It is not just lower priced property that is ending up in the foreclosure sector in the US, with high end real estate making up almost a third of distressed sales, a new report shows.
Higher priced properties are taking a greater share of foreclosure activity, with houses priced in the top tier accounting for 30% of all foreclosures in July 2009, according to new data from Zillow.com.
Properties in the bottom third and middle third of values took an equal share, some 35% each, of foreclosures in July, while the highest tier of values claimed the rest. Compared to 2006, top-tier homes now make up nearly twice the proportion of foreclosures.
At the height of the real estate bubble, properties in the lower one-third of home values made up 55% of all foreclosures, while homes in the medium range accounted for 29%. The top one-third represented only 16% of foreclosures, according to the data.
Indeed, the latest data from Amherst Securities shows that there is a strong link between increased negative equity and the decreased probability of improving the delinquency status.
The latest prediction is that property foreclosures could reach two million next year and rise to a total of 7.2 million by 2014. Researchers at Wells Fargo say that the worst of the damage may already be done.
These figures have helped to prompt the US adminstration to do more to stem the every increasing rate of foreclosures which many experts believe could de-rail the fragile real estate recovery in the US.
An announcement is expected next week that will see new financial incentives for struggling property owners and for real estate lenders. It will be aimed at those who are already able to take advantage of the existing Home Affordable Modification Program (HAMP).
The aim of the new programme will be to allow borrowers in imminent danger of default to make a graceful exit and to avoid the stigma associated with foreclosure and help keep communities intact.