subject: The foreclosure tidal wave is finally reaching better-heeled Americans – ForeclosureConnections [print this page] The foreclosure tidal wave is finally reaching better-heeled Americans ForeclosureConnections
Foreclosure notices kick in for million-dollar homes
Is wealthier America beginning to run out of reserves?
Will relatively lower legal costs see more short sales and re-negotiations?
Its time for the wealthy analysts who sit in judgment over lower and lower-middle class Americans laboring under foreclosure to catch a wake up call, take a dose of reality, and face up to the fact that foreclosure is affecting the super-rich too.
That's right. Foreclosure is a national economic illness, not a just a blight on the humble poor who do not know to handle money. In witness to this fact, an increasing number of million-dollar homes are in possession right now and that includes those with multi-auto garages, ocean vistas, year round pools and even media rooms.
Why only now? It's simple. People with the money to buy these in the first place had reserves to sandbag tidal waves, at least 'til now. The top-end foreclosure peak occurred most recently during February 2010, with over 4.100 high-end homes somewhere in the pipeline between notice of intention and transfer to new owners that's a staggering 121% up from a year ago, and happening too just as the low to lower-middle quartiles are showing signs of stabilizing.
According to a well-positioned independent analyst, lower-end borrowers were the first to experience escalating foreclosures, because they did not have spare cash reserves or credit available. Luxury homeowners did (at least till now) they simply flashed their credit cards and carried on as if nothing untoward was happening.
Will this continue, perhaps even through to 2011? It seems it could, although reliable regional data is still not yet available. According to Vice President Jim Kinney of luxury home brokers Baird and Warner, the trend is definitely up in Chicago, where 37 out of 295 million-dollar-plus single-family homes that sold in the first quarter of 2010 were either short sales, or foreclosures. A year ago, these sales amounted to just 10 in three months. The situation is not much different in Fort Myers, Florida either, where Mike McMurray of McMurray and Nette is expecting the pipeline for upper-end homes to swell accordingly.
Another indicator is likely to be the fact that the jump in the 90-day delinquency rate for houses worth a million dollars or more was 13.3% for February 2010, compared to 8.6% overall. The bigger difference, however, may lie in how far the better-heeled borrowers may be prepared to go before accepting the foreclosure baton. This is because there's more at stake, and legal fees a relatively smaller amount.
For this reason the top-end of the American market is likely to be characterized by more re-negotiations and short sales, as opposed to foreclosure auctions. The prospect of high commission short sale bargains reportedly has salivating realty agents already flying in good prospects is that innovation, or simply greed?
