Amidst all of the news about lower foreclosure rates and an improving economy, low housing prices linger as one of the primary signs of a recent recession. While this is good news for investors and buyers looking to get a good deal on a property that will increase in value, it makes selling a home more difficult and sometimes financially painful for people who bought when the market was better.
This problem affects all parts of the housing market, from modest condos to million dollar estates. Even the lavish celebrity homes that we love to admire on TV are causing financial headaches for their owners. Where a nice saltwater pool and a 20 car garage were once an asset to a large property, the scale and expense of these types of homes make them undesirable for buyers (even those with a big budget) who are looking for a deal.
“There is a finite market to reach with properties like this,” said a real estate agent who handles high value homes. That means heavy marketing in expensive publications like the Wall Street Journal, and filming promotional videos to post online for prospective buyers.
Beyond difficulty selling, some of the rich and famous that own these properties also encounter unexpected economic woes that make it difficult to maintain the homes themselves but unable to sell them for a reasonable price. Former football star Eddie George recently avoided a high profile foreclosure on a home worth about $1.6 million. The George’s accountant recently told reporters that even for celebrities upside-down mortgages for homes bought before the bubble can cause problems in refinancing and tax assessments.
Source: USA Today, “Superstars risk super losses on lavish homes,” G. Chambers Williams III, June 8, 2012.