Florida land boom of the 1920s
The Florida land boom of the 1920s was Florida's first real estate bubble, which burst in 1925, leaving behind entire new cities and the remains of failed development projects such as Aladdin City in south Miami-Dade County and Isola di Lolando in north Biscayne Bay. The land boom shaped Florida's future for decades and created entire new cities out of the Everglades land that remain today. The story includes many parallels to the modern real estate boom, including the forces of outside speculators, easy credit access for buyers, and rapidly appreciating property values.
By the 1920s, its economic prosperity had set the conditions for a real estate bubble in Florida. Miami had an image as a tropical paradise and outside investors across the United States began taking an interest in Miami real estate. Due in part to the publicity talents of audacious developers such as Carl G. Fisher of Miami Beach, famous for purchasing a huge lighted billboard in New York's Times Square proclaiming “It's June In Miami”, property prices rose rapidly on speculation and a land and development boom ensued. Brokers and dealers speculated wildly in all classes of commodities as well, ordering supplies vastly in excess of what was actually needed and even sending shipments to only a general destination, with the end result being that railroad freight cars became stranded in the state, choking the movement of rail traffic.
By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any reality of land value. New York bankers[who?] and the IRS both began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. To make matters worse, in October 1925, the "Big Three" railroad companies operating in Florida—the Seaboard Air Line Railway, the Florida East Coast Railway, and the Atlantic Coast Line Railroad—called an embargo due to the rail traffic gridlock, permitting only foodstuffs, fuel, perishables, and essential commodities to enter or move within the state.
Then, on January 10, 1926, the Prinz Valdemar, a 241-foot, steel-hulled schooner, sank in the mouth of the turning basin of Miami harbor and blocked access to the harbor. The old Danish warship had been on its way to becoming a floating hotel. Because the railroads were still embargoing non-essential shipments, it now became completely impossible to bring building supplies into the Miami area, and the city's image as a tropical paradise began to crumble. In his book Miami Millions, Kenneth Ballinger wrote that the Prinz Valdemar capsize incident saved a lot of people a lot of money by revealing cracks in the Miami façade. “In the enforced lull which accompanied the efforts to unstopper the Miami Harbor,” he wrote, “many a shipper in the North and many a builder in the South got a better grasp of what was actually taking place here.” New buyers failed to arrive, and the property price escalation that fueled the land boom stopped. The days of Miami properties being bought and sold at auction as many as ten times in one day were over.
Although the railroads lifted the embargo in May 1926, the boom nevertheless fizzled out. Disaster then followed in the shape of the September 1926 Miami Hurricane, which drove many developers into bankruptcy. The 1928 Okeechobee Hurricane and the Wall Street Crash of 1929 continued the catastrophic downward economic trend, and the Florida land boom was officially over as the Great Depression began. The depression and the devastating arrival of the Mediterranean fruit fly a year later destroyed both the tourist and citrus industries upon which Florida depended. In a few years, an idyllic tropical paradise had been transformed into a bleak, humid remote area with few economic prospects. Florida's economy would not recover until World War II.