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Recovery in Florida's Real Estate Market, New York Times, April 1, 1977
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Miami - A heavily glutted market had been created by over enthusiastic developers and buyers and lending institutions during the heady days of the early 70s. Then along came the recession of 1974-75, and the Florida real estate market became a disaster area, severly hurting the state's employment, banking operations, construction activity, retail operations, and numerous other lines.
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Charles Kimball, prominent economist, estimates more than $3 billion of major housing properties failed between September 1974 and 1977 in Dade and Broward, where the building boom was greatest. Hundreds of condominiums were foreclosed by banks, real estate inv trusts, and mortgage companies, which then had to pump more money to complete construction before struggling to unload the properties at sharply reduced prices.
Now, however, the condominium recovery has finally begun, according to bankers and economists...
The comeback actually began during 1976, but it seems to have picked up steam during the last quarter.
It will be some months before the overhang of condos is reduced to more satisfactory levels and a new upsurge in the sales trend gets under way. From 1971 to 1973, there was a large excess of building permits issued for new housing units compared with the rate of family formations at the time. Some sources put the excess as many as 263,000 units. That resulted in a big inventory buildup that has since been reduced by 50,000 mainly because of continued population growth and a much reduced pace of building.
Other factors include the national recovery, the severe winter up north, and a substantial infusion of foreign capital. The new money is coming from Venezuela, Colombia, other parts of Latin America and Canada as well as Switzerland, Germany and Italy.
As a result, the condo industry is starting to move upwards slowly again. At its peak, there were 240,000 workers, the total was down to 120,000 last year and is currently estimated at 140,000.
The housing recovery has permitted financial institutions to recoup some of their realty losses. At the end of 1975 for instance, First National Bank of Miami had taken control of 16 troubled projects, valued at $30 million. It has since disposed of four of them and received down payments on others realizing about $20 million in the process.
I think the worst is over, but we still have a 12 month overhang in housing inventory based on current absorption, said Mr. La Comb of First National.
"A recovery is under way and I think we'll have a boom here in two years."
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