Even as Denver's overall housing market shows signs of improvement, the number of high-end homes slipping into foreclosure continues to climb.

Last week, 31 homes valued between $500,000 and

$4 million went into foreclosure, including four over

$1 million, said Ron Woodcock, a broker with Re/Max Southeast who tracks foreclosures.

Much of the problem stems from the inability of potential buyers to obtain "jumbo" loans — financing above $417,000.

"Jumbo money has dried up across the country, and that market is going to be a disaster," Woodcock said.

Sales of homes over $1 million plunged 40 percent between 2008 and 2009, said Lon Welsh, managing broker of Your Castle Real Estate, and sales of non-distressed homes declined 46 percent. But foreclosure sales increased 56 percent, from 16 to 25 homes sold, in that time frame.

Short sales were up 433 percent, from three to 16 sales.

"We expect to see that the number of luxury distressed sales will continue to increase dramatically in 2010," Welsh said. "If you are a buyer with a long time horizon, 2010 will be a great time to hunt for deals."

Even homes that aren't in foreclosure are being offered at deep discounts.

Luxury real-estate specialist Edie Marks has twice dropped the price of a Cherry Hills Village estate that's been languishing on the market. The 15,000-square-foot house on 4.7 acres initially was listed at $8 million. Today, it can be had for $3.5 million.

"The people that have money are sitting in a kind of cocoon," Marks said. "They're not making decisions because they're concerned about what's coming down, in terms of taxation and vindictiveness against the wealthy."

The good news is this is a once-in-a-lifetime opportunity for buyers to purchase the home of their dreams at below-

market pricing, said Rollie Jordan, a luxury-real-estate specialist at The Kentwood Co. at Cherry Creek.

"There are some great values out there," said Jordan, whose last three deals have been foreclosures and short sales. "My clients are happy, and I am happy that they were able to get a great buy."

It's also a better deal for banks, said George Leonard, a broker with Your Castle. The property remains occupied, so the bank does not have to worry about maintaining it or keeping it heated.

"Banks are beginning to see that it's cheaper to do a short sale than it is to do a foreclosure," he said. "When a foreclosure happens, the bank loses about 70 percent. If they do a short sale, they only lose 40 percent."

But getting a great deal through a short sale is likely to take some time. It takes an average of three or four months for the bank to approve an offer, said Jon Cole of RealtyTMS, a Boulder company that manages short sales for realty agents.

"It can linger on, depending on how difficult the bank is, how responsive they are and what requirements they're seeking, and how long the buyer is willing to wait," Cole said. "Sometimes, the buyer gives up and moves on to another property."