Miami developers, whose condominiums are nearly completed, could tap into a new source of revenue based on a news report from the Florida coastal town, Punta Gorda.
There, police arrested a couple having sex atop a 100 foot high construction crane. “The man, who worked at the site and had keys to the crane, told officers he was photographing the city skyline.”
For the foreseeable future, renting out crane cabs for sex would generate a higher percentage profit than selling condominiums in unfinished buildings.
What is happening to Miami real estate markets and its skyline dotted with cranes atop unfinished condominiums is both predictable and terrifying.
And because it is terrifying, not a single elected official is copping to responsibility in the unfolding collapse, spurred by their blind enthusiasm for zoning and permitting decisions and the influence of campaign contributors and the bill-by-the-hour development lobby.
Today’s Miami Herald documents the pain felt especially in some of Miami’s poorer neighborhoods where increasing numbers of homeowners are facing foreclosure.
The poor are always hit the hardest by corruption and fraud: the landmarks of the housing boom as with all sorts of pollution.
They are also hit, first, on the bottom step. But the entire economic ladder is being shaken hard and under-reported by the mainstream media.
Lots of people in high places (measured not by construction crane height) are praying that the mortgage fiasco resolves itself quiety. Elected officials who presided over the mess have their game faces on.
Government officials—in Congress and the White House—are scrambling to come up with plans to stage-manage the fallout (urging “cooperative” efforts of financial institutions to work out billions of loans generated in the enthusiasm of the “ownership society”—remember that?).
The Florida legislature has been engaged in a highly publicized effort to “jump start” the Growth Machine by slashing property taxes. But when all is said and done, the proposed relief of 7 percent is mired in delusion.
Over the last year revenue that Florida collects from real estate transactions dipped 25 percent, “causing overall tax revenue to fall for the first time since the 1970’s.” (New York Times, June 15, 2007)
So, at the same time that damage in Miami’s condominium, mid-price and upper price housing markets is just beginning, cuts in tax revenue piled atop declining tax base are setting the stage for recession and social unrest.
The billion-dollar Boca Development—that focused on coastal condos—is trying to shed hundreds of millions of assets. Production home builders are burning cash under conditions of tighening credit and balooning inventory.
The NY Times reports, today, that a Bear Stearns “set of hedge funds” tied to leveraged mortgage portfolios is down 23 percent “and recently suspended redemptions, prohibiting investors from getting their money back.”
If you own shares in a hedge fund, you will never know if its managers have been buying Miami condominiums until it is too late to do anything about it.
One is tempted to say, speculation is an individual and personal choice. But not when the societal outcomes are so severe.
The notion that what is happening in real estate markets is inconsequential is reinforced, almost like a mantra, by the financial elite.
According to the NY Times, “None of the finance officials at the banks expressed concern about the recent spike in interest rates, suggesting that the market’s adverse reaction passed quickly and that spikes occur every year. ‘As long as we continue to see that kind of benign environment—good availability of economic liquidity—I don’t think it will have much of an effect on our business,” Mr. Viniar (chief financial officer of Goldman Sachs) said.”
In markets like Miami, governed primarily by speculators, thousands of investors are not facing the future with the same equanimity.
In the next six months as Miami condominiums obtain certificates of occupancy the real Miami will begin to hurl, showing what was achieved by politicians in Tallahassee and Washington who promoted the “ownership society” as the replacement for the dot.com boom.
The stories are yet to be told of ordinary people who leveraged hard earned dollars into properties their ordinary incomes cannot afford.
But of communities in Florida, and developers who got their way by zoning changes and building permits in wetlands and farmland—suburban sprawl that should never have been allowed—every single taxpayer will be paying for terrible decisions made by their elected officials for a long, long time to come.
Those at the top of the Ponzi scheme, and the politicians they subsidized, will be on easy street—no matter how bad inflation gets or how many police officers scour crane cabs for couples engaged in free expression.