The last time a building boom ended in South Florida, the region's entire economy crashed too. Now, as luxury condo sales slow and the dollar grows stronger, analysts fear the wheels of the current cycle are once again grinding to a halt.
But this time they’re predicting a soft landing, in part because developers didn’t have enough money to overbuild. And single-family homes and ultra-luxury Miami Beach condos may not even feel a bump.
The problem slowing down today’s cycle is simple: plummeting foreign currencies are hurting Latin American and European buyers. Those buyers have been driving a boom that launched in 2011 when the dollar was weak.
“Think of it this way: People were quoted the price of a dollar for a pen. They thought they were paying a dollar. But then with the currency adjustment, they’re now paying $2. If you’re offered the pen for $1, it’s hard to come back and pay $2 for that same pen.”
Already inventory is comparatively high — and expected to grow next year, with developers delivering the most units downtown Miami has seen in a decade. Industry watchers say we’ve reached a tipping point.
The Miami Herald was given exclusive access to the study, which was commissioned by the city of Miami’s tax-funded Downtown Development Authority and covers the downtown condo market through August.
The report concluded that downtown developers have readjusted their sales expectations as “increased inventory, rising land and construction costs, and fewer international buyers changed local market dynamics.”
Since 2007, the dollar is up nearly 200 percent against the Argentine and Venezuelan currencies, 164 percent against the Russian ruble, 119 percent against the Brazilian real, 35 percent against the Canadian dollar and 27 percent against the Euro, according to research conducted by EWM Realty International.