South Florida's Housing Crisis Leaves Behind Ghost Towers

By Lisa Rab
Published on June 17, 2009 at 7:54am

Miami alone has produced 23,000 new condo units since 2003 and is now experiencing the worst condo meltdown of any city in the country, according to Jack McCabe, a Deerfield Beach real estate analyst. Broward and Palm Beach counties built or permitted more than 18,000 condos. As a region, South Florida is probably the worst-hit, McCabe says.

"I think our population growth is about zero right now, and we're not creating any jobs," says McCabe. "Who is going to live in these things?"

While developers, investors, and real estate agents struggle to answer that question, the bust is taking a visible toll on condo complexes scattered throughout Broward and Palm Beach counties. Some developers appear to be in denial, masking empty units with a façade of glamorous amenities while legions of buyers file lawsuits to avoid closing on their purchases. Other developers survive by lowering their standards and their prices, accepting renters and auctioning off unsold units. Then there are complexes with so many empty units that crime has begun to invade. The resulting fear prompts more owners to flee.

A tour of some once-celebrated condo projects illuminates the misery the housing bust has caused. Welcome to condo living — after the boom.

Anybody home? Tao Sawgrass, Sunrise

The security guard is melting in the midafternoon May heat, standing sentry in the blinding white driveway of the Tao Sawgrass condos in Sunrise. In black pants, black tie, and dark shades, he mops the sweat from his forehead as he questions every car that approaches the twin condo towers. The guard, who says his name is Hugo, has only been on the job a month or so, but already he understands the routine.

Anyone who wants to ascend the winding driveway to the majestic entrance of the 26-story complex must get by Hugo first. Right now, most of the visitors are employees — the security guard at the front desk, the woman who sells the condos — because no one lives there. Not a single resident, in 396 units. "Not that I'm aware of," Hugo says.

http://www.browardpalmbeach.com/2009-06-18/news/south-florida-s-housing-crisis-leaves-behind-ghost-towers/

Today the complex is an elaborate monument to the folly of the boom years, when it seemed logical to sell half-a-million-dollar high-rise units on the edge of the Everglades.

Condos take many months to build, often the time frame can be measured in years. Plunk down a mere couple of thousand while the thing is still on the drawing board with a nominal price of say, $400,000, and by the time the thing is built and ready for occupancy, you can sell your position for $100,000, as the price may well have shot up beyond $500,000 for a unit.

There are few other ways to make that kind of return, and if you can dodge out of making the purchase, you're pretty much only putting the original couple of thousand at risk. There will always be some bigger sucker down the road.

Until there isn't, and you're the last sucker standing in line.