Chicago Foreclosures Hinder Market Rebound

Real Estate Appraiser with PahRoo Appraisal & Consultancy



If you think the Chicago real estate market is completely on its way back, here is a little extra dose of reality that may alter that line of thinking.  Last year in the Chicagoland area, there were over 35,000 foreclosures that sold at auction.  In Illinois, once a property goes to auction, there are really only 2 results from the auction sale: the property is sold back to the bank which owned the mortgage, or someone, i.e. an investor, outbids the bank and buys the property for cash. 

According to Woodstock Institute, foreclosure auctions were expected to increase in numbers due to the lengthy delay on many cases in the wrongful foreclosure category.   2011 saw 20,281 auctioned homes and 2012 saw 35,244 homes; 2013 is forecasted to exceed 2012.

"There's going to be pain in the housing market in the short term.  There's still high levels of filings. Five years into it, there is still work to be done to help people save their homes," said Katie Buitrago, senior policy and communications associate at Woodstock.

The Woodstock Institute is a Chicago-based research and public policy firm.  On Wednesday, they will be publishing their official 2012 foreclosure activity report.  In all of Chicago and the surrounding areas, there was not one area that did not exhibit double digit foreclosures.  Additionally, in the northern 6 counties of Illinois, 91.3% of the homes that sold at auction were purchased by the banks who initiated the foreclosure proceedings.  On a related note, pre-foreclosure activity resulted in over 66,000 first notices going out.

Another unflattering statistic, according to CoreLogic, is that Illinois is 1 of only 4 states to see depreciation in home prices for 2012.

Katie Buitrago says the surge in auctions "is a mixed blessing," She also commented that, "We've been having a lot of trouble in the region with vacant properties that have been languishing for years. The longer they're vacant, the more likely they are to be a destabilizing force in their communities." 

There is good news in the Chicago-area housing market because many neighborhoods are experiencing an increase in buyer activity and a decrease in available inventory.  Unfortunately, not all neighborhoods are rebounding equally and it is creating a gap between the 'good' market areas and the 'bad' market areas.  Therefore, even as the market improves in Chicago and Northern Illinois, not all property owners are going to see the benefit because they are negatively impacted by the increase in foreclosure activity.  The only potential positive is that there has been a large increase in the number of foreclosure investors in these areas. 

Cherry Picker Investments is a firm that solely operates in this “little” niche of the industry.  The company supports and represents seasoned real estate investors at foreclosure auctions in addition to their typical strategy of working with Realtors and buying direct from property owners.  Cook County is the busiest auction arena, but the surrounding counties are also full of opportunity as well for experienced real estate investors.

“The reason why most people don’t take advantage of the foreclosure auctions is because the process can is overwhelming for beginners, not to mention it’s a numbers game.  Additionally, most investors don’t have the time to go to multiple auctions every day, but Cherry Picker Investments does,” said Benjamin De Los Monteros.  Given the emotional process of tracking and bidding at multiple auctions, Cherry Picker Investments manages the ‘numbers game’ for clients and coordinates representation at each and every auction to streamline the buying process for investor clients to help them maximize their profitable and free up their time to address higher profit margin activities.  If it’s a “bargain” deal you are looking for, whether you plan to live in the property, fix it and flip it, rent it out, or just buy and hold, auctions are your best bet.  Cherry Picker Investments has over 20 years of auction buying experience, and prides itself in being one of the key contributors in reducing the shadow inventory in Illinois.


Michael Hobbs, President, PahRoo Appraisal & Consultancy


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
ActiveRain Community
Illinois Cook County Chicago
Foreclosure Talk
Posts to Localism
Local Expert
HyperLocal Neighborhood and Community Posts
housing inventory
real estate

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Michael Hobbs

Ask me a question
Spam prevention