Everyone in Miami has seen the ads — full-page spreads which look like they belong in Vogue, but that are actually promos for luxury condominiums.

In Miami-Dade alone, 48,000 condominiums, including condo-hotel units (hotel rooms and one- or two-bedroom suites purchased individually, but which are rented out like conventional hotel rooms) have been proposed, planned or were under construction at the start of 2005. That's in addition to thousands of existing units, according to the South Florida office of Integra Realty Resources.

About 15,000 of these condominiums will be located along the ocean with another 10,000 slated for downtown. Also, 9,700 will be built along the Miami River, west of downtown, and 6,500 are slated for the Brickell Avenue corridor, just north of downtown. About 15% of these units are condominium conversions.

“The question is not if we have a bubble, but how big it will be before it bursts,” says Carlos Migoya, regional president for Wachovia Bank in Miami-Dade and Monroe counties. “In 1981, after the devaluation of the Bolivar, the Venezuelan currency, a lot of predominately Venezuelan buyers gave up on their condominium deposits and it took five or six years for the market to adjust,” recalls Migoya. No one knows how long the adjustment period will be this time, he says.

What is likely to happen, if the condominium bubble does burst, explains Carlos Berner, president of JBM Capital Advisors in Miami, is that projects will be finished and buyers will close, but the buyers may not be the same people who originally put down deposits because some contracts will be flipped before closing.

As many as 25% of the units planned will probably not be built, says Jack Winston, a residential real estate analyst at Goodkin Consulting in Miami. One reason is construction costs continue to climb. In the last 12 months, they have gone up between 12% and 17%, he says.

There are really two condominium markets in Miami-Dade, says Berner. There is an oversupply of high-end units, those selling for $400,000 and up, while there is a need for more affordable units, those below $250,000, he says.

Predicting the long-term future for the condominium market is especially hard in Miami, says Migoya, because there are so many foreign nationals buying apartments as second homes. Latin Americans have always been enamored with Miami condominiums, but today a lot more Europeans than in the past are also buying these units, lured by the falling dollar, he says.

Not everyone is buying condominiums to live in. Many buyers are investors or speculators, both foreign and domestic. Among the locals, many are wealthy, but a significant number are not. In the latter category, some have mortgaged their homes in hopes of making a killing.

“I was sitting in a restaurant with my business partner recently when one of the waiters told me that he and his brother had bought three condos,” says Winston.

Investors and/or speculators represent 50% to 75% of condominium buyers today compared to two years ago, when only 40% to 50% were estimated to be investors, says Winston, who notes that there are probably more investors in the Miami-Dade condominium market than in any other major metropolitan area in the U.S.