Since 2001, Florida real estate has been the hottest thing since Michelob came out with a low-carb beer. Investors were looking to buy as much as they could possibly afford and primary owners and the second home market saw their home values increase by 300% within just a couple years in some spots. The real estate market became the best in the Orlando market, then was overshadowed by the SW Florida market of Naples, Ft. Myers, and Cape Coral. What more can the baby boomer market ask for? Every day of sunshine, palm trees, fishing, golfing, and most importantly, boating. The arm corp of engineers years ago dredged over 400 miles of intercoastal and fresh water canals throughout Cape Coral, using the dredged dirt to fill in the wetland and marshy areas. Anchor stores, major companies, and high-end corporations were entering the market. Super Target's, WalMart's were going in everywhere. Housing appreciation was tops in the country, exceeding expectations and making the Phoenix and Las Vegas inferior to what SW Florida was seeing. With appreciation at 43% over ONE YEAR, the smart investor must ask themselves if this market can sustain another year like that.

Enter the years 2006-2007. Smart investors were right. After the Fed started raising rates, prices became nearly unaffordable, taxes/insurance premiums increased, and the new hurricane era hit, Florida has been one of the worst markets in the country. Although I could write pages on declining factors in the market, most of you know it already so I will get to the good part.

When the market was hot, lending institutions opened the floodgates so that any John or Jane Doe could finance real estate with no money out of pocket, little money out of pocket, etc?Banks were offering NINA and SINA products. NINA stands for ?No Income No Asset Verifications. SINA stands for Stated Income No Asset Verification. As long as your credit score was 700 or better, you could finance up to 8 properties with no money down. Here is the problem. Let's say a school teacher from New Jersey with a base salary of $45,000 is interested in real estate and looks to take advantage of the real estate market. Realtors call up and tell them how great the market is and how much wealth they can create for themselves by leveraging the banks money to buy all the real estate you could buy. Believe me, there were hundreds, if not thousands of investors JUST LIKE THIS. So the school teacher buys 8 houses for no money down, each house with a purchase price of $250,000 let's use which is average. That is almost $2,000,000 in debt! With the intention of never holding the property for long, putting a renter in and flipping for a short resale, things looked great.

Then the market doesn't take a 'soft landing' as most parts of the country may have. Florida literally crashed. Houses valued at $250,000 now became part of the inventory that investors built for the same intention and the domino effect began. Prices pummeled to maybe $220,000 and lower in some spots. Now this school teacher owns $2 million in real estate, can't rent them, and worse of all, he/she cannot sell them or even get phone calls on them. Foreclosures stockpiled. Short Sales were not even an option to most with values declining at such a rapid pace.

In a much worse case, the investor market and non-asset verified bank programs, the market crashed so hard that even homes at the original median house price could not sell. Homeowners who have lived in FL for years and finally had some value in their homes refinanced and did some upgrades to their home, bought the boat they always dreamed about, or treated themselves to something finally attainable for themselves. Because of the saturation of similar homes investors built, these homeowners are now in dire straits because their refinance, although still at a conservative price now put them at an overvalued price in the market.

Houses are going into pre-foreclosure dozens at a time, days at a time. A savvy real estate investor sees the potential. Is FL a bad market now? Yes. Can you still make money in the market? Absolutely. You can now buy homes brand new and up to current building code for less than $200,000. The market WILL bounce back. Maybe not until the end of 2008, but there is no doubt in my mind that it will happen again. Look at the factors: Unemployment rate is very low, the overall economy is relatively good in Florida, insurance is likely to come down, and more importantly taxes are going to likely come down. Florida has no sales tax. Not fair for the homeowner. They have to pay all the taxes and tourists buy their things at cost. SW Florida is a hotspot for vacationers. It is likely that a 6% tax is going to be slapped on goods after January 2008. Property taxes are going to come down as a result.

Geography is not the problem. We have an international airport with some of the strongest numbers in the country, we have championship golf courses and marinas, we have more boating than you can possibly imagine, and white sand beautiful beaches in Ft. Myers, Naples, Sanibel Island and Captiva Island.

With those factors said, should we wait until they are all put into effect? I wouldn't. Although the market rent is $1000-$1200 for homes non-waterfront and $1500-$2000 for waterfront, factor that into your bottom line numbers. If you can buy a home 15% under the median, you are in a safe position. If you have some money put aside and you don't know what else to put it in besides a 4% Money Market at your bank, Florida real estate should be a place for you to look at, especially when the market is down. Weather the storm, buy at lowest prices in a bad market, and taking all factors into consideration, you will likely be successful in re-investing in the Florida housing market, especially the SW Florida market of Lee County.

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