If you’re looking for a distressed mansion, you had better act soon.
A foreclosed mansion in Boulder City, Nev. The number of foreclosed luxury homes fell this summer to among the lowest level since the start of the housing crisis. In July, there were just over 1,628 homes priced at $1 million or more – far below the monthly peak of over 5,000 in early 2011, according to RealtyTrac. So far, there have been 19,863 foreclosures of homes priced at $1 million or more – down 15 percent from 23,448. “The numbers tell us that the worst may be over for foreclosures on the high end,” said RealtyTrac’s Daren Blomquist. Brokers say the slowing foreclosures are yet another sign that the high-end housing market may be strengthening. The rising stock market this summer has made the wealthy feel wealthier, while strong demand from overseas buyers is also boosting the high end.
Still, housing economists warn that mansion foreclosures could spike again later this year. Credit is still tight, especially on the high end. Jumbo, or non-conforming loans, don’t benefit from all of the government-assistance programs aimed at improving the housing market. What’s more, banks typically wait longer to foreclose on high-end properties, since they take bigger write-downs on the loans and because luxury properties are more expensive to maintain. After years of stalling on the mansion foreclosures, banks may start clamping down this year and next.
“I think you could see a scenario where these foreclosures go back up,” said Jonathan Miller, of Miller Samuel, the New York real-estate appraisal company. “Credit can be very tight for these types of loans.”
Blumquist said that while the monthly totals could tick up again, the annual total for 2012 is still likely to be the lowest in four years. He added that high-end foreclosures tend to be regional, with declines in California and Arizona, but increases in Illinois and Florida. Nevada, Georgia and other parts of the South have recently seen several lavish mansions come on the market through foreclosure. A $23 million home in McClean Virginia – once owned by aerospace entrepreneur Rodney Hunt – is expected to be auctioned off this week. The home is over 20,000 square feet and was once featured on MTV’s “Teen Cribs” show.
The sale of the home is being handled by David Lowry of Tranzon Fox in Maryland. In Boulder City, Nevada, a fantasy home built by a wealthy real-estate developer, is now on the market for $3 million after going through foreclosure. The home has a man-made river, called Lazy River, that was modeled after the Grand Wailea Lazy River in Hawaii. It cost more than $1 million to build, and requires 120,000 gallons of water to run, said Gene Northup, of Synergy Sotheby’s International Realty in Las Vegas.
“It’s an amazing property,” he said.