Speculating on Real Estate in 2008

In an effort to capitalize on a depressed real estate market in Florida, I have found myself in somewhat of a dilemma.  My specific problem which I am starting to believe has a direct bearing on why the market in FL is depressed is this:

Until I am able to sell the property that I own in the Midwest, I cannot purchase the property that I am interested in down south.

So how does this relate to the real estate market as a whole or at least the market in the place that I am looking to make my investment?  My speculation follows 2 facts related to U.S. population migration.

1. The
   population in Florida increased 13.6% from 2000 to 2006 while the US population overall increased just 6.4% in the same period. 
2. Our economic structure has evolved over the past 40 years from a manufacturing base to a service base, which is the predominant reason why real estate in Michigan (auto mfg) and other states has been suffering.

The significance of these 2 facts as to the reason why FL real estate is tanking relates directly to the lower incomes that people in service industries make relative to those with similar education levels who work in the manufacturing industry AND the fact that so many people, like myself, can’t purchase real estate in the south until they can sell their homes in northern states.  The demand exists, which is why I don’t prescribe to the notion that price is the sole factor in this market.  The real problem is that the people who want to make purchases can’t, either because they can not afford what they want or because they have other properties to sell before they can make new purchases.

The income factor bears directly on the buying power of service workers who would otherwise have greater earning power if employed in manufacturing.  By reducing the buying power of these families the economic environment has in effect reduced or eliminated the ability of these people to purchase homes.  This is also the predominant reason behind the overwhelming number of foreclosures that our mortgage industry is faced with, but that is a topic for
another discussion.

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