Another difficult four years predicts relator groups
San Francisco, CA -- (SBWIRE) -- 10/03/2012 -- Illinois’ dubious honor of the most foreclosures in the U.S. last month has lured in investors like WayPoint Real Estate Group LLC, who have been securing home prices at absurdly low rates.
Illinois saw 17,781 homes default to foreclosure in August. That number is up 42% from the year prior. It also marks the eighth straight month of rising foreclosures. Due to the sudden rise, Illinois took the nation’s top spot for the first time since 2005.
“More Illinois homeowners are entering the foreclosure process, and more are losing their homes,” said Daren Blomquist, vice president at Irvine, California-based RealtyTrac. “It’s going to get worse before it gets better.”
Despite the U.S. housing market making a worthwhile rebound overall, Illinois is certainly not following suit. Foreclosures are slowing across the country, increasing 1% in August. The national rate for foreclosure was one in 681 households. That is less than half of Illinois’ rate.
Part of the lingering problem for Illinois is the unemployment rate, which rose to 8.9% from 8.7% in July. Illinois employment is down nearly 300,000 from the nearly 6 million in 2008. The downsizing of manufacturing and public-sector jobs is the main culprit, says Bob Tomarelli, U.S. Economist at forecasting firm HIS Global Insight Inc.
It is being forecast that Illinois could break the record set in October 2009 for foreclosures, as lenders release a backlog of repossessed properties, according to Blomquist.
Since 2007, residential property values in the Chicago area have declined each month, according to S&P/Case-Shiller home-price index.
“Properties in the pipeline create uncertainty in the market and negatively affect buyer confidence,” Smith said in a telephone interview. “It’s preventing a floor from stabilizing prices in the Chicago region.”
One of the largest logistical problems for Illinois recovery is that it does not appeal to international and retired buyers. Sun Belt states like Florida and Arizona have a much easier time keeping residential prices afloat due to such interest.
Tomarelli states that it is unlikely to see a return to prominence until 2016. “There are many more buyers interested in Florida housing stock and the climate there,” said RealtyTrac’s Blomquist.
Chicago foreclosures in the second quarter were discounted at 46% compared to non-foreclosures. Chicago’s south side neighborhoods, such as West Englewood, properties have sold for less than $20,000 cash. Deals in those areas accounted for a fifth of all distressed sales last year, further swaying Chicago’s value to the anemic side.
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