Silent Suffering in Luxury Markets - Foreclosure instead of Short Sale

Excellent report Wendy.  I hope you can help each and everyone of them.  Thanks for sharing.

Enjoyed the blog Wendy.

This is sad news indeed. To see people who did the right thing, not doing liar loans and putting 20% down, losing their homes is sad.

Wendy ~ Your absolutely right.  These high end clients are more likely to suffer in silents due to pride amd trying to fix it themselves.  It all relative with any income.  Just because one has more doesn't not mean they don't have bills.  So, when the income drops and the bills keep coming in they are in the same position as anyone else.

Wendy,

 Nice to see you honoring "date night"!! I hope I don't see anyone here staying to comment when they could be on a date with their significant other:) 

 I agree with your post and as some others have mentioned, I believe this is not solely confined to the high end market. I know many people who, even after I have explained everything, still do not make the calls they need to make. So many just give up. I have heard many horror stories about the loan modification program and those types of stories tend to travel faster and louder. Then there is the news media.  The market is going up, no, it's going down. The banks are paying back their taxpayer loans, no, they are hemmoraghing 9 billion (on the news this am...AIG).    All the banks are doing badly, while there top echelon are syphoning millions away..   People are having their homes foreclosed on while they are trying to take steps for either loan modification or short sales.  Short sales are taking months and months for answers!

Who are we to believe?  I can completely understand why people are afraid to take the steps needed. Many are hoping it will just go away, many are in disbelief. And we, as Realtors, certainly cannot guaratee that any of the above things will not happen. I, for one, am very angry.

Did you hit on the nerve center of short sale oaradox. A $150K short sale client is rarely in denial. Where I have the most problems with owners being delusional is in the high end. I think they are so tied into their material things equating to their self worth that they prefer to believe that if they don't think about it then the problem doesn't exist.  

The human side of the economic crisis hits every level of our poplulation.  I cannot imagine the stress that all of these people endure on a daily basis. 

Wendy:

The Real Estate market is going to see a whole new wave of Foreclosures and Short sales and they are going to be the very clients that you have blogged about...  The "strategic default" will be the next wave to come ie. Borrowers/Sellers that could financially afford to keep their homes but the are so under water with value to mortgage amount they are going to walk away.  You are in a prime market -- Best of luck and keep up the good work... Great blog post -- I hope you turned the BB off during date night -- I always get in trouble for that : ) 

Wendy - Cari and I see it all over the East Bay.  When touring with the RMA or CCRIM it is apparent that so many higher end homes are under stress.  You are right that most do not want to default or walk away but the situation has gotten dire.  It is sad to see and hear the stories and with most of these folks having been competitive in their lives and work there is still a stigma attached to losing the home. ~Doug

Any homeowner that is upside down and in financial trouble is embarrassed and ashamed - whether they be high end or low end. Out "kicking the bricks" in this market and seeing what people are going through is really tough. The best I can do is as a real estate professional is help people come to grips with reality and help them objectively consider their options.

I blog extensively on this subject and I just recently posted about foreclosures beginning to creep into wealthier neighborhoods:

http://foreclosedhomesinchicago.net/142/foreclosures-hit-wealthier-chicago-neighborhoods/

Wendy, it shows that no matter what your income level is things happen. Wheter it is bad money management or illness ot job loss. It doesn't matter. The emotional problems are the same.

What is happening in our economy is a great equalizer, unfortunately.  Democrats and Republicans, high income tax bracket on down.  Doesn't matter on this one.  EVERYONE is silent because they don't know who to turn to.  The government sure isn't here for anyone during this trial and tribulation. How many people that are not in that price range suffer too?  There has not been ONE hearing on the subject.  I blogged this yesterday, and I hope it's okay that I link it.  Too Little, Too Late . . . Short Sale Speculation  Anybody going through this (doesn't matter what amount) is SUFFERING!!

Wendy: I am in the same kind of upwardly mobile community--the Hamptons and even though these are second homes and, maybe because they are second homes---I am seeing the same silent suffering. These are people who have never had a financial issue before in their lives. They owned their own companies and lost them; or they were executives on Wall Street, lost their job and they are moving to their homes here to live--job loss in the financial markets is devastating and as a result we have seen more foreclosures then ever before. Many feel no pain for these "rich" people. But they are no longer "rich"--they have been disembowled so to speak. Read my post just before yours "PRESTO!, CHANGO! YOU ARE HOMELESS!" I have so many comments from members who are seeing first hand how the housing crisis is affecting EVERYONE!  Very important information here on your post--this is actually the "second wave" as I call it. People who are losing their homes now are the middle class and the upper middle class, not the "no-down-payment", "unemployed lay-about" who got a loan in spite of that fact---these are people like you and me and our family members who grew up with the greatest work ethic and responsible money handling ever!!! Just wait until April, when the gov't has ordered the banks to "dump" short sales on the market---watch as the higher end of the market crashes down so far they may never recover---they certainly won't see market appreciation any time soon and thus the great "UNDERWATER" effect. It will affect all of us soon!

I know Lafayette well and grew up in the Diablo Valley and owned a home in Pleasant Hill as an adult. We need to understand that these are not necessarily folks living high and beyond their means. The cost of living is unbelievable. I miss the San Francisco Bay so much but I've been calling Austin home for many years and see no reason to go back except to visit. At first read of your blog I thought perhaps like many that buying a modest multi million dollar home (by some standards) with an interest only loan is insane.....but I blame the mortgage industry for getting owners into this mess and encouraging the false inflation of values. Perhaps the California disaster is reason for the projection for Austin growth to be 86% in the next 15 years. Please don't misunderstand my comments because I do truly love northern CA but the balance sheet just wasn't working for me there. It truly does hurt to abandon your home state.

This is a huge issue...I would say the inaction in the luxury segment is a difficulty experienced globally.