It’s one of a growing number of high-end foreclosures — a sign that housing distress is not limited to lower-income neighborhoods.
Elvira and James Grau own Space Odyssey, a former warehouse in Englewood that they bought in 2005 and turned into a 26,000-square-foot entertainment venue. Elvira Grau made an appearance on “The Real Housewives” reality show in 2010, planning a party for one of the show’s stars, Teresa Giudice. But the Graus were apparently not able to keep up with the $17,500 monthly payments.
Million-dollar-plus foreclosures like the Graus’ are rare, but are on the rise, according to RealtyTrac, a California company that follows the foreclosure market. Although the numbers of foreclosures on properties with mortgages over $1 million are still tiny — less than 2 percent of all foreclosures nationwide — they’ve more than doubled since 2007, RealtyTrac said. In Bergen County, more than 70 foreclosures of million-dollar-plus properties have been auctioned since January 2010, according to the sheriff’s office.
For buyers of luxury homes, the rising number of foreclosures in this price range offers the potential for better deals, since foreclosed homes generally sell at discounts that could total hundreds of thousands of dollars.
As in the case of the Graus, high-end foreclosures often involve business owners, according to several observers.
But whether it’s a $200,000 house or a $2 million house, the basic story is the same. During the housing boom, households took on too much debt, in the form of mortgages or home equity loans. Often, the mortgages were exotic loans with low initial payments that were followed by higher costs later.
When families faced job losses or other economic setbacks as the economy fell into recession, many couldn’t keep up with the mortgage payments, said Daren Blomquist, a RealtyTrac vice president.
High-end homeowners in trouble have taken longer to fall into foreclosure because they typically had more of “a financial cushion to fall back on, to keep making their mortgage payments,” Blomquist said. “They’ve been able to hold out longer.”
Phyllis Salowe-Kaye, head of N.J. Citizen Action, the state’s largest housing counselor, said these homeowners often took equity out when their houses appreciated in value during the boom.
“We’ve seen instances where the husband and wife both worked on Wall Street, and three years ago, they lost their jobs,” she said. “They’re doing different jobs and living in homes with mortgages up to $1 million, and there’s no way they can pay that.
“They have the same problem as someone who has a $200,000 house or a $400,000 house that’s being foreclosed,” she continued. “At some point, somebody’s going to take their house.”
I guess that you can say that million-dollar foreclosures have almost tripled in San Diego County since 2007 – but who was getting foreclosed at the peak?
SD County Foreclosures Between Jan 1 – Sept 5 of Properties Valued at More Than $1,000,000:
2007 – 40
2008 – 88
2009 – 117
2010 – 158
2011 – 131
2012 – 105
There have been 4,483 foreclosures this year, so the million-dollar club makes up 2.3% of the total.
RealtyTrac sure doesn’t mind stirring it up though, maybe those foreclosure subscriptions are down? HousingWire picked up the story here in the dog days of summer, and was happy to make it sound like the sky is falling:
Foreclosures on million dollar homes in New Jersey and across the nation seem to be on the rise as more well-to-do families default on expensive mortgages, according to The Record out of New Jersey. The publication cites RealtyTrac data, which shows foreclosures on loans valued above $1 million making up less than 2% of all foreclosures nationwide. Still, foreclosures on these types of properties have doubled since 2007, the California-based real estate research firm said.
I’d like to see them chase down the banks who are letting defaulters ride for free!