Florida land boom of the 1920s
Encyclopedia
The Florida land boom of the 1920s was Florida
's first real estate bubble
, which burst in 1925, leaving behind entire new cities and the remains of failed development projects such as Aladdin City
in south Miami-Dade County
and Isola di Lolando
in north Biscayne Bay
. The preceding 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 modern real estate boom, including the forces of outside speculators, easy credit access for buyers, and rapidly-appreciating property values.
By the 1920s, its economic prosperity had set the conditions for a real estate bubble in Florida. 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 the publicity talents of audacious developers like Carl G. Fisher
of Miami Beach, famous for purchasing a huge lighted billboard in New York
's Times Square
proclaiming “It's June In Miami”, property prices rose rapidly on speculation and a land and development boom ensued.
Brokers and dealers speculated wildly in all classes of commodities as well, ordering supplies vastly in excess of what was actually needed and even sending shipments to only a general destination, with the end result being that railroad freight cars became stranded in the state, choking the movement of rail traffic.
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 reality of land value. New York bankers and the IRS both 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, permitting only foodstuffs, fuel, perishables, and essential commodities to enter or move within the state.
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. The old Danish warship had been on its way to becoming a floating hotel.
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 a lot of people a lot of money 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.” 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.
Although the railroads lifted the embargo in May 1926, the boom nevertheless fizzled out. Disaster then followed in the shape of the September 1926 Miami Hurricane
, which drove many developers into bankruptcy. The 1928 Okeechobee Hurricane
and the Wall Street Crash of 1929
continued the catastrophic downward economic trend, and the Florida land boom was officially over as the Great Depression
began. The depression and the devastating arrival of the Mediterranean fruit fly
a year later destroyed both the tourist and citrus industries upon which Florida depended. In a few short years, an idyllic tropical paradise had been transformed into a bleak, humid remote area with few economic prospects. Florida's economy would not recover until World War II
.
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
's first real estate bubble
Real estate bubble
A real estate bubble or property bubble is a type of economic bubble that occurs periodically in local or global real estate markets...
, which burst in 1925, leaving behind entire new cities and the remains of failed development projects such as Aladdin City
Aladdin City, Florida
Aladdin City is an unincorporated community in Miami-Dade County, Florida, United States. It is located about southwest of Miami within the unincorporated community of Redland...
in south Miami-Dade County
Miami-Dade County, Florida
Miami-Dade County is a county located in the southeastern part of the state of Florida. As of 2010 U.S. Census, the county had a population of 2,496,435, making it the most populous county in Florida and the eighth-most populous county in the United States...
and Isola di Lolando
Isola di Lolando
A Miami real estate bubble burst in the mid 1920s as a land boom fueled by outside speculators was stricken by economic realities and unexpected hurricanes. One failed development project left its remains scarring north Biscayne Bay near Miami Beach, Florida...
in north Biscayne Bay
Biscayne Bay
Biscayne Bay is a lagoon that is approximately 35 miles long and up to 8 miles wide located on the Atlantic coast of South Florida, United States. It is usually divided for purposes of discussion and analysis into three parts: North Bay, Central Bay, and South Bay. Its area is...
. The preceding land boom shaped Florida's future for decades and created entire new cities out of the Everglades
Everglades
The Everglades are subtropical wetlands in the southern portion of the U.S. state of Florida, comprising the southern half of a large watershed. The system begins near Orlando with the Kissimmee River, which discharges into the vast but shallow Lake Okeechobee...
land that remain today. The story includes many parallels to the modern real estate boom, including the forces of outside speculators, easy credit access for buyers, and rapidly-appreciating property values.
By the 1920s, its economic prosperity had set the conditions for a real estate bubble in Florida. 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 the publicity talents of audacious developers like Carl G. Fisher
Carl G. Fisher
Carl Graham Fisher was an American entrepreneur. Despite having severe astigmatism, he became a seemingly tireless pioneer and promoter of the automotive, auto racing, and real estate development industries...
of Miami Beach, famous for purchasing a huge lighted billboard in New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
's Times Square
Times Square
Times Square is a major commercial intersection in the borough of Manhattan in New York City, at the junction of Broadway and Seventh Avenue and stretching from West 42nd to West 47th Streets...
proclaiming “It's June In Miami”, property prices rose rapidly on speculation and a land and development boom ensued.
Brokers and dealers speculated wildly in all classes of commodities as well, ordering supplies vastly in excess of what was actually needed and even sending shipments to only a general destination, with the end result being that railroad freight cars became stranded in the state, choking the movement of rail traffic.
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 reality of land value. New York bankers and the IRS both 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
Florida East Coast Railway
The Florida East Coast Railway is a Class II railroad operating in the U.S. state of Florida; in the past, it has been a Class I railroad.Built primarily in the last quarter of the 19th century and the first decade of the 20th century, the FEC was a project of Standard Oil principal Henry Morrison...
, and the Atlantic Coast Line Railroad
Atlantic Coast Line Railroad
The Atlantic Coast Line Railroad was an American railroad that existed between 1900 and 1967, when it merged with the Seaboard Air Line Railroad, its long-time rival, to form the Seaboard Coast Line Railroad...
-- called an embargo due to the rail traffic gridlock, permitting only foodstuffs, fuel, perishables, and essential commodities to enter or move within the state.
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. The old Danish warship had been on its way to becoming a floating hotel.
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 a lot of people a lot of money 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.” 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.
Although the railroads lifted the embargo in May 1926, the boom nevertheless fizzled out. Disaster then followed in the shape of the September 1926 Miami Hurricane
1926 Miami Hurricane
The 1926 Miami hurricane was a Category 4 hurricane that devastated Miami in September 1926. The storm also caused significant damage in the Florida Panhandle, the U.S. state of Alabama, and the Bahamas...
, which drove many developers into bankruptcy. The 1928 Okeechobee Hurricane
1928 Okeechobee Hurricane
The Okeechobee hurricane, or San Felipe Segundo hurricane, was a deadly hurricane that struck the Leeward Islands, Puerto Rico, the Bahamas, and Florida in September of the 1928 Atlantic hurricane season...
and the Wall Street Crash of 1929
Wall Street Crash of 1929
The Wall Street Crash of 1929 , also known as the Great Crash, and the Stock Market Crash of 1929, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout...
continued the catastrophic downward economic trend, and the Florida land boom was officially over as the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
began. The depression and the devastating arrival of the Mediterranean fruit fly
Ceratitis capitata
Ceratitis capitata, the Mediterranean fruit fly, or medfly for short, is a species of fruit fly capable of causing extensive damage to a wide range of fruit crops...
a year later destroyed both the tourist and citrus industries upon which Florida depended. In a few short years, an idyllic tropical paradise had been transformed into a bleak, humid remote area with few economic prospects. Florida's economy would not recover until World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
.