Posted Feb 24, 2021 by Martin Armstrong
QUESTION: Mr. Armstrong,
My wife and I are trying to buy a second home. We live in Wisconsin and want a place somewhere warm. We are trying to buy in Florida, but we are financing it and we bid at the asking. However, on all of the properties, someone comes in with cash and ABOVE asking.
Are we buying into a bubble? Is it best to wait? I will only consider Florida because that is where you are based off of your computer.
Any guidance would be appreciated.
ANSWER: It does not appear to be a bubble. It is not just the real estate going up in Florida. The problem is limited supply and a mad dash out of New England, Illinois, and California. But this is taking place across the board. I was looking for a classic 328 Fararri of 1985 vintage. I use to have one in London. They were going for $50,000 on average. They are now running $100-$150,000 in 3 months. The same is happening in collectibles and art. It simply appears that we are entering the phase of a massive shift from Public to Private assets. This is our Index we have provided to our Institutional clients over the decades. The historic low was 2009 post-1968. This trend appears to be in motion overall into 2032.
In real estate, very few places up for sale and they are selling very fast. The draconian measures in the Democratic states like New York and California have accelerated the migration out of those regions. More than 1 million people have fled New York City to Florida already. You have major chains shutting down in New York City. New Yorkers are fleeing to Florida and so are the restaurants from New York. New Yorkers are realizing that even when vaccinated, it will not return to normal. New Yorkers are even migrating to Texas. But with the Ice Storms there, they are already shifting to Florida.
Places like New York City are just no longer safe as is the case now in many cities in California. Gun permits are soaring in New York because of the sharp rise in crime. Politicians do not understand anything. If you are in business and sales decline, you run sales to try to boost activity. In New York, you impose lockdowns, revenue declines, so the solution is to raise taxes and fees like tolls. You can’t make up this sort of brain-dead mismanagement. Governments will never cut expenses.
On top of all of that, the lockdowns have resulted in alcohol abuse, kids committing suicide for they cannot learn remotely, the very fabric of society is being torn apart. The quality of life in New York and California in rapidly declining and the politicians will never admit a mistake.
I personally am not thrilled about this migration to Florida. Traffic has increased noticeably. Please go to the east coast! Even my house has doubled in value in four years. Florida is the safe-haven in the United States with no state income tax and no ice storms and a governor who has rejected the Democrat’s lockdown agenda that destroys society and business threaten Biden that he would call out the national guard to protect Floridians against the Federal government. I would personally cheer a separatist movement.
It reminds me of my favorite movie, Brave Heart, being of Scottish heritage when William Wallace stood up against Eglish tyranny: “They may take our lives, but they will never take our freedom.” Just sometimes, you have to stand up against tyranny or you and your posterity will lose everything.