Overall U.S. foreclosure activity is down 23 percent year-to-date through October 2013, but foreclosure activity on properties in the $5 million-plus value range is up 61 percent from the same time period in 2012.
The number of these ultra high-end properties with a foreclosure notice in 2013 is relatively miniscule — fewer than 200 compared to 1.2 million total properties in all value ranges with 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.
This trend may indicate lenders are now financially stable enough to more comfortably weather the big-ticket losses that these properties potentially represent. In addition, an improving housing market means more prospective buyers, even for these ultra high-end properties — which includes both homes and commercial properties. A bigger buyer pool translates into higher sales prices on these properties, allowing lenders to recoup more of their losses on these jumbo loans gone bad.
“A home selling for $5 million or above represents the ultra-luxury end of the market, and so far in 2013 we’ve had 34 properties close over that price with the average sale being $7.7 million,” said Emmett Laffey, CEO of Laffey Fine Home International, covering the five boroughs of New York. “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.”
The delayed rise in foreclosure activity on these high-end properties may not all be instigated by the lenders, however. Some of the owners may have had the means to hold out against foreclosure longer than most owners.
The following slideshow features 9 ultra high-end homes in some stage of foreclosure, and below the slideshow are links to view the full details of these homes on RealtyTrac.
- Malibu, CA high-end foreclosure
- Pacific Palisades, CA high-end foreclosure
- Beverly Hills, CA high-end foreclosure
- Malibu, CA high-end foreclosure (2)
- Malibu, CA high-end foreclosure (3)
- Delray Beach, FL high-end foreclosure
- Boca Raton, FL high-end foreclosure
- La Jolla, CA high-end foreclosure
- Houston, TX high-end foreclosure
Not surprisingly Florida and California together accounted for more than 60 percent of all ultra high-end foreclosure activity so far in 2013. In both states a combination of a severe housing boom and bust over the past seven years along with a plethora of high-value coastal property, have resulted in relatively high numbers of high-end foreclosures — although high-end foreclosure activity in California was actually down compared to a year ago.
Because a listing price is not consistently available on properties in foreclosure, for the purposes of this analysis, RealtyTrac categorized properties into value ranges using three different data points available in its real estate database: estimated amount of outstanding loans on property; estimated market value; and assessed value from the tax assessor. If any of these three amounts was above $5 million, the property was included in the $5 million-plus category.