The New York Times recently pointed out that owners of houses valued at a million dollars or more are defaulting on their mortgages at a higher rate than owners of less expensive homes.
One out of 12 owners of homes worth under $1 million are behind with their mortgage payments, the Times reported, while more than one in seven owners of properties valued at more than $1 million are in delinquency.
Incongruities, even visual incongruities, surround the defaults on expensive homes. More familiar is the imagery that goes with foreclosed average houses, which may be plain and rather dilapidated as their owners run out of money for upkeep before they default on their mortgages. But it’s striking to see adds for foreclosed homes that are large, handsomely designed and still beautifully maintained, with tiled patios, swimming pools, lush landscaping.
Why are owners of pricey homes not paying on their mortgages, in some cases even walking away and mailing the keys back to the bank? Experts offer various answers. Some million-dollar homes were sold by predatory lenders to people who couldn’t afford them. And the financial turbulence of the past three years hasn’t spared those once able to afford homes with prices in seven figures. Some wealthier purchasers may be more confident, more apt to retaliate against lenders if they feel that they’ve been cheated—that their investment in their house went sour because someone rigged the game.
What’s certain is that not only rust belt cities like Detroit but much wealthier towns are seeing community life shattered by foreclosures and the abandonment of property. As the Times reported, “The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe.”
And in Marin County, Calif., where local people were forced out by rises in property values some time ago, those who replaced them are being pushed out now because the bubble has burst. This post appears on the healdburgbubble blogspot:
“I grew up in Marin and have watched as all of my friends have moved, priced out of a market that has become dominated by trust fund babies and wannabes. I am looking to buy a house, but cannot afford to buy one in Marin. I try to have some compassion for these people who are losing their homes, but when it comes to the over-sized homes of the wannabes—well, I’m having a bout of compassion fatigue.”
