Foreclosures Skyrocketing for High-Priced Homes

While the numbers are small – less thanrn200 homes – the incidence of foreclosure among ultra-high end homes has skyrocketedrnrecently, even as the rate for more mundane homes has plunged.  RealtyTrac said today that foreclosure activityrnon homes valued at $5 million or more has jumped by 61 percent since Octoberrn2012 while the overall rate of filings has dropped 23 percent so far this year.</p

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

The company said the uptick in activityrnmay indicate that lenders are now financially stable enough to face thernpotential big-ticket losses on these homes or it may indicate that they arernlooking at an improved market for more expensive homes and seeing the possibilityrnof better recoveries through foreclosure.</p

“A home selling for $5 million orrnabove represents the ultra-luxury end of the market, and so far in 2013 we’vernhad 34 properties close over that price with the average sale being $7.7rnmillion,” said Emmett Laffey, CEO of Laffey Fine Home International,rncovering the five boroughs of New York.  “Any foreclosure properties inrnthis type of ultra-luxury market usually get purchased very quickly since therernis one thing all super rich buyers want – an outstanding deal on a real estaterntransaction, and in most cases foreclosures of this magnitude come with severalrnmillion more dollars of built-in value.”</p

RealtyTrac said that the delayedrnrise in foreclosure activity on these high-end properties may not all be therndoing of the lenders.  Some of thernhomeowners may have had the means to hold out against foreclosure longer thanrnmost homeowners.</p

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

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