Wednesday, January 09, 2008

Miami and its peculiar delusions, by gimleteye

After detailing the horrors of overdevelopment in Miami, the Herald's "Foreclosures haunt condos" (January 9, 2008) ends with a good news twist making the quoted sound like a madman. The Club at Brickell Bay condo owner says, "This is Manhattan, it's the future Manhattan, so we're all sitting real good." Well, alrightee-then.

I don't mean to be the perpetual spoil-sport, a rainer on the Chamber parade. But I seem to recall, on "sitting real good": they said the same on the Titanic.

That sinking feeling is growing widespread. Mortgage lenders like Countrywide are on the verge of Bankrupcy. Citigroup is writing down a further $16 billion in mortgage-related losses. Production homebuilders are staggering under the weight of losses, too. The stock market indexes are falling faster than the temperature guage as a winter cold front passes through.

According to a blogger/real estate professional quoted by the Herald, "An 818 square foot unit, which sold in June of 2006 for $430,000, was listed Monday for $220,000."

If these small examples are the tip of the iceberg, what does the rest of it look like? To me, it looks a lot like the people we elected to public office-- from lowly city and county commissioners straight up the totem pole.

Miami may not be unique in this respect: instead of caring about its existing tax base-- taking care of the needs of the poor, of the taxpayers who already live here, of our quality of life and infrastructure-- most elected officials are busy chasing rainbows like the biggest speculative bubble in housing in history, or if they are not chasing rainbows and the pot of gold at the end of it, they're inventing multi-billion dollar infrastructure projects to paper over the billions of dollars in infrastructure deficits they have failed to fund.

In other words, now the talk in government circles turns to "economic stimulus" packages, such as the $3 billion Miami plan that works only by deforming the purpose of Community Redevelopment Agencies.

If I were the editor of the Herald, I'd pay more attention to the experience of the real estate professional who recently sent a letter to the Florida of Department of Community Affairs outlining her horror at what Miami Dade has turned into:

"As a Realtor, I have 21 listings. Virtually all of the families they represent are leaving South Florida if not the state. The reason is not our lousy weather. It is the fact that the gridlock we have created from paradise precludes any measurable quality of life.

Whether it is the hours long and increasingly expensive commute to work and jammed schools across hopelessly crowded highways, the lack of employment affording a livable wage or prospects of a middle class existence, the absence of healthcare for all but lucky corporate employees, the result is the same: regular hardworking families have been robbed of the American Dream. Worse, they are trapped in their concrete cells which are worth less than they paid just a year or two ago.

These folks are competing with investors who bought in new developments which will never become communities. Instead, they are surrounded by vacant foreclosures and subsidized rental properties. I assure you, it is nearly impossible to find a buyer who will risk his or her family's assets in areas like this.

Worse, the mounting foreclosures (one property in every thirty in Dade County), put the hapless seller in competition with institutions with far deeper pockets. You can drive the areas of South Dade's newer developments for miles and possibly see just a few occupancies per block. Of those, few are owner occupants.

It would be criminal to offer up ANY precursor to additional development in Dade County unless and until ALL land within the UDB is totally built out with proper infrastructure in place (schools, police, fire department, roads, water and sewer, trash, etc.), essentially, not before 2015 or later. It is unfortunate that you of the DCA are put in the position of exercising the common sense that our local officials have chronically lacked. Nonetheless, please know that the buck stops with you and that thousands of citizens are counting on you to do what our elected officials have failed to do for years. Thanks in advance for stopping the idiocy."

Back to today's Herald story, I would have closed on the note that appears toward the end of the article, on struggling community associations, "unkept grounds and disruptions in services."

It is inescapable that the budget crisis affecting unsustainable development is going to spread to city and county budgets. Pockets of prosperity will continue to float above the turmoil-- after all, that is what the fomenters of the housing bubble have been saving up for.

It is not as though they couldn't see it coming.


Anonymous said...

We can blame Mayor Manny Diaz for this disaster. His "height and density at all costs" philosphy encouraged the city commission to approve every proposed loophole and exception allowing too many condos. Investors will lose billions. Miami has become a national punch line.

When is enough enough?

Anonymous said...

Now Manny Diaz wants to mortgage the City's future by giving away billions to the Marlins baseball team, a fixed rail streetcar, a PAC Center bailout and massive concrete structures on waterfront park land. The burden of the mortgage payments for these boondoggles will depress Miami for decades. The exodus from Miami will accelerate.

(Of course, several select insiders will make a fortune.)

Anonymous said...

From Palm Beach Post blog:

"The housing market is beyond just being bad; it is awful. Speaking from experience, two Open houses and no attendees and no offers for a house on the market for months at a value well below others in the neighborhood. Friends, you can argue until the cows come home about the future but right now we have a real estate disaster on our hands and when it turns around is anyone's guess."

Which is why Manny Diaz is looking to beef up the economic stimulus package for his insider friends. I say, throw out all the bums.

Anonymous said...

Manny "I love concrete" Diaz is looking to get every construction project approved now so all his Cuban friends (who live in Coral Gable and Pinecrest) will make fortunes over the next few decades. The costs are borne by the taxpayers.

Anonymous said...

Of Course, there was NO mention of the Mortgage Fraud Taskforce . . . nice!

Anonymous said...

Recently the Miami Herald produced a 3-D map that indicates so many new condo projects built throughout the downtown area. It was shocking to actually see all the towers that are there and know that we are faced with rough times as a result of the glut of units on the market and in the pipeline.

I believe that our local elected leaders are mostly to blame for this fiasco and forthcoming recession. All of our property values and our economy have been harmed by the fact that way too many housing units have been permitted to be built. This situation was compounded by the fact that many projects were permitted variance, special permits and up-zoning to allow more height and density.

Look at those buildings and research what the properties were zoned for and what the city leaders permitted to be built. That vast difference in the quantity of extra units that was allowed to be built has helped to make this glut and crisis so much worst.

Jorge Perez, chief executive officer of condo developer the Related Group, is just one of the major local developers that is now looking to create a fund to buy distressed units in South Florida's saturated condo market.

Peter Zalewski, a principal of Condo Vultures real estate, which targets distressed buyers, said Perez's reputation with the general public could suffer because of the move, creating the impression that he helped create the market's bloated inventory and is now feeding off of it.

Creating a problem then offering a fee to fix it, is a bit unscrupulous to say the least.

An arms dealer starts a war and then sells one or both sides weapons.

A security alarm company sends a burger to break into your house and soon thereafter sends you a solicitation to purchse a security system.

An exterminator sends a person to drop off vermin, termites or roaches at our house then turns around and offers you its services to rid them

A developer that was instrumental in persuading the local government officials to grant up-zoning, variances and special permits to build taller and denser housing projects, helped create the glut of housing which lowered everyone’s property values and then offers to buy the property back at a deep discount is truly a predator that is a danger to our community.

Unscrupulous developers combined with elected leaders that mismanage our community by disrespecting our neighborhood zoning codes have brought us to this sad place in time. It is time that we rid ourselves of both.

Harry Emilio Gottlieb
Coconut Grove

Anonymous said...

Great comment, Harry.

Anonymous said...

Harry. Well stated.