The 1% Also Don't Pay Their Bills: 10 Ultra Luxury Properties In Foreclosure -- By Tyler Durden, Zero Hedge

As we reported yesterday, something odd is happening in the US, which supposedly is deep in a "housing market and economic recovery" - foreclosures on ultraluxury homes, those worth $5 million and over, have soared by 61% in 2013 (even as overall foreclosures continue to decline due to the well-known and much discussed "foreclosure stuffing" process, which means millions of properties are held in bank shadow inventory just waiting for the moment to be unleashed and end the implicitly home price subsidy abused by banks for the past three years). Granted, the overall sample is relatively small, with fewer than 200 properties in the ultraluxury category compared to 1.2 million for all properties tracked, but as RealtyTrac notes, "each of these high-value properties represents a much bigger potential loss for the foreclosing lender compared to a median priced property."

Additional thoughts from RealtyTrac:

This trend may indicate lenders are now financially stable enough to more comfortably weather the big-ticket losses that these properties potentially represent. In addition, an improving housing market means more prospective buyers, even for these ultra high-end homes. A bigger buyer pool translates into higher sales prices on these properties, allowing lenders to recoup more of their losses on these jumbo loans gone bad.

"A home selling for $5 million or above represents the ultra-luxury end of the market, and so far in 2013 we’ve had 34 properties close over that price with the average sale being $7.7 million,” said Emmett Laffey, CEO of Laffey Fine Home International, covering the five boroughs of New York.  “Any foreclosure properties in this type of ultra-luxury market usually get purchased very quickly since there is one thing all super rich buyers want – an outstanding deal on a real estate transaction, and in most cases foreclosures of this magnitude come with several million more dollars of built-in value.”

Regardless of the arbitrage opportunities available to "all cash" buyers, who would be happy to park some cash in real estate, the fact that ultraluxury foreclosures are soaring also means that even the "1%" is starting to succumb to reality and beginning to feel the pressure of a financial reality in which only the "too biggest" can never fail.

So what are the properties in question? The photo gallery below, courtesy of RealtyTrac, shows just where any given $5 million + property stopped making its mortgage payments.

MONTAGE, IRVINE, CA 92614

This home nestled on a bluff overlooking the ocean was listed for sale at $15.9 million but the foreclosure judgment amount at the foreclosure auction scheduled in November was $12.8 million.

PACIFIC COAST HWY, MALIBU, CA 90265
This foreclosure auction property is located right on the water on Pacific Coast Highway in Malibu. It features two detached units and was listed for $9.5 million, but the opening bid at the foreclosure auction in November was $8.8 million.

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