Bank Foreclosure Homes Rising in High-End SF Bay Areas

Bank foreclosure homes are rising in number in high-end neighborhoods in the San Francisco Bay Area, based on an analysis of foreclosure data by the Chronicle.

According to the study, the number of high-end houses in foreclosure in upscale neighborhoods such as Greenbrae, Los Altos and Alamo in the 9-month period ended September rose by around 200 percent compared to the same nine-month period last year. In these neighborhoods, the median home price exceeds $1 million.

Foreclosures in mid-scale neighborhoods such as Los Gatos, Walnut Creek and Campbell are also rising. In these areas, the median price hovers around $500,000.

Housing analysts said that while the foreclosure numbers in high-end communities are not as high as those in lower-cost communities, the significant increase in the pace of foreclosures in high-cost areas is alarming.

In Saratoga, where homes are being listed at the median price of $1.34 million, a total of 101 notices of defaults were filed in the first three quarters of this year, marking an increase of 43 percent from the same 9-month period in 2008 and representing a default rate of eight notices for every 1,000 houses. Based on an analysis of past records, more than 50 percent of homes notified of default ultimately became bank foreclosure homes.

The pace of foreclosures is even higher in the suburban areas of San Francisco such as zip code 94531 in Antioch, which is among the most foreclosure-clobbered areas in the area. During the first 9 months, homeowners in the area received 1,123 notices of default, representing 90 residential units in foreclosure for every 1,000 houses. The median home sales price in the area is $231,090.

All in all, 17 percent of San Francisco area default notices during the first three quarters were in neighborhoods where the median home price exceeds $500,000, a substantial increase from a little over 12 percent in 2008.

Peter Schiff, head of Euro Pacific Capital, said that a lot of California residents who own homes worth $1 to $3 million purchased larger and costlier houses than they needed. He added that many of them made their purchases partly for investment, but they are now being overwhelmed by the depression in prices.

According to housing analysts, many affluent buyers may have accumulated higher home equities, but the resetting of their adjustable mortgage loans and their inability to obtain jumbo loans may have pushed them to let their properties turn into bank foreclosure homes.