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High-end home foreclosures next housing dilemma?

Posted July 13, 2009

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— Even million-dollar homes in nice neighborhoods are not immune to the housing crisis.

Is a second mortgage crisis hitting the Triangle? Is a second mortgage crisis hitting the Triangle?

Experts say that the increasing number of high-end homes going into foreclosure is the next big housing dilemma.

Nearly 30 high-end homes – priced at above $500,000 – are in foreclosure in the Triangle as of Monday, including a home on Hunter's Meadow Lane in Raleigh that a Parade of Homes entry listed as worth $1.2 million.

"It's a beautiful home, one the builder intended for himself," said neighbor Kim Powell. "The turn of events in the economy just changed all that."

Powell lives next door and is surprised someone hasn't bought the house.

"The next shoe to drop is that higher end of the market – the $500,000-plus," said local investment adviser Ken Bell.

The problem is two-fold.

He believes that in some cases, buyers have entered into risky loans with payment options.

In other cases, builders are not able to sell a house before it goes into foreclosure. So, banks are offering incentives.

Wes Carroll has been trying to sell a high-end home in the Regency Manors subdivision of Cary for 18 months. Two years ago, he said, the home would not have been on the market for that long.

To help keep the house from going into foreclosure, he said banks are working with builders, like him, to help buyers with closing costs and lower interest rates.

He said he believes it is working and that he has seen a lot more traffic in the past 30 to 45 days. He recently received an offer.

That's what neighbors on Powell's street are also pulling for, she said.

"We're optimistic that the right person will come along," she said.

62 Comments

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  • discowhale Jul 14, 2009

    "He believes that in some cases, buyers have entered into risky loans with payment options."

    You mean like the folks talked about in earlier stories here, and elsewhere, that had bought high dollar houses, through programs aimed at helping low income people buy houses? If a guy who can afford a $300,000 house, buys a $500,000 house, it just proves he's no smarter than a guy who bought a $100,000 house that couldn't really afford it.

    I'm not inclined to feel sorry for either of them. Living above your means, is dangerous, regardless of how much you make. I'm glad I never bought into it.

    And yes I understand that's not the whole story on the economy, but it was the tipping point. Economists warned about it for YEARS before it happened.

  • lmbl Jul 14, 2009

    Large homes mean big profits for the builders at an enormous cost to the environment. Now that Raleigh is overcrowded and not as beautiful as it once was, people who can actually afford to live in a nicer area will move somewhere with clean air, good schools and other amenities this city used to have before the developers destroyed it. Leave some space for parks and open area instead of turning Raleigh into an asphalt jungle. Most of the "keep up with the Jones type couldn't really afford those monstrosities anyway.

  • wildervb Jul 14, 2009

    BULLDOZER,

    Do you plan on building smaller, more affordable houses in the future?

  • BULLDOZER Jul 14, 2009

    I think all of us builders who make it through this will be much better business people on the other side. I live within in my means(live in a paid for home and a large one too) and still am concerned about my business' future. Wherever you are on the housing debate, our industry is paramount to this country making a turn for the better. Here's to a great fall and better spring.

  • shortcake53 Jul 14, 2009

    Politicians added to the problem, but no one forced anyone to live beyond their means. Choices people made got them where they are. Take responsibility.

  • FromClayton Jul 14, 2009

    yeah well i do not believe in building such a huge unsustaniable house anyway. no one needs that large of a house. welcome to the real world.

  • rand321 Jul 14, 2009

    Frank and Dodd did not help in the housing matter. but the ballooning sub-prime crisis occured with the GOP in total control. Bush highlinghed in a State of the Union delivered in 2005 the highest rate of homeownership and then in speeches around that time as evidicen of the "ownership" society working. Greenspan highlighted the innovative mortgage products to spread risk. he eventually admitted the error or flaw in his thinking about bank executives and their enterprise fidcuciary outlook.

    So its time to stop the blame game to get to work and fix the problems.

  • DontLikeTheSocialistObama Jul 14, 2009

    I really feel for all of these people that were living beyond their means. Now they expect the taxpayers to get them out of their mess.

    More change (socialism) that you can count on from our Socialist President Obama and Socialist Governor Perdue.

  • DontLikeTheSocialistObama Jul 14, 2009

    Senators Frank and Dodd put through policies that forced Fannie Mae and Freddie Mac to support the mess that led to the housing bubble that blew up and is destroying our economy.

    Clinton's justice department in the 90's forced the banks to give loans to anybody whether they could afford them or not.

    More change (socialism) that you can count on from our Socialist President Obama and Socialist Governor Perdue.

  • WRALblows Jul 14, 2009

    "Good grief.. and once again lets remind who was in charge of the banking committee at that time.... That's right Dodd and Frank."

    Wrong. Dodd and Frank were not the head of the banking committees at that time. They were in the minority party. But it's your lie, tell it how you want to.

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