Miami house market may take 2 years to recover: Mayor

MIAMI (Reuters) - The housing market crisis in south Florida was a "perfect storm" of oversupply, fraud, speculation, and tight credit, and it could take a couple of years for the Miami condo market to work through its oversupply, Miami Mayor Manny Diaz said on Wednesday.

Many Miami real estate developers "clearly" built more housing units than they should have in the housing boom from 2000-2005, Diaz said in an interview with Reuters.

"Obviously this is a perfect storm," he said.

The mayor, who is the new president of the U.S. Conference of Mayors, declined to take any responsibility for the overbuilding that contributed to the south Florida property collapse.

Over-construction of condominium units has been widely blamed for a severe downturn in the Miami real estate market following a boom from 2000-2005.

At one point, the city of about 400,000 people had more than 60,000 condo units at some stage of planning, permitting or construction.

But asked whether city officials bore some responsibility for overbuilding, Diaz said he believed in property rights and did not think it was up to the mayor of any city to determine "whether a person has a right to do any project or what kind of project they can build."

"I think that's kind of a scary proposition, frankly," Diaz said.

Some of the massive Miami condo projects that were on the drawing board were never built while others have been crippled by a sharp fall in property values as foreclosures, mortgage fraud, and a credit crunch ravaged the market.

The number of "real-estate owned" (REO) properties in Miami-Dade County skyrocketed 287 percent in the first quarter of this year and 184 percent in the second quarter, according to private real estate broker Condo Vultures. REO properties are those taken back by lenders after failed foreclosure auctions.

Echoing many members of the U.S. Conference of Mayors, Diaz said the foreclosure crisis, which has forced hundreds of thousands of Americans out of their homes, is a "big problem" for cities. Foreclosures drive down the value of neighboring properties and have condo associations teetering on the brink of insolvency.

But Diaz said the housing bill signed by President Bush two weeks ago, which launched a $300 billion government initiative to refinance mortgages, offered hope for troubled homeowners.

Ultimately, the construction of hundreds of housing units in the city's downtown core, for decades a veritable ghost town after 5 p.m., will prove "very positive for the future of Miami," Diaz said.

(Reporting by Tom Brown and Jim Loney; Editing by Diane Craft)