Can you imagine sleeping comfortably in your newly rented Miami condo just to be awoken at the crack of dawn by a knock at your door? To make being jolted out of a deep sleep even worse, on the other side of that door is a sheriff whose there to serve your landlord with one of many Florida foreclosures.
Unfortunately this is all too common to the tenants of many South Florida condominiums. The luxury condominium at 1200 Brickell Bay Drive has 80 units that dropped into foreclosure in 2007. Ranked first among condominiums in Miami-Dade and Broward counties with the most units in foreclosure is The Club at Brickell Bay. The lenders are owed more than $42 million by their borrowers.
As we creep into the New Year, we see a large number of Miami condo buildings with hundreds of millions of dollars in defaulted mortgages that are straining to stay afloat. According to an analysis by Condo Vultures, in the 20 buildings in Miami-Dade and Broward counties with the largest numbers of units in foreclosure, loans in default totaled more than $271.8 million.
Along Brickell Avenue, in Miami's financial district, you will find three of the top five buildings that are going through foreclosure. This area has jokingly been referred to as the ‘Florida foreclosure district’.
The percentage of units in foreclosure varied widely, among the 20 buildings ranked at the top. For some large complexes, a high number of units in foreclosure still represents a small portion of the overall building in some of Miami’s larger condo buildings.
There are 65 units in foreclosure at the Vue at Brickell, represented 20 percent of this 36-story complex. Two blocks away, the deluxe Jade Residences at Brickell Bay which is just two blocks away topped the list with the highest dollar value of mortgage defaults of $60.7 million.
From an investment perspective, there were great expectations of how spectacular Brickell was going to be but blatant mortgage fraud involving inflated appraisals and faux buyers led to the dizzying rise in defaults and Florida foreclosures. One local Miami real estate agent was quoted as saying, “These buildings are notorious because the fraud was so prevalent”.
Broward has fewer new luxury condominiums than Miami-Dade, which explains the smaller overall number of foreclosed units and defaulted mortgages. But many of them are condo conversions such as Sailboat Pointe in Oakland Park, which has a 9 % foreclosure rate. Broward foreclosure numbers reflect more people who are losing their real homes rather than speculators who bet wrong.
Those buyers that are looking for a bargain in Miami-Dade County will be happy to know at least that these opportunities only get better as the construction of some 10,000 units is finished, contributing to the glut.
When roughly 10 % of the units are up for sale in a building it is considered ‘‘healthy’’ and a sellers market, any more it's a buyer's market. The prognosis could be grim when more than 10 % of units are in foreclosure.
On Monday, The Club at Brickell Bay had 128 units listed for sale in the South Florida Multiple Listing Service and thirty of those were listed as short sales. This means they were discounted because of foreclosure or possible delinquency. A majority of these Miami condos are currently listed for less than half of what they were originally purchased for.
In the meantime, residents of Miami condo buildings with high foreclosure rates are living with the burden of vacant units. Some face special assessments and hikes in maintenance fees from community associations facing budget shortfalls.
Some associations are struggling to cover expenses because a large percentage of their residents are behind on fees. A result could be unkept grounds and disruptions in services such as cable and internet service could result.
Some tenants in these buildings say they aren’t worried and they are in for the long haul. Many have hopes that they will prosper in the end and profit from their investments.
Contributed by MLR Realty
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