Chicago foreclosure rate twice the national average
Originally published in Crain's Chicago Business on Tuesday, Oct. 24By Lorene Yue
The number of Chicago-area homes entering some stage of the foreclosure process increased in September, keeping the metropolitan area’s rate at more than twice that of the nation.
A total of 6,177 homes in the eight-county metro area were in the foreclosure process last month, a nearly 5% increase from August, according to a report released by RealtyTrac Inc., which tracks foreclosures. The Chicago area represents the bulk of the 7,431 Illinois homes at some stage of foreclosure.
“Chicago foreclosure activity has increased more than 60% over the last months, boosting the foreclosure rate to an unexpectedly elevated level given the area’s low unemployment rate and above-average home price appreciation,” James Saccacio, CEO of RealtyTrac, said in a statement.
In the Chicago metro area, one household in every 471 are in some stage of foreclosure. That compares with one in 658 households for Illinois and one in 1,030 for the nation.
The rate for the Chicago area, based on the number of homes in the foreclosure process compared to the total number of homes, was also the second-highest among the nation’s top five metro areas, according to RealtyTrac. Only Dallas had a higher rate than metro Chicago, while Los Angeles, Philadelphia and New York all were lower.
Housing experts are concerned about the increase and don’t anticipate a slowdown for the remainder of the year.
“I wouldn’t be surprised if (foreclosure numbers) go higher than that,” said David Rose, director of research for the consumer advocacy group National Training and Information Center in Chicago. “If the second half of the year is anything like the first half, we are going to see a jump.” Mr. Rose’s organization tracked 4,695 foreclosures started in Chicago for the first six months of the year. Last year, the city had 7,575 for the entire year.
He said the housing boom of the late 1990s and early 2000s, when low interest rates and easier access to credit helped stoke a hot home-buying trend, is proving to be problematic for consumers who find themselves financially stretched in the economic slowdown.
“A lot of people were getting into houses they couldn’t afford with teaser rates,” he said. “Then the loans reset and they get into trouble.”
The national trend doesn't look any better, said Rick Sharga, a vice-president at RealtyTrac.
"Over a trillion dollars is going to readjust in the next 15 months," he said. "We had almost 850,000 foreclosures last year and we are at 913,000 through September."
Mr. Sharga predicted that national foreclosures could hits 1.2 million to 1.3 million by the end of the year.
Cook County homes represented the bulk of September foreclosure activity for the metro area, with 4,401 homes entering some stage of the process. September’s figures were up nearly 3% from the previous month and the rate of filings was more than twice the national average.
DuPage County was the only county in the metro area to experience a decline in foreclosure filings. The 369 properties entering any stage of the foreclosure process in September marked an 11% decrease from August.
More Will and Kane county homeowners were in the foreclosure process in September than August, according to RealtyTrac. Will County’s figures were up 17% from the previous month and at rate of nearly four times the national average. Kane County’s numbers were up 16% and at a rate that was nearly three times the national average.
“We’ve got some rough times to look at in Chicago and we will see pockets of housing where the prices are not rising,” Mr. Rose said.
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