On Friday, I met up with a realtor in Fernandina Beach, a small seaside community on the northeast coast of Florida. We met at his office...

"This time last year, 1,100 properties were listed for sale. Now it's over 1,900," he told me, logging into his database. "But prices on the island are holding up well... it's worse off the island. Prices have fallen about 15%."

When I'm assessing value in a property market, I always study the bottom end of the market. Cheap houses are more standardized... the market is deeper... and prices don't jump around so much.

I asked the realtor to show me only houses on sale for less than $200,000. He looked dubious, but his system pulled up seven listings. "Last year," he said, "I probably would've gotten zero."

He printed off the list of houses and ushered me outside to his metallic gold SUV...

The median price of coastal property in Florida has risen at least 35% in each of the last four years. I bet Miami's skyline features more construction cranes than any other city in the developed world. Florida coastal property is the undisputed epicenter of America's real estate boom. When people talk about property bubbles, they talk about Florida.

Six months ago, the market turned. Stories of forfeited deposits, cancelled projects, and lawsuits started appearing in the press. They took down the "condo-flip" website, where speculators traded preconstruction condos online. Here in Fernandina Beach, I started to see For Sale signs all along the beach road. I live in a housing complex near the ocean. There are 48 units in my complex. Right now, seven are for sale, including the one I rent.

The realtor took me into three houses and drove me by four more. I expected to find only bombed out shacks in my price range. I was totally wrong. Take the first house we saw for example. 

Listed for $189,000, it had three bedrooms and two bathrooms. Total floor space was 1,200 square feet. It was built two years ago, so it still looked new and fresh. It had a screened back porch and a one-car garage. The backyard was 200 square feet, closed in by a fence.

The location wasn't great. The realtor described it as a "blue-collar" neighborhood, but the surrounding houses looked pretty good. It was only a mile or so from the ocean. The school was across the street, and the main tourist drag through town was just a few blocks walk away.

"It's been on the market for six months already," said the realtor, "so you've probably got some room in the price. Also, they'll probably pay closing costs for you."

All this tells me the market is anything but overvalued.

All the noise about bubbles and the Chicken-Little headlines about subprimelenders are simply distractions.

When you consider 30-year fixed mortgage rates at 5.75%, the beautiful Florida weather and nearby ocean, the weak dollar and its relentless inflation, the gargantuan property bubbles in Europe, and the opportunity to live in the richest, safest, country in the world, where I know no one is going to seize my land, the conclusion is obvious.

I'm going to buy a house here as soon as I can.

Good investing,