THE RICH AREN'T DIFFERENT: MORE HIGH-END HOMES NOW IN FORECLOSURE

By Gilman & Edwards
21.12.13
01:27 AM
<< Blog

RealtyTrac continues its analysis of October and 2013 year-to-date foreclosure data, and one finding is particularly interesting. There has been a shift, the real estate market research company says, in foreclosures of ultra high-end properties. While Maryland has a number of very expensive properties to its credit — thanks to the Chesapeake Bay, the Atlantic Ocean, the mountains to the west and Washington, D.C., right next door — but the state is not among the top five in this category.

For RealtyTrac, “ultra high-end” means valued at $5 million or more. The researchers took a number of things into account in determining which properties qualified: the dollar amount of outstanding loans on a property, the estimated market value and the value assigned for taxes.

A quick analysis identified fewer than 200 homes in the $5 million+ category that had received a foreclosure notice this year. The number is small, but it’s significant: It marks a 61 percent jump from 2012 to 2013. Florida and California, once again, lead the pack.

There are a few possible explanations for the increase. For one, the housing market is on the mend, so buyers of distressed properties — even very high-end distressed properties — are easier to find. (And, as one real estate professional points out, super rich buyers love an outstanding deal on real estate.) More buyers translates, generally, into higher prices. Lenders, then, are able to recoup more of their losses, so they are willing to move ahead with foreclosure on a $5 million+ mortgage.

Another explanation puts the ball in the homeowner’s court. Wealthy homeowners may simply be able to hold on longer than average homeowners can. They may spend down other assets to make the mortgage payments, or they may make enough of a payment on such a large loan that the lenders have been appeased.

Again, very few homeowners fall into this category, and fewer still are facing foreclosure. They should know, though, that there are options. They do not necessarily have to lose their homes.

Source: Collections & Credit Risk, “Ultra High-End Foreclosures Soar,” Darren Waggoner, Dec. 4, 2013

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