Just a word of caution from someone who's family has now been through 2 separate real estate downturns. What goes down...may never come up.
My parents bought a small, modest home in Houston in the early 1980s. They paid $75,000. That area went through the oil bust in the late 80s. Economic recession/depression in the early 90s. The home is now is now listed on Zillow as worth $98,000.
My father bought the home cash, putting every cent he had saved into that home. If he had put that cash into an investment that matched inflation (govt tips, bonds, etc)...he'd have had $168,409.59 right now. If he had put it in the stock market or other balanced portfolio...who knows.
Bubbles rarely *EVER* get back to peak periods.
My advice to you would be to rent. Buy if you think of it as home, not an investment. 2005 prices for homes are at least 10-15 years away IMHO...and inflation adjusted, NEVER going to recover.
Agreed, unless there is a large shift in teh economy down here. There is no/verry little industry and certainly not enough to support many of the prices of these homes. THat was always my argument when people compared it to California and other water-areas with high real estate. Many of those areas have the jobs to support that growth. Down here in SW Florida, it is mostly second homes or snow bird homes.
Also, regarding the canals, yes, you can have your boat behind it, but be aware that there are bridge and power line restrictions to consider. The Cape bridge is 55' and the power lines for most of the cape coming in to bimini are 55. There are homes without those restrictions (I owned one), but you have to know where to look. Many of those homes with canals are not good for anything but a flats boat, and that can be pushing it sometimes in a low-low.
I personally think that the prices here could stand to fall some more. The compensations here are at or below Texas compensations and the houses are much more expensive. Plus, there are soooo many repos and houses sitting ready to go repo that any chance of getting rid of your purchase would be difficult. I think the best place to invest for a 'investment property' would be more of the Naples and Marco area where it is a tighter (and smaller) community and the typical resident is not affected by the economy. In other words, they are rich. Of course, you are going to have to write a bigger check for the property. I personally would buy in the Cape again, but only for a house I planned on living in and keeping. Many people have done that to have a place to put their boat as slippage down here is expensive and not a lot of it.
PS You also better check your insurance and taxes before investing in the properties here. That can easily exceed 10k year just for that.