The construction cranes are moving a little slower in Miami these days. While the real estate market reports and newspaper articles quote real estate brokers and developers saying "it's a different type of market now, one where demand is going back normal levels," the fact is that demand for new condos in Miami is dropping quickly.

The real estate market in this vacation hot spot (especially for South Americans) is cooling on the back drop of an ever- increasing supply of units. It also doesn't help that (1) borrowing costs are now at their highest level in four years, (2) banks are slowly tightening borrowing requirements (3) speculators caught in the moving market are trying to unload their units.

Please, don't think the real estate market is crashing in Miami, because it's not. It's just taking a lot longer to sell condos. I know of new projects that were suppose to have broken ground by now, but are being delayed because of soft unit sales.

How bad will the real estate market in hot spots like Miami get? Is a crash in prices underway? No one knows that answer for sure. Some analysts predict the market will have a soft landing because projects are only being built if a minimum number of units are pre-sold. Other analysts predict dire consequences for the vacation real estate market, simply because the demand-supply relationship is changing quickly.

Personally, I believe what happens to the Miami (and other vacation hot spot) markets will have to do with the future of interest rates. Most vacation units were purchased in the past three years in an environment where interest rates were very cheap. For those that did not lock in with a low 30-year fixed rate, higher interest rates are causing concern. A two-year old 215-unit building I saw in Miami had 35 of its units listed for sale on the MLS by their respective owners--not a healthy sign.