From the Ground in Miami,
Part Two
by Graham Summers
October 18, 2006
I was expecting a different tune from Yovani Garcia.
I’d anticipated that Yovani, a Miami condominium developer, would be lamenting a slowdown in condo sales. Interest rates are higher. Everyone and their mother knows that Miami’s condo market has been out of control for the last couple of years. It simply couldn’t hold up… could it?
It could.
I spoke to Yovani twice on the phone in the last five days. Both times, his office sounded like a madhouse in the background. During the course of our conversations, I could barely hear him above the phones ringing and sales representatives talking. “Sound pretty busy over there,” I commented. “Oh yeah, this Loft 3 project is proving very popular,” Yovani replied.
The Loft 3 project is a condominium scheduled for completion in 2010. Yes, you read that correctly. People are clamoring to buy condos that won’t even be available for four years.
The condos start at $159,000 for one bedroom and one bath. All you need to buy one is 5% down now and another 5% at groundbreaking in July 2007. For one of Yovani’s condominium projects to even reach groundbreaking, it needs to have deposits for more than 80% of the units in the building.
When I commented to Yovani that I’d heard of a recent slowdown in condo sales, he asked, “Slowdown compared to what? If you’re talking about the last two, three, or five years, then yes, it’s slower this year. However, you’ve got to understand that prices are going to be skyrocketing, and condos at these prices are going to be out of reach in a couple of years.” When I asked what he meant by out of reach, he gave me a ballpark figure of $500,000-$700,000 per unit.
“It’s going to be like Manhattan,” he added.
So who’s buying these things? According to Yovani, 30,000 new residents arrive in Miami each year. A large number of these are recently retired baby boomers. “Baby boomers comprise the largest percentage of the U.S. population. And when they retire, they all move to either Arizona or Florida,” he said.
Yovani’s not blowing smoke either.
According to a 2004 survey from Del Webb, a real-estate developer with properties in some 20 states, 55% of baby boomers say they will move when they retire… 36% of them plan on moving more than three hours away from their current residence. Judging from my experiences in Miami… a ton of them are moving into Miami condos.
Is Miami’s condo market slowing down? Doesn’t sound like it.
Good trading,
Graham Summers
