Miami’s Real Estate Catch 22

December 23, 2014

Very worthwhile, if somewhat tooth-grinding reading, in the Washington Post.  Miami’s real estate market hardly blinks at global climate change, and the now locked-in sea level rise that will devastate South Florida in coming decades.

(if you haven’t seen my video on South Florida Sea Level rise, above, now is a good time)

The one-percenters from South America and elsewhere who are fueling the real estate bubble will probably come out just fine. Many are not actually living in the posh developments that are springing up along beaches  – where eroding sand must be trucked and replaced regularly.  These are simply places to park billions of dollars until it becomes obviously unsustainable – probably after the next cat-4 or 5 storm comes thru with a reality check.

In the meantime, taxpayers will continue to foot the bill for the growing number of pumps needed to keep water off the streets during high tide. Another example of how the fossil fuel industry privatizes the profits of burning carbon fuels, and socializes the costs.

Washington Post:

Meanwhile, Miami Beach keeps growing. Last year, the city collected $128 million in property taxes, an increase from $117 million in 2013 and $114 million in 2012. Thirty-two new condo towers have been proposed since 2011, said Peter Zalewski, founder of condo consulting site CraneSpotters.com. Twelve are currently under construction. The average asking price for resale condos, he said, is about $1.1 million.

Many buyers come from South America, more concerned by currency instability in their home countries than encroaching saltwater: “They want somewhere safe to park their money,” said Zalewski, whose firm tracks applications. “A lot of buyers here never step foot in the condos. They’ll sell them before the water makes it to the bottom floor of their buildings, anyway.

Foreign investors fueled nearly one-third of real estate transactions last year in Miami-Dade and Broward counties, according to a National Association of Realtors report. Eighty-one percent paid cash, the report found, and 72 percent bought a condo or townhouse.

Simon Mass, a Canadian real estate investor (and longtime friend of Tansey), plans to buy a $23 million slice of land of North Beach and, as soon as the city grants permission, build a 230-unit condo tower. Many buyers, he predicts, will never visit the properties. They might as well be buying stocks on a computer. “Sea level rise,” he said, “is simply not a concern in those cases. That’s why people have insurance.”

Others are seeking a vacation home, a temporary escape from the sputtering economy in Brazil or political unrest in Venezuela. They flash wealth in South Beach without inviting trouble, Mass said. They drive nuclear-orange Ferraris. They stroll the Lincoln Road Mall in Louboutin heels. They rack up four-figure sushi tabs at Nobu.

“Are they worried about sea level rise?” Mass said. “Do they look like they’re reading the newspaper?”

Sydney Morning Herald:

What was not so widely reported was that South Beach stank of shit. There is no nice way to put it. The place smelled of human waste. There had been a brief, heavy downpour but the water could not escape, so the sewers backed up and filled the roads. The traffic slowed to walking pace or seized entirely, and the models tottering between the restaurants and hotels and clubs had to pick wide arcs on the pavements to avoid the nasty pools swelling from the gutters.

Only the people seemed to take it in their stride, perhaps because this sort of thing is no longer unusual in and around Miami.

Trip Advisor – Review of Miami’s Vizcaya Museum and Gardens:

The gardens of the Vizcaya Museum are vast and marvelous. The only thing spoiling it was the horrible smell. Most of the ponds with still water were stagnant and smelled like sewage waste. There’s a huge stone/cement ship in the center of the water which looks nice but the water around it was filled with trash (yes – soda cans, straws, napkins, etc..). There’s so many nooks and areas to walk to where you’re greeted by wonderful statues and busts as well as that annoying smell and dark swampy green slime water. You could see garden attendants adding new sand and clipping plants, but why they don’t clean the ponds, I don’t know. There were several young ladies taking their Quinceañera pictures, but I kept wondering how they could walk around that stinch in those beautiful gowns?

Jeff Goodell in Rolling Stone:

You would never know it from looking at Miami today. Rivers of money are flowing in from Latin America, Europe and beyond, new upscale shopping malls are opening, and the skyline is crowded with construction cranes. But the unavoidable truth is that sea levels are rising and Miami is on its way to becoming an American Atlantis. It may be another century before the city is completely underwater (though some more-pessimistic­ scientists predict it could be much sooner), but life in the vibrant metropolis of 5.5 million people will begin to dissolve much quicker, most likely within a few decades. The rising waters will destroy Miami slowly, by seeping into wiring, roads, building foundations and drinking-water supplies – and quickly, by increasing the destructive power of hurricanes. “Miami, as we know it today, is doomed,” says Harold Wanless, the chairman of the department of geological sciences at the University of Miami. “It’s not a question of if. It’s a question of when.”

Below, video from last year documenting increasing concerns among scientists about the potential for massive sea level rise in the relative near term.

 

4 Responses to “Miami’s Real Estate Catch 22”

  1. anotheralionel Says:

    This is the gigantic fraud being perpetrated not the acknowledgement of climate change realities. I have seen a few commentators at Climate Progress crowing about how good real estate is in Florida right now. Are these people dupes or a part of the problem.

    ***

    Can anybody suggest why I cannot post a comment at Eli’s place using this ID? I have been trying for days now, cannot seem to get through the wall.

    I do the reCAPTCHA

    Choose OpenID WordPress

    enter ID

    Hit publish

    and get ‘You do not own that identity’

    Driving me nutts.

  2. anotheralionel Says:

    I may have sussed this WP thing.

  3. climatebob Says:

    The general understanding about rising sea levels in Florida and elsewhere are gaining ground and will probably reach South America at about the same time as it reaches the Governor. One good storm and flood and it will be all over. The lack of hurricanes making landfall does not mean that they have gone away. This is what we are doing in New Zealand. http://www.climateoutcome.kiwi.nz/blog/infrastructure-loss-in-new-zealand-due-to-sea-level-rise

  4. andrewfez Says:

    I’ve posted this before but the article i read on Miami said that if they wake up to climate change then there will be a run on real estate. When the property value crash happens that will also crash property taxes and castrate Florida’s ability to pay for mitigation projects. What you have to remember about Florida is they have no state income tax. The reason they are able to not have an income tax is because they jack up the property taxes to offset the otherwise hole in state funding. When the Miami property value bubble bursts, the state will be losing a large source of income. Municipal bond defaults may come into play (bonds issued for mitigation for example). Miami is delinquent tax investor heaven as it offers lucrative, state backed returns; that will become a final game of musical chairs. I don’t know how well infiltrated Blackstone and JP Morgan are in Miami, but they were scooping up large amounts of single family homes during the last property crash, hoping to securitize them into rental-backed-derivatives and push them onto investors, giving their friends a go at modern feudalism.

    This is a potential economic contagion problem: markets tend to anticipate bad things baked into the cake; and thus when Miami goes offline, all Atlantic coastal property is going to take a hit. Insurances will go crazy. If JP and Blackstone are there, Wall St. will go crazy. The American tax payer will again be the lender of last resort, except this time there will be no recovery over previous value (at least in Miami).


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