Oct

29

As the folks at Global Financial Data remind us, sometimes "real" property prices are virtual. As their Chief Economist, Bryan Taylor, notes in an essay on the Florida Land Bubble of the 1920s, "two-thirds of all Florida real estate was sold by mail to speculators who never visited Florida. Many of them tried to flip the land through ads in the Miami Herald. For those who actually went to Florida, binder boys were hired to expedite purchases." The "binder boys" were what many mortgage brokers/real estate agents were during the most recent real estate bubble; they collected down-payments and offered seller financing for periods as little as 30-days.

One can get a gauge of the size of the crash from the price for The Land Co. of Florida common stock.

As Dr. Taylor notes, "The stock traded on the New York Curb (later the American Stock Exchange) and traded in September 1925 at 93. After the train embargo was announced in October, the price fell to the 60s, and continued to fall, decreasing to the 20s by February 1926. One would expect that the hurricane of September 1926 would have caused a further collapse, but in reality, the stock price rose after September, hitting 41 in December. Perhaps the impact of the hurricane should be reevaluated, but it was downhill from 1927 on. By the time the stock market crashed in October 1929, the price had fallen to 5 and by the end of 1930, the stock was at $0.50, never to recover. The stock stopped trading on the Curb in May 1931."


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