More High End Homes In the Bay Area Going Into Default

An article in the San Francisco Chronicle reported results of their recent analysis of the Bay Area housing market. It's 2 years since the flood of lower priced homes went into default, and now there is evidence of distress hitting the upper priced homes, especially the over one million dollar range.

From 2010 to 2012, a large amount of risky option ARMs will be reset, and it doesn't look like lenders will be jumping at the chance to offer refinancing. And the government programs are generally aimed at the lower income population buying lower priced homes.

There aren't many foreclosures in the higher priced market in the Bay Area as of yet, but if they increase, other high priced home values will go down, causing more to be upside down, further contributing to the vicious cycle.

November 2009