Fortune Mag Bearish On Miami Real Estate in 2009
Fortune just released their Top 10 list of the worst-performing U.S. real estate markets for 2009. The majority of the cities are in California including the Top 3: Los Angeles, Stockton and Riverside. While only one Florida metro made the Top 10 list, the magazine's outlook for Miami-Miami Beach suggests we have a bit of a drinking problem: "Miami will be nursing the hangover from its epic building boom for years to come. After falling 22% in 2008, prices are predicted to plunge another 23% next year." Apparently home price and local government tax revenue aren't the only things falling in Miami right now. The decline in travel bookings and in-bound tourism led S&P to cut the rating on Carnival's credit last Friday from "Stable" to "Negative" given "worries that the deteriorating economy will cut into the cruise operator's revenue."
During the Florida high-rise boom of 2004-06, new condo prices went through the roof and building materials went along for the ride. Concrete, rebar, drywall, copper wire, pavers...you name it, it went up. Prices got so out of control that many developers started looking to China for cheaper substitutes, and drywall was at the top of the wish list. Word now out of Southwest Florida that Chinese drywall with high sulfur content is possibly to blame for destroying A/C coils. The speculation is that some of the drywall imported between 2004-05 was manufactured with waste materials scrubbed from coal-fired power plants in China. While plenty of residents are now suing their developers, others are taking it in stride. According to the News-Press, one neighbor at a gated community called Bella Terra dressed up as Chinese drywall for Halloween. 
That was the gist of the real estate outlook article in the Herald last week, and the same sentiment is now being echoed over on the Gulf Coast. According to the Herald-Tribune, "Only 89 properties in Sarasota County changed hands in 2008 for a total of $131.3 million, a 47.5 percent drop in sales volume from the 109 properties that sold for $250.3 million in 2007.Office buildings saw the largest drop in dollar terms, followed by hotels and shopping centers." Many desperate landlords are taking a kinder, gentler tact and helping their struggling tenants with rent reductions and renegotiation of lease terms. The only other alternative is eviction, but Venice commercial realtor George Huhn says, "If you are a shopping center owner and you evict someone this year, you're crazy. Vacancies are going to go through the roof, and everyone will be competing for tenants."
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