Real estate bubble btouxn

Tracking housing prices, 1991-2015.

Housing in Sarasota and Manatee has posted a respectable rate of return for buy-and-hold investors. But short-term investors will probably have more fun in Las Vegas.

The average price of a home in the Sarasota-Manatee county metropolitan area increased 256 percent between the end of 1991 and the end of 2015. That's about three times as fast as the rate of inflation, which isn't bad. But your money would have done a lot better in an S&P 500 index fund, which rose more than 600 percent over those 24 years.

People often say that housing isn't as risky as the stock market. That was true in Sarasota-Bradenton in the 1990s, when prices rose steadily at a rate of about 6 percent a year. A lot of folks believed it right through 2006, even as prices more than doubled in five years. And when the big bubble popped, homeowners who did not sell also did not lose money. What they lost was a decade of rising value. Prices at the end of 2011 were almost exactly where they had been at the end of 2001.

Now, it seems, happy days are here again. Or are they? The price index increased at a rate of about 13 percent a year between the end of 2011 and the end of 2015, which seems like a boom. The history of Florida real estate strongly hints that there will be also be another bust. But when? Step right up, folks, don't be shy—just put your money down, and you'll find out.

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