At the beginning of the housing crash, it seemed as though luxury homes might be spared the worst of it. But the latest Standard & Poor's/Case-Shiller Home Price Indices show that in many metro areas, prices are stabilizing among cheaper homes but still falling in the high-end real estate market.
So far, according to Smart Money magazine, wealthier homeowners have been able to stay in their homes longer because they have more money to ride out the downturn. But as the sluggish economy drags on, that may be changing. Although borrowers with bigger mortgages who have stopped making payments have been able to remain in their homes longer than those with smaller mortgages, banks may step up foreclosure proceedings.
Homeowners with loans of $1 million or more were in default for an average of 792 days in 2011 before their homes were repossessed, while those with loans lower than $250,000 were in default for an average of 611 days, according to the Wall Street Journal. As more pricey homes go into foreclosure, luxury home prices in the area will likely drop even further.
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