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It seems that even pop stars aren’t immune from the foreclosure crisis sweeping the nation. For the second time in the past two weeks, a property owned by the King of Pop himself, Michael Jackson, has fallen into foreclosure. The famous Neverland Ranch, located in Los Olivos, California, which has been in default for some time, has been scheduled for foreclosure sale on March 19 at 1pm at the Santa Barbara County courthouse.
The opening bid on the sprawling property that spans nearly 3,000 acres is reported to be $20 million, and the auction is expected to attract some potential buyers due to the high profile reputation of its former owner.
While it may seem ridiculous that someone with such an international reputation for being incredibly wealthy would not be able to avoid foreclosure, it points to a growing trend in the foreclosure market. More and more often, regional markets around the country are seeing high-end, luxury properties go into foreclosure. While Jackson’s Neverland ranch is an extreme example, we are seeing high end investors simply allowing their properties to go into foreclosure. Many speculate that the slumping real estate market has led to many owners being unable to sell off their properties, and rather than pay sky high mortgage payments until the market turns around, it may actually be more cost effective in many cases to let these properties go into foreclosure. With property values so low, there’s no guarantee that the property will be worth what the buyer paid for it anytime soon, so foreclosed homes may simply be easier and more affordable in the end.
The same is occurring in many areas that have seem heavy, high-end development in recent years. In fact, states with some of the highest foreclosure rates, such as Colorado, Florida and California all have newly built, luxury homes making up a great deal of their foreclosure inventories. In Colorado, buyers and investors are finding many of the mountain resort development homes that have been built in the past decade slipping into foreclosure due to their sky high initially inflated sale values and the extreme drop off in property values in subsequent years.
Much of the same sort of development homes with inflated property values are now entering the bank foreclosure market in Florida’s southern Atlantic coastal region, as well as many portions of California’s wine country, where Jackson’s property is located.
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