A blast from the past... by gimleteye

Read this post from a year ago, on eyeonmiami:"Miami housing markets headed sharply lower, it's only a matter of time".

ORIGINALLY POSTED SEPT 24, 2007: "The housing market in Miami feels like a great wooden ship headed into gathering seas. You can hear the creaks and the groans of the timbers as they shift in the hold.

In part, the slow motion unwinding of the housing bubble is due to the cushioning effect of risk diversification: that massive distribution of risk through financial derivatives based on mortgages.

In Miami and surrounding farmland, bankers and developers rushed hand-in-hand to fill their pockets as quickly as possible with the fruit of easy credit. They lured flight capital, speculators, first homebuyers—anyone with a yen to “own” a home—and plowed under the grading blades farmland, environmentalists, civic activists all with the same enthusiasm and self-assurance that only thing better than making money is making more money with less effort.

This particular ship of state is still captained by an elite of well-heeled lobbyists, political fund raisers, engineering companies, cement makers and developers. The only way they know to sail, is straight ahead: more highways, more nail guns, more zoning change permits."

Today the banks that originated mortgages in Miami and Miami-Dade County, Florida’s largest, are buying back scads of properties in foreclosure auction while the lobbying class is preparing more zoning change permits in farmland.

The multiple of historical average in terms of rate of foreclosure (approximately quadruple) parallels the excess of zoning and permitting of units above historical average during the building boom.

But what goes up so fast, must come down as fast: banks can’t keep dead assets on their books forever.

At some point, they will have to reef the mainsail and that means letting those properties go at low, low prices.

Robert Schiller, the Yale economist who predicted the popping of the housing asset bubble, believes home prices are likely to retract 40 to 50 percent in the frothiest markets, like Miami’s.

Those low prices will establish new benchmarks for neighborhoods and communities, infuriating neighbhors, civic activists, environmentalists, and others who may not have bought into the housing bubble so much as been drowned in it.

Currently, the zip codes for Miami Beach show 53 months of inventory based on the current rate of sales. While prices are trending downwards, it is difficult to extrapolate meaningful statistics because there are so few sales. The same is true in City of Miami condo sales.

The better statistic to gauge the wind, is the rate of condo buyers walking away from deposits on newly built condos, or, litigation arising from their efforts to do so. And even better statistic: how many realtors are abandoning the profession.

While the homebuilders are struggling to conserve cash in Miami-Dade, at the same time land use lawyers, lobbyists and engineers are ginning up to rush through applications to move the Urban Development Boundary in Miami-Dade County yet again.

At a recent community council meeting in suburban west Dade, the same tired arguments were trotted out by the growth lobby with the self-assurance of those possessed by lucky charms, voodoo spells, charismatic talismans and superstition: that growth is inevitable, that demand is rising, that the only place to put affordable housing is in farmland.

The zoning council members, part of the building fraternity, mumbled and nodded assent despite the best efforts of government planners who actually do see the picture clearly but are too careful, too insecure in their jobs, too beaten down by lobbyists and politics than to raise their voices: that those lights on the reef are in the wrong place, intentionally put there to shipwreck taxpayers, citizens, and the public interest.