A lot of people have been afraid that once the foreclosure moratorium was lifted we would see a huge surge in foreclosures. However, the April foreclosure market report released last week by ATTOM seems to confirm that that’s not likely to happen. That report actually showed an 8% decline in activity from March but that was driven mostly by a decline in foreclosure completions. The developing pattern seems to be that foreclosures may start but never complete. Rick Sharga, executive Vice President of market intelligence for ATTOM, provided an explanation:
The extreme difference between foreclosure starts and foreclosure completions in April might be the beginning of a trend. Record levels of homeowner equity should provide financially distressed homeowners the opportunity to sell their homes prior to a foreclosure auction, meaning we should continue to see fewer foreclosure completions. While it may take several months to determine if this is actually what’s happening, it seems like a real possibility in today’s low supply/high demand housing market.
That has been the argument against a surge in foreclosures.
At the local level Illinois had the highest foreclosure rate among states and Chicago had the second highest foreclosure rate among major metropolitan areas. However, check out my graph below and you’ll see that Chicago foreclosure activity declined slightly last month and it remains at a level consistent with pre-pandemic levels.
Mortgage delinquencies should be a pretty good leading indicator of foreclosures and they keep hitting new lows. The graph below comes from Black Knight’s March Mortgage Monitor Report which shows quite dramatically how delinquencies just hit a record low over at least a 22 year period. It’s as if the pandemic never happened.
Chicago Shadow Inventory
However, we are seeing a gradual uptick in the number of Chicago homes in foreclosure as you can see in the graph below. That’s been the trend now for 10 consecutive months but it’s very gradual. It’s not like we are going to see 5,000 homes again any time soon.
#Foreclosures #ChicagoForeclosures #Coronavirus
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.