The Real Deal Miami

How long will Miami condos sit dark?

By Jennifer LeClaire | December 30, 2008 10:54AM

When the Miami condo market went bust with tens of thousands of units
still vacant, it fulfilled worst case predictions of a skyline full of
darkened buildings.

Market forecasters are now attempting a different sort of prediction:
projecting how long it will take for the market to absorb the current
inventory.

There are approximately 38,000 new condos either completed or being
finished in Miami-Dade County. The MLS shows 25,116 condos for sale in the county. That’s about a 42-month supply, according to McCabe Research
& Consulting, not counting the condos that have yet to be finished.

But that’s just one take. What are brokers, attorneys and others saying
about the darkened condos that are troubling the local real estate
economy? There is no general consensus in the market. Some are wildly
optimistic while others offer doom and gloom.

Victoria Blintser, a broker at Rapid Realty in Aventura, is more
optimistic than McCabe. She believes the turnaround will
take 12 to 24 months.

“With property values in South Florida taking at least a 50 percent
discount, reverting back to 2004 prices, most analysts agree that we’re
somewhere close to the bottom of the correction,” Blintser said.
“However, there’s still a glut of inventory in the market.”

A glut indeed — and one so bad that some industry watchers are far less
optimistic than Blintser and even more pessimistic than McCabe. Michael
Ross, a partner at the law firm Greenspoon Marder in Fort Lauderdale,
heading up the firm’s real estate, finance and transactions practices,
is expecting the worst.

“Many new condo units in Miami were purchased as an investment, not to
put a roof over a person’s head,” Ross said. “Until demand catches up
with supply, which in my opinion will be between five to seven years
from now, units will remain dark.”

Richard Swerdlow, CEO of Condo.com, disagrees. He said he’s already
seen more deal flow thanks to dropping prices and lower interest rates.

“We expect to see any remaining inventory still out there on the market
throughout the first half of 2009,” Swerdlow said. “Many of the condo
buildings that are dark, so to speak, are turning to rentals as an
opportunity. This is creating a lot of positive activity as there are
many people looking for condos that are not in a position to buy right
now.”

From her position serving the luxury market, Rapid Realty’s Blintser is noticing less
desperation than even a month or two ago in negotiating short sales.
That signifies that a much healthier real estate market is on the
horizon.

“The banking system recovery, coupled together with drops in
foreclosure filings and interest rates, gives us more of a positive
outlook on markets such as ours in South Florida,” Blintser said.