Real Estate Boom Has People Flipping for Miami
No Shortage of Investors Looking to Get in on Hot South Florida Market
By GLENN SILBER and STEVE BAKER

Oct. 7, 2005 — - The lines of people typical in Miami are usually those wrapping around the countless bars and nightclubs on a Saturday night. However, some people have been lining up in Miami for quite a different reasons these days: real estate. Investors have been known to wait on day-long lines to spend hundreds of thousands of dollars just to get in on the real estate boom that has hit Miami and South Florida over the past three years.

This summer, one such location that has generated buzz was a condo-conversion development called Pineapple Grove Village in Delray Beach, Florida. It was promoted as being "close to the beach," but was really 12 blocks away. Closer than the beach are the railroad tracks right next door.

But apprently none of that took away from the market value of Pineapple Grove. Buyers are paying upwards of $350,000 for a one bedroom and up to $800,000 for three bedrooms. Pineapple Grove is just one example of the booming real estate markets in Florida. Many of the people who showed up for the condo launch seemed more interested in "flipping" the property -- buying and quickly turning over their condo for a profit -- than living there.

Flipping Successes

Peter Celnicker, a real estate agent and investor, arrived in Florida four years ago just as the real estate tide was rising.

He put his entire savings of $15,000 down on a one-bedroom condo with 1 1/2 baths and held it less than a year and made $13,000 when he sold it. Celnicker says he then took the profit from that first condo and, with a little extra money, purchased another house which he is selling right now for about a $150,000 profit.

He told ABC News' "20/20" that he has had many other successes flipping real estate since. In fact, he says he's already made his first million -- at least on paper.

"My goal has been to buy 10 properties a year for the next 10 years. I'm 31 now and at 40 I should be doing very well," Celnicker said.

Ces Lawton is another member of the new millionaires club. He'd spent most of his life running a family printing business until three years ago when he and his wife started flipping properties in Daytona Beach, Fla. He's been specializing in what's been called the pre-construction condo market and says he's been successful buying condo contracts in luxury condo developments like the Marina Grande project in Daytona Beach -- even though it hasn't even been built yet.

"Less than a year ago we purchased three units in the first tower preconstruction, first pricing and in a year, they've appreciated somewhere close to a million dollars. Once they get close to finished with the construction, we're going to flip them," Lawton said.

According to Lawton, real estate flipping started out as something fun and evolved into a business for him and his wife.

Too Good to Be True?

In the endless maze of condo developments, newcomers to the flipping game may be taking a big gamble. Longtime housing industry consultant Lewis Goodkin says massive speculative buying has artificially raised condo prices in Miami and throughout southern Florida. "The appreciation is abnormal," he said. In some buildings, says Goodkin, units are doubling in price between the time of an initial contract to the closing.

Perhaps no one is more aware of the climbing price tags in south Florida than Mark Zilbert, president of Zilbert Realty Group. "People are seeing 200 [percent], 300 [percent], 400 percent returns on what they invest in a construction condo," Zilbert said. "There's this gold rush mentality."

Zilbert says that condo flipping has helped fuel one of the biggest residential real estate booms in Miami's history and estimates there are now between 60,000 and 70,000 condos in various stages of planning, development and construction in downtown Miami He adds that the waterfront locations are what's making Miami so desirable these days.

Signs of a Slowing Market

Like the 19th-century gold rush, some people say those who got in early on the real estate boom have done very well, but those who came late to the game may find that prices are too inflated for them to enjoy any significant profit on their property.

Darryl Randall bought a three-bedroom unit with views of Biscayne Bay for $1.l million and actually had intentions of living in it. However, the potential payoff was too tempting and he listed it on the market for $1.8 million.

"[I] planned on staying here forever, but $700,000 is $700,000. And in a market like this, it's time to move up and move out," Randall said.

Randall put his condo on the market 10 weeks ago, but so far there's been no buyer.

Signs the condo market may be cooling are no surprise to housing industry expert Goodkin. He suggests that real estate speculators could wind up like those who invested in the high-tech dot-com industry. "They are going to find out that some of the stuff they put their money in is worth a whole lot less than they paid for it," Goodkin said.

Supply and demand dictates that if you have too much supply, the value of the product goes down. Zilbert says that despite the risks, he believes the Miami area is still a good bet.

"We have a growing population. We have 1,100 people moving to Florida every single day. Then add to that all the vacation and second home buyers from Europe and around the world. The cliché of 'The Field of Dreams' -- 'Build it, they will come.' I'm absolutely convinced if we build 100,000 units in Miami, the buyers will come." Susan Miller and Richard Gerdau contributed to this report for "20/20."


http://abcnews.go.com/2020/Business/story?id=1193793&page=1

Mileageman, Great update, this is true and great, its happening everywhere in the city of Miami, condos are selling faster than they even get a chance to break ground.

Check this out, :banana: :righton: :carrot:

# 1, The Paramount Bay m)) is almost SOLD OUT, there's a White Tent groundbreaking Party this weekend on the 60 floor tower, In fact they already starting digging up a hole on the property for the party goers to see.
# 2, The Onyx 2 :okay: , 51 floor, condo tower Has broken ground last week, with the Moonbay condo right next to it, Sold out with 15 floors and rising vertical on the bay at 31st street.
# 3, the Ice 1 and Ice 2 :down: , may have stalled , but where both towers will still rise soon, all the old apartments are being demolished this week, its a whole area of old residents gone behind the so-call low income Village houses on 32nd and 31st streets.
# 4, the Soleil Tower :cool: at 31 street and Biscayne is selling so fast, Construction has started next door on the parking garage tower of the project and soon will break ground on its 43 floor, 514 foot tall condo tower.

Other condo tower projects have started in the Civic Center :applause: - Miami river area.
The Miami River House :hm: condo tower has almost sold out on the river at 12th Ave bridge on the north side, The old 10 floor Travel Hotel there is now Closed and Vacant, ready to be torn down.
www.miamiriverhouse.com
also, the Jenny Tower :wink2: condo on n.w. 14th ave. and 15th street is sold out and ready to rise soon, the foundation there is almost completed.
acccross the street from that is the 14th street Club 15 floor condo tower ready to break ground next month, also the 17 floor, 174 residence Wagner Place condo tower getting ready to knock down the old houses on site next to the JMH complex west side at 14th Terrace and 13th court.
Star Lofts :( condo tower is sold out and a tall blue Tower construction crane is going up Now, this weekend, making the total of Tower cranes in the City of Miami :wave: alone, at 39 now, I say , Go Cranes !!! :banana2: :cheers1:

Why the blue face Chuck? Jenny tower?? Is this one being built by Forrest Gump? Anyway I see all the flipping as a bad thing. This isnt going to work out the way we all want it to unless people live in these things. Why? Because places like Whole Foods and Midtown shops need people to shop there. If everyone is just buying as an investment and not living there that is not going to happen. Eventually the market will get saturated, and not just for a while but for a long time because there will be so many open units. That will be the end of the boom gang and for years to come. With many highrises standing nearly empty no other condos will be built, and with them empty there will be large amounts of office and retail space empty as well. Nothing new will be built in DT for years. So here is hoping that people buy these things to live in and not just to flip. A residential downtown with night life and shopping would be fantastic.

True :okay: Rider of Rohan :wave: , thats why the MIDTOWN :cool: shops mall is so important to have good quality stores and no cheapo ones like Walmart :bash: , a new Movie theater complex in the MET :cool: shops downtwon with a Whole foods market, The new Mary Brickell Village :cool: opening in 2006 , just like Midtown shops will bring in residents to stay awhile, the Wynwood Marketplace :cool: will bring in retail stores to an area that has nothing now, and the new CITE :cool: condo complex just openeed this summer has all retail stores in its ground floor ,with a new CitiBank on the corner open late each night , and more shops are on their way, there will be more retail and entertainment here in the downtown core to keep the residents busy and stay put here as perament residents of this growing city, With the new science and Planetarium :cool: getting ready for construction in Bicentinential park, and the new Miami Arts Museum :cool: , starting soon, too. :applause: :carrot: m)) :banana:

True :okay: Rider of Rohan :wave: , thats why the MIDTOWN :cool: shops mall is so important to have good quality stores and no cheapo ones like Walmart :bash: , a new Movie theater complex in the MET :cool: shops downtwon with a Whole foods market, The new Mary Brickell Village :cool: opening in 2006 , just like Midtown shops will bring in residents to stay awhile, the Wynwood Marketplace :cool: will bring in retail stores to an area that has nothing now, and the new CITE :cool: condo complex just openeed this summer has all retail stores in its ground floor ,with a new CitiBank on the corner open late each night , and more shops are on their way, there will be more retail and entertainment here in the downtown core to keep the residents busy and stay put here as perament residents of this growing city, With the new science and Planetarium :cool: getting ready for construction in Bicentinential park, and the new Miami Arts Museum :cool: , starting soon, too. :applause: :carrot: m)) :banana:

I dunno chuck, I liked the old science museum :). They built a new one in St Paul Minnesota. What a massive waste of money, they spent millions to build a movie screen that moves..thats fucking stupid (pardon my french). They also built it on a hillside going down to the riverside..which is cool and a good use of space but then only put in two elevators (its about 5 levels) and people wont let on people with wheel chairs and strollers because they are too lazy to do the steps. Anyway I miss the old one lol

Hey Chuck, also Plaza on Brickell and 50 Biscayne poured their foundation this week.

finally...plaza on Brickell broke ground like a year ago or something....they're finally pouring the foundation!

and wow...chuck are you sure that onyx two has broken ground


I'm glad to hear about paramount bay!

I agree with rohan, all of this "flipping" these investors are doing seems like playing poker. As much as I enjoy hearing about all these tall towers going vertical, I can't help but believe that these developers and investors aren't using good judgement. These units are high priced to begin with, but get more ridiculously appreciated in price each time they're flipped. The end result is a tiny 400 sq. ft. loft that the investor is asking $2 mil for, but nobody else is rich enough (or dumb enough) to buy. I'm not saying all of this to be a buzzkill, but we also need to be realistic in case the bubble bursts as a result of investors unable to sell off (or "flip" off) their massive number of pricy condo units. Even renting these units out, considering the price being paid for them and the property taxes to be paid, wouldn't make sense because you probably would end up in the hole.

There is no 'bubble'.

And yes, some will be hurt. I suppose that differs from other times in which some are hurt.

Wait a minute. How is this any different ?

^Who ever said it was different? But, if there is a bubble in Miami, we'll soon find out when construction is completed on all those units. My fear is a logical one: if the bubble does burst, it's going to be a mess for a number of people and it could take years to absorb all of those units. While the investors who buy these units are free to do as they choose, obviously, I sympathize with all of the average Joes (the vast majority) who get priced way, way out of buying a home. That is, unless they have a good credit rating and have to go up to wazoo in debt if they want to own their own home.

Sunstorm -

I'm just reacting to the bubble concept. I think we've too quickly adopted a term which is born of lazy-mindedness. Look, what do you get when a bubble bursts ? Right. Nothing. Do you really think that's going to happen in Miami ? Suddenly nothing, no more demand for housing ?

Now, slowdown, for sure. Anyone can see that.

I agree with Sunstorm..but I dont think it will happen all at once. In fact its probably already happening. But Sun is right, when a lot of units come online then we will all find out what it going to happen. If they get occupied then I guess Im wrong, and I hope I am wrong. But, if they sit there with a for sale sign on it then there is a big problem, and frankly it will be the end of the boom. The last person to buy a flip is going to get screwed and personally I have little sympathy for them. I would put a price Im willing to pay on a unit and not go above it. If a unit in DT is $400,000 then why would I pay $700,000? I wouldnt and therefor I am in no danger of losing my shirt.

You will never lose money on real estate

IF

you buy in good locations with direct views of the water.

AND

you have the liquidity to HOLD your investment for years if need be to ride out any market fluctuations.

If you are investing your whole life savings in a pre-construction condo, you are a retard in my book. All it takes is one tragedy....a lay-off, divorce, death in the family, car accident, personal judgment against you to destroy your life. Without reserves, you are just one step away from being out on the street, especially now with the much tougher bankruptcy laws. There are no more "free-lunches" if you fuck up.

I agree with Sunstorm..but I dont think it will happen all at once. In fact its probably already happening. But Sun is right, when a lot of units come online then we will all find out what it going to happen. If they get occupied then I guess Im wrong, and I hope I am wrong. But, if they sit there with a for sale sign on it then there is a big problem, and frankly it will be the end of the boom. The last person to buy a flip is going to get screwed and personally I have little sympathy for them. I would put a price Im willing to pay on a unit and not go above it. If a unit in DT is $400,000 then why would I pay $700,000? I wouldnt and therefor I am in no danger of losing my shirt.

And I might agree with you - at worst, a balloon losing air. Not a bubble bursting.

finally...plaza on Brickell broke ground like a year ago or something....they're finally pouring the foundation!

and wow...chuck are you sure that onyx two has broken ground


I'm glad to hear about paramount bay!

STREEEEEEEEET :rock: :righton: !!!,

Yes, YEs Yes :okay: , all three are true, Two Yellow Tall tower construction cranes on the North tower of the Plaza on Brickell site,, waiting for the south tower pouring soon. :cheer:

ONYX 2 :) has broken ground with huge rods in the ground at the site and a heavy metal object holding them down into the ground . :hi:

Paramount Bay :cool: had its Party satruday night, it was huge and will be in the next issue of Ocean Drive with all the Hoopa and pictures of famous buyers and guests. :fiddle: :horse:

I thumb through every issue of Ocean Drive, knowing that someday, I'm going to see a pic of Chuck at one of those parties. :)

^loool, chucks da man, ull see him next to j-lo and all the celebrities @ da parties.

I hear J-Lo's got the hots for Chuck.

If anyone's going to get hurt, it'll be the last of the flippers. You know... the ones crazy enough to cash advance $15,000-60,000 off their credit cards to put down a nonrefundable deposit on a preconstruction condo at 29% interest who literally MUST sell it for 150% of the preconstruction price just to break even due to all the interest they'll be paying on the cash advance and realtor commission... ESPECIALLY if the project gets delayed for a year or two. What about the developers? They'll do fine... They can turn around and sell it for $15,000 less than the preconstruction price, and still make just as much money as they would have made before.

Buying real estate is generally a good investment... but buying preconstruction condos with high-interest cash advances and literally betting the farm on the unit doubling in value is a dangerous poker game that's going to get lots of otherwise-sane Miami residents hurt, and hurt badly. And yes, I do know someone who did just that to buy a unit in Nordica and another unit somewhere in Coral Gables. He's shitting bricks right now, because he just found out that the developer of the second unit he bought is holding back 90% of the units and (like many developers) defines "sold out" as "sold out of units that will be sold preconstruction". And he won't even be able to buy it if he tries, because no bank will give him a mortgage to buy a $360,000 condo with his income and $60,000 in credit card debt... :runaway:

Roark might disagree, but I'm of the general opinion that preconstruction condos are no longer a good deal, haven't been for at least a year (for non-realtors, at least, for whom realtor commissions are a liquidation cost that can't be overlooked), and for now at least, the ONLY sane reason for a non-realtor to buy a preconstruction condo is if they're buying it as their primary residence AND they're hellbent on getting one specific unit in that building. The days of buying units for $180,000 and flipping them 18 months later for $360,000 are over. I don't think there's a bubble that's going to burst... but at the prices some people have been buying preconstruction condos, the market doesn't have to crash to destroy them financially... it just needs to not grow as fast as they're counting on it growing.

We are already seeing signs of double-digit percent price drops in Manhattan and other markets in luxury homes and condos. There was a NY Times article last week about this. The cheap stuff (studios and 1 bedroom's) are still growing but the luxury market is taking a serious dump. It'll be interesting to see if this trend comes to Miami. We all know how linked New York and Miami can be.

http://www.nytimes.com/2005/10/09/realestate/09cov.html

So it's time to shake the Magic 8 Ball and ask: Is the party over?

Some signs point to yes. New market data show that the number of sales in the third quarter dropped 17.8 percent compared with the same quarter a year ago. Average prices fell some 12 percent, or about $160,000 per apartment, from July to the end of September while median prices dipped only 3 percent, or $25,000. Apartments are spending longer on the market, and inventory is building up. Sellers are cutting prices.

"There is a standstill situation," said Jacky Teplitzky, a broker with Prudential Douglas Elliman. "We all thought September was going to be a strong month, but that did not happen. The phones did not ring. Turnout at the open houses was low, lower than we had expected."

Are these just the summer doldrums, the slow exhale after a barn-burning spring? It's difficult to say. In the last 10 years, third-quarter posted gains over the second quarter five times; the other five, they showed a slump, according to data from Miller Samuel, an appraisal firm.

Still, any dark signs may be false harbingers. If the Manhattan market is pyramid-shaped, with a few $10 million and $20 million properties at its apex, the broad base of cheaper studios and one-bedrooms seems to be as strong as ever. Average sale prices for large apartments - four bedrooms or more - plunged some $2 million over the last three months. Luxury inventory built up and top-shelf apartment sales, whose stratospheric prices can skew averages, dropped off sharply.

Data from Brown Harris Stevens show the number of new listings this September was 60 percent higher than a year ago.

Still, prices for studios and one-bedrooms leapt by 10 percent. Brokers say there has never been a stronger demand for studios.

And over all, home prices in the city are still up 10 to 12 percent over last October.

So, what effect will a price drop have on new construction, given that there is no reason to believe that people who need homes will stop moving to Miami ?

I hear J-Lo's got the hots for Chuck.

She likes those dashing guys :cheers:

So, what effect will a price drop have on new construction, given that there is no reason to believe that people who need homes will stop moving to Miami ?

I dont think most of the buying is people NEEDING to move to Miami. I of course have no proof of that. I do think that much of it has been speculation and people looking for an investment or a second home (rich Latin Americans or New Yorkers). What was talked about soooo much early on was that it was people moving from the suburbs back to the city to be close to work. But if we look at the boom in Homestead Im not so sure that is true. I doubt theres going to be any drop in population of Kendall or Doral and they will continue to push the urban development line west. Its my hope that people are moving to Miami from outside the state and from the burbs and that places like Park West and Wynwood will be revitalized..and eventually Shorecrest and Little River as well.

Okay...Dale is right...there is no bubble. Please! Real Estate has moved and is moving in cycles (http://www.restainer.com/skyscrapers/realestatecycles.jpg). The market is healthy. The Tulip Bulb Market in 17th Century Holland, or the Nasdaq Market burst in 2000 are pretty clear examples of bubbles popping an losing 20% + in a very short time span. This real estate market should not be compared. For those that have regually read posts here now of the deal I offered a friend...I'll give one beer for every article that he can come up with that mentions "real estate bubble" prior to 2000. It does not exist...there isn't a bubble and the ridiculous phrase is invented for laypeople to get worked up into a frenzy.
Anyway I see all the flipping as a bad thing. This isnt going to work out the way we all want it to unless people live in these things. Why? Because places like Whole Foods and Midtown shops need people to shop there. If everyone is just buying as an investment and not living there that is not going to happen.I don't think it is bad...people that are advised of the risk are welcome to chose whether they would like to sell their property or not. Not everyone is flipping. It is important to know what flipping usually is. Realtor sells 8 apts (not so hypothetically) in Brickell on the River. These are sold pre-construction, that is, when there is nothing but a dirt lot. Of the 8 apts, 2 people flip and 6 people stay on as end users. What happens is that as the dirt lot turns into the 42 story high rise, the risk of loosing deposits is minimized. The two flippers (do you really think that they are bad?) sell to end users before closing.
Win = The flippers make a return on their money
Win = The buyers don't have much risk, and they move into a brand new apt with warranties on every appliance, hot water heater, and elevator.
That is the market working. What is so bad.
Create a doomy gloomy scenario and the flipper doesn't flip and has to close...so what? So there are two people that might not shop at Whole Foods.
I suppose that if you think that everyone is a flipper, and no one will shop on the way home from the office buildings downtown on the way home or at lunch...then you may have a point and Whole Foods and the other businesses will fail...but not everyone is flipping in every building, and there are plenty of workers (over 100,000 within a couple blocks of Whole Foods) that will make it work out.
My fear is a logical one: if the bubble does burst, it's going to be a mess for a number of people and it could take years to absorb all of those unitsThere's no bubble! When the real estate cycle moves from boom to bust/sellers market to buyers market/expansion to recession (see the real estate cycle graph above), then yes, it will be a mess for a number of people. Don't be afraid. I don't understand the logic of being afraid of a number of people losing money...there have been a great number of people that have made money...that is the way it goes.
I sympathize with all of the average Joes (the vast majority) who get priced way, way out of buying a home.I applaude the people, average joes and the above average people, and the below average people that bought real estate years ago. Odds are, if you were an average Joe in 1992 and bought South Beach or Miami real estate your equity has elevated you to above average. You should really sympathize or pity the people that did not buy real estate back when they may have been able to. Would have should have could stories are abound...and will continue to be through this cycle too.Buying real estate is generally a good investment... but buying preconstruction condos with high-interest cash advances and literally betting the farm on the unit doubling in value is a dangerous poker game that's going to get lots of otherwise-sane Miami residents hurt, and hurt badly.True...buying almost anything with cash advances or revolving debt is a bad idea. No financial planner or Realtor would ever advise that a person buy a condo that they can not afford to close on...let alone advise them to leverage the property and the down payment.Roark might disagree, but I'm of the general opinion that preconstruction condos are no longer a good deal, haven't been for at least a year (for non-realtors, at least, for whom realtor commissions are a liquidation cost that can't be overlooked), and for now at least, the ONLY sane reason for a non-realtor to buy a preconstruction condo is if they're buying it as their primary residence AND they're hellbent on getting one specific unit in that building.Well...I don't entirely disagree...the best way to buy most property and especially pre-construction is with a Realtor/developer that you trust to get you in early pricing. You should chose someone that has purchased pre-con themselves and has an in. There are definitely great deals still...if you someone walks in to a sales center now though, the likelihood of getting burned is very high.
Okay..back to work..

I don't think I was clear enough in my former posts in this thread. I have read several times, right here in the Miami forum, that the majority of units being built are high priced units, and that its mostly investors who are buying them. If I am wrong, then there is a lot of misinformation going around at this forum. With Miami's pop. density and growth, there will always be a need for new housing/condos. My concern, and I'm trying to be clear here, is that with all of the expensive units being built, and many of them are being flipped, that this will create a glut of units that these investors are trying to sell at a profit. This has the potential of MAYBE stimying the construction of more affordable units because the investors who paid a bundle aren't going to try selling their units for less than what they paid. What you get are empty luxury condos and residents who can't afford to buy them. Miami's average household income doesn't justify building so many luxury condos. If more affordable housing were built, they would sell like hotcakes and there wouldn't be talk of a "bubble". Unfortunately, flippers right now are making that difficult because, apparently, what few affordable units there are are being bought, then flipped for consecutively inflated prices to the point that there are no affordable places left to buy. This is esp. bad for newcommers and young adults.

If Miami does see a dramatic drop in real estate values of its higher-priced units, it will eventually come back up because its Miami and a desireable place to live. My concern is that it COULD take a while. Which means that in the meantime there would be a halt to any new construction and cancelled projects.

Also, Miami needs to address the more serious issues of bringing in higher paying jobs so people living there can afford to buy (instead of rent).

I have read several times, right here in the Miami forum, that the majority of units being built are high priced units, and that its mostly investors who are buying them. If I am wrong, then there is a lot of misinformation going around at this forum.Not sure that was really written in the forum...but it is easy to infer that. People mostly discuss the new high rise projects...the ones that have important architects and that are located in the most desireable places. When you think about it...this is a skyscraper forum...skyscrapers tend to be built in dense areas that are the most desireable/expensive. There are plenty of projects that aren't considered luxury. The reality is that the overwhelming majority of building permits in Miami-Dade County are issued outside of the Miami city limits. My guess is that people here don't discuss the thousands of townhome/mid-rise/house units outside the city limits/non waterfront for the same reason that People Magazine doesn't put B/C actors on the cover...they just aren't as interesting or sexy. Soooo....it probably isn't right to assume that all the building going on is in the luxury market...it may also appear that way because the luxury people tend to advertise more.With Miami's pop. density and growth, there will always be a need for new housing/condos. My concern, and I'm trying to be clear here, is that with all of the expensive units being built, and many of them are being flipped, that this will create a glut of units that these investors are trying to sell at a profit.Just because there are a lot of luxury apartments...and some people flipping, doesn't mean that the sky will fall...some people that thought that they would flip and make a mint won't some will. This has the potential of MAYBE stimying the construction of more affordable units because the investors who paid a bundle aren't going to try selling their units for less than what they paid.Not sure how you make that connection? Luxury apartments get built with ocean views on the best available land...affordable housing gets build on less expensive land in neighborhoods conducive to that product. What you get are empty luxury condos and residents who can't afford to buy them. Miami's average household income doesn't justify building so many luxury condos. Who are we to say what justifies building luxury condos? Not many developers building oceanfront/bayfront condos factor average income in there calculus anymore than Rolls Royce calculates average income in designing their latest product. So what if the lot is full of empty Rolls Royces? Does that mean that people will stop manufacturing or buying Cheverolets? If more affordable housing were built, they would sell like hotcakes and there wouldn't be talk of a "bubble". the phrase "affordable housing" is a bit ambiguous don't you think? There will people that will afford anything built, and there will be people that can't afford anything built. You are assuming again that there aren't any apartments being built except for luxury apartments...this isn't true...Unfortunately, flippers right now are making that difficult because, apparently, what few affordable units there are are being bought, then flipped for consecutively inflated prices to the point that there are no affordable places left to buy.This is called a market economy...it's been successful in the United States for a very long time. If supply exceeds demand...expect prices to fall...if demand exceeds supply expect prices to rise (the handy real estate cycle chart makes this clear). I know one of those evil flippers! If I put the property on the market and an end user didn't buy it for a 171% return, then I'd have easily accepted 150% or even 100% (I'm not greedy). And if no one bought it at all...I'd take my lumps move into a new building and pay the mortgage (not many people are going to walk away from a 20% down payment in a luxury building). Maybe I'd put it on the MLS and resell it for a lot less than than the market...Now that brand spanking apartment looks pretty attractive to the guy living in an old apartment without a view...he can sell his condo and move up....his old apartment is affordable to someone else moving up...etc. etc. etc. Yes, houses are expensive to young people....duh! So are yachts, theatre tickets, Cadillacs and other things that older people buy! That's the way it goes.
If Miami does see a dramatic drop in real estate values of its higher-priced units, it will eventually come back up because its Miami and a desireable place to live. My concern is that it COULD take a while. Which means that in the meantime there would be a halt to any new construction and cancelled projects.I still don't see that connection...if the market stops buying luxury condos...developers will stop building them, land prices fall into equillibrium and building would continue if the market demand is there. Also, Miami needs to address the more serious issues of bringing in higher paying jobs so people living there can afford to buy (instead of rent).Miami has addressed quality job growth and continues to do so...please check out the Beacon Council website for an update, or attend a few Greater Miami Chamber of Commerce events, these are great ways to see how the local business community/government in action. Jobs continue to relocate here... :) It's a great time to be alive in Miami!!!! Here is to the people that are making it happen!!! :cheers: