Guest AuthorThe headlines are achingly familiar:
“Financing loosens up for new condo projects/ Lenders provide nearly $900 million in financing”
“Brickell project changes to condo”
“Fort Lauderdale rental boom underway”
“Related Group plans 4 more condo towers.”
And so on.
With the wounds of South Florida’s last boom/bust cycle still fresh in our memories – to say nothing of our wallets – another one looms.
By way of review, the last boom started in 2000 and really got cranking is 2003. It continued unabated until 2006, the euphoria so great most folks thought it would never end. Condo prices rose so fast and so high that ordinary people got into the flipping game.
It was easy. Put a deposit on a modest $300,000 unit today and sell it in a month for 10 percent more. Then do it again.
If you were a developer, all that flipping led you to believe demand was higher than it actually was. So you raced to get plans approved for another project to be sure you didn’t miss the wave. If you were a banker you were happy to handle the financing and pocket the profit.
Then along came 2007 and the fiscal fiasco that gave new meaning to the word imprudence. The cowboy bankers who pumped up the bubble went white with fright and stopped making loans – of any kind.
Developers were left standing without a chair when the music stopped and the flippers ran for cover. The 22,000 condos built in Miami-Dade during the boom years – more than in the previous 40 years – mostly became unsold inventory along with another 40,000 in Broward and Palm Beach.
Real estate analysts and economists predicted it would take 10 years to clear out the unsold units. Projects that were nearing completion limped to a finish and queued up behind the rest of the pack looking for buyers who never came.
Today it’s as though none of it happened. The pile drivers are again at work. Cranes etch a new skyscape. Concrete is flowing, banks are lending and buyers are buying.
Lessons learned? Maybe so, but it’s hard to believe given all the building. No, this one has all the signs of the others, the busts and booms of the 70s, 80s and 90s. It’s the Florida syndrome, as much a defining characteristic as palm trees.
The consequence of all this whiplash activity is cyclical misery. High-hog living interrupted by privation. Tax rolls that swell and collapse. A middle class that comes and goes. Steady, moderated growth would be far superior.
But what to do? Somehow put a break on demand? Slow the permitting process? Toughen financing? Put a cap on growth?
None of those options is likely – or even desirable. America IS, after all, the world’s free market model.
So we’re doomed, doomed to lurch along like traffic on I-95, racing at breakneck speed one minute, at a crawl the next and every so often stopped by a three-car pile up. The best we can hope for is a little restraint.
If you’ve driven I-95 lately, you know how likely THAT is.
