The Coming Crash in Property Values in South Florida Share

Originally Posted: June 26

I just had a very interesting conversation with my bestest pal Dominique Alexandar about the possible implications of the Gulf oil spill on homes in Florida and what that may do to valuations of property there . . . as well as what impact this could have on the banks -- who may see hundreds of thousands of homes literally abandoned, not to mention boats docked along the coast.

I know I said I was going to stop making predictions about the economy but :) . . .

This is going to get much worse soon as both banks and insurance companies -- something no one talks about much -- are at grave risk for serious shortfalls if property values in Florida suffer a huge hit -- which seems likely to me to happen within the next 60-90 days.

I talked about banks suffering a big hit around the end of August. Well, Hurricane Season is likely to be in full force by then and don't be surprised if people soon just walk away from Florida.

The valuation of homes, especially around Ft. Myers / Naples is probably going to be dramatically impacted and insurance claims are certain to cause some serious pain for insurers. This is a mess -- not just an ecological mess . . . it is a financial catastrophe just waiting to tick off.

People will still live in Florida and homes will continue to be bought and sold -- but values across the board are likely to suffer and people who may be in dire straits financially already may not survive. I expect a lot of people to simply give up and let the banks take back their homes; same thing with boats, too.

Tourism (at least for 2010 and 2011) is going to crash and burn and all businesses with revenue streams tied to tourism are going to suffer huge losses over the next 12 months -- not just along the Gulf Coast. People aren't going to travel because they want to conserve gasoline and no one is going to set on a black beach and watch chocolate covered pelicans die right in front of them.

I still believe that the economy will rebound and "pick up" towards the end of 2011. But this year . . . not so good, in my opinion. And getting worse by the hour.

This is why I said all those years ago that the months between May and October of 2010 was going to be the REAL 2012.