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Researchers warn condos being overbuilt in S.Fla.


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Researchers warn condos being overbuilt in South Florida

By Rafael Gerena-Morales

Business Writer

Posted December 2 2004, 11:15 AM EST

South Florida's strong housing market is at risk of overbuilding condominiums as investors -- many of whom don't plan to live in the units -- make up a growing share of buyers, housing experts said Wednesday in Fort Lauderdale.

As the prices of single-family homes have escalated in South Florida, condos have become a popular housing choice.

But regional demand for condos may be weaker than appears because an estimated 50 percent or more of condo buyers are "speculators," or people who buy units with the sole intention of selling them for a quick profit, panelists said. About 300 people attended the program by the Urban Land Institute, a real estate research and education group.

Currently, more than 100,000 new condo units are in varying stages of development in South Florida, with more than half slated for Miami-Dade County, according to Metrostudy, a West Palm Beach research firm. That's too many condos for South Florida to digest, said Brad Hunter, a Metrostudy housing analyst.

"Not all of these projects are going to get done. They better not," Hunter said. Mortgage lenders and developers need to do a better job of learning who their condo customers are and screen out speculators, he said.

Jay Massirman, of CB Richard Ellis Inc. in Miami, issued a tougher assessment. He estimated that as many as 75 percent of condo buyers in some new developments are speculators. "There's going to be a problem" in South Florida's condo market that could lead to a "blowup," Massirman said.

In addition to South Florida residents, condo speculators include investors from Latin America and Europe who could walk away from deals if they can't quickly sell their units at a profit, a condition that could cause condo prices to fall steeply, panelists said.

South Florida's housing market will face other challenges next year, speakers said. The recent rash of Florida hurricanes will cause homeowner's insurance rates to rise, and higher prices for commodities such as cement, steel and oil will also trigger higher housing costs.

Overall, though, South Florida's housing market as a whole is expected to do well next year, helped by relatively low interest rates, an improving job market and relocations to the area, panelists said.

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It should be noted that the ULI tends to be anti-development from my experience.

As long as it's speculators taking the loss, I don't see what the big deal is. Dowtown is on the way back. People will live there. If they have to leave westchester, kendall and doral to do it. So be it.

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Ken Rosen, one of the heads of the Cal-Berkeley Real Estate program who also heads up several real estate funds, had his annual commercial and residential real estate conference call the other day for institutional investors. He's generally pretty on-the-money when it comes to his predictions, and the South Florida condo market was on at the top of his list of probable downturns in the near future due to all the "flippers" and speculative buying going on there.

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You've just been quoted...


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Developers, naturally, are responding with an incredible array of high-profile, high-flying condo developments. The Downtown market alone has more than 20,000 units in the construction pipeline to be built over the next three years.

or this


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