Five years after the housing crisis erupted, America’s wealthiest families are now losing their homes at a higher rate than the rest of the country. Surprisingly, many are doing so by choice.
More than 36,000 million dollar homes were foreclosed – or at least listed as defaulted – in 2011, according to RealityTrac, a company that tracks foreclosures nationwide.
Although million-dollar home foreclosures account for less than 2% of overall home foreclosures, it’s a much bigger share of foreclosure activity than in recent years, according to CNN Money.
Foreclosures on properties valued at $1 million or more have risen by 115% since 2007. The share of multi-million dollar foreclosures — or homes valued at more than $2 million — jumped by 273%. Meanwhile, the share of foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21%.
“These properties are accounting for a bigger piece of the foreclosure pie,” said Vice president of RealtyTrac Daren Blomquist.
Wealthy homeowners avoided foreclosure in the past by using their other assets and alternatives to hold out on a default. But with the housing recovery still years away, many homeowners decided it would be best to walk away – even if they could still afford the monthly mortgage payments.
“In the lower-priced houses you’ll see more people defaulting because they can’t afford the payments and it’s a choice between feeding their family and paying the mortgage on a home that’s under water,” said Stuart Vener, a national real estate and mortgage expert with the Florida-based Wilshire Holding Group.
“In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?” Vener said.