The U.S. housing crisis began with the meltdown of subprime mortgages, but now the greatest damage lies at the other end of the wealth spectrum.
The owners of more than one in seven homes with mortgages above $1 million are seriously delinquent, according to data compiled for The New York Times by research firm CoreLogic.
Meanwhile, only about one in 12 homeowners are delinquent on mortgages of less than $1 million.
“I’ve never seen the wealthy hit like this before,” Las Vegas real estate agent Ken Lowman told The Times.
“They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a 'Plan B.'”
But it’s not clear how many of those defaulting are in real distress. Some of the wealthy seem to have decided that it makes financial sense to blow off their payments.
“The rich are different: they are more ruthless,” Sam Khater, CoreLogic’s senior economist, told The Times. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”
With economic growth apparently slowing in recent weeks, many experts are worried about the entire spectrum of the housing market.
Karl Case, co-creator of the S&P/Case-Shiller home price index, is one of them.
He points out that housing starts are stuck at 15-year lows. “Home building is dead flat in the mud,” Case told Bloomberg.
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