The turnaround in the Miami real estate market can only be called complete; well it can also be called dramatic, or for that matter completely dramatic. This time last year it was one of the worst hit markets of the crash, and now it is not only one of the top 3 real estate markets in the world, but developers are proposing to build 83 new condo tower developments in the next few years, totalling 12,410 units. That is according to Condo Vultures Principal Peter Zalewski, who told a packed International Real Estate Congress in Miami this week that "it is 2004 all over again".
When America crashed few markets suffered worse than Miami, with thousands of foreclosures every week and very few people buying, available stock was languishing on the market. What's more with foreclosures being the only thing selling prices were being dragged down at a remarkable rate.
But as the rental market in America began to make headlines and foreign investors began flooding into Miami to get their piece of the action, the market came to a dramatic bottom. Indeed, Miami went from one of the worst hit markets of the crash, to one of the top 3 real estate markets in the world according to the Knight Frank prime cities index. Miami wasn't even featured on the index in Q3 2011, but it then jumps onto the index at 2nd with year on year price growth of 19.1% in Q4 2011. It has stayed in the top 3 every quarter since.
Because of the lessons we all learned at the hands of the financial crisis, some people will be chilled to the bone at the mention of it being 2004 all over again. In 2004 real estate markets like Miami were heading for trouble as lending and building both became irresponsible and over-confident. But now, the supply figures support the need for such a large amount of new development.
In 2008, after the collapse of the financial markets, there were 108,000 townhouses and condominiums on the market in South Florida. Today, there are less than 3,000 of those units left to be sold out of 49,000 built since 2003 in the region's coastal markets, says Zalewski. In a year, all of those units will be sold, he says.
Of course, one of the new developments is to be on the site of Bal Harbour Club in Bal Harbour, Florida, where units will be priced at $2 million each. This is not a sign of the growing need for housing in America, but a sign of just how quickly the recovery has grown in places like Miami. At least, it will be if they sell.