Millionaire Foreclosures on the Rise

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million dollar foreclosureBy Jessica Dickler, CNNMoney

NEW YORK -- Five years after the housing bubble burst, America's wealthiest families are now losing their homes to foreclosure at a faster rate than the rest of the country -- and many of them are doing so voluntarily.

Over 36,000 homes valued at $1 million or more were foreclosed on -- or at least served with a notice of default -- in 2011, according to data compiled by RealtyTrac, which tracks foreclosures. While that's less than 2 percent of all foreclosures nationwide, it represents a much bigger share of foreclosure activity than in previous years.

"These properties are accounting for a bigger piece of the foreclosure pie," said Daren Blomquist, vice president of RealtyTrac.

Out of all foreclosure activity, the share of foreclosures on properties valued at $1 million or more has risen by 115% since 2007 while the share of multimillion dollar foreclosures -- or homes valued at more than $2 million -- jumped by 273 percent. Meanwhile, the share of foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21 percent.

Until recently, many homeowners at the high end of the housing market were able to postpone the foreclosure process, Blomquist explained. With other assets and alternatives, "they had more financial means to hold out against default."

In addition, lenders are typically more amenable to working with homeowners that have other resources, said Ron Shuffield, president of Esslinger-Wooten-Maxwell, a real-estate firm in Miami where homes priced over $1 million represented 9 percent of all foreclosures last year.

But with a recovery in the housing market still years away, foreclosure has turned out to be a worthwhile option after all. Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a "strategic default." Even though they can afford the monthly mortgage payments, they still decide to walk away from their home because they owe more on the property than it is worth.

See inside 8 multimillion dollar foreclosures

"In the lower-priced houses you'll see more people defaulting because they can't afford the payments and it's a choice between feeding their family and paying the mortgage on a home that's under water," said Stuart Vener, a national real estate and mortgage expert with the Florida-based Wilshire Holding Group.

"In million-dollar homes, you're looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?" he said. In many cases, it often makes more financial sense to walk away.

At least they can take their time packing up all of their belongings. On average, it takes about 348 days for a foreclosure to be completed, Blomquist said. "They may get almost a year of free housing out of the deal."

But don't expect a few depressed mansions to bring down the neighborhood. A single foreclosure in an otherwise wealthy area is unlikely to impact surrounding values, Blomquist said.

"You're not going to see the weeds growing," Vener added. But there will be an opportunity for buyers to snatch up these impressive houses at bargain basement prices, he said, which could provide a much-needed boost to sales overall. "In a good way, this is going to drive turnover," he said.

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Millionaire Foreclosures on the Rise

Median List Price: $186,000
Total Listings: 53,009
Median Age of Inventory: 138 days

Home Price: $4.995 million
Beds/Baths: 6/6
Sq. Ft.: 12,000

Users of Realtor.com searched for homes in Chicago more than any other city in January. With a little over 53,000 homes for sale, the city has ample supply for house hunters. 

Behind this luxury home's brick and limestone exterior, is a whopping 12,000 feet of space. The listing description claims the house offers just the right balance of public and private spaces. 

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Arched doorways and exposed beams infuse the wide halls with an old-world feel. Other details include maple floors, leaded windows and period lighting.  

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The first floor features an expansive recreation room and private gym. Upstairs is the home's "master bath," which comes with a vanity, makeup desk, whirlpool tub and vintage shower.

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Median List Price: $81,700
Total Listings: 22,370
Median Age of Inventory: 70 days

Home Price: $290,000
Beds/Baths: 3/3
Sq. Ft.: 2,800

Speaking volumes to the affordability of Detroit housing, not one of Realtor.com's Detroit listings is priced above $1 million. 

This $290,000 home is high-end as far as the city's market goes. The apartment, which features waterfront views, dates back to Detroit's heyday when the American automobile industry was firing on all cylinders. 

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The expansive living room offers a glimmer of its roots, with its hardwood floors and fireplace. Price per square foot of the dwelling is just $104. 

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Pictured here is the home's elegant dining room. There are virtually no other city markets that'll deliver an apartment interior like this one for such a low price. 

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Median List Price: $320,444
Total Listings: 26,858
Median Age of Inventory: 83 days

Home Price: $10.95 million
Beds/Baths: 6/9
Sq. Ft.: 13,699

Los Angeles' median home price may tower over the national median (which is below $200,000); but in coming in at No. 3 on our list, that apparently hasn't stopped prospective buyers from scouring the city's listings. 

This spanking-new, palatial mansion features floor-to-ceiling windows that display the home's jaw-dropping panoramas for all they're worth. 

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The home's inviting infinity pool perches over the urban sprawl.  

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In addition to otherworldly views, the $10.995 million home features a stark, contemporary interior.

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Median List Price: $221,995
Total Listings: 21,693
Median Age of Inventory: 124 days

Home Price: $4,898,100
Beds/Baths: 4/2
Sq. Ft.: N/A

Philadelphia's median home price hovers above the national median by a considerable margin. The city has one of the highest average inventory ages on our list. That may induce more sellers to cut their prices. 

This apartment building offers some stunning flats that cost nearly $5 million a piece. 

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The expansive interior has a sleek layout along with details that add a dash of swank. 

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Philly's skyline waits outside floor-to-ceiling windows. The upscale apartment has access to an in-house gym and pool.

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Median List Price: $169,500
Total Listings: 17,699
Median Age of Inventory: 69 days

Home Price: $2.75 million
Beds/Baths: 6/8
Sq. Ft.: 6,917

Phoenix-Mesa, bringing cheaper than average homes to the home-buying table, is fifth on our list. Perhaps luring flocks of bargain hunters, the area's homes are selling significantly faster than in most cities. 

This contemporary has a well-landscaped courtyard and guesthouse. The listing description plays up the home's privacy, which makes the home "feel miles away." 

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The home's crowning feature is probably the pool pictured here, which sits between the guesthouse and main house. 

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The stucco home also offers an artist's studio and three-stall barn, along with a pastoral field for horse-riding. 

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Median List Price: $150,000
Total Listings: 48,705
Median Age of Inventory: 91 days

Home Price: $6.75 million
Beds/Baths: 8/12
Sq. Ft.: N/A

Atlanta has also drawn the interest of many prospective buyers, and its affordable median home price -- $150,000 -- may explain why. 

This rustic waterfront mansion represents the pinnacle of luxury in Atlanta real estate. 

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The finely-finished home offers a giant kitchen whose kitchen island, with its eight stools, is so expansive that it seems more of a bar, than actual cooking space. 

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Pictured here is the home's lavish great room. Its arched windows bathe the space in light. With eight bedrooms, the home seems tailor-made for clan getaways. 

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Median List Price: $142,000
Total Listings: 18,827
Median Age of Inventory: 110 days

Home Price: $3,999,999
Beds/Baths: 6/8
Sq. Ft.: 6,763

Florida is one of the states hit hardest by the the housing bust with rampant foreclosures driving down home prices all around the state. So it's no surprise that buyers have the Tampa-St. Petersburg-Clearwater area in their crosshairs. 

This magnificent waterfront manse sits on some prime Tampa real estate. Price per square foot? $591. While that may strike you as exorbitant, keep in mind, pre-meltdown, this place's value surely dwarfed its current price tag. 

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The home is decked out in luxurious upholstery. There are six bedrooms and six bathrooms. 

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The house offers no shortage of windows, keeping the home's lush, tropical setting within reach. 

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Median List Price: $189,900
Total Listings: 16,291
Median Age of Inventory: 94 days

Home Price: $6.495 million
Beds/Baths: 3/5
Sq. Ft.: 5,025

Dallas' median home price hovers around the national median, rendering it a fairly affordable city to your average American. 

This home, however, is not affordable to your average American -- but, hey, it's fun to look at. The contemporary sits on a one-acre lot that stares out at the Dallas skyline. Recently, the home's price was slashed to $6.49 million. 

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The home features an expansive living area with soaring ceilings and floor-to-ceiling windows perfect for sucking in the stunning city sprawl. 

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There's also a fully equipped kitchen that offers your fair share of marble countertops. The home is handicap-outfitted.

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Median List Price: $155,000
Total Listings: 10,857
Median Age of Inventory: 81 days

Home Price: $3.99 million
Beds/Baths: 5/8
Sq. Ft.: 8,676

Another city still reeling from the housing bust, Orlando is attracting many bargain hunters eager to capitalize on low home prices. 

This mansion, constructed in 2009, recently had it's price cut to $3.99 million. It sprawls 8,676 feet, and has an exterior built largely of stone. 

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The interior feels almost regal with its cherry-stained wood paneling, columns and crown molding. The chandeliers don't hurt either. 

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Other highlights beyond its exquisite decor include the home's game room, hot tub and golf course views. 

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Median List Price: $121,000
Total Listings: 21,665
Median Age of Inventory: 105 days

Home Price: $8 million
Beds/Baths: 6/8
Sq. Ft.: 13,489

Las Vegas took one of the biggest shellackings from the bursting of the real estate bubble, with its median home price plunging by more than 60 percent. It would seem that buyers are keen on taking advantage of the rock-bottom prices. 

This massive luxury home almost certainly used to be worth well over $10 million. Now the 13,489-square-foot behemoth is running for $8 million. 

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Interior details include arched doorways, columns and coffered ceilings. 

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