Foreclosures Skyrocketing for High-Priced Homes

While the numbers are small – less than
200 homes – the incidence of foreclosure among ultra-high end homes has skyrocketed
recently, even as the rate for more mundane homes has plunged.  RealtyTrac said today that foreclosure activity
on homes valued at $5 million or more has jumped by 61 percent since October
2012 while the overall rate of filings has dropped 23 percent so far this year.

The 200 or so very expensive homes that
have received a foreclosure notice this year pales in comparison to the total
of 1.2 million homes in less rarified price ranges that have also received
notices, but as RealtyTrac points out, each of these homes represents a much
bigger potential loss to the lender than do median priced homes.   

The company said the uptick in activity
may indicate that lenders are now financially stable enough to face the
potential big-ticket losses on these homes or it may indicate that they are
looking at an improved market for more expensive homes and seeing the possibility
of better recoveries through foreclosure.

“A home selling for $5 million or
above represents the ultra-luxury end of the market, and so far in 2013 we’ve
had 34 properties close over that price with the average sale being $7.7
million,” said Emmett Laffey, CEO of Laffey Fine Home International,
covering the five boroughs of New York.  “Any foreclosure properties in
this type of ultra-luxury market usually get purchased very quickly since there
is one thing all super rich buyers want – an outstanding deal on a real estate
transaction, and in most cases foreclosures of this magnitude come with several
million more dollars of built-in value.”

RealtyTrac said that the delayed
rise in foreclosure activity on these high-end properties may not all be the
doing of the lenders.  Some of the
homeowners may have had the means to hold out against foreclosure longer than
most homeowners.

More than 60 percent of the high-end
foreclosure activity was not surprisingly in Florida and California.  Both states had notable real estate booms and
busts and their coastal cities in particular have larger shares of expensive
homes than in most of the U.S.

Article source: http://www.mortgagenewsdaily.com/12042013_realtytrac_foreclosures.asp

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