Here Comes the Sunbelt

MIAMI BEACH, FLA.—You probably don't want to hear this, but it's glorious down here. Highs in the 80s. Lows around 65. The pools are busy.

Last week we had what the locals called "a cold snap." You needed a sweater vest to eat dinner outdoors.

OK, hate me.

But it's times like this that make you remember why all those Sunbelt states had a real-estate boom in the first place.

It may be hard to recall now, through all the drama and pain of the real estate collapse, but back in the bubble there was at least a smidgeon of method to the madness.

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Hundreds of cars are were stranded on Lake Shore Drive earlier this week in Chicago.

"Eighty million baby boomers are about to retire," went the argument. "They're not going to hang around in places like Chicago, New York, Boston and Pittsburgh all winter if they can help it. Slowly, population is going to shift to better climates—like Florida, Nevada, Arizona and California."

Sure, the boom became ridiculous. Obviously, prices got totally out of whack. And, of course, a lot of purchases were financed in crazy ways.

But was the argument really wrong?

Look out your window. Welcome to Fargo—wherever you are.

This has been the third appalling winter in a row. And if you think this weather is miserable when you're 50, try it when you're 75.

Will this be bullish for cheap real estate in warmer parts of the country, from Arizona to Texas to Florida? Will this ghastly winter turn the tide for the real-estate bust? We'll have to see.

For all we know, the next few winters could be mild. But it's human nature to extrapolate from recent experience. For boomers with empty nests, and those nearing retirement, the idea of moving south may be back on the agenda.

Away from the weather and the demographics, there's a third factor that makes me more bullish: the looming retirement crisis.

Tens of millions of baby boomers are completely unprepared for retirement. They haven't saved anywhere near enough. While the stock market has rebounded dramatically from its lows, many sold during the crisis.

According to the Employee Benefits Research Institute, a think tank, two-thirds of workers—and two-thirds of retirees—have saved less than $50,000 for their retirement. That's chicken feed.

On top of that they'll have Social Security, and the equity in their home. They will need both. Yet Social Security may face some cuts.

Will this drive boomers to live somewhere cheaper? It might. And that may also be a case for looking south.

According to the Accra Cost of Living Index, places like Phoenix, Arizona, Las Vegas and Austin, Texas—and Fort Myers—cost less than half as much to live in as Manhattan, and far less, too, than places like Chicago.

House prices, as everyone knows, have collapsed across the sunshine states. While the rest of the country has also been hit, the declines have in most cases been more muted.

How do the two compare? Using house price data from Zillow.com, I looked at typical real-estate prices in one of the boom-and-bust towns down here—Fort Myers, Fla.—and those in a typical northern city—in this case, Chicago.

Bottom line? At the height of the mania, according to Zillow, typical real-estate prices in Fort Myers briefly reached parity with those in Chicago. Today? They're down to about 60%. The ratio in the late 1990s, before the boom: also about 60%.

By this measure, at least, we're back where we started. It's like the bubble never happened.

In practical terms, the price gap today may be even wider than it appears. That's because there now are so many foreclosures down here—and in the other former bubble states—that an aggressive shopper can find ridiculous bargains. Even in Miami Beach, where we own a place, I see prices have been coming down again over the past nine months or so. A lot of the European buyers vanished after the Greek crisis. And many distressed homeowners, after keeping one step ahead of the bank for a couple of years, have finally run out of options.

None of this is going to give a real boost to the property market in the short term. There are so many distressed homeowners around that prices could stay depressed for quite a while. They could fall further. And anyone looking to buy needs to do their homework carefully.

Yet in the depths of a crash, it is always tempting to assume that the preceding bubble was totally ridiculous. They often aren't. Consider the bubble before real estate: that in tech stocks. By 2002-03, everything about it looked absolutely absurd. (I remember having dinner at the time with a former venture capitalist who confidently assured me that "Amazon.com is going to end up as a division of Barnes & Noble.")

But here we are. Today, just as those "crazy" investors predicted in 1999, we really are using small handheld computers with mobile Internet connections to surf the web, bank, read the news, watch TV and video-chat with friends on the other side of the world. Stocks of a few big winners, such as Apple and Amazon, have actually far surpassed their bubble-era peaks.

We are hard-wired to extrapolate from the present, from booms to busts.

Will real estate in the sunshine states recover? Will the great baby-boom migration south actually take place? I think it might.

OK, maybe I'm just being a contrarian. But hey, at least I'm a warm contrarian!

Write to Brett Arends at brett.arends@wsj.com