Foreclosures On The Rise Among Wealthy
During the last few months of 2011 we were treated to nightly reports about the Occupy Wall Street movement and its offspring around the country. One of the chief complaints coming from the occupiers is their perception that the wealthy keep getting wealthier off the backs of the poor. The “One Percenters,” the occupiers allege, are making life miserable for the rest of the country by stealing all the wealth.
If you sympathize with the Occupy movement it might come as a surprise to you that foreclosures among the wealthy are accelerating at an astronomical pace.
Recently Fox News 8 in Cleveland reported on a CNN Money story from Jessica Dickler indicating that foreclosures among America’s wealthiest citizens were increasing at a rate faster than those of middle and low-income Americans. In fact, the report went on to say that foreclosure rates on homes valued over $1 million had risen 115% since 2007. For homes valued at $2 million or more the increase was closer to 270%. By the same token, foreclosure rates on homes valued at $500,000 or less has actually fallen by 21%.
In fairness, many of these wealthy homeowners are walking away voluntarily rather than having foreclosure forced upon them. Their reasons for doing so very according to their own individual circumstances, but it’s not uncommon for them to treat their foreclosure as a business decision; understanding they’ll save more money in the long run by walking away then by satisfying a mortgage on which they are heavily underwater. It is not unlike the decision many blue-collar Americans have to make except for the fact that the wealthy have the ability to tap other assets yet are choosing not to do so.
On the one hand there are those who believe voluntary foreclosures by the wealthy are unethical because they have the means to pay a mortgage. On the other hand, being underwater as the result of an artificially bloated housing market is the same problem regardless of your annual income. The fact is real estate prices went through the roof during most of the 1990s and well into the next decade. When the correction finally came it hit the wealthy, in terms of real value, just as much as the middle class and the poor.
If there’s any good news from the Fox/CNN report it is the fact that these very expensive houses will most likely be maintained meticulously during the foreclosure process. When the properties are finally ready to go back on the market it’s unlikely they will be trashed by their owners upon departure, meaning they will be turn-key properties ready to be immediately purchased and inhabited by their new owners. According to some real estate experts that will be good for the market. Some even expect these houses to lead the real estate resurgence a few years from now.
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