Would-be condo buyers have their pick of properties in South Florida, where construction cranes fill the sky.

Too bad nobody's buying. According to the Florida Association of Realtors and market expert Jack McCabe of McCabe Research and Consulting (www.mccaberesearch.com), there is currently a five-year supply of condo and townhouse units on the market in Dade County, which represents an inventory of more than 24,000 units. Not surprisingly, prices have dropped accordingly. Median sales prices for existing condo units in Ft. Lauderdale, Miami, and West Palm Beach/Boca Raton fell 10 percent from 2006 to 2007 and now range between $171,000 and $263,500.

Unfortunately for the housing market, McCabe believes the situation will only get worse in 2008 and 2009. More than 19,000 condos are scheduled for completion in Miami-Dade County this year, with 6,400 additional units expected in 2009. "There are over 15,000 more condos under construction in Miami-Dade right now than were built and absorbed in 1995-2004," says McCabe, who estimates absorptions during that time at 1,000 units to 2,000 units per year.

Despite the saturated market and weakening values, though, the sales prices for units in these new properties reach as high as the cranes building them. "Thousands of these units are priced at $1 million and above," says McCabe. "They are in much higher price ranges than the existing stock for-sale on the multiple listing service."

What's a developer to do? Hope and pray. "Private developers are faced with a nightmare, truthfully," McCabe says. "They will have cancellations, buyers who litigate to get refunds on their deposits, and people who will want to close, but can't get a mortgage."

To mitigate the damage, McCabe recommends developers close to delivering finished units contact their buyers and ask whether they are still planning on purchasing the unit, and if so, whether they've obtained a mortgage. If buyers are waffling, McCabe suggests offering a price concession that softens the pain of slumping values and thereby keeps them in the deal.

"Some developers will renegotiate," he predicts. "Other developers whose equity is gone may just turn in the keys like individual homeowners. For vulture buyers, this may be the best time since the RTC [Resolution Trust Corp.] days."

Learn more about markets featured in this article: Miami, FL.