Though foreclosures have fallen nationwide, one housing sector has seen a big increase: ultra-high-end homes.
Foreclosure activity on homes valued at $5 million or more has soared 61 percent since October 2012, RealtyTrac reports. Meanwhile, the overall national foreclosure rate for all housing types has fallen 23 percent this year.
Still, the number of $5 million-and-up homes facing foreclosure is small — less than 200 — compared to the 1.2 million homes of all housing values that have received foreclosure notices this year.
“But each of these high-value properties represents a much bigger potential loss for the foreclosing lender compared to a median-priced property,” says Daren Blomquist, vice president of RealtyTrac.
There was a delay in high-end foreclosures compared to other housing types, possibly because the home owners had the financial means to hold out longer, RealtyTrac notes.
The top five markets for high-end foreclosure activity are Miami-Fort Lauderdale-Pompano Beach, Fla.; Los Angeles-Long Beach-Santa Ana, Calif.; Atlanta-Sandy Springs-Marietta, Ga.; Orlando-Kissimmee, Fla.; and New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.
An improving housing market will likely mean these ultra-high-end properties won’t sit unoccupied 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,” says Emmett Laffey, CEO of Laffey Fine Home International, which covers the New York area.
Source: “High-end Foreclosures up 61 Percent Year-to-Date in 2013,” RealtyTrac (Dec. 3, 2013)