Miami—Driving through this town, with flocks of cranes looming over half-finished high-rises, a casual visitor might think the real estate industry is still booming. But it’s becoming increasingly obvious that some of those structures are monuments to bad decision-making.

It would be easy enough to dismiss the Miami experience, and it may be more extreme than that of any other U.S. market, given the kind of “hot money” that flows here. But it’s only a matter of degrees.

Now that the subprime lending market has finally followed the condo market into the tank, it’s time for apartment owners to heed a very simple and well-worn adage: Get back to basics.

Considering how firmly real estate brokers and lenders denied there was a single-family housing bubble a little more than a year ago, it’s not surprising that analysts and investment advisers are downplaying recent economic news.

Sure, they say, there are some problems with subprime loans to overstretched home buyers. And so what if some of the nation’s largest lenders and homebuilders, like Countrywide Financial and Pulte Homes, have seen their stocks fall precipitously?

Some pundits like to call the drop in leading stock market indexes in late February and early March a “buying opportunity.”

I don’t know how far stocks will fall or how bad losses will be on loans to overstretched home buyers, and no one really knows if fears about home values and lender soundness will spread to the commercial real estate and lending markets.

But I don’t hear many economists making convincing arguments to counter Former Federal Reserve Chairman Alan Greenspan’s statement that there is a good chance of a recession beginning later this year.

Even the generally optimistic experts who spoke at the Apartment Finance Today Conference here could not deny that a slowdown was under way. They shied away from predicting a recession but acknowledged that absorption had slowed nationwide and that rent growth was slowing in many markets.

Don’t get bogged down in too many statistics, and don’t be distracted by debates over what to call the next economic phase. The conclusion here is crystal clear: You can no longer count on overeager investors and lenders to make any deal work financially, or turn any property into a money maker.

The flood of capital is beginning to slow, as brokers report decreases in the number of offers on available properties and cap rates start to tick up again in some markets.

Remember when you could only make money by picking the right markets and managing your properties well? I hope you did not forget those skills. They are going to come in handy in the coming months and years.

As R. Lee Harris, one of our frequent contributors, said at the Apartment Finance Today Conference, apartment players have slipped into what he called “bubbleized thinking.” That’s the condition wherein real estate is so popular that people forget it involves risk, and there is no longer a “risk premium” on real estate versus U.S. Treasury securities.

Harris’ advice to apartment owners may have seemed a little out of step with the exuberance of the last year, but his are words to live by. “Don’t be a risk taker. Be a risk manager,” he advised. “Think about all the ways you can get upside down with a property.”