Friday, January 01, 2010
Florida did overbuild
Doing the same exercise as I did for California: since 1980, population in Flordia has grown by about 8.7 million--average household size is 2.46 people, for increased demand of 3.6 million units. About 4.6 million units were built, or one million more than necessary to meet full-time residential demand. Florida has a large second home market, but really...Florida's population is about half of California's.
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Florida may have been preparing for the coming Baby Boom retirement, albeit a bit early. Noting the trends for retirees to move south, developers used overly cheap loans to build retirement nests for them. The too cheap loans led to too many nests, too soon.
Centrally planned rates lead to a mismatch between supply and demand, if the rates are held significantly lower than the free market would place them. Central planning must be done with care, and unintended consequences cannot be ignored. If you centrally plan one element of the economy over zealously (rates below Taylor rule in this case), it necessitates centrally planning many related elements via micro managing regulations.
The whole thing can become too complex for central planners to figure out.
Florida's growth industry is growth.
Doing the same exercise as I did for California: since 1980, population in Flordia has grown by about 8.7 million--average household size is 2.46 people, for increased demand of 3.6 million units. About 4.6 million units were built, or one million more than necessary to meet full-time residential demand. Florida has a large second home market, but really...Florida's population is about half of California's.
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