How Florida foreclosures have affected Florida real estate activity of late tells a very interesting story. Much of it has to do with the speculation in real estate that’s gone on in large and small ways down in Florida for years, for a fact. This kind of speculation always rests on a belief that property and land values will continue to rise into infinity. That’s always a false assumption, though.

Why these false assumptions hooked so many people for as long as they did is a question that’s yet to be answered. Perhaps it’s been because real estate has been on a generally upwards curve for well over a decade until just recently. However, as soon as the current recession began, it was inevitable that Florida would eventually feel the same pain affecting much of the rest of the country.

Florida was generally able to duck many of the issues that surrounded the bursting of the housing bubble which affected states like California or cities like Las Vegas, for example, and where home values have crashed badly in the last few years. It might be because Florida had no personal income tax and continued to attract steady in-migration for longer than many other states, most of whom have seen decreases in population lately.

This sort of population increase couldn’t last for ever, of course, and it soon became the case that Florida saw out-migration (more people leaving than coming into the state) for the first time. California has been experiencing a small level of such out-migration for a decade or more. Unfortunately, fewer people means less taxes, which Florida is also finding out about.

It shouldn’t be any surprise that Florida would be no more immune to this issue than any other state, though it took the recession to finally bring that fact into focus starting in late 2008. Property values have declined and unemployment has increased. Anyone who bought into the idea that overpriced real estate would continue increasing in value is being taught a lesson right now.

Many people, in fact, who have been left holding the bag in terms of being in real estate that’s worth less than they paid for it or can expect to get for it in the near future understands this issue now, though they didn’t when it first began to appear. They also understand, hopefully, that there are fewer options in a down economy that will enable them to avoid foreclosure.

It really doesn’t need to be that way, because there are several different programs that can help homeowners avoid foreclosure and also help the state reduce the number of FL foreclosures over time. Whether Florida real estate ever really acts as rationally as it should is a question, but if it can there’s a possibility that real estate can return to being the investment vehicle that many once assumed it would always be.

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