Boom and Bust Parallels
Since Miami’s boom led it to surpassing NYC in new construction, I thought it relevant to look into NYC’s real estate boom of the 1980’s and subsequent crash. What I found was a timeline of the real estate boom and bust of the NJ/NYC metropolitan area that is eerily similar to what is happening here today. Could what happened in the Big Apple during the 1980’s foreshadow the future of Miami’s real estate market?
- 1982 – Real Estate Buzz Begins
- 1983 – Real Estate Gains Limelight
- 1984 – Prices Begin To Skyrocket
- 1985 – Prices Rise, Affordability Questioned
- 1986 – Manic Pace
- 1987 – Cracks Appear At The Top
- 1988 – The Crash Begins
- 1989 – The Market Turns
- 1990 – Bank Failures And Foreclosure
- 1991 – A False Glimmer Of Hope
- 1992 – Reality Sets Back In
- 1993 – Hope For A Bottom
- 1994 – Disappointing Bounce
- 1995 – Uncertainty As The Bottom Is Hit
Apples to Apples Comparison?
The article that I used as a reference has supporting NY Times articles for each year. It’s fascinating to see the parallels:
- One could begin Miami’s boom-preceding real estate buzz at around 2002. This would coincide with 1982 and 1983 in the above time line.
- The market gaining the limelight seems to coincide with 2003 and 2004 when projects were announced throughout Edgewater, the CBD, and Brickell on an almost weekly basis.
- By the end of 2004, Miami’s boom was approaching its height. Everything seemed to be happening at once. There was a flurry of developer and investor activity. The national and international media had Miami in the limelight. It was tantamount to a renaissance of sorts. Prices began to rise sharply and people began questioning affordability as the median home price rose beyond the reach of Miami’s Median Household Income . This would appear to coincide with 1985 in the time line.
- 2006 was a year where many people got into contracts fearing that there was still time to get a good deal and prices were going to continue to rise. This coincides with the Manic Pace of 1986.
- Now, in 2007, foreclosures are at historic levels, prices are slumping, there is an over supply of condo units for sale, and still dozens more projects in the pipeline. This would coincide with 1988 – 1990 in the NJ/NYC boom where similar conditions arose.
It took around 7 years for the market to bottom out and recovery to ensue in the NJ/NYC metropolitan area. Are we to expect the same in Miami? So far, events are following a similar track.