Glutwatch: Trouble at the top

If you're among those who think that subprime loans are bankrupting low-end buyers who could never afford a home to begin with, you're in for a surprise. According to new data from Zillow, the top tier of the market is where the problem is. And it's going from bad to worse.

In 2005, before home prices began their speedy decline, the bottom third of the housing market made up more than 60 percent of all foreclosures. Thanks to the first-time buyer credit, the percentage of foreclosures in the bottom third of the market fell to roughly 35 percent. Meanwhile, the upper third of the market effectively doubled from 16 percent to 30 percent -- and there are indications it may go even higher.

The longer unemployment remains high, the more middle- and upper-class families will exhaust their savings and decide to go into foreclosure "strategically" rather than lose everything to the bank. Banks have made it so difficult (if not impossible) to get jumbo mortgages right now, foreclosure is looking like an increasingly attractive proposition.

If high-end owners in Las Vegas or Phoenix etc. think there's no hope of selling or refinancing, they could opt for foreclosure now rather than later. Might as well start the clock on that seven years to clean up your credit!

Who knows, they might even find a unique rental opportunity like this 10,000 square-foot mansion near Seattle, recently turned into $650 a month rental units for 10 lucky souls. If high-end foreclosures keep growing, today's apartment glut may become tomorrow's new rental wave.