Rockford Foreclosures Drove Down Home Prices by 43 Percent

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Rockford foreclosures drove down home prices by up to 43 percent in 2009 as job losses in the area continued to push more homes into foreclosure.

There were more unemployed people in Rockford than any other city in Illinois in 2009. The jobless rate hit 16 percent in December, far above the nationwide rate of 10 percent and the 10.6-percent jobless rate of Chicago.

According to data from Rockford Area Realtors, foreclosure properties for sale drove home prices in the city’s 61104 zip code to fall in 2009 by 43.3 percent, and in 12 zip codes in the Rock River Valley, median prices fell by over 20 percent. The deepest plunge was in Leaf River, where home prices fell by 43.4 percent.

Realtors also said that despite the plunge in prices, home sales were slow in the first half of 2009. Sales only showed improvement in the second half when a surge of first time home buyers took advantage of the federal tax credit, pushing sales up by 2.6 percent compared to 2008.

According to Jeffrey Hewings, head of the Illinois Regional Economics Applications Laboratory, the jump in sales in the second half of last year was expected to improve home prices, but the rise in Rockford foreclosures put a downward pressure on prices.

In 2009, more than 3,600 foreclosures were posted in the city, representing 2.52 percent of all households and marking a 16.2-percent increase from foreclosure filings in 2008. Rockford ranked 53rd in a listing of the 203 most foreclosure-battered metropolitan areas. The Chicago metro area, which ranked 38th, was the only Illinois area that ranked higher than Rockford.

Hewings believes that there are a lot of potential sellers in Rockford and in other parts of Rock River Valley, but they are waiting for home prices to improve. The problem is, according to realtors, when prices rise, properties tend to stay longer on real estate listings.

In the early part of 2009, as Illinois foreclosures continued to overwhelm the market, it took about one year to a year-and-a-half to sell a home statewide, a bleak comparison to the two to three months needed to sell a home in 2008. In the latter part, the situation has improved to about 9 months.

According to Rockford realtors, the $6,500 federal tax credit could entice more move-up buyers to make their purchase this year. Additionally, Hewings said that Rockford foreclosures will rise this year, hindering hopes of home price appreciation.

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