State is no longer a cheap place to live or to have a vacation home

Snowbirds are a unique American institution. Nowhere else in the world do so many families migrate from north to south for a winter vacation. Oh, it’s true that many in the north of Europe escape to the south of France or the Italian Riviera — but only the wealthy. In America, the middle class (if they are so disposed) can retreat to a southerly clime when the leaves begin to fall. Florida is the snowbird capital, but the species may become endangered if present trends continue.

The perfect storm began about five years ago when the bodacious bureaucrats in the taxation and finance division of Florida’s inept government decided to let those “damn Yankees” pay for their crumbling infrastructure and inadequate schools, among other things. Thus, property taxes for snowbirds were systematically tripled over the next three years while taxes for “homesteaders” were held to their maximum 2 percent increase per year. This started an exodus of retirees and others with fixed incomes, who could no longer afford their condos. In effect they started killing the snowbird that laid the golden egg.

Concurrent with this, property values soared and a building boom ensued. In 2005, property values in Palm Beach County (the epicenter of all this madness) increased 24 percent in one year. The average price of a home or condo was $350,000 (today the average has plummeted to $242,900). A prime example of this feeding frenzy was a truly ugly 30-story condominium/ yacht basin, built by the Blue Herron Bridge in Riviera Beach. Before construction was complete, a large banner was hung on the building saying, “Sold Out.” In reality, greedy realtors had bought up most of the apartments at pre-construction prices and financed them by mortgage, hoping to flip them at a huge profit (today that condo is mostly empty).Then, the tsunami hit Wall Street, and Americans were forced to relearn the painful lessons of the Great Depression.

Property values plunged precipitously, and millions of homeowners could not pay their mortgages, which were much higher than the value of their property. The tidal wave hit Florida harder than most areas of the country because of its over-development and a unique aftershock.

My friend Chip Davis sells Porsches for Braman Motorcars of Palm Beach. He has a customer who has a residence in Palm Beach (among others he owns all over the world) and buys a new Porsche every year. Two years ago his customer called and cancelled his order, saying, “When I called my broker for my usual monthly stipend of $100,000 he informed me that my account was zero-zip-zilch.” The broker had invested all the money with the Madoff Investment firm and Bernie had “made-off” with his $50 millions of life savings. This scenario was played out with hundreds of the rich and famous from Florida and elsewhere, including Norman Braman, owner of Braman Motorcars.

While our country is recovering from the recession, Florida languishes in a deep slump. The Palm Beach Post reports; “The Great Recession might be over for the nation but Florida’s economy is still shrinking.”

Thousands of properties are in foreclosure and there are many bargains — that’s the good news. The bad news is that it’s a cash market. The banks are simply not lending money on condos — too risky. When you add the high property taxes that snowbirds will have to pay, Florida is no longer a cheap place to live or a cheap place to have a vacation home. Last year, for the first time in Florida’s history, more families moved out of Florida, than moved in. (Will the last legislator leaving the council chambers in Tallahassee, please turn out the lights).

However, as Alexander Pope once said, “Hope springs eternal in the human breast.”

As I sit at my word processor on this beautiful November day in Florida, pumping out this rhetoric, a colossal cruise ship is on its maiden voyage from Helsinki, Finland, where it was built, to Ft. Lauderdale. The Royal Caribbean “Oasis of the Seas” is five times bigger than the Titanic and 40 percent larger than the industry’s next largest ship. Some of the staterooms are bigger than the average condo and it will hold 6,360 Floridians (at per-person rates running from $1,299 to $4,829) who wish to sail the Caribbean, and forget their woes this winter.