Since the housing bubble burst five years ago, there has been visible increase in the number of wealthy American families that are losing their homes to foreclosure and in most cases, such foreclosures are said to be mostly voluntary.
From the report put together by RealtyTrac, an outfit geared towards tracking foreclosures, more than 36,000 homes worth about a million dollars were either foreclosed or served with a notice in 2011. Although the percentage falls below 2% of total nationwide foreclosures, it is higher in comparison to preceding years.
According to the vice president of RealtyTrac, Daren Blomquist, “These properties are accounting for a bigger piece of the foreclosure pie.” This can be seen from the report that among the foreclosed properties, there was 115% increase in foreclosure of properties that are valued at a million dollars and above beginning from 2007. The percentage is even higher in the case of homes that are valued at $2 million and above at 273%. Such cannot be said of the homes valued between $500,000 and $1,000,000 since their foreclosure rate reduced by 21%.
It would also interest you to know that a lot of homeowners within the multi-million dollar range were until recently, able to postpone every process that has to do with foreclosure of their properties. According to Blomquist, “they had more financial means to hold out against default.” It was also determined that those homeowners who made fair deals with the lenders were the ones that had other means of income, according to the President of Esslinger-Wooten-Maxwell, a Miami-based real estate firm, Ron Shuffield. It is also reported that 9% of the total foreclosures recorded last year in Miami was represented by properties valued more than $1 million.
Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a “strategic default.”
But with a recovery in the housing market still years away, foreclosure has turned out to be a worthwhile option after all. Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a “strategic default.” Even though they can afford the monthly mortgage payments, they still decide to walk away from their home because they owe more on the property than it is worth.
According to a national real estate and mortgage expert with Wilshire Holding Group, a Florida-based real estate firm, Stuart Vener, “In the lower-priced houses you’ll see more people defaulting because they can’t afford the payments and it’s a choice between feeding their family and paying the mortgage on a home that’s under water.”
“In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?”
He goes further to say, “In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?” In most cases, it has been said that the best financial decision to take in such cases is just to walk away. According to Blomquist, foreclosures take up to 348 days to be completed, the homeowners have enough time to pack up their belongings and leave. This is just equal to a whole year of free housing for the owners of such foreclosed homes.
Blomquist further states that the fact that a few houses were foreclosed within a given wealthy neighborhood does not in any way have any negative impact on the values of the surrounding homes. Vener says, “You’re not going to see the weeds growing.” He goes further to state that on the other hand, foreclosed homes are an opportunity for real estate investors to make good bargains. He sums it up this way, “In a good way, this is going to drive turnover.”
Contact Sound Financial Enterprise, LLC for more information about your housing needs.
PO Box 8611, Tacoma, WA 98419
First Published: February 23, 2012: 5:54 AM ET
By Jessica Dickler @CNNMoney February 23, 2012: 10:09AM ET
Article found at: http://money.cnn.com/2012/02/23/real_estate/million_dollar_foreclosures/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29