Yes, even the ‘wealthy’ go through foreclosure sometimes.
Nationwide, foreclosure activity on properties in the $5 million-plus value range is up 61% from a year ago, according to RealtyTrac.
The trend comes despite the fact that, overall, U.S. foreclosure activity was down 23% in October, compared to October 2012.
Although fewer than 200 ultra-high-end properties were subjected to foreclosure as of October 2013 – a fraction of the approximately 1.2 million total properties in all value ranges with foreclosure notices – these properties represent a much bigger potential loss for lenders compared to median-priced properties.
About 60% of the high-end homes that have been foreclosed upon so far this year are in Florida and California, according to the report. Both states have gone though an extreme boom and bust cycle during the past seven years, resulting in a relatively high number of foreclosures on high-value properties, many of them located smack dab on either of the two coasts.
But as Emmett Laffey, CEO of Laffey Fine Home International, says in the report, these high-value foreclosure properties won't be on the market for long:
"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," Laffey notes.
The report hypothesizes that some of these high-end foreclosures may be arriving late in the downturn cycle, simply because the homeowners had greater financial resources and thus were able to delay the foreclosure process for a longer period of time compared to homeowners with median incomes.
For more, including a slideshow featuring nine ultra high-end homes in some stage of foreclosure, click here.