The Luxury Foreclosure Capitals of USA
October 13th, 2008
A drive through the luxury foreclosure capitals of USA will be an eye-opener that swimming pools and luxury cars do not necessarily guarantee that the house is not foreclosed upon.
Lagual Niguel in Orange County, California host ritzy beach cities like Laguan Beach as well as Dana Point. But it also boasts of the higher number of bank repossessed foreclosed houses. These have led to the rapid fall of house prices by 7.2% since the last year. Second ranking San Juan Capistrano in California had 190 foreclosed units in a locality having 33,826 residents. Only a few miles apart banks have repossessed 181 houses in the planned neighbourhood of Ladera Ranch that has 23,140 inhabitants. Here too the selling prices of houses have sharply fallen.In Tustin Foothills (northern Orange County) there were 165 foreclosed units making it rank fourth. The fifth position went to San Jose region with 157 foreclosed houses and 44,401 residents.
The luxurious regions are all located in California. Of the 25 worst hit spots, 24 were in this Golden State and nine came from Orange County. Southern California with its 42-mile beach and golden climate has always attracted settlers. But those who purchased houses during the peak of the housing boom when none or little down payment was required are now in trouble. They are sending back the new keys to the lenders – that is the banks.
A survey shows that apart from the sub-prime mortgage meltdown unemployment and falling real estate markets also contribute to this increasing number of foreclosures.
Senator Dick Ackerman comments that the glorious weather of the region attracts settlers and this causes a high demand in houses. Thus the market swings easily from boom to bust. Mark Zandy of Moody’s Economy agrees with these views and says that people bought fancy high-ended houses during the boom but now they cannot keep up with the mortgage payments. But those residing further north are also feeling the pinch of foreclosures.
The bank repossession process in California is extremely speedy. This means it passes through the non-judicial route by which the lenders, borrowers and officials settle the matter between themselves without going through time consuming legal procedure. In states like Florida foreclosures can drag on for over a year. Thus the market takes a longer time to correct itself. Most of the owners of fancy houses took out jumbo loans that disqualify them from taking the help of government programmes.
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