Miami's Condo Market Still Strong

Miami’s real estate market continues to thrive in spite of the difficult economic conditions being experienced all around the nation. As reported in The Miami Herald, the closings at downtown Miami condos have continued despite the slow-down in the economy.
The article reads:
“Since 2003, 17,299 condos have been finished and 12,169 have closed at an average price of $405,966 per unit, adding up to total sales of nearly $5 billion in the greater downtown Miami area, which includes the Brickell, central business district and Midtown neighborhoods.”
More than 12,000 units have closed in downtonwn, a large number of units for any local economy to absorb, even in robust economic times. The fact that all of these units have closed despite the current economic climate speaks volumes about the city’s stability and ability to attract buyers. This is a testament that Miami continues to grow and prosper, and will continue to be a source of prosperity for its residents.
It is also a testament to how far the city has come in creating an urban core to live, work and play in. Not too long ago, Miami had no urban core to speak of. Now, downtown has been completely transformed. The residents who will live in these 12,000 that have closed will help create a new urban environment and a brand new sustainable city. These closings also create an opportunity for renters to live in the urban core, renters who are likely to become buyers once the lending market improves.
This is why the City of Miami will continue to invest in projects such as the Miami World Center, and continue to work towards implementing the new zoning code, Miami 21. These investments are necessary to build the city we all want to live in, and create a sustainable home for our children.

- Manny

Read The Miami Herald story.

LETTER URGING CONGRESS TO MOVE QUICKLY TO ADDRESS NATIONAL FINANCIAL CRISIS

Our nation is at a crossroads, and Washington must act now. With that in mind, I sent the following letter today to Congress on behalf of the nation’s mayors urging Congress to move quickly to address the current national financial crisis:

Dear House and Senate Leaders and Members of Congress:

I am writing to you in my capacity as President of the United States Conference of Mayors. The current dysfunctions in the financial markets are having major economic impacts across the country, in particular to large urban centers. I list just five of those impacts below:

Loss of jobs/Loss of economic development and growth
From January through August 2008, the US economy has lost over 605,000 jobs (an additional 105,000 job losses are expected in September) and total unemployment now totals 2.2 million. The consolidation in the banking industry that is occurring due to our current financial distress will only exacerbate the situation. For cities like New York that rely on personal income taxes for a major source of their operational cash, the impact will be devastating, adding to the shortfalls in property tax collections resulting from the national housing crisis.

Cities drive the national economy. Metro economies now account for 86% of national employment, 90% of labor income and 90% of the Gross Domestic Product. Metropolitan areas are the economic engines of America because we invest in our neighborhoods, we invest in our people.

Let there be no doubt, our current national economic crisis is having, and will continue to have, a severe impact on our ability to continue investing in our nation’s growth. Rising unemployment and reductions in personal income are putting a significant strain on our budgets and our ability to deliver services and promote economic development.

Let there also be no doubt, it is at a time like this that the American people require more from their Mayors. Increases in crime are already evident in many areas. Job training and job placement become more important than ever. Budgets cuts in schools result in the elimination of after school programs designed to keep our young people off the streets, away from trouble.

We are delighted by the recent continuous reference to Main Street and its new-found popularity. We are delighted that Washington seems to be re-discovering what Mayors have long known, that Main Street is America’s cities.

Strong and prosperous cities are a strong and prosperous America.


Loss of confidence
A loss of confidence in our banking system is also currently playing out in what should be simple determinations of what constitutes safe havens for operational funds (let alone long-term investments). For example, the City of Miami holds approximately $10 Million of liquid cash and investments to cover day-to-day expenses.

When Wachovia’s financial distress was coming to light, we seriously considered pulling out our funds. Even though we have State legislative protection against failing public depositories, had Wachovia collapsed it may have been months before access to our cash would have occurred and in that event, short-term borrowing for liquidity would have been either very expensive or downright impossible.

Access to Credit Denied/Delayed/Costly
Prior to the most recent bank failures and consolidations, the municipal bond market was averaging $5-7 Billion per week in new bond issuances. Over the past two weeks, the average of entries into the marketplace has diminished to well under $1 Billion per week and the visible supply of new issues has backed up to over $15 Billion. These numbers represent a delay of necessary capital projects that help spur job creation.

For those municipalities that have been able to access the market over the past two weeks, their entry has come at a price of between 75-85 basis points in stated interest costs and an additional interest penalty of 30-35 basis points in order to get their transactions done. The overall effect of the current economic crisis on municipal debt has been an increase of approximately 1.0% -1.20% in interest costs over the period prior to two weeks ago. When cities issue debt in the tens and hundreds of millions of dollars, these changes in borrowing costs represent significant added costs to taxpayers. Additionally, some municipalities simply cannot afford to issue debt at these interest rate levels.

Lost Values in Pension Funds and 401K retirement accounts
Citizens around the country rely on their retirement savings accounts and pension funds to provide for themselves in their golden years. These funds have lost millions in value as a result of the losses being suffered in the stock market. In fact, the Dow Jones’ loss of 777 points in a single day reduced equity values by more than $1 trillion. For municipalities around the country, these losses directly translate to increased pension contributions from already strained city budgets.

Foreclosures and Housing Values
Property taxation represents local government’s largest revenue source. With 1.7 million foreclosure proceedings in 2007 and an estimated 2.3 million additional foreclosure proceedings expected in 2008, cities have had to adjust, and will continue to adjust, their operating budgets downward to offset lost property tax revenues. Cities realize that housing markets fluctuate and they plan accordingly utilizing budgetary reserves. However, the magnitude of foreclosures and their expected long-term impact on national housing stock will greatly upset the ability of cities to address the needs of the American people.

On behalf of the American people, the US Conference of Mayors urges and expects Congress to move quickly to adopt a thorough solution to address the national financial crisis for the long term, a solution that benefits both Main Street America and Wall Street.

Sincerely,

Manny A. Diaz
PresidentU.S. Conference of Mayors

About the Troubling Economic Crisis

The events of the past few days have caused me great pause and consternation. Our nation is gripped in a financial crisis that at its worse could send us down a course that would rival the Great Depression.

And yet these days it seems we go from crisis to crisis – a war with no clear result or end, the housing and foreclosure crisis a few months ago, now we have a melt down on Wall Street.

Congress considers passing a plan to bail out an industry that should know better, an industry Congress had coddled, and will now subsidize.

Congress will then move on to the next debate – all without addressing the underlying conditions that got us here, and keep getting us here.

Why are markets failing? Why are the fundamentals of our economy not sound? Why do people feel worse today, and are more pessimistic about our future than at any other time in our history?

This is a time when Washington has lost its values----- lost its principles - lost its sense of purpose - It no longer invests in our cities, it no longer invests in our people.

Plain and simple, Washington has abandoned us.

Cuts to education, cuts to housing, health, public safety, youth programs, economic development, job training, arts, and infrastructure.

This comes at a time when people in America are suffering – when our nation needs the most.

Consider the following:

1 in every 6 children lives in poverty, with nearly half living in extreme poverty. Is poverty and economic opportunity an urban problem or an American problem?

The US economy has lost over 450,000 jobs so far this year - wages remain flat - gasoline is now over $4 a gallon - rising food prices, rising medical costs - hitting each and every one of us in the wallet.

Is our economy an urban problem or is it an American problem?

We know the answer - these are America’s problems – and yet cities have been left alone to deal with them.

Cities drive the national economy. And yet, when Mayors bring up the issues we all face – we get the same response.

We are told Mayors need to be fiscally responsible, that we need to do more with less, but there is not enough money to solve urban problems.

CDBG is funded at a little over 3.5 billion annually, and has been cut every year since I’ve been in office – We get a Water Bill passed over a veto, approximately $5 billion annually – this is what we spend on water! And remember the SCHIP crisis? How much resistance did the current administration put up to spending money to make sure uninsured children got health insurance?

And yet, this same administration proposes we spend $700 Billion to bail out Wall Street. We are supposed to entrust the bailout to the same regulators who allowed it to happen.

This isn’t monopoly money – Can any of you imagine what $700 billion dollars could do in America’s cities? Or even $350 billion?

Then we are told we MUST spend this money to save our economy, save our very way of life, but no one talks about the path that led us here. The financial crisis has been building up for some time – we know about the bad lending practices; irresponsible borrowing; irresponsible lending - No one bothered to look at underlying value until it was too late.

Meanwhile, mayors have been working on financial literacy, small business assistance, entrepreneurship, education – working with organizations like the ICIC to reinvigorate our inner cities –

We are arming people with the knowledge and tools necessary to make wise financial choices, to build credit worthiness, to accumulate wealth. And now the financial crisis may lead to a credit crisis – Whereas banks were too eager to lend, now they don’t lend at all.

It is time for Washington to end its partisan gridlock, end the pointless debates, and engage in some serious planning and leadership to address the issues we all face.

I’ve spent the last 2 months travelling throughout the nation as part of our Mayor’s March Across America – these are 5 cities, 5 forums.

They deal with crime and public safety to make our streets and neighborhoods safe for children and families. Poverty reduction and economic opportunity so that we can financially empower all Americans. Arts, culture, and tourism - stimulating an industry that creates jobs that cannot be outsourced - a generator of over 10 million jobs and $1 trillion in economic impact. Infrastructure investment - to repair and rebuild our nation’s resources, with every billion invested generating over 47,000 jobs that cannot be outsourced.

And our environment - again generating millions of jobs that cannot be outsourced, preserving our nation and planet for generations to come.

These forums will form the basis for what we will present to the next president as his urban agenda for the first 100 days.

The next president must understand that an investment in America’s cities, an investment in America’s people is an investment in America’s future.