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Welcome to Miami’s Condo Bust

by Joshua Dorkin on August 30, 2007 · 13 comments

  

miami-condo-crane.jpgThe Orlando Sentinel had an extremely interesting article today about the Miami Condo Bust. The article detailed the dangers that go along with pre-construction investing real estate speculation.

How’s this for scary:

Just how many other speculators face the same dilemma in the nation’s most glutted condo market will become clear during the next two years. That is when 25,000 new condo units, most of them rising in or near Miami’s downtown, will flood an area already saturated with 23,000 condos listed for sale. An additional 40,000 units have been approved, but analysts doubt the majority will break ground.

Orlando and other Florida cities — Naples, Fort Myers, Tampa and Sarasota among them — also have huge condo gluts. With 4,440 condos listed for sale, Orlando has an unprecedented 29-month supply, and last month sales plummeted 64 percent lower than a year ago.

But Miami, with its unmatched volume and untold number of speculative buyers, is ripe for the hardest fall in the U.S.”


If anyone out there who fell for this mass hysteria wants to complain, you’ve only got yourself to blame. Did anyone really think that the population of Miami was going to grow fast enough to keep up with the construction? With a crane on every corner, Miami looks like it is preparing for all of Iraq’s refugees at once.

Regardless of whether people fell for the hype or not, the big question now is whether or not these condos will ever get sold.

I think we’re in for a few years of a falling (crashing) or flat market in Miami. Buyer’s have a ton of leverage and can basically set their own price at this point. If anyone wants to get out of their penthouse, give me a call, I’ve got $10 Grand I’m willing to send your way.

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{ 13 comments… read them below or add one }

Roger September 1, 2007 at 7:24 am

The number of units due to come onto the market is staggering! Interesting case study for some other regions perhaps?

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NM real estate September 1, 2007 at 10:26 am

Good point, Roger. I’d also be interested in hearing some more case studies for other regions.

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Tom September 1, 2007 at 2:17 pm

That’s insane. Even if it was a booming real estate market, thats an awful big number of condos to sell.

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Andy Murray September 2, 2007 at 3:02 pm

I see a similar situation occuring in the UK also, seems to be loads of these “condo” style buildings going up.

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Las Vegas Guy September 4, 2007 at 11:59 pm

See the same thing here in Las Vegas. BUT we still have over 5,000 people moving here a month and its one of the top vacation destinations in the world.

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Carmel Real Estate September 5, 2007 at 8:39 am

I used to live in Orlando and almost fell for this myself. Thank God I had enough sense not to buy. Even being a real estate professional it is hard to ignore the hype and take an unbiased look at what is really going on.

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Adam Snider September 5, 2007 at 12:28 pm

So I guess if I wanted to move to Miami, now would be the time to do it—just as long as I don’t plan on selling the place anytime soon.

As Tom said, even in a booming market, that’s a huge number of units to sell.

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Gerard Winter September 7, 2007 at 11:01 am

Love to get my hands on a cheap condo.
I live in Europe, but want to move to Miami.

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Xavier September 10, 2007 at 6:40 pm

There’s one person like Gerard on this page, but thousands throughout Europe and Latin America. That’s one reason why Miami’s where it is: Foreign interest and investment. Miami’s market may fall the hardest, but that’s only because it rose the highest–during the housing boom. The city has been altered significantly because of the construction surge and will benefit in the longterm.

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Lionel September 11, 2007 at 6:58 am

Indeed Xavier it will benefit,…all those investors will make a lot of money if they can hold but will they be able to? were they sold a dream or a real door open to a new future…will 5 year /10 year be enough to remodel biscayne blvd the right way w the right transit?

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Toronto condos December 17, 2007 at 7:07 am

As far as I am concerned a condo is always a good investment, let it be in Miami or Vancouver but you should consider when and how you want to use it. If you are not there permanently you can rent it out and make money on it or at least get the money needed for paying the installments.

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DB October 10, 2009 at 5:54 pm

With the recent downturn in the economy I feel it’s a positive sigh that new condos are being built. Hopefully in the next few years the real estate market will rebound here in the US.

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MatthewP February 10, 2010 at 9:52 am

Anyone have any statistics on price development in Miami? I’ve been receiving mixed messages when speaking to brokers. I wonder if prices are bottoming now?

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