Jade at Brickell Bay, one of the success stories of Miami-Dade County's condo boom era, is leading the pack with a more dubious distinction — the most foreclosures at any condo development in the county this year.
The 48-story luxury tower on Biscayne Bay had 17 foreclosures seeking payment of $15 million, according to court filings this year through May 4.
At the high end of the scale, owner Jose Collazo owes Citibank $1.07 million on the 1,700-square-foot unit he bought in March 2006 for $1.43 million. Jade's homeowner association also is going after owners like Patricia Martinez for $11,429 in unpaid fees on a $2.1 million unit she bought in April 2006. Neither owner could be reached for comment before deadline.
Creditors will force the properties to be sold at auction unless owners resolve their debts.
The 326-unit complex at 1331 Brickell Bay Drive had more foreclosures than any other building in Miami-Dade and was second in South Florida only to Sailboat Pointe in Oakland Park, a condo conversion with 20 properties in default. Another condo conversion, The Tides on Hollywood Beach, followed with 16 foreclosure filings.
The numbers support Miami real estate analyst Lewis Goodkin's belief that the South Florida condo market "is nowhere near bottom."
He said the true impact of the slowdown on prices and resale activity won't be known until late 2007 and into 2008 when condos that sold before or during construction at the peak of the market in 2005 start coming online.
Attempts to sell now are being compounded by falling appraisals and hesitant lenders. At least one has sworn off Jade already.
Jade's unwanted distinction signals the housing freefall hasn't hit bottom, said broker Peter Zalewski, head of Condo Vultures Realty and a former Daily Business Review reporter.
"It's significant because Jade was the first property to come to market at $500 a square foot and the first generation to come online," he said. "If the first is in trouble, imagine what's going to happen with the other ones."
Brokers and lenders once said waterfront condos would be the last to be hurt.
But trouble for Jade and The Tides, an oceanfront conversion by Chicago-based joint venture MCZ/Centrum Florida, illustrate the impact of the housing slowdown and the speculative activity that propped up the five-year boom.
Sailboat Pointe is a lakefront condo conversion on a peninsula in a middle-class suburb west of I-95 and fetched much lower prices than the other two developments.
Jade turned heads before construction because it showed new condos could sell and resell for more than $1,000 per square foot, usually a price reserved for Miami Beach mansions and Fisher Island condos.
Jade developer Edgardo Defortuna's profile rose with the $16.65 million acquisition of the Jade site in 2001 by investors led by him and Argentine developer Miguel Angel Barbagallo after Brazilian developer Grupo Multiplan nixed development plans.
Defortuna's Fortune International bought the site, designed the project and launched pre-construction sales on its own. Fortune later paired up with Swire Properties, the developer of Brickell Key, as equity partner on the $145 million construction project.
Defortuna did not return several calls seeking comment. Fortune International is no longer the exclusive broker at Jade.
The buzz about South Florida condos in the early part of the decade drew investors to the market and got people to sleep on sidewalks for the first crack at units.
Fast forward a few years and Miami-Dade has thousands of units ready to be delivered this year, but absorption is not close to keeping pace.
The average number of monthly condo sales from February to April was down 31 percent from the same months last year, according to sales brokerage Esslinger Wooten Maxwell.
Experts say the market needs six to 12 months of inventory for steady growth in a healthy market. At the peak of the market, inventory was down to two to three months.
Today, Miami-Dade has 28 months of existing inventory — without taking into account the new units that haven't closed yet, said Ron Shuffield, president of EWM.
In April 2005, there were 5,125 condos on the market. One year later, the number of available units spiked to 15,581, and the number rose to 22,924 in April, according to Multiple Listing Service research by EWM.
And that number is expected to continue rising as projects are completed.
In October, there were more than 54,500 condo units under construction or in the planning stages, according to the Miami Planning Department.
The boom was fueled in part by easy credit to buyers who purchased multiple units and pooled money from investors with the expectation of easy resales in a hot market.
But with the sales slowdown, units sitting on the market longer and more new ones about to arrive, owners caught with condos when the wheel of fortune stopped spinning now face hundreds and in some cases thousands of dollars in monthly maintenance fees plus their mortgages.
Owners of Jade units under foreclosure owe lenders and the homeowner association nearly $15 million. Three owners owe a total of nearly $40,000 in fees to the Jade Residences at Brickell Condo Association.
Shuffield was surprised that quality buildings such as Jade would have such a high number of foreclosures because developers typically asked for at least 20 percent down.
Jade has a rooftop lounge, library, 24-hour business center, observation deck and European spa. Units were marketed with high ceilings, stainless steel appliances, spa bathtubs, bidets, marble vanity countertops and concierge services.
Buyers had been buying and selling with ease, but now there are plenty of would-be sellers and landlords.
A search of a brokerage Web site showed 56 Jade units, or 17 percent of the building, were for sale, and 17 for rent. Eighteen units were priced at $2 million and up.
The least expensive unit with 895 square feet listed at $510,000.
Another problem for Jade owners trying to sell is that even willing buyers may have trouble finding a mortgage. Greenpointe Mortgage Funding stopped lending at Jade because of inflated appraisals and prior resale activity.
"Greenpointe is not the most conservative, but they are the most picky about appraisals," said Grant Stern, owner of Morningside Mortgage. "They caught it about a year ago and cut off funding."
Lenders have labeled Jade an "investor hotel" because more than 30 percent of unit owners are deemed speculators, he said. Some put speculative activity in the tower at 60 percent or higher.
Stern said the foreclosure activity has prevented his peers from closing on deals at Jade because lenders are staying away. It's common to have some owners fall behind on maintenance fees, but "bank foreclosures are the real red flag."
Miami City Commissioner Marc Sarnoff, whose district includes Jade and who campaigned to limit high-rise condo development to the downtown area, said he sees a silver lining in the dark foreclosure clouds.
"This will bring the cost of buying a condominium down in South Florida, which in and of itself is probably not a bad thing as the market needs to correct itself. That is what free enterprise does ... self-corrects," he said. "There is an abundance of supply, and there is not enough demand."
Through May 4, South Florida had 13,235 foreclosure filings that added up to almost $3 billion in loans.
Condo foreclosures accounted for 17 percent of the total valued at almost $387 million. Miami-Dade had $247 million, Broward had $139 million, and Palm Beach had $423,155.
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