Owners of upscale properties have been deeply discounting their homes, as their hopes of a market recovery fade. These discounted properties are attracting the attention of overseas investors, who hope to catch some deals. With industry insiders cautioning that further declines are likely, even million dollar property owners have not gone unscathed, reflected in increasing mortgage delinquencies for high-end homes. For more on this, see the following article from Property Wire.
Property investors from the Far East and Europe are returning to the US real estate market, snapping up bargains in the higher end sector where vendors are slashing prices.
Owners of properties worth over a million dollars are fearful that so many people are waiting for the real estate market to recover that the so-called ‘shadow inventory’ could cause a glut that will see prices tumble again.
‘I don’t think home prices have bottomed yet, especially at the high end of the market. Many people are stuck as there aren’t many buyers looking at property over $1 million.
It will get worse before it gets better,’ said Dennis Hedlund, founder of iEmergent, a forecaster for mortgage and real estate companies.
Typical is places like the western Chicago suburb of St. Charles which saw an unprecedented growth of wealth, especially in high-end homes.
An hour by train from the center of Chicago and known for good schools, it was a magnet for senior managers and professionals.
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But as the housing crisis that began in the subprime residential market spread up the property chain, the once-thriving high-end local market ground to a near halt.
With a population of 40,000 it now has 74 properties for sale for over a $1 million.
‘That’s a huge number to have on the market in a community of this size,’ Trafals said.
In 2009 five homes over $1 million have sold, compared with 21 in 2008. Prices are down 20% from the peak in 2007.
Even big discounts are not attracting buyers and the same picture emerges across the country.
‘High end owners have been hit from all sides,’ said Cora Berkery, a realtor at Surterre Properties in Orange County, California, site of Disneyland and hundreds of million-dollar homes.
Many wealthy owners have held asking prices high in the hope of outlasting the property slump but now they are finding that even if they slash their price there are no takers.
Even wealthy people are losing their jobs and the latest foreclosure figures show that more luxury properties are ending up in distress.
Figures from research firm First American CoreLogic show that 9.4%of those with jumbo prime mortgages, that is over $417,000, are 90 days or more behind, an unprecedented level.
As people hold on desperately in the hope of the market picking up all this is doing is storing up trouble for the future, according to Michael Lefevre, head of the National Association of Mortgage Professionals.
‘There is a lot of property out there that is yet to hit the market and could mean 2010 will be worse than 2009,’ he said.
Those who realize this are trying to get out now. Surterre Properties’ Berkery said in the past few months she has seen more high end homeowners become proactive and sell their homes at auctions at a massive discount.
‘The good news is property is selling, if at a huge discount. Most of the buyers we’re seeing are foreign investors from the Far East and, now that the euro is stronger, we’re seeing more Europeans too,’ she said.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.