foreclosures spreading to wealthy la la lands
http://news.yahoo.com/s/nm/20080407/us_nm/usa_housing_mcmansions_dc
foreclosures come to McMansion country
By Andy Sullivan
55 minutes ago
LEESBURG, Virginia (Reuters) - Million-dollar fixer-upper for sale:
five bedrooms, four baths, three-car garage, cavernous living room.
Big holes above fireplace where flat-screen TV used to hang.
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The U.S. housing crisis has come to McMansion country.
Just as the foreclosure crisis has hollowed out poorer neighborhoods,
"for sale" signs are sprouting in upscale developments so new they
don't show up on GPS navigation screens.
Poor people weren't the only ones who took out risky, high-interest
loans during the housing boom. The sharp increase in housing costs --
and the desire to live in brand-new, spacious houses with modern
features -- led many affluent buyers to take out loans they couldn't
afford.
"People had in their head, 'I need a mud room, I need giant columns, I
need a media room, and I'm going to do anything to get it,"' said
Robert Lang, co-director of Virginia Tech's Metropolitan Institute, a
research organization that focuses on real estate and development.
The crisis has hit especially hard here in Loudoun County, Virginia,
where upscale developments have supplanted horse farms over the past
fifteen years.
About an hour's drive from Wa****ngton, Loudoun is one of the nation's
most affluent counties, with a median household income of $98,000,
more than double the national figure.
The county has also ranked as one of the nation's fastest growing in
recent years as developers built thousands of super-sized, amenity-
laden houses to keep pace with the booming high-tech economy.
These houses are sometimes nicknamed "McMansions," disparaging both
their extravagance and their look of mass production -- like
hamburgers from a McDonald's restaurant.
Between 1990 and 2005, the county's population tripled to 272,000.
Many of those moving here relied on risky, high-interest loans to buy
the house of their dreams.
"People pushed the limits to be able to buy. They couldn't afford to
buy there otherwise," said Virginia Tech consumer-affairs professor
Irene Leach.
High-interest loans accounted for 16 percent of the total during the
height of the mortgage boom in 2005, less than other outer-ring
suburban counties in the region but more than neighboring counties
closer to Wa****ngton.
Now the bill has come due. One out of every 69 households in the
county was in foreclosure in the last three months of 2008, well above
the national average of one filing for every 555 households, according
to RealtyTrac.
Most of these have been concentrated in the county's poorer
neighborhoods, but local realtor Danilo Bogdanovic says he is
increasingly seeing more foreclosures on properties worth more than
$800,000 as affluent borrowers burn through savings in a vain attempt
to stay in houses they can't afford.
"They've just prolonged the pain," Bogdanovic said. "I don't think
they're immune to it."
At the end of 2007, 20 of the 25 houses for sale for more than
$850,000 in Loudoun County appeared to be foreclosures, according to
Tony Arko, his partner.
These can take years to sell, as they must compete with brand-new
developments still coming online.
Housing prices in the county plummeted 8 percent in 2007, the sharpest
drop in the region, according to the Wa****ngton Post. New home starts
plummeted by 50 percent.
Bogdanovic and Arko have sold many foreclosed properties to investors
looking to rent them out. But there's no market for a million-dollar
rental property, they say.
In the Beacon Hill development, a golf course s****s among large
houses and gazebos set on rolling hills. Residents keep their horses
at an equestrian center.
A 7,300-square-foot mansion on Spectacular Bid Place features three
chandeliers, a spiral staircase and a state-of-the-art kitchen. The
owner offered it at $1.35 million in January 2006, before foreclosing
in August 2007. The house found a buyer in January 2008 -- for
$963,000.
Several miles away, the million-dollar fixer-upper with the holes in
the walls has been on the market since December. It is still unsold.
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