Bloomberg is reporting that condominium developers have continued building very quickly, despite the Florida real estate market's sell-off in the past year. This ignorance to the needs of the market forced the market into recession in October, becausethe Floridian economy has become very dependent on the strong housing market from 2002-2005. One expert in the article even went as far as to say that Florida is the "epicenter for all the problems that exist in the housing industry."
Bizarrely, 20,000 new condo units are being developed despite the recent sell-off in the market and lack of demand. I guess the developers missed Economics 101 -- when there is no demand, there's no reason to flood the market with supply. These ridiculous actions are only exaggerating the area's already-significant supply glut.
These events could force any companies with exposure to the Florida condo market to further write-down its book value. The ramifications of this entire debacle are becoming more and more clear, and once investors realize that a recession is developing in Florida, they will quickly become very leery to invest in companies based in Florida.
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