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Good Time to Build Condos in Miami

Atlanta Fed: Good time to build condos in Miami, West Palm Beach

Date: Friday, September 28, 2012, 12:28pm EDT - Last Modified: Friday, September 28, 2012, 2:48pm EDT
 

Millicento Residences
The Related Group

Millecento Residences, a Miami condo planned by the Related Group, is among the new projects across South Florida.

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Senior Reporter- South Florida Business Journal
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An article released by the Federal Reserve Bank of Atlanta concluded that it’s an opportune time to build condominiums in Miami and West Palm Beach.

The speed with which new cranes have returned to the area after the housing meltdown has surprised many economists, but the report, issued Thursday in the Atlanta Fed’s EconSouth, justifies the trend. Authors Jessica Dill, a senior economic research analyst, and Carl Hudson, director of the Atlanta Fed’s Center for Real Estate Analytics, studied sales trends and interviewed South Florida real estate experts to determine that there is plenty of demand for the new condos and the financing methods are less risky than in the bubble market.

In the 12 months ended June 2007, there were 15,334 condos that started construction in Miami and West Palm Beach, and 29,581 units were under way, according to CBRE Economic Advisors numbers cited in the report. As of June 2012, it found 800 condos that started construction and 1,422 were under way. That is a 26 percent year-over-year increase in condos in the planning stages.

Click here to see CVR Realty's list of planned projects.

The Atlanta Fed report noted that the inventory of condos for sale in South Florida has declined for several years as sales of existing units have increased. Prices have also trended upward in many South Florida ZIP codes.

“Given the ongoing international demand for South Florida real estate, indications that cranes are migrating back to South Florida are a welcome sight,” the Atlanta Fed report stated.

The report also noted that the increase in South Florida rents might bolster condo development because some consumers might opt for home ownership.

“The big question is whether the changes in construction financing as a result of the crash are sufficient to prevent a repeat of the crash that nearly wiped out the crane population,” the Atlanta Fed report stated.

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