“The numbers tell us that the worst may be over for foreclosures on the high end,” said RealtyTrac's Daren Blomquist.
Brokers say the slowing foreclosures are yet another sign that the high-end housing market may be strengthening. The rising stock market this summer has made the wealthy feel wealthier, while strong demand from overseas buyers is also boosting the high end. Read more: 5 Trophy Properties in Europe)
Still, housing economists warn that mansion foreclosures could spike again later this year. Credit is still tight, especially on the high end. Jumbo, or non-conforming loans, don’t benefit from all of the government-assistance programs aimed at improving the housing market.
What’s more, banks typically wait longer to foreclose on high-end properties, since they take bigger write-downs on the loans and because luxury properties are more expensive to maintain. After years of stalling on the mansion foreclosures, banks may start clamping down this year and next.
“I think you could see a scenario where these foreclosures go back up,” said Jonathan Miller, of Miller Samuel, the New York real-estate appraisal company. “Credit can be very tight for these types of loans.”
Blumquist said that while the monthly totals could tick up again, the annual total for 2012 is still likely to be the lowest in four years. He added that high-end foreclosures tend to be regional, with declines in California and Arizona, but increases in Illinois and Florida. (Read more: For Luxury Homes, the 'Year of Capitulation')
Nevada, Georgia and other parts of the South have recently seen several lavish mansions come on the market through foreclosure. A $23 million home in McClean Virginia – once owned by aerospace entrepreneur Rodney Hunt – is expected to be auctioned off this week. The home is over 20,000 square feet and was once featured on MTV’s “Teen Cribs” show.