Is South Florida headed for another housing bust?
174 new towers proposed since 2007
HALLANDALE BEACH, Fla. – South Florida is in the midst of another building boom.
Peter Zalewski with condovultures.com said 174 new towers have been proposed since the housing market crashed in 2007.
"Of the 22,600 units proposed, roughly about 40 percent are being built by people who have never built here before," he said.
The last building boom began in 2003. Prices and inventory peaked in 2006 before the bubble burst the next year.
"Very tough, very hard, and I remember it well," said Carlos Rosso, the condo division president of Related Group.
While Related Group, the largest privately-held condo development company in the U.S., is building new towers again, Rosso said the company is building to meet demand.
"We are building them with cash from buyers, so if we don't have the amount of pre-sales required, we are not building the building," he said.
One building, Beachwalk, has every unit sold with 50 percent down.
Zalewski said banks, previously leery of lending, are beginning to open up financing.
"As financing opens up, look for the concern to get greater and greater that there could be a bust," he added.
Many of the projects are rental properties, but Zalewski issued a warning for buyers.
"Our expectation is that rents are going to start to erode and potentially collapse and if that happens, watch the buyer of pre-construction condos to start to think twice about it because many are buying for investment, not home ownership," he said.
Experts say there should be at least two more years of growth but those with short memories may be destined to repeat history.
"This is South Florida and we have a history of boom and bust," said Zalewski. "There is nothing that indicates that this will be different."
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