High-End Homes See More Foreclosures

March 10, 2015

Prior to the recession, high-end homes tended to see fewer foreclosures than the rest of the market. But in the aftermath of the recession, that trend is reversing, according to a recent report from the real estate analytics firm CoreLogic.

The foreclosure rate for homes that are $750,000-plus peaked in May 2012 at 6.8 percent – nearly double the peak of 3.6 percent that the overall market saw in October 2011.

Both rates have declined considerably the last two years, but the upper end of the market continues to see higher foreclosure levels, according to CoreLogic.

Sam Khater, CoreLogic’s deputy chief economist, says that the 2008 housing crisis and stock market crash disproportionately affected wealthier home owners, which may help explain one factor in the reversal. He also notes that several states with significant inventories of luxury housing have some of the highest foreclosure rates nationwide. The three states with the highest foreclosure rates as of December 2014 were New Jersey (5.2%), New York (4%), and Florida (3.7%)—all states that have a large number of high-end homes too.

Source: "Bigger Mortgages Likelier to Go Into Foreclosure," The Wall Street Journal (March 5, 2015)