Well, it appears that not only the poor are among the many deeply affected by the multitude of crises distressing our lovely economy these days. Even in the upper echelon, where million dollar homes and sprawling acres of prime real estate paint a pristine picture, the mortgage crisis is slowly trickling in.
Granted, the default numbers aren’t as high in this elite pool of homeowners as in other, lower- income areas, but in upscale neighborhoods where median prices hover upwards of $1 million, about twice as many households received default notices from January to September as in the same period in 2008. Not a good sign, especially when most of these homeowners purchased homes they most likely couldn’t afford as investment properties with the hopes that they too would profit from the ever-expanding bubble—until it burst, that is.
Fortunately, for the affluent, most of their homes were purchased with large down payments and they usually have more fiscal resources at their disposal, so the impact shouldn’t be as severe for them as for most but, in their defense, mortgage companies and their loan modification programs don’t have as much mercy on the wealthy and so there are fewer options for relief. The increasing influx of homes on the market, due to foreclosure or last resort sales, that remain empty don’t help much either. Neither do a lot of the failed loan modification programs that were implemented this year, coupled with the rising unemployment rate.
“Foreclosures have a snowballing effect,” said Mark Hanson, principal of Menlo Park’s Field Check Group. “They establish terrible sales prices and then everyone’s value comes down, and then you have thousands more people in a deeper negative equity position, which increases their likelihood of default and foreclosure.”
It was only a matter of time before the impact of the broader housing market made its way into the mid- to higher-end of the American Dream. The question is, will it remain, or is the next windfall closer than we think?