NAPA — Buyers last week of a Spanish-style, 3,220-square-foot house on a cul-de-sac here got a bargain: $1 million for a hilltop home in Northern California's wine country, with views to San Francisco in the distance.
Two years ago, the same property sold for $1.4 million. But after the lender foreclosed on the property, the home was deeply discounted. Real estate agent Michael Snider, who handled the sale, thinks more such sales are on the way.
"It's just beginning," Snider said.
The wealthy may be able to hold off foreclosure longer than others, but eventually those with debt they can't handle will be foreclosed on, he said.
As foreclosures multiply across California, they are spreading from the vast tracts of new houses in the deserts to luxurious homes in picturesque Napa Valley.
Napa County saw 112 homes repossessed in the first quarter, up from 23 a year earlier, according to DataQuick Information Systems. Most of those foreclosures have been in lower-priced areas, where new-home construction and sub-prime lending were widespread during the housing boom.
But the top end is now starting to tumble.
The house Snider just sold is next to two other distressed properties. One house across the street is being offered as a short sale (that is, a sale for less than the amount of the mortgage) and another property for sale a few doors down was abandoned by its developer before construction was complete.
Elsewhere in Napa, a 5,676-square-foot Mediterranean villa on a 35-acre lot was recently foreclosed on. It's now on the market for $5.255 million.
Seven other houses in the city worth more than $1 million each are in default or have been foreclosed on, according to ForeclosureRadar, a company that sells default data.
Snider said he saw some of his well-to-do clients running out of time. "They're just pushing aside their mortgage payments, holding default off," he said, even using credit cards to make mortgage payments.
Those options will run out over the next few months, Snider predicts, pushing more hilltop mansions over the financial edge.
"That will be the next phase," he said.