Market Conditions: Foreclosures Up 84% in Chicago
The Sunday Tribune had some interesting information on Chicago foreclosure rates and existing inventory numbers.
On the foreclosure rates:
Foreclosures in Chicago in July rose by 84 percent over their level in the same month two years ago.
In the 60611 ZIP code on the city’s Near North side, for instance, the number of foreclosures filed has quadrupled, to 25 in July from 6 in the same month two years ago.
During the same time frame, foreclosures in the 60659 ZIP code, which covers North Park and West Ridge, climbed 489 percent, to 53 from 9, according to data from RealtyTrac.
As reported Thursday, the Woodstock Institute, a Chicago-based non-profit that promotes community reinvestment, said in a report that the number of foreclosed properties going to auction in the five-county Chicago area climbed 98 percent between 2006 and 2007, to 13,727, and that it believes the trend is continuing this year.
New laws sprout as homes sit [Chicago Tribune, Aug 24, 2008]
On MLS inventory:
That compares with active MLS listings for nearly 63,000 detached homes and another 39,000 attached (condos, townhouses and duplexes) for just the Chicago area as of July 31, said Alvin “Chip” Wagner III, owner of A.L.Wagner Appraisal Group, Naperville, which tracks MLS numbers.
Trading Places [Chicago Tribune, Aug 24, 2008]
(“The Chicago area” was not defined in the article. I don’t know if that is the 9-county area that the IAR uses for its monthly numbers or a 5-county area.)
On a somewhat unrelated note…IAR just released sales data for July: “In the Chicagoland Primary Metropolitan Statistical Area (PMSA) total home sales (which include single-family and condominiums) were 7,274, down 25.2 percent from 9,730 home sales in July 2007.”
I’ve updated my trend chart: http://blog.lucidrealty.com/chicago_real_estate_statistics/ – it’s the third graphic on the page. The gap has closed a bit but it’s not much of a consolation – except for those of us on the sidelines.
FWIW, just a few additional points that you can look up if you’re interested…
1. for whatever reason, historically summertime is the quiet period when it comes to the national rate for foreclosures, payment delinquencies. This year the delinquency rate has been steady climbing throughout the year.
2. Joblessness in IL is still increasing.
3. It is not impossible that residential housing construction can dry up for years. As an analogy recall that between 1990 and 1998/9, there was no commercial high-rise built downtown due to the 80’s overbuilding.
Yes only “25” foreclosures so quadrupling is a bit of hyperbole though statistically correct. however don’t underestimate the potential for additional forclosures.
natuarlly YMMV.
But how many units total are there in 60611? 25 in foreclosure still doesn’t seem particularly terrifying, and isn’t nearly enough to destroy all the comps throughout the zipcode.
There are apparently 1103 units for sale on the MLS (per Kevin (first) using Jameson’s search). And that 25 is for one month. If the average market time for those 1103 listings is 3-4 months, you have something north of 5% of listings (possibly) being foreclosures (yes, I know that that’s not the normal process for foreclosures, but use this as a jumping off point to think about it).
If 5% of the overall market is offered at distressed prices, it WILL affect similar items for sale at the same time. This is especially true for housing, as it’s not just about what the willing buyer will offer, but what that buyer’s willing lender will finance, which (again) WILL be affected by the pricing of recent comp sales.
This one statistic- a jump of 84% in foreclosures over a two year period- indicates that the bottom is still far away.
While the neighborhood for neighborhood numbers don’t sound “terrifying”, when you consider that they are for ONE MONTH, that’s just staggering.
You never used to hear of ANY foreclosures in zips like 60611, 60610, or 60614. You heard of relatively few foreclosures ANYWHERE prior to this rampage.
Jamie Dimon at JP Morgan Chase confessed that “prime is looking TERRIBLE”.
And jumbo loans are going out at two percentage points more interest than conventional- it will be very difficult to get upper bracket places financed without massive downpayments, as was always the case before credit became so loose in the past few years.
Looks to me like we won’t see bottom till 2011 earliest, and that the mighty will fall the hardest even though they’re the last standing. Look for 50% drops in the prices of upper bracket properties as the already tiny pool of buyers dries up due to much tighter credit and unavailability of financing…..not to mention that many people who found themselves suddenly affluent in 2001-2005 find themselves just as suddenly in steeply reduced circumstances, due to the disappearance of incomes based on high fees and commissions in the FIRE economy.
I’ve seen saying for months that foreclosures are huge – in all neighborhoods. And now the hard data is proving me right.
C’mon, Laura, foreclosures have been artificially depressed from (at least) 2001 through last year. Now that the music has stopped, someone also took away most of the chairs. Of course 7-08 is a LOT worse than 7-07 because last year there was still tons of stupid money available (all too much of it from JPM, getting into jumbos hard in ’07, hence Dimon’s airing of his portfolio’s issues).
And then there is the lag b/t default and foreclosure and the (as we’ve seen here) significant number of properties with lis pendens filed, but no foreclosure. YoY comparisons aren’t going to be comparing apples to apples until at least 1Q09. Yes, it’s an issue (big and growing), but percentage increases over an artificially low base number don’t tell the real story.
And true upper bracket properties are such a tiny sliver of the market as to be unworthy of general discussion. Now, if you’re talking about maroons (not necessarily UC grads) who paid $2MM+ for a 2-floor plus basement house on a 25′ lot, then you’re probably right. But that’s no longer “upper bracket”, just an overpriced chicago home.
You make my points exactly, anon.
We are now only beginning to see the full extent of the massive bezzle that was the real estate market of 2001-06. The dumbest money made its moves into laughably overpriced properties at the peak, just as the wave began to break, which I figure was beginning to happen 2005-2006. That was when I began to see properties in “marginal” areas such as Rogers Park and Edgewater linger on the market for as much as 600 days- a great indicator that the place is overpriced. But there was still a lot of really easy money going around, for I met 3 people who bought ludicrously overpriced little dumps with IO loans. Interest only!!!
…and who acted like I was stone idiot for not jumping to do the same.
Those upper bracket properties may be only a “sliver” of the market, but developers built about 3X as many of them as they could ever get a legitimate market for, and most of the buyers were semi-affluent (at best) buyers who could never, ever have gotten financed for these places in any other period.
Now, delinquencies are higher than ever, which indicates that foreclosures for the next year will be even higher than those we see already. And we are not yet seeing total capitulation on the part of the sellers, despite some truly staggering price drops.
The worst is yet to come.
“The worst is yet to come.”
Yes, but upper bracket homes are not the best example of why. There are very, very few examples of “semi-affluent” people buying (rather than signing a contract and making a deposit) $3mm+ properties with $2.9mm+ loans and almost all of them involve more fraud than your typical no-doc with a severely overstated income.
Just a few years ago a $1,000,000 could buy a pretty sweet property. $1,000,000 today can hardly buy a POS McMansion in a gentrifying neighborhood.
hd:
Serious question–what do you mean by “a few” and what would satisfy you as “pretty sweet”?
I ask b/c I looked at houses a bit under that price (mostly to get a sense of what you got when you went out of our price range) 7-8 years ago (in the city and a couple inner ring suburbs) and was not roundly impressed.
Anon:
I’m just commenting in the general sense. Actually, I was sort of paraphrasing a realtor from an article in the Chicago Trib Magazine a few years back. The quote was something along the lines that a million dollars late last decade would get a buyer into a unique and special property but since prices have risen so dramatically a million dollars gets a buyer a nice tract home. Or something to that effect. I’ve been staring at this glowing screen working since 7:30 a.m. and sometimes I take 5 minute breaks to post a comment here or there.
Thanks. Like I said, serious question, as I think it’s educational to have other perspectives. I didn’t really find the uniqueness, unless “unique” is code for defective in a significant way.
I believe it. I had to drive to WI last weekend, so I took the “scenic” route. The sheer amount of houses I saw for sale along the North Shore was mindboggling, and that was just on Sheridan Road.