After several years' absence, construction cranes are once again dotting the South Florida landscape. Like the proverbial canary in the coal mine, is this "bird" a harbinger of another construction boom-and-bust cycle, or is it simply a sign of a healthy economy?
Atlanta Fed staffers Jessica Dill and Carl Hudson explore this question in "Does the Return of the Cranes Signal a Housing Revival in South Florida?" Featured in the third-quarter issue of EconSouth, the article details some of the factors fueling recent and projected condominium construction, including renewed in-migration and foreign buyers, especially from Canada and South America.
However, "the big question is whether the changes in construction financing as a result of the crash are sufficient to prevent a repeat of the crash that nearly wiped out the crane population," the authors write. For the time being, financing is still constrained as banks are less willing to finance construction projects. This has forced builders and buyers to commit more of their own funds, which "serves to limit speculative excess," they note. And since the pool of prospective buyers is significantly smaller, "fewer projects will be started in the first place, making overbuilding much less likely."
For an in-depth discussion of South Florida condo construction, read the full story in EconSouth, available in print and online.