Saturday, May 26, 2007

Collapse of Florida condo boom a harbinger of things to come in overbuilt Madison?

Real estate is cyclical everywhere, but nowhere more so than in Florida, where the boom-bust cycle has always been more dramatic than elsewhere and where, when the market bottoms out, the low can have all the ferocity of a tropical depression whipping up a hurricane. So, Florida isn't necessarily a good example of anything except the fact that it's a wild and crazy place. Still, the report in today's NY Times is enough to make you stop and think.
As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.

“Motivated” sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.
Madison's housing economics are far different from the speculative frenzy that grips the Florida coast from time to time. However, some parts of the article do have a familiar ring.
“When you drive by in the daytime, they are gorgeous,” Mr. McCabe said. “But when you drive by at night, there’s no furniture on the patios and only one light on out of 10.”
Hmm... Couldn't happen here, could it?

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