Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
"You are just starting to see the tip of the iceberg with luxury short sales," said Adrian Heyman, owner of Property Advisors, a real estate broker in Scottsdale, Ariz. "A lot of wealthy people are upside-down in their mortgages, and they just can't afford the second or third vacation home anymore."
"The reason the low end stopped falling is because the government stepped in with affordable loans," said Scott Simon, managing director at Pacific Investment Management Co., a Newport Beach-based investment firm that runs the world's largest bond fund. "There is no political will to bail out a million-dollar house."
From Bloomberg News to The Detroit Free Press to You
High-end borrowers turning to short sales
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How does this bode for the Tucson Foothills Million+ home market.
Currently we have 113 homes for sale (with more sure to come in January/February) priced from $1,000,000 to $13,500,000 and they’ve been on the market an average of 294 days, at an average list price of $2,134,738, median of $1,549,000.
On the other side of the equation, 37 have sold this year- after an average of 256 days on the market, for an average sold price of $1,450,649, median of $1,232,000. So, just considering the high-end, there’s a big gap between the price of the homes for sale and of those that have sold.
And based on YTD sales, (the most generous interpretation) we’re looking at about 3 years worth of high-end inventory. With much of it intended for the swarm of 2nd and retirement home buyers, who have so far done a pretty good job of not showing up.
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