BOSTON (MainStreet) -- Million-dollar-and-up homes are the fastest-growing segment of the U.S. foreclosure market, with banks seizing some 335% more such properties last year than they did in 2007.
"We're seeing evidence in our data that the high-end market is starting to get hit more," said Daren Blomquist of foreclosure watcher RealtyTrac.com. "I think high-end homeowners have a little more 'padding' to get through tough times if they experience a job loss or other trouble. But as the tough times continue, more and more of these homeowners are succumbing to foreclosure."
True, RealtyTrac's latest figures show that homes with $1 million or higher mortgages represented just 2.3% of houses in foreclosure during the first 10 months of last year. But that's way up from the 1.2% percent of the market for which million-dollar houses accounted during the same period in 2007.
Blomquist suspects more and more rich people are falling into foreclosure because they had mortgages they could easily afford in good times, but can no longer cover in today's tough economy.
"No matter how wealthy you are, there's always that potential that you'll lose your job," he said. "Even if you have a very high income, you're always susceptible to not being able to make your mortgage payments."The expert also thinks some high-end foreclosures stem from "strategic defaults." That's where consumers simply walk away from homes and let banks foreclose because a property's value has dropped to less than the unpaid mortgage balance.
"Even if a rich person can still afford their home, they might say: 'We have negative equity, and it just doesn't make sense to keep making mortgage payments on this property,'" Blomquist said. "I would suspect that rich, financially savvy homeowners might consider
The good news: Well-heeled house hunters may find they can pick up million-dollar-and-up foreclosures on the cheap.
The latest available RealtyTrac figures show foreclosed homes sold for 27% less on average than nonforeclosed properties did during 2011's first quarter.
Blomquist said RealtyTrac doesn't break out numbers for $1 million-plus homes, "but we definitely see a built-in discount with foreclosures. There are really big opportunities to get good deals."
Click below to check out the five highest-priced U.S. foreclosures listed for sale on Realtor.com, the National Association of Realtors' official home-buying site: