During the height of the housing boom, some likened the feverish flipping game in Miami's condominium market to a circus. The circus is back, and more high-flying than ever.Flash and Fantasy
At a recent party to launch a new project from New York-based developer PMG, acrobats swung over the crowd, and in gravity-defying flourish, poured champagne into the glasses of wide-eyed investors.
"It's exactly what we want. We wanted a little bit of show and a lot of flash," said Kevin Maloney, president of PMG, who re-entered the Miami market in 2010 to purchase some of the remaining beachfront and bayside construction sites.
Prices are up nearly 25 percent from a year ago, according to the Miami Area Association of Realtors.
How did it happen? Foreign, all-cash buyers like Venezuelans, Russians, Chinese, Canadians, and Brazilians. They were either looking for a safe-haven to park their money or were taking advantage of a weak dollar. Whatever the reason, they came, they saw, they bought.
"It's mind boggling. I'm perplexed as to how all this can go forward this quickly," said Peter Zalewski of CondoVultures.
PMG's Maloney has sold 100 of the 190 units he plans to build in his "Echo" development and that is without even breaking ground. The rest he hopes to entice with flash and fantasy, which is exactly what Miami is all about.
Even with that 25% rise from a year ago, prices are still way under where they were in 2005.
That said, my reaction is still the same: Here we go again!
"Echo" is a nice name (as in echo bubble).
Click on the link and watch the video. It's quite entertaining. Clearly the Fed has sponsored yet another bubble as people are once again buying sight unseen. This time, it's primarily foreign buyers.
Will it end any better this time? Probably for the banks simply because they are not deeply involved in funding.
How about the buyers? I think you know the answer to that, but don't expect the Fed to care. Rather, expect them to cheerlead this artificial boom every step of the way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Wine Country Conference
I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig’s Disease).
Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease.
To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike “Mish” Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013
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