We're doing so well on building housing that it's scary
By Michael Lewis
Was I the only one scared to death by an upbeat report on our front page last week that in the City of Miami alone, 66,648 housing units in 233 projects are in the pipeline?
I was scared because I have no idea who's going to live in them all when they're done.
And if they aren't occupied, what's going to happen to our economy?
Maybe I'm just a worrier. A Builders Association of South Florida panel last week said, hey, we've got plenty of people moving here to buy everything we can build. We're not long on housing - we're short. The Europeans can't get enough of what we've got.
But Miami isn't alone in its unprecedented building boom. Look at the rest of the county.
Unfortunately, there's no way to get an accurate total. Subrata Basu, assistant county planning director, says each city tracks its own permits and construction progress and the county can't get a total until buildings are done and get certificates of occupancy - far too late to figure out how many housing units are in the pipeline.
But we know that Homestead alone has 16,000 to 20,000 rising or about to, a number that would more than double that city's population.
Sunny Isles Beach is condo heaven, with housing planned everywhere. Aventura is booming. Doral is looking at a moratorium but has 3,000 units already approved from developer Sergio Pino alone that won't be affected.
In fact, virtually everywhere in the county but Key Biscayne, which is flat out of land, is bulking up on housing like a Barry Bonds on steroids.
Given Miami's 66,000-plus total, far more than 100,000 units must be in the pipeline in Miami-Dade County. Who, I repeat, is going to live in them all? Or will anywhere near all of them ever get built?
Use a figure from Mr. Basu as a yardstick: each year this county's population grows about 30,000. That, he says, equates to a need for 10,000 to 12,000 added housing units every year - a substantial need indeed.
Until recently, in fact, the cry was not that we were overbuilding but that we were lagging. There was nowhere for people to live.
So on the surface, our boom seems like a godsend.
It would be if most of that housing were for the people who most need it, at the bottom and middle of the income scale. But, as we can see out our windows, that's hardly the case. We're building luxury and more luxury.
How many of those 30,000 newcomers can spend $400,000 and up for starter housing?
But let's assume that each could afford what we offer. If their need is 10,000 to 12,000 units a year and we're building or planning more than 100,000, we've got at least eight to ten years' supply in the works. Will some of these units have to sit vacant that long - or will some projects die before the first shovel of dirt is ever turned?
My concerns have nothing to do with either quality or the need for any given project. Most seem anywhere from good to great. And in isolation, any one would sell like hotcakes to clamoring buyers and all would be good investments.
In fact, they all seem to be selling to clamoring buyers waiting to get a piece of the action. But a large percentage of those buyers are not occupants. They are speculators, expecting to sell the units quickly for a fat profit.
It's not developers who'll get hurt if the boom turns sour. They'll have sold out. But what will speculators do with vacant units the day enough projects rise to outpace demand? Will they have the deep pockets to pay the mortgage and condo fees month after month for one or a dozen condos they'll have to rent out for a fraction of the carrying cost?
That's what scares me.
Every unit we build today will be valuable infrastructure for this vibrant and growing community - in the long run. They'll be great investments - in the long run. We'll have plenty of newcomers at 30,000 a year to absorb them - in the long run. We can't get enough of them - in the long run.
In the short run, however, too many speculators seem to be counting on too much demand - again, assuming that everything that's planned is built.
Every condo sold today to an end user is a good sale. It's good for the developer, the user and the community. It meets a real need and we're glad to have it, thank you.
But, as Mr. Basu points out, a dark condo doesn't fill streets with people, support retail establishments or build our economy or community. It just drains speculators' wallet.
And what scares me most is whether the flippers who are loading up on condos have fat enough wallets to carry units until enough people flood into this area, at 30,000 a year, to absorb an unprecedented 100,000-plus new housing units.
I love the new housing - but how much is enough?