October 27, 2008 / 12:48 AM / 9 years ago

Miami "Corner" measures construction bust

MIAMI (Reuters) - At the height of Miami’s condo construction boom, a stretch of South Dixie Highway south of the city was the place to be for a painter or drywaller looking for work or a contractor looking for workers.

But those days are long gone, along with evaporating home values across Florida, and the state that led the nation in job growth during a spectacular real estate boom is diving with a devastating construction bust.

What was once a horde of hundreds of laborers who showed up before dawn has dwindled to a few dozen. Many have drifted to more promising hunting grounds in hurricane- hit Texas and Louisiana, or home to Mexico or Central America.

“It’s very bad,” said Gustavo Almendares, a 64-year-old Honduran grandfather who spent 14 years working what is known as “The Corner,” so long that many of the others began calling him “Tio,” Spanish for uncle.

“Before, at 5:30 in the morning, there were lines of contractors in their cars and trucks waiting for workers,” he said. “Now it doesn’t exist.”

Long dependent on population growth and construction for its economic health, Florida lost 71,900 construction jobs from September 2007 to September 2008, more than 62 percent of all the jobs lost in the state. The downturn parallels a property crash that began after the market peaked in late 2005.

During the boom, Florida’s unemployment rate ran well below the nation‘s. But at 6.6 percent it is now 0.5 percent higher than the U.S. jobless rate.

Florida’s gross domestic product is fourth among the U.S. states, behind only California, Texas and New York. In 2004 and 2005, when property prices were booming, Arizona, Nevada and Florida led the nation in GDP growth.

But while economic growth slowed last year across the United States, it ground to a halt in Florida.

U.S. economists said faltering construction subtracted more than 1 percentage point from GDP growth in the three states.

The flagging economy forced Florida lawmakers to slash $6 billion from the budget earlier this year, and the government has already raided reserve accounts to plug holes that developed when sales tax revenues tumbled.

State economists are already predicting a $3.5 billion shortfall next year with the housing market not expected to turn around until 2010.


Nearly 80 percent of the construction losses are in specialty trades, including electrical, plumbing and drywall, according to state figures.

As a result, subcontractors like Alex Soto, 40, a flooring and carpentry specialist who once worked on fancy condo towers in the Brickell banking district and on the Miami River, are scrambling for a few days work each month.

Where he once pulled down $2,000 to $3,000 a week, Soto said he is lucky to make $1,500 a month and might get one week of work.

“The other weeks I am looking for work,” he said. “The situation is desperate.”

The market is so choked with hungry workers that a bathroom installation for which Soto once charged $1,500 to $2,000 now brings $300.

Condominiums under construction are seen in downtown Miami, Florida, October 15, 2007. REUTERS/Carlos Barria

“People are working for nothing. Just to survive.”

Florida is no stranger to boom-and-bust property cycles.

A swampland boom of the 1920s ended with a dramatic crash. A mid-1970s bust, a speculative bubble in condominiums similar to the current one, took years to work through.

William Stronge, an economics professor and historian at Florida Atlantic University, rates the current collapse the third worst in the state’s history.

“This is like the mid ‘70s. You get an excess. You get an overexpansion of the industry and then you pay a price for it,” he said. “Construction booms in Florida, when they collapse, tend to take four or five years before they come back.”

The current downturn, at least so far, is nowhere near as severe as the one in 1974-75, when the number of construction jobs contracted by 38.8 percent at its nadir, said Rebecca Rust, an economist with the state’s Agency for Workforce Innovation. That figure is currently 13 percent.

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At the height of the housing boom in 2005, construction accounted for 8.3 percent of Florida’s jobs. That’s down to 6.5 percent, close to the 2003 figure of 6.7 percent, Rust said.

“That peak was probably not sustainable,” she said. “We really don’t expect construction to resume at peak levels.”

With record numbers of foreclosed and other properties on the market, economists and real estate analysts don’t expect the economy to turn around any time soon.

“The housing downturn is not over yet,” Rust said. “We’re hoping to see improvements in 2009 but more normal growth is expected in 2010.”

Stronge noted that Florida’s in-migration has slowed, pointing to Fort Lauderdale’s Broward County, which had a population decline last year for the first time in history.


At the WeCount! Community Workers Center in a warehouse district near “The Corner,” loaves of bread and jars of spaghetti sauce are stacked on a table. Churches send supplies to feed hungry workers who come to fill out job applications or use the computers lining one wall to learn English.

Director Selene Echeverria said her center tries to find jobs for several dozen workers a week, some of whom are living under a bridge nearby. Homelessness, she said, is on the rise.

“When they come they are begging for jobs,” she said. “They are very desperate. If you go out to work once a week, you don’t have money to pay the rent or to buy food.”

An upswing could not come too soon for Augustin Gonzalez, a 37-year-old carpenter who used to send $1,000 a month to his wife and four children in Panama, but who is now lucky get three days work a month and to send $150.

He thinks his homeland may be a better place to find work than the United States.

“I think I am going back to my country,” he said. “In Panama right now there is a lot of work in construction. But now I need to make enough money just to get back there.”

Reporting by Jim Loney; Editing by Eddie Evans

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