Baklava Cheesecake in Florida

New York, April fool’s day 2011.

Fusion cuisine has reached a new level in Florida.

In the little town of Venice, one can for example stop at a café to eat Thai sushi (!??), then stroll down the street to enjoy a baklava cheesecake (!!!) at a El Greco.

Frankly, fusion cuisine is best left to Californian chefs.

But Floridians will be forgiven for not focusing on the quality of their cuisine.

They have more important problems to worry about because their economy surely does not look like it is out of the woods.

To the casual visitor’s eye, real estate is not showing any signs of bottoming out.

Already when driving away from the Orlando airport, this visitor will be surprised to find condominiums advertising nightly rates.

Not to be outdone, nearby motels fight back with special weekly deals seemingly to attract people who cannot afford to live in condos.

And this is only a warning.

Driving south on route 41, the landscape gets more depressing.

Ghost mall after ghost mall, one inevitably wonders how in hell will Florida get back on its feet.

That is until one reaches Naples, a beautiful modern city with endless beaches.

Wealth there is abundant yet not ostentatious.

The architecture is very attractive, the infrastructure new and space plentiful.

Unlike its filthy namesake in Italy, Naples in Florida is amazingly well manicured.

If and when the sunshine state will recover, it undoubtedly will start here.

Already foreigners are taking advantage of excellent bargains.

In spite of, or maybe because of the crisis, Florida is still a favorite destination for foreigners seeking a home in the US.

54% of Germans looking for a home in the US, choose Florida.

Germans, but also Canadians, are particularly attracted by South West Florida.

Latinos, on the other hand, tend to move to the Miami area and Brits to Orlando.

Don’t ask me why Orlando.

But foreigners are not alone.

Florida is still enjoying a net inflow of American migrants as well.

While California lost 1.5 million and New York 1.7 million residents from 2000 to 2009, Florida saw a net increase of 1.2 million.

Many of these New Yorkers moved south, to Florida.

Other “feeder states” are New Jersey, Minnesota, Ohio and Illinois.

This trend is well established, but has recently been reinforced by fiscal policies.

Feeder Illinois’ 66% increase in income taxes, for example, will no doubt have an influence on people’s choice of residency.

It is thus not only the weather, the beaches and the life style that attracts fellow Americans to Florida.

Low taxes and sound public finances help too.

Politics may change, but with a per capita deficit of only $ 194, Florida looks to the future with some confidence.

No belt tightening here.

By contrast, the per capita deficit in New Jersey is $ 1,209 , $ 887 in California, $ 722 in Minnesota and $ 512 in New York.

So, Florida will once again rise from its ashes.

It did so after its previous real estate bubble/burst.

That was in 1926.

Then as now, Florida’s real estate bubble was seemingly a harbinger of a stock market meltdown to come.

Let this report be a warning to my great grandchildren.

They will most likely be around when the next Floridian real estate bubble will materialize.

But if they will care to read my report, maybe my offspring will be saved major losses by selling their stock portfolios as soon as real estate prices in Florida reach unsustainable levels.

But has the recovery already begun?

One real estate dealer we met, not surprisingly, believes so.

He claims South West Florida is “The Growth Coast”.

Already existing homes have reached 4.8 month supply, down from 21 months.

However here is the caveat.

The commercial real estate meltdown is yet to hit.

Banks have so far kept most underperforming loans on their books.

The regulators have given them a grace period and low interest rates have in turn given the banks’ customers a break.

By thus buying time, the Fed hopes banks will be in a stronger position to take large write offs.

It may well work.

But the write offs and forced sales are still ahead of us.

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