 1933-1942 (MA thesis). Florida State University. p. 48 – via DigiNole.
  25. ↑ Evans 2011, pp. 6–7.
  26. ↑ Evans 2011, p. 4.
  27. ↑ Ch. 18296, §2, Laws of Florida (1937)
  28. ↑ Browns, Henry; Brown, Rebecca (2009). "MURPHY DEED RIGHT-OF-WAY RESERVATIONS: A 1930S TAXPAYER BAILOUT YIELDS RIGHT-OF-WAY COST SAVING". The Florida Bar.

Sources

Further reading

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.