During the past week, this blog has concentrated on short sales and mortgage information you could use if you decided to buy a distressed property. It is important that we realize that short sales will be prominent in every market and AT EVERY PRICEPOINT!!
Yesterday, Bloomberg posted an article regarding homeowners doing short sales on their million dollar homes. Below are the highlights and my insights.
“Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
“The rich aren’t as rich as they used to be,” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”
As defaults on the biggest mortgages rise, borrowers are turning to short sales to exit loans that now are larger than the market value of the house.
We must face the fact that short sales will be a part of the real estate landscape for years to come. And we must realize that a short sale is much better than a foreclosure for our neighbors and our neighborhoods. And that includes the most expensive neighborhoods in the country.
Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.
“You are just starting to see the tip of the iceberg with luxury short sales,” said Adrian Heyman, owner of Property Advisors, a real estate broker in Scottsdale, Arizona.
In a previous post, we explained that over 99% of the homeowners that fall 90 or more days behind on their mortgage never catch up.
This will increase the number of distressed properties in our high-end markets. As inventories build, it will have a negative affect on prices of million dollar+ homes.
Price your home accordingly!
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Good stuff Steve, keep it coming!
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