What happened in Florida shouldn’t happen, period. A building shouldn’t fall down. Someone said to me, who was not born here, said this happens in third-world countries where corruption is rampant. Remember watching the YouTube video of major buildings in China being put up in a few days. Would you want to live there?
I shudder to think about the people who live in Florida in the condominiums still standing. Building regulators and insurance companies are swooping in to look under the hood. Undoubtedly there will be repairs needed, and the cost will be high. What happens when you can afford to buy the condo, pay the monthly fees, but when there is an assessment, it throws off your money management to the wind?
As the story unfolds, and it will take time, the cost to fix the structural problems associated with the building was delayed due to the massive cost. The question is always, who is to blame and who should pay for this? Should the developer? Why me? What happens to people who are now homeless, must continue to pay their mortgage and were living their best life, and now find themselves living on the edge in a hotel?
There will be tremendous debt to fix the buildings still standing. It needs to be monitored, or it will become a serious problem ten years from now when the gig is up. We have watched that in our history through the mortgage crisis. But this is what we do. We leverage. It is very American. We live beyond our means, and the banks take full advantage of that.
Many years ago, we were in Madrid and met up with an old friend from high school. Her father was a diplomat, so she and all of her siblings spread out around the world. Her husband, who was a Spanish banker, was shocked that she had credit card debt. In Spain, at least at this point, they did not have credit cards. Credit card debt was unacceptable. They lived vastly different than Americans.
Millennials are not into debt, and Generation Z is definitely not. We might all take a lesson from this. The desire of the next generation to live within their means will force housing to change. Developers leverage themselves with banks. They usually put down only 10% to buy a building or a plot of land and take the other 90% in debt to build the property with the hopes that they can then sell it, pay the bank back and make some money in the transaction. When there is a downturn in the economy, and when you only have very little skin in the game, it isn’t such a big deal to walk away.
Many lessons to be learned in Florida. I hope that we do not repeat lessons that should have been learned from our past about highly leveraging our bank accounts to live lives that teeter on the edge. I have never understood living large with debt. We had nothing for years and lived hand to mouth; the thought of seeing a huge credit card bill would have given us too much anxiety.