Miami’s image as a tropical paradise drove interest in Florida real estate and set the stage for its real estate boom. Easy credit was extended at low rates and many people borrowed money to buy real estate. Many investors bought real estate with no intent of ever utilizing it on the belief that they would sell it to the next investor in line at a handsome profit. The creation of new financial instruments further increased demand and interest in the sector. Investors’ appetite for risks increased and their demand further pushed up real estate prices. The Miami Herald became the heaviest newspaper in the nation because of its massive real estate advertisement section.

Like all bubbles, this one eventually burst. In a brief period, the next investor in line ceased to exist and real estate prices began to crater. Bankruptcies jumped six-fold and the value of building permits slumped by 80 percent at the trough of the downturn. Oh, by the way—we’re not referring to the recent real estate downturn, but the real estate boom-and-bust experienced in Miami in the 1920s.

During the Florida real estate bust (the more recent one, this time), condo prices fell 60 percent from peak to trough, according to the Miami Association of Realtors. Whole condo towers sat unoccupied. In one case, only a single unlucky buyer bought a unit in an otherwise empty high-rise building. In Miami today, however, multifamily housing is recovering, with condos and apartments being built all over the city. The empty condo units across the city have been purchased or rented and demand exists that cannot be fully satisfied.

The Wall Street Journal reports that, while 35 percent of permits nationally are for multifamily housing, in Miami that figure is 76 percent. Miami’s real estate market is ranked third behind New York and San Francisco for the proportion of multifamily permits. According to Condo Vultures LLC, there are 118 condo towers proposed for Miami, with 35 currently under construction. Much of this growth is fueled by foreign investors, who are flocking to U.S. real estate. Unlike speculative investors during the last boom, foreign investors pay cash and they like to hold properties for rental income rather than flipping them.

You could make the case that we haven’t learned our lesson and hot spots, such as Miami, are getting overheated again. There’s nothing to be done about that, so no point in worrying about it. The key point is that Miami is a canary in the home building coal mine in a way. The recovering health of its formerly overbuilt real estate market is an excellent reflection of the improving national picture.