Where to Find High-End Homes for a Bargain
Anyone looking for a bargain on a high-end luxury home may have luck finding a discounted foreclosure on real estate valued at over $5 million. While the rate of mortgage foreclosures was on the decline through the third quarter of last year, the luxury housing sector isn't following the national trend. Real estate around the U.S. valued at $5 million or more that went into foreclosure jumped by an alarming rate of 61 percent during the year ending in October 2013.
According to a report by RealtyTrac, an online marketer of foreclosure properties, fewer than 200 pieces of real estate in the $5 million and above category went into default through the year ending in October 2013. That small figure compares to about 1.2 million properties in total, but each of these luxury properties could represent a substantial loss to the lender behind the mortgage. Because foreclosure properties can go on the market for about 20 percent under value, Daren Blomquist, vice president of RealtyTrac, said banks won't be too badly hurt because these discount properties move quickly and banks are more stable now. "The improving housing market will mitigate their losses somewhat on these high-end homes."
Where to find bargain luxury homes
The states reported to have the most luxury real estate foreclosures were Florida and California, two states also high in general foreclosures compared to the rest of the nation. Both of these states boast beachfront homes and property with coastal views which appeal to wealthy buyers, and both have been through very extreme forms of the housing bubble boom and eventual collapse.
Leading the top five markets in which ultra-luxury homes went into foreclosure was the combined metro area of Miami, Fort Lauderdale, and Pompano Beach, Fla. The region surrounding Orlando and nearby Kissimmee also made the top five. Florida continues to lead the nation in foreclosures of all price categories, so anyone looking for good deals and quick sales on properties there have choices, but they will need to be ready to pay in cash. Many people use a home equity line of credit to buy foreclosures, but the money needs to be available within days of the seller accepting the offer.
Bargain luxury home shoppers in California have their share of foreclosed high-value homes to peruse. The combined market of Los Angeles, Long Beach and Santa Ana took the number two slot in mortgage defaults in excess of $5 million.
Atlanta and the surrounding areas of Sandy Springs and Marietta followed behind the Los Angeles area. The region hosted about half as many ultra-luxury estates as the Miami area during the year ending in October.
Not all of the high-value foreclosed houses were in warm regions though. Rounding out the top five was the New York City metro area, including Long Island and northern New Jersey.
The big picture
Overall, foreclosures across the U.S. dropped by 23 percent over the previous year, according to the report. Leading the states in foreclosures are Florida, Nevada, Maryland, Ohio and Illinois, so bargain shoppers may have many choices in these states.
In most places, foreclosure activity has been steadily slowing down, but there are a few markets which are exceptions and not all are in states with high numbers of loan defaults. The rate of foreclosure in Baltimore, for instance, jumped by nearly 300 percent over the year ending in October 2013. In Washington, D.C., the rate nearly doubled in that time frame. New York City's foreclosure numbers were up by about 20 percent, with Philadelphia and Miami trailing behind. In all other of the metro areas RealtyTrac surveyed, the pace of home foreclosure was on the slowing down.
As the rate of foreclosure is on the decline, mortgage rates are slowly creeping up. To check on rates, visit our mortgage page.
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What to Know Before Buying a Foreclosure
