Timing in with Miami Real Estate Market’s Boom and Bust

The year is 2005 and it was all the way living, it was some good years for the overall real estate market and it was a fun time for investors, developers and the buyers as well. Looking back when this was Boomtown in 2005, when ABC News did that first story, it met a young real estate lawyer and speculator named Richard DeNapoli. He’d bought four condos worth $1 million with a $200,000 down payment. DeNapoli was banking on a $400,000 profit for his four condos. And according to him it was on of his business highlights.

But today, those condos are nearing completion, and his expectations are more modest. DeNapoli has flipped his four units to other Florida home mortgage loan applicants, but for less than he’d hoped. Because he bought in early enough he’ll make a $275,000 profit and that is a big maybe. The worst-case scenario, he said, would be to break even or have to buy and then rent the units he speculated on. That is what this high-low movement of the real estate market is going. “It’s a stalemate right now,” DeNapoli said, “between buyers who have a lot of supply to look at and sellers who don’t want to budge on their asking prices.” Obviously he can’t believe the movement either.

Ok looking back in 2005 again, “The equation is that you have speculators buying units, and they’re trying to flip their contract to other speculators who in turn are trying to flip their contract to other speculators,” Jack Winston, an analyst with Goodkin consulting, saw a boom based on shaky foundations.” He also said at the time. “Somewhere along the line, you are going to run out of speculators.” Now, Winston is saying: I told you so. And I think that is fact considering the market’s state right now. It is unavoidable thus reality strikes in.

He continue saying that “Basically, we predicted at that time it was pretty close to a Ponzi scheme.” And adds, “And the last person is the one who gets hurt. And that’s basically what happened here.” Winston and others estimate that 70 percent of the Miami condo market was driven by those speculators in search of quick profits. “Probably some time around
September or November of 2005, it was as if someone turned off the spigot,” he says. “Since that time, new sales at condominium projects have come to a halt, practically a stand still.” It is more to a fault that the market is in a stand still mode and has been there for some reasons as well. The lesson on this is learned for sure. Analyzing the past few years of the market and its state now, it is hard to compare but the difference is obviously seen.

Jron Magcale
http://miamirealestatetrends.com/

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