It was standing room at a tax deed auction in Palatka, Fla., this week. The town situated between Jacksonville and Gainesville estimated that about 75-85 people bid on tax deeds, some of which went for 10 times their listed price.

Bidders came from all over the state, according to Deputy Clerk of Courts Kenny Downs, who said that one bidder even came all the way from Canada. Deed auctions haven’t always been so lively, but interest has been picking up in the last 12-18 months. Only a handful of local people used to show up, with deeds usually going to the first bidder who would pay what was asked. But it’s no longer that simple.

The auction is yet another example of Putnam County’s suddenly red-hot real estate market. Although North Florida real estate prices have risen dramatically in recent years, they are still considered a bargain compared to the rest of the state. Larry Pritchett, property appraiser for Putnam County, said his offices are overwhelmed by all the land changing hands — and all the new hands swooping to buy up the property.

It’s not something everyone is happy about.

Putnam County residents prize their small towns on the banks of the St. Johns River, along with their local communities and open spaces. It’s a catch-22, however, as these qualities are leading to the county’s growth. As funds from the county’s Better Place Plan go toward widening and paving roads, as well as to water and sewer programs, administrators are trying to make the area more accessible to present and future residents.

The nation’s home prices have skyrocketed since 2000, but the Putnam County cost stayed relatively stable until recently when, along with much of the North Florida housing market, it too began to soar. While experts say the growth of national prices is slowing, Putnam County’s prices don’t show any signs of stopping as tourists and investors discover the St. Johns River — and the communities along it.

“There’s only one St. Johns River,” said Ben Bates, owner and president of Coldwell Banker Ben Bates, Inc.

The scarcity of land at the coasts and an improved Putnam County infrastructure have both drawn people to the area — many who might not otherwise come. Bates said their attention moves west as they move from more densely populated areas to more open spaces. Putnam averages 98 people per square mile, compared to 269 people in the rest of Florida, according to the U.S. Census Bureau.

But prices in Putnam County are still lower than prices in the rest of the state.

Patrick Kennedy, director of planning and development for Putnam County, said that things have gotten so competitive that many people are buying land they cannot yet build on. Since the comprehensive land use plan (which designates certain parcels for agricultural, as well as commercial real estate use) may dictate uses other than those requested by landowners, it’s a chance they have to take — and are willing to.

“I think that’s the issue that our office is going to face,” he said.

Despite many properties that have doubled in value over the past year, most homes in Putnam County remain considerably lower than in the case of most South Florida real estate or the rest of the country. The median house value in 2000 was only $68,500, compared to Florida’s median of $105,500 and the U.S. median of $119,600. Officals say there are two indicators of growth in an area:

1. The prices people are paying.
2. The volume of transactions.

Both indicators are going through the roof. But while land is changing hands, the county’s lack of infrastructure keeps development at bay unless developers can afford to do it themselves.

“The rural character is both the good and the bad, in that sense,” Kennedy said.

One of the reasons housing prices have been going up is because of an increase in demand without an increase in supply. Houses in Country Club Heights, a subdivision built in the 1960s, were selling for just $50,000-60,000 in 2004, but now go for more than twice that. People selling houses can get tax breaks on their profit if they put the extra money into a new house of greater or equal value, causing demand to increase rapidly.

While many properties are going up in value, there are still plenty of opportunities for people entering the market, even in lower income brackets — a rarity for Florida, which faces concerns of alienating its own middle class some areas due to the high costs of housing (Palm Beach real estate is a prime example). Low Florida home loan rates mean good news for residents of Putnam, who are among the state’s poorest and need to get the absolute most out of their investment.

Putnam officials stress that there are several options for people who don’t want to spend as much. Even in pricier neighborhoods, bargain homes in need of improvements sell for less than newer properties. While building costs are in line with other areas of the state, land costs are lower in Putnam than surrounding counties. Overall, if you are able to enter the real estate market in Putnam County now, you’ll get more for your money and high appreciation.

Here’s a look at what $100,000 will get you across Florida…

• Palatka: 1,044 square feet of house with three bedrooms and one bathroom, built in 1945.
• St. Augustine: A one bedroom, one bathroom house built in 1995.
• Jacksonville: A two bedroom two bathroom, 960 square-foot condo built in 1983.
• Orlando: A one bedroom on bathroom, 485 square-foot condo, built in 1986.
• Fort Lauderdale: A one bedroom, one bathroom condo built in 1978.
• Naples: a one bedroom, one bathroom, 396 square-foot condo built in 1989.

The difference is clear. It’s not hard to see where your Florida home loan will go farthest… and why so many residents are looking to the northern part of the state in search of a better deal.