More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent according to the real estate analytics firm Core Logic. By contrast homeowners with less lavish housing are much more likely to keep up.
About one in 12 mortgages below the million dollar mark are delinquent. In Los Altos five properties were scheduled for foreclosure auctions, in a recent issue of the Los Altos Towncrier, a weekly newspaper where local legal notices are posted.
Whether it is the primary residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population. In Las Vegas, Ken Lowman , a longtime agent for luxury properties said, 4 of 11 sales he brokered in June were distressed properties.
“They made their plans based on the best of all possible scenarios that their incomes would continue to grow, that real estate would never drop. Not many had a plan B,” Lowman said.
The Corel Logic data suggests that many of the wealthy, purposely dumping their financially draining properties, just as they would a sour investment. In Los Altos where the median home price of US $1.50 million dollars makes it one of the most exclusive towns in the US. Several houses that had been scheduled for auction recently where still occupied.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again.
“Those with high net worth have other resources to lean on if they get in trouble,” said Sam Kather, Core Logic senior economist. “If they’re going delinquent faster than anyone else, that tells me that they are doing so willingly.”