Why are so many luxury homes going into foreclosure?

Services for Real Estate Pros with Think Glink Media

Foreclosures have jumped a whopping 61% in the past year for luxury homes.

But don't freak out: This number doesn't represent the whole housing market. In fact, a new report from Realty Join says overall foreclosures are down 23% this year. 

So, where is this sudden rush of high-end foreclosures coming from?

Here are a few reasons why we could be seeing more luxury homes hitting the market now:

1. Lenders are back on their feet.

A multi-million dollar foreclosed home is a big loss for any bank, so the rise in foreclosures may be a sign that lenders are now financially stable and ready to start moving in on the deliquent homes.

2. Home prices have made steady leaps.

Now that home values are on the rise, lenders may think they'll be able to get a better return on their foreclosures than they would've earlier in the year. And with strong sales and turnover in the high-end luxury market this year, there's a good chance these homes will be sold pretty quickly. Besides, there's not much a super-rich buyer loves more than getting a great deal on a luxurious mansion.

3. Wealthy homeowners finally letting go.

While wealthy homeowners typically have the financial means to hold off the foreclosure process longer than others, at some point they have to call it quits too. Affluent homeowners may have decided their homes were too big of a burden and let them fall into foreclosure. 

Find out more about the explosion of luxury foreclosures in my new CBS story.

Rainers, Have you noticed a lot of luxury foreclosures entering the housing market recently?



Ilyce Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com, The Equifax Personal Finance Blog and CBS Moneywatch She is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.

Comments (4)

Thom Abbott
MyMidtownMojo.com |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA
Midtown Atlanta GA Condos For Sale

I've not paid attention to this in the Atlanta market...but I'll be checking it out now!

Dec 10, 2013 10:29 PM
Ilyce Glink
Think Glink Media - Chicago, IL
Best-selling author, award-winning TV/radio host.

Hi Thom, thanks for your comment. Please do check it out, I'd love to know what you find out.

Dec 10, 2013 11:36 PM
Jack Schlenk
Chicago, IL
Review my many articles

Please explain why the Lincoln Park market for single family properties  in the time 01/01/2014 - 01/01/2015 had 198 listings and only 71 unit sold (36%) of the market.

Mar 19, 2015 06:56 AM
Jack Lewitz
Exit Strategy Realty - Evanston, IL

I recently sold a luxury REO and think the reason these homes go to foreclosure is because the homeowners usually have multiple liens, are going through divorce , state and federal tax liens , wrapped business with home equity and both business and home are tied together in failure so they just prolong and then walk away. 

Aug 30, 2015 11:18 PM