Miami Condo Boom Goes Bust

Feb. 16, 2007 — -- Two years ago, Miami's real estate market was hot -- red hot -- and the hype was contagious.

When ABC News shot a story about it in the fall of 2005, we called it "Boomtown Miami." Old buildings were falling to make way for new condo towers that were selling out in just a few days.

"It was very exciting. It was an adrenaline rush," Kari Fernandez, a condo sales agent, says. "We're talking almost 1,000 units sold in a week."

Investors, speculators, flippers, everyone seemed to be making staggering profits -- at least on paper -- in a matter of weeks.

Across the country, the real estate market has gone flat, but nowhere quite like here in Miami. Not that Miami is suddenly at a standstill: In the skies, flocks of building cranes compete with birds as condos race to completion. Look around, and you can see a skyline transformed, with more than 100 new condo buildings now under construction, representing about 25,000 condo units due to be completed and delivered in the next 18 months or so.

But developers are avoiding new projects, focusing instead on completing construction and sales for all those buildings already under way. It's a far cry from the adrenaline-fueled boom of just two years ago.

Back when this was Boomtown -- in 2005, when ABC News did that first story -- we met a young real estate lawyer and speculator named Richard DeNapoli. He'd bought four condos worth $1 million with a $200,000 down payment. DeNapoli was banking on a $400,000 profit for his four condos.

Today, those condos are nearing completion, and his expectations are more modest.

DeNapoli has flipped his four units to other buyers, but for less than he'd hoped. Because he bought in early enough he'll make a $275,000 profit -- maybe. The worst-case scenario, he said, would be to break even or have to buy and then rent the units he speculated on.

"It's a stalemate right now," DeNapoli said, "between buyers who have a lot of supply to look at and sellers who don't want to budge on their asking prices."