Foreclosure activity on the whole was down 23% year-to-date in October, according to a study by RealtyTrac. However, foreclosure activity on homes in the $5 million-plus range was up a staggering 61% from the same period in 2012.
While the number of ultra-expensive homes being foreclosed on is small – fewer than 200 – they each represent a much greater potential loss to the lender than median-priced homes, according to RealtyTrac. However, the improving housing market may mean that lenders are becoming financially sound enough to weather those losses, and more prospective buyers mean higher foreclosure sale prices, allowing lenders to recoup more of their money even on high-end foreclosures, according to the report.
“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 in 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.”
Florida and California – both states with a lot of expensive coastal property – accounted for more than 60% of the ultra-high-end foreclosure activity so far this year, according to RealtyTrac.
While overall foreclosure activity is down nationwide, the foreclosure rate on ultra-expensive homes is skyrocketing, according to data released today.