IN MIAMI BEACH, THE CAPITAL OF RETRO, everything old is new again. Take condo sales. This time around, it's well-heeled foreigners who are scooping up marked-down units for cash, many hoping the local property market is rebounding, and that they'll pocket profits when they sell.

Not so fast. Although Peter Zalewski, founder of Condo Vultures, a Bal Harbour, Fla., real-estate consultant, is happy to see the activity, he worries that these and other expectant newcomers have spent too much time in the sun. "The reality is, they will be riding out these units for quite some time," Zalewski warns.

Victor Juhasz for Barron's

Discounted properties could be a value trap for naïve investors.

Many Florida real-estate experts say there won't be any meaningful appreciation in South Florida condominium prices for at least five to seven years, because of excessive supply. For example, an average of 45 condos a month priced above $750,000 sold in Dade County, home to Miami, in June, July and August. But an average of 2,439 remained on the market, according to EWM Realtors. Based on this rate, it would take more than 54 months, or 4½ years, to clear the market.

Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach, Fla., thinks prices could drop another 10% to 15% in the next year. Some gloomsters say even that is optimistic, and that it could take a generation for the market to return to equilibrium.

Median condo prices rose 129% in Dade County from 2001 until the market peaked in the second quarter of 2006; they rose 189% in Palm Beach County, to the north, in the same span. Since then, prices have fallen an average of 47% to 50%.

Recent demand has centered on "new-new" properties, not rental buildings converted to condominium status, says Orlando-based economist Henry Fishkind. But more than 100,000 conversions have taken place around the state since 2005, so many of their units could end up selling below replacement cost, Fishkind says.

The real-estate meltdown is only one of the Sunshine State's problems. Demographics is another. Florida historically was the fastest-growing state east of the Mississippi, but Fishkind says North Carolina and Georgia grew faster in the past two years.

Researchers at the University of Florida reported this year that the state's population had shrunk by 58,000 in the 12 months ended in June -- the first annual slide in 63 years. Many state politicians and economists doubt those statistics. McCabe, the Deerfield Beach consultant, thinks the numbers might understate the loss.

In any case, the state's appeal as a retirement mecca appears to be dimming. In 1980, 26.3% of all U.S. citizens 60 and older who moved across state lines ended up in Florida, according to a recent study by William Haas, a University of North Carolina/Asheville professor. By 2000, the figure had dropped to 19.1%; by 2007, it was 12.5%. "Maybe it will drop to 8% in the next decade," says Fishkind, although he notes that because of the expansion of the 60-plus population, the total of newcomers could remain the same.