Mellowing in the Muck of Miami

By Mark Collingsworth

Miami – Bright lights burst with radiance from Miami Beach condo balconies in the night’s darkness. Towers of high-rise condos that stood without signs of life just a few months ago are lighting up, indicating that more residents are moving into the half empty buildings.

Miami Beach

Mired in the muck of one of the nation’s worst housing crashes, Miami Beach and neighboring Miami are seeing legal disputes between developers and bankers begin to thaw. A growing number of condominiums are selling, albeit at bargain basement prices that just a few years ago seemed unimaginable.

For the first time in years sales of condos and homes are showing an improvement in an otherwise financially tinged marketplace. Miami is the east coast’s epicenter of the housing crash, but improving conditions are beginning to get real estate agents and appraisers busy again.

South Florida’s market is still caught in the web of the financial crisis, legal disputes and hedge funds that financed many of the developments gone bankrupt. Entire blocks of projects remain at a standstill, fenced off as partially finished developments sitting to rot in the Florida sun.

Investors have swarmed to Miami, many of whom are cash paying foreigners looking for bargains. But growing numbers of would-be buyers feared purchasing units in only partially sold buildings concerned about condo associations and developers going bankrupt, leaving them in economic jeopardy.

An impasse that developers had with bankers, buyers and sellers has all but ended a feud allowing developers to sell units for less than what condos were originally constructed for when they were new. The resulting short sales have prompted a mini boom helping propel the marketplace forward.

Miami is rife with economic uncertainty even though one would hardly know it in posh South Beach, where hotels and restaurants bustle with paying guests. But even in South Beach waiters and bartenders say business is slower these days as the financial crisis strains the local economy. Unemployment hovers around 14% and foreclosed homes and condos remain a growing threat. The local economy and the housing market is anything but stable.

During the boom Miami saw more new condos constructed than ever before at one time since its incorporation. More than a third of all the new units – estimated at more than 14,000– constructed remain empty even as investors look for properties to purchase. The housing crisis will take years to over come in Miami, but more condo sales demonstrate an improving trend.

Banking problems haven’t been the only thing troubling new condominium developments. Half darkened developments got the assistance of Florida courts to collect condominium owner association fees from tenants, whose dead-beat owners refused to pay their monthly fees to keep on water, collect garbage and upkeep on pools and other amenities.

In many cases, receiverships were a last ditch effort by developers to stave-off bankers from foreclosing. Dozens of developments were on the brink of failure as a result of the hardship. “We’ve already collected well over $100,000 in rent under receiverships for our clients,” said Ben Solomon, an attorney credited with the program. “It’s resuscitating some of these associations.”

On a clear moon-lit night the Miami skyline reflects the stark reality behind the still troubled marketplace. A number of towering new buildings built during the boom are seeing more lights shine above showing a growing presence of residents.