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Originally Posted by kardon
All those photos of Miami look great, but their market doesn't look good.
From the Miami Herald:
The area most in danger of falling prices: condos, which now make up more than half of housing sales in South Florida.
Experts predict condo prices will slow, flatten or even fall this year, especially at the high end, because the boom churned out too many units too fast.
There are, for instance, 15,080 units under construction in the city of Miami alone, compared with 11,241 built in the entire past 10 years. And that doesn't even count the more than 28,000 units approved to go up in Miami.
Condo fever already has cooled from the time when buyers camped out all night at sales centers. In 2004, it took developer Jorge Perez of the Related Group of Florida about a week to sell out The Plaza, a 1,000-unit Brickell Avenue project.
Perez's more recent project, the 1,750-unit ICON Brickell, just a few blocks away, went on the market in April. But after more than eight months, it's still not sold out.
To summarize the market, developer Henry Harper scooped up the milky froth on his cappuccino at a Miami restaurant with his spoon. ''This is now gone,'' he said.
While rising construction costs may buffer the market by choking off proposed projects, some market watchers say so many buyers are speculators that prices will drop.
''There is severe overbuilding of condos,'' economist Hank Fishkind said in January at an Urban Land Institute conference in Hollywood. He gloomily predicted, ``People will get hurt, banks will go bankrupt.''
Deerfield Beach investor Jack McCabe is betting on it. He has started several so-called vulture funds to swoop in on distressed properties at bargain prices after a market fall. He says he has more than $10 million in pledges already.
''I think it will happen in 2006,'' he said. ``The writing is on the wall.''
DO YOU AGREE OR DISAGREE?
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