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Thread: Florida Real Estate ready to tumble ?

  1. #1
    Banned Melonie's Avatar
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    Default Florida Real Estate ready to tumble ?

    Posted on Thu, Apr. 07, 2005

    The specter of a South Florida real estate bust

    This has the making of a ghost story.

    As night snuffed out the last remnants of twilight in Fort Lauderdale, I looked up at the tall new residential tower by the New River and shuddered. It was a 31-story tower of darkness. Lights shone from no more than a dozen of the 315 condos. The rest were a study in black windows and empty balconies. As if the condo dwellers were phantoms.

    But are they spectral beings? Or just speculators?

    Speculation madness has gripped the real estate market in South Florida, particularly the high-rise condos going up along the beaches and in the old coastal urban centers. Real estate analysts estimate that anywhere from 50 to 75 per cent of our new luxury condos are being scarfed up by high stakes real estate gamblers.

    Last month, Raymond James & Associates warned that ''anecdotal reports'' indicated speculators and investors accounted for 85 per cent of Miami high-rise condo sales.

    No one actually knows, said Michael Y. Cannon, managing director of Integra Building Resources' Florida operation. Cannon, who predicted condo bust of the early '80s, said this time around the data is either sparse or a few months old and not of much use in market careening ahead at such reckless speed.

    But Cannon knows that we're in the midst of a speculation epidemic. He calls it ''hyper flipperism,'' as buyers put up their 20 percent for condos under construction and try to flip the contracts, at a profit, before the buildings are completed. There are reports of condos changing ownership two or three times without an actual human being ever moving in.

    OMINOUS WARNINGS

    Robert Shiller, the Yale economist who warned that the late 1990s tech-fueled stock market was overheated, overpriced and in for a brutal fall, said Wednesday on National Public Radio that the U.S. housing market was now nurturing that same reckless abandon. He said the danger was particularly acute in what he called the glamor markets -- like South Florida.

    And Shiller warned that this bubble, too, may burst.

    Such talk casts a peculiar light over the raging debate about new residential construction in downtown Fort Lauderdale. The Broward County Commission reacted with something like outrage last month when the city commission requested approval for another 13,000 new housing units in the urban core. The county reduced the number to 3,000.

    There were sharp words about so much traffic on the highways, so many more children in the schools and other stresses on the infrastructure if the city got another 13,000 units. But phantoms don't drive cars. Ghosts don't pack classrooms.

    If those 13,000 new units were to be built, along with the 45,000 new luxury units coming on line in Dade County, the big problem might be avoiding speculators as they hurled themselves from the balconies of their overpriced high-rise condos.

    HOUSING SOLUTION?

    If nothing else, when the bubble bursts, South Florida will have a ready-made solution to its affordable housing problem. After the big bust in the 1980s, a regular Joe could land himself a luxury high-rise condo on Miami's Brickell Avenue for 60 grand.

    I wonder if we're supposed to feel any sorrier for flippers snared in this real estate Ponzi scheme than, say, chumps who gamble away their paychecks at the Hard Rock Casino. But Shiller warns in his book Irrational Exuberance, updated to include the current real estate madness, that when they start abandoning their 20 percent deposits en masse, it could mean trouble for all of us. ''The bad outcome could be that eventual declines would result in a substantial increase in the rate of personal bankruptcies, which could lead to a secondary string of bankruptcies of financial institutions as well.

    ''Another long-run consequence could be a decline in consumer and business confidence, and another, possibly worldwide, recession.''

    Suddenly, our little ghost story turns very, very scary.

    ----------------------------------------------------------------------------

    I'm old enough to remember the S&L meltdown. This time, with huge budget deficits, there' s just no way that the US gov't could afford to bail out the banks left 'holding the bag' i.e. forclosed real estate which can't be sold for prices which would cover the outstanding balances of the bad loans. How big is the systemic risk factor ?

    ~
    Last edited by Melonie; 04-08-2005 at 03:33 AM.

  2. #2
    Veteran Member kittykat1971's Avatar
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    Default Re: Florida Real Estate ready to tumble ?

    Scottsdale is experiencing the same concerns. I LOVE the home appreciate here, but know the bubble may burst soon...

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    Moderator Djoser's Avatar
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    Default Re: Florida Real Estate ready to tumble ?

    That would kinda suck, since I just got back down here, and my 'real job' is doing architectural drawings.
    You must have chaos within you to give birth to a dancing star.
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    God/dess AinNY's Avatar
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    Default Re: Florida Real Estate ready to tumble ?

    They are over building here(lauderdale)...its not going to tumble just yet....but soon.

    besides the area cant really handle many more people...theres already way too much traffic

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    Featured Member scorpio's Avatar
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    Default Re: Florida Real Estate ready to tumble ?

    The operative word is "speculators"

    when these greedy bastards move in, every arm-chair quarterback invester moves in too and the market goes over value and will eventually "correct" itself. Just like Tech stocks, dot coms, etc.

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    Default Re: Florida Real Estate ready to tumble ?

    Dont forget A LOT of people who own residences in this area do not live there year round....most of the year they DO NOT live there....so it may appear that they are vacant.

    what do i knwo anyway...i just got here myself

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    Featured Member Muyaha's Avatar
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    Default Re: Florida Real Estate ready to tumble ?

    what the average price of a home 3 bed 2 bath in south florida?

    I may have many faults, but being wrong ain't one of them.

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    Default Re: Florida Real Estate ready to tumble ?

    it all depends on where it is located...the one we rented for a few months was a small 3 bed 2 bath in ft lauderdale...not even in the center of town...but it was on its own canal leading to the intercoastal...

    We asked a real estate lady...she said about 650k

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