One of the ugliest housing / property crashes in the history of the US is happening in condo-crazed Miami Florida. As this Bloomberg headline story points out, in the middle of the crash, builders are still building. And there are no buyers.
Fuel to the fire my friends. Fuel to the fire. Summed up nicely with this realtor quote: ``This is dumbfounding to me,'' Rosser said. ``It's a building boom in the middle of a housing bust.''
Anyone want to guess the percent downfall from peak to trough? 20%? 30%? 50%? 80%?
When the dust settles, this dot-condo flameout will be a crash for the ages. Miami may see the worst fall - yes, even bigger than Vegas or Phoenix.
Well done Miami. Well done.
Miami Condo Glut Pushes Florida's Economy to Brink of Recession
July 20 (Bloomberg) -- In the middle of the biggest glut of condominiums in more than 30 years, Miami developers keep on building.
The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s, and help push Florida's economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody's Economy.com, who owns a home in Vero Beach, Florida.
``Florida is the epicenter for all the problems that exist in the housing industry,'' said Lewis Goodkin, president of Goodkin Consulting Corp. and a property adviser in Miami for the past 30 years, who also foresees a recession. ``The problems we have now are unprecedented and a lot of people will get burnt.''
Thirty-seven new high-rise condos and 20,000 new units are being built in Miami's 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC in Deerfield Beach, Florida. That's the most unsold units since McCabe began tracking sales in 2002.
While the housing industry is responsible for 10.6 percent of the nation's jobs, in Florida it accounts for 20 percent, Zandi said. Florida construction jobs fell 2.9 percent in May to 626,200 from the peak in June 2006, according to the U.S. Bureau of Labor Statistics.
``All those jobs are going away now, and we're seeing the trickle-down effect in declining sales in big-box retailers and home-furnishing manufacturers,'' McCabe said. ``Florida is headed to a recession.''
``The market is as close to a depression as Miami has seen in 30 years,'' Eichner said. ``There's a gargantuan supply of homes and the overwhelming preponderance were built for speculators, not for people who are living there.''
As much as half of those putting down deposits for Miami condos are speculators looking to flip units, or sell them quickly for a profit without living in them, said McCabe of McCabe Research.
With sale prices falling, McCabe said he expects up to 50 percent of them to walk away from their deposits in the next 18 months rather than complete the sales.
Many ``flippers'' closed on their units and now can't sell them, said Michael Cannon of Integra Realty Resources-Miami Inc., leaving completed condo towers with floors of dark windows and empty balconies.
The skyline of Miami is visible from Key Biscayne, the barrier island where John Rosser lives. Some nights the real estate broker scans the new buildings and sees more dark windows than lighted.
``This is dumbfounding to me,'' Rosser said. ``It's a building boom in the middle of a housing bust.''
29 comments:
When the shitty...sorry I mean "city" you live in is based on hype, posturing and pretentiousness is it any wonder they are in a nose dive?
We are SO HAPPY to be out of Miami. Portland, OR rocks! Of course they think they are immune from the housing bubble...sigh...some people NEVER learn.
Maybe they can take a hurricane head on this season. It would wash away all the poorly built condos and give them a chance to start over. Paradoxically it would stimulate the local economy.
Veritas_Faust
Blogging as Anonymous while in exile from google...its a long and boring story.
LauraVella said: Stock market is already down 184 points this morning on bad Google and Caterpillar new.
Sales in Miami will drop 85+%
`Florida is the epicenter for all the problems that exist in the housing industry,''
Wrong!
THE WORLD...
Friday, July 20, 2007
State Farm Florida Insurance Co., Florida's largest private-market homeowners' carrier, said Thursday it will drop 50,000 coastal policies starting in January as part of a plan to reduce its overall hurricane exposure.
The company also will eliminate an additional unspecified number of wind-only policies.
Wait how can they drop insurance on me? This is just not right.
"Summed up nicely with this realtor quote:"
Where in the story does it say the guy quoted is a realtor?
O.K., here's the really scary one. Many on Wall Street believe the problem with subprime mortgages is limited and under control. They may be right, but it's impossible for anyone to predict how many debtors will ultimately default on their obligations. Many home buyers used creative financing to buy expensive houses in the years of booming home prices. "It's a tough one to get a handle on because we're not really sure what's truly at risk," Scott says. "It could spring on us suddenly."
What other forms of risky credit threaten debt markets beyond subprime? Bill Larkin, portfolio manager of fixed income at Cabot Money Management, believes he's already seeing signs that subprime worries are spreading, rocking other areas of the credit market. He sees a "flight to quality," with many bond investors fleeing not just subprime but anything with a hint of risk.
If the trend accelerates, it becomes even tougher for home buyers to get mortgages, pushing home prices lower. It also becomes more expensive for companies and hedge funds to borrow. That could cut off the flow of money into stock buybacks, mergers, and acquisitions, especially the private equity buyouts that have fueled the bull market. "Just like raising rates, this acts as an economic brake," Larkin says.
"People are starting to get nervous," Larkin adds, but it takes a while for these trends to show up. "It doesn't just -- boom -- happen." Are there lots of other forms of bad debt out there? Are lenders -- as Larkin jokes, "using their garage door as collateral?" No one knows. "That's where the risk is," he says. "There's not a lot of transparency here."
Pimco bond guru Bill Gross has warned investors not to think subprime is only a problem for a few hedge funds or investment banks. The problem affects millions of home buyers who financed their houses with cheap money but are now seeing mortgage payments rise along with defaults. Gross wrote in his July investment outlook, "This problem -- aided and abetted by Wall Street -- ultimately resides in America's heartland, with millions and millions of overpriced homes and asset-backed collateral with a different address -- Main Street."
"Where in the story does it say the guy quoted is a realtor?"
Uh, here maybe?:
The skyline of Miami is visible from Key Biscayne, the barrier island where John Rosser lives. Some nights the real estate broker scans the new buildings and sees more dark windows than lighted.
``This is dumbfounding to me,'' Rosser said. ``It's a building boom in the middle of a housing bust.''
"You may never see something like this again in your lifetime"
Until it happens in Vegas. They don't have hurricanes, but water is becoming a major issue for the southwest. At some point we may see Vegas residents screaming about the Belaggio's fountain extravaganzas in the face of skyrocketing water prices.
Geez, more people kicked to the curb by Insurance companies in Florida. Good info. Makes LauraVella's estimate of an 85% price drop in Miami seem downright reasonable.
BTW, John Crudele at the NY Post is doing a series on the manipulation of inflation figures. For those interested:
HEY BABY, INFLATION'S UGLY:
SMOKE, MIRRORS CAN'T HIDE THE RISING COST OF EVERYTHING
http://tinyurl.com/yqdye3
Anybody notice the similarity between Phoenix and Miami. Both sweaty roasting shit hole cities with a bunch of call center wannabees. There is no local economy just a bunch of posers.
Why would anyone want to live in that 3rd world cesspool anyway?
NY Times reports today:
Economic Indicators Hint at Toll From Housing Slump
A typical ambiguous MSM treatment of economic news but two things stood out:
1. “The leading index has slowed in recent months, suggesting a possible softening of the overall pace of economic activity later in the second half of this year,” the Conference Board’s labor economist, Ken Goldstein, said.
In front of the house committee, Bernanke had suggested a rebound for the second half. "Softening" is too soft a word. We're already at a "softening of the pace of economic activity."
2. Brian Bethune, an economist with Global Insight, said that while the report captured the weakness in the housing market, it failed to reflect the economy’s bright spots. “It’s not picking up the strength of the global economy, the momentum of corporate profits driven by overseas sales and employment conditions,” Mr. Bethune said.
"Overseas sales and employment conditions" means shareholders are doing great as multinationals sop up swarms of dirt cheap labor.
As far as the the decrease in unemployment claims, I guess alot of Americans have just given up.
I love Florida living. Great jobs, big pawks for the children, leberal pet laws, good pubic schools.
It get allitel muggy in the summer but boby oh boy is it nice in the winter.
I think i will stay!
The Phoenix-Miami-Vegas connection is spot-on
Posers. No real economy. Fraudsters. REIC. Illegal Immigrants. "Bottle Service". Credit. Debt. Flash.
And now, of course, Housing Crash.
``The wave of baby boomer retirees is gathering momentum, and the weaker dollar makes Florida seem like a bargain to Europeans,'' Denslow said. ``With any luck at all that will sustain us.''
I live in Florida and I've been hearing this crap a lot lately. I think it's delusional desperation on the part of the REIC. Maybe Eurotrash is snapping up property in Miami and Orlando but only because they are resort cities. I don't think they are doing much buying in other parts of the state. Besides, I think the Europeans will start bailing out when the next series of severe hurricanes hits.
Also, I don't see the big wave of retiring baby boomers everyone is counting on. Baby boomers are going to live a lot longer than their parents so they will need quite a bit more money for retirement. Why would they move to a state where most of the housing is 100% overpriced and the homeowners insurance and property taxes are spiraling out of control? Their limited incomes would be eaten up by the annual increases that are equal to or greater than a mortgage payment. Not to mention that what tax breaks we do get are only for people who live here year round. If they are part timers, they get no tax breaks. I see places like the Carolinas and Texas as much better retirement spots.
We'll never see Don Johnson again in our lifetime either
Keith I'd get worried about your penchant for telling the truth. W is going to send his agents to whisk you off to Guantonamo as "a person of interest" just so you can't blog anymore.
MAN, THE MIAMI VICE RE-MAKE OF LAST YEAR SUCKED!
*****************************
Why would anyone want to live in that 3rd world cesspool??
Welcome to anywhere Amerika!
I live here! This place sucks! Everyone hates everyone! From the cubans, haitians, illegals, lazy welfare lifetstyle blacks, jews in boca and don't forget the bottom of the baRRELL nascar lovin' white trash withe the rebel flags hangin' off the full size truck. YEEE HAAAA! no one can drive either! Definitely not a "melting pool" You have to know spanish to get a job in miami! No one can get along b/c they are from somewhere else and there is no common bond! So everyone hates everyone. The crime is out of control, gangs, shootings, jessica lunsfords you name it and South Florida is famous for being "floridiots in the news" 9/11 flight highjackers were taught how to fly down here! No one cares about a thing down here. The schools are good at graduating college athletes and low life breeders. Aids is in one of every 100 people here. Highest rate of simgle moms also. Highest cost of living too!! Fun place to be! Nightlife is like Disney $6- $7 beers everywhere you go!
After writing this I really hate it here.
My wife and I vacationed in Fla. in summer of '05,'06 didn't make it this year (due to family interference)
Hot n humid, but who cared, we were 10 feet from the water and or a tiki bar.
The condo complex we stayed at was a great location as pertaining to beach access, great restaurants, shopping, amuzements...yada,yada.
While I was there I picked up some local real estate mags. The values ranged high and wild depending on what unit or floor you wanted.
Lowest price that I could find then was about 1.85m. Up to 6 mil for penthouse with roof access.
Jump ahead to summer '07. I have been looking on-line at same units for sale, only more of them. Prices vary from 900ish to about 2.5 mil
Inventory up/ prices down!
I wonder if I'll be dumb enough to buy when they hit 500k?
So, if the “peak oil” thing has any momentum, everyone would be bailing out of AC-required climates ASAP and RE would slump across Florida and the South. Guess that theory bites the dust, and we have at least 30 years of plentiful energy left.
As long as I don’t quit smoking, I guess I’m cool.
Note the point in the article--20% employed in housing, vs 10% nationally. Bear in mind while vegas is not my idea of paradise they have the casinos as the draw--employ people. Florida its the beach......If you are in a housing crash and 1 out of 5 people work in housing--you are hosed. Also, I disagree with Annon--not all U.S. cities are alike. Miami is worse than any of them--by far....
Hey, what wrong with ya'll. $1 million for a 2/2 condo on 1200 sqft is a great investment! Hurry while they last! If you don't get in now you'll be priced out forever.
New York City prices still MAD, check out this article in the NYT, there is no supply of 3 bedroom apartments. http://www.nytimes.com/2007/07/22/realestate/22cov.html?ref=realestate
sure miami,vegas have blown up, but i have many multi millionaire friends on wall street that cant cough up enough dough. how about some feedback on NYC on the blog? Thanks
The best region is Buffalo NY, minimal no of jobs (outside of govt or tourism), no RE bubble, and slowly becoming a low cost center for keeping backoffice jobs stateside (see Citicorp's move out of NYC). This place is it, with nearly 80+% of housing, costing between $45K to $195K, this city is built for a future of long term stagnation whereas the rest of the bubble zones (i.e. Boston-to-DC corridor, Miami, Phoenix, SoCal, etc) will have motorcycle gangs and lots of petty crime. And with the money you'll save, you can invest in automated snow blowers for the winter.
Just remember, current real estate prices in Florida when adjusted for inflation are a steal compared to 1925. 1/4 acres lots near Miami were selling back then for the inflation-adjusted equivilent of $300,000.
In 1925, 50% of the population of Miami was employed in real estate development or sales of some sort. (The other 50% were their families)
Then the hurricane hit--- by 1928 (a year before the Great Depression) real estate values had dropped as much as 90%.
The best region is Buffalo NY, minimal no of jobs (outside of govt or tourism), no RE bubble, and slowly becoming a low cost center for keeping backoffice jobs stateside (see Citicorp's move out of NYC). This place is it, with nearly 80+% of housing, costing between $45K to $195K, this city is built for a future of long term stagnation whereas the rest of the bubble zones (i.e. Boston-to-DC corridor, Miami, Phoenix, SoCal, etc) will have motorcycle gangs and lots of petty crime. And with the money you'll save, you can invest in automated snow blowers for the winter.
Check the property, sales and income tax in Buffalo? Same reason why Detroit is boned: corrupt tax-and-spend political machines, and there aren't any jobs moving to Buffalo that don't have some fat juicy tax breaks attached to them.
Then again, the CAD$ is reaching parity with the US$, there's probably plenty of jobs at the Walden Galleria for all the cross-border shoppers..
Nope, Buffalo's not really going anywhere until there's a property and corporate tax abatement to 0% for 10 years or more.
Someone's seriously gonna need to start a new self-help group soon called DSA "Depressed Sellers Anonymous". What a sad, sad state of affairs down here in sunny South Florida. It'll take a miracle and many years to regain the trust lost by so many down here and so many once thinking of moving here. We are the laughing stock of america and probably the butt of some pretty amusing jokes! Paradise gone wrong...
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