Chicago Market: Housing Bust Affects the Wealthy Too
Reuters wrote an article this week entitled, “Wealthy May Be Next in Line in U.S. Home Crisis.”
And wouldn’t you know it- the writer chose Hinsdale, Illinois as an example of how the bust was affecting the wealthy. The article had some good quotes about the Chicago housing market.
About Hinsdale:
“There is a section of the population here that over-extended themselves to buy here and then keep up the facade of wealth,” said Sharon Sodikoff, a broker associate at local real estate agency Prudential Homelife Realty. “In the next year or so they’ll be forced out in dribs and drabs.”
The average sale price in Hinsdale for the 12 months through September 30, 2007 was $1.15 million.
“The next wave of problems will come from prime borrowers who bought too much house or borrowed too much against it,” said Michael van Zalingen, director of home ownership services at Neighbourhood Housing Services of Chicago.
Inventory is rising in Hinsdale. It had risen to 17 months by the end of October 2007 versus only 6 months in January 2006.
What about Chicago, you ask?
“I’ve seen people who bought less than a year ago and have no equity in their homes simply walking away with no regard for the consequences,” said Genie Birch, a real estate agent at Chicago-based Koenig & Strey GMAC who covers the city’s wealthier districts.
Real estate agents say speculative investors who bought to make a profit are also walking away as the rents they charge fall behind the mortgage payments as their adjustable-rate mortgages readjust.
The article states that you won’t see as many foreclosures among the wealthier because they have the ability to call up the lender and make some kind of deal- presumably for a short sale.
“You won’t see many foreclosed homes here because that would involve public embarrassment,” Prudential Homelife Realty’s Sodikoff said. “But they will call their realtor and get them to quietly broker a deal to get out of their homes.”
Oh really? Remember this million dollar Hinsdale foreclosure at 805 W Hickory? I chattered about it in September 2007.
It was originally listed for sale in 2004 for $3.198 million. It went to foreclosure auction with a price of $1.301 million after spending three years on the market. It was sold in foreclosure auction.
Granted, there isn’t a tidal wave of similar foreclosures in Hinsdale or other wealthy communities. But I’ve seen million dollar foreclosures in Wheaton, Burr Ridge and Highland Park in recent weeks (to name a few.)