Chicago Foreclosures for Sale Pull Down House Prices

by Donald Hanz on cities

Chicago foreclosures for sale pulled down home prices during the three-month period ended September 30, although total sales of previously owned homes increased by 2.4 percent, according to the Illinois Association of Realtors.

A total of 21,298 single-family houses and condo units in the Chicago metro area were sold during the quarter, with the sales price median dropping to $205,000, a decrease of more than 16 percent from the $244,900 median in the July-September quarter last year.

However, within the city of Chicago, total house sales dropped in the July-September quarter to 5,821 units, a decrease of almost 5 percent. The sales price median also dropped sharply by nearly 21 percent to $230,000, compared to last year’s third quarter.

The drop in total house sales in the city of Chicago was caused largely by a drop in sales of condo units, falling by nearly 17 percent to 3,532 condos. Sales of condo units also fell during the same quarter last year by 27 percent. The sales median for all types of homes within the city was $279,000.

In contrast, sales of single-family houses within the city increased to 2,289 units, a jump of more than 22 percent, but the depressed prices of Chicago foreclosures for sale pulled down the sales price median to $154,900, a drop of 24.4 percent.

Foreclosure postings in the Chicago metro area that includes Naperville and Joliet rose by almost 7 percent from the previous quarter and by 28.5 percent from last year’s third quarter to a total of 33,065 filings. One out of every 113 residential units in the metro area got a foreclosure filing during the quarter.

According to a real estate research company, negative equity drove a lot of mortgage borrowers in the Chicago metro area into foreclosure. The firm reported that almost one in every 5 homeowners in Illinois was underwater in September, equivalent to 410,000 mortgage borrowers or slightly more than 18 percent of all homeowners with home loans throughout the state.

The report also showed that in addition to the 18.4 percent underwater borrowers, another 5 percent of homeowners in the state had equity of less than five percent and are at risk of getting underwater.

Analysts also reported that most underwater borrowers in Illinois took out home loans within the years 2005 to 2008, chose adjustable-rate loans and purchased less costly houses.

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