Another sign that the current distress in the housing market doesn’t discriminate, defaults continue to rise in the million dollar market.
Andrew Keatts of The Daily Transcript reported over the summer a study conducted by The New York Times, “…found that more than one in seven homeowners with loans in excess of $1 million are seriously delinquent…compared with one in 12 homeowners with loans below the million-dollar mark.” Keatts reported that data was not released on the state or county level “because of concerns over sample size.”
La Jolla based MDA Dataquick was able to provide more local numbers. “Dataquick found that in California ZIP codes with median home prices exceeding $500,000, notices of default (NOD’s) rose 1.5 percent from the last quarter of 2009, and declined 19 percent year-over-year. Conversely, ZIP codes in the state with median home prices below $500,000 saw NOD’s fall 5.8 percent from the last quarter of 2009, and 43 percent year-over-year.”
Keatts went on to report that although the part of the SD market that is above $500k is faring better than similar markets in CA, it is still recovering slower than the below $500k market. THE toniest ZIP code in SD County, 92067 (Rancho Santa Fe) had its NOD’s increase quarter-by-quarter 44.4 percent and 3o percent year-to-year.
Although no one knows for sure, many of the experts are speculating that a good number of these are strategic defaults, that the more well off are looking at these homes as a bad investment and just walk away since they have other substantial assets. Quoting Alan Gin, associate professor at USD “…it’s possible that those on the upper end of the market are more likely to view an underwater home as a bad investment, and thus view strategic default as an option.”