It seems just about everyone has been affected by the economic downturn of the past several years, from the small guy trying to make his mortgage payments right up to the top echelons of big business. With foreclosures at an all time high for low to medium priced homes, you would think that luxury real estate would be among the highest hit for bank takeovers. While high priced properties have indeed been affected by the recession, foreclosures have not been that high on the list on luxury real estate takeovers.
There are several reasons for this.
For the most part, people who purchase luxury real estate do so because they can afford it. They are already earning high salaries or have accumulated the wealth needed to maintain a home on the expensive side of town. Banks don’t lend millions of dollars to people who have no hope of ever paying it off. That’s just good economic sense. And you can bet that many people who own homes worth several million dollars will immediately mortgage those homes and invest that capital in other projects that will provide an even higher return on their investment.
That’s just what wealthy people do.
Secondly, most people who have made their way into big time luxury real estate have done so through careful planning and good business sense. Most likely, a person who lives in a high priced home has a background in making sound financial decisions. Although foreclosures have not been high on the list when it comes to luxury properties, they have taken a serious hit through a stagnant economy and flat real estate market.
To continue reading this article and many other click Luxury real estate – has the recession eroded the value?
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