Who Will Buy My House in Miami?
- From: periodistalibre@xxxxxxx
- Date: Fri, 21 Sep 2007 21:26:55 -0700
What the Sale of the Carlyle Group Tells Us About the Collapse of the
Housing Market -
By ALAN FARAGO -
Would someone from Dubai or China please come to Miami and buy my
home?
This seems a reasonable plea, given this morning's news that the big
private equity firm, (in which President George HW Bush made his
fortune after leaving the White House)-the Carlyle Group--sold 7.5
percent of itself to the United Arab Emirates. 19.9 percent of NASDAQ
is being sold to Dubai, that couldn't get our ports but getting the
platform on which US equities trade. China, discontent with the value
of its foreign currency investments, has set up its own fund to invest
directly, not just in US debt, the value of which is declining to
record lows against other currencies.
Since no one else is going to buy my house, I invite foreign economic
ministers to spend a few nights with me in Miami -we'll put you up,
give you the keys to the Toyota hybrid so you can drive around and see
the value we've created from the sunshine state.
The national rate for home foreclosures has doubled in the past year:
in Miami, it has doubled beyond that, according to the desultory
vultures at county mortgage auctions, crossing off one property after
another on the thick list of foreclosures because the banks aren't
quite ready to let them go.
The Miami Herald reported today a crowd of more than three hundred
people who packed a Marriott hotel ballroom to bid on 20 units at
Platinum Condominiums. "In May a one-bedroom on the 14th floor closed
for $360,000. But Thursday night, two one-bedroom condos on the
tower's 16th and 18th floors couldn't crack $220,000."
Of the auction, real estate advisor Lew Goodkin said "better bargains
should come in 2008 when the market is even softer."
It's a creepy fun-house hall of mirrors economy that is unfolding in
the aftermath of serial financial bubbles: first the dot.com stocks
and now housing. Combine these with the decadal loss of American
manufacturing capacity through role reversals in the global economy,
the only way political leaders could massage the impacts was to deny,
literally, meaning.
In the paid advertisement real estate section of The Miami Herald,
it's put another way by homebuilder, Pride Homes, announcing another
blowout inventory sale: "The builder has listened to what home buyers
want in today's marketplace, and are responding to their needs."
It is line that if you say often enough, becomes even less true.
Today, it doesn't matter if real value is created when subdivisions
are pressed into landscapes like Florida's in the shape of cookies cut
from a sheet of pre-mixed dough. What matters is the notion of value.
In the late stage of the building boom, Florida's homebuilders were
building into a vacuum, caused by a massive proliferation of
liquidity.
No one cared. Glad-handing local politicians acted as zoning
authorities and petty despots at the bidding of campaign contributors
who must be right because, well, they made so much money. That worked
for a while, first as homeowners threw used their home as a piggy bank
for personal consumption, and later, as American suburbs became self-
fulfilling sumps for over-stressed workers who reversed Tim Leary's
admonition to "turn on, tune in, and drop out" to simply tune out.
Here are the people whose needs were being responded to, by over-
building: Wall Street investment bankers who figured out how to take a
construction loan, ordinary mortgage, whatever-bundle them like
campaign contributions and then take bonuses as a percentage of
underwriting fees after they multiplied the value of the underlying
asset 10X, 20X, 100X.
This was called diversification of risk, a net benefit to the world
economy.
In Miami today, local politicians and builders and lobbyists are
testing each other's handshakes with shrugs, persuaded that their
hangovers from the housing bubble will go away and everything will
return to normal good times, just put a little more of yesterday's
vodka into this morning's orange juice, pass just one more zoning
measure, approve one more lane widening or rail link into farmland,
another interchange where insiders own property, another platted
subdivision or strip mall where the only local business doing well is
the one printing "for sale" signs.
It is happening again in Miami, where the periodic assault against an
urban development boundary (intended to protect the Everglades and
taxpayers from the costs of suburban sprawl) has been joined once
again by a chorus of lobbyists and land speculators-many of whom paid
outlandish prices, tens of millions of dollars, for property that has
no intrinsic value absent a zoning change today and a market revival
tomorrow.
There's the rock mining industry, in Miami Dade, owned by corporations
in Australia and Mexico-sending trucks and employees and lawyers and
lobbyists to protest a federal judge's decision to stop the
billionaires from ruining the water supply that millions of South
Floridians depend on.
Is it really so unreasonable to want to sell my Miami house to the
Chinese?
"We're out to make deals and sales at all cost, no matter what," says
the spokesperson for Pride Homes.
"No matter what" is driving Florida Power and Light, one of the
nation's largest power producers, to seek permitting for two new
nuclear power reactors with a couple of thousand megawatts at sea-
level and a stone's throw from Pride's homes starting at $200K, to
accommodate Florida's growth that a Miami Herald editorial actually
wrote yesterday, "shows few signs of abating".
For such "responding to the needs of people", sea level rise from
global warming looks like a future to bank on.
---------------------------------------------------------
Alan Farago of Coral Gables, who writes about the environment and the
politics of South Florida, can be reached at alanfarago@xxxxxxxxxx
.
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