Chicago Foreclosure Activity: No Signs Of The Feared Surge

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.

Chicago foreclosure activity
After a dramatic plunge following the pandemic foreclosure moratorium Chicago foreclosure activity has just now begun to resurge now that the moratorium has ended.

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.
US delinquency rate over time
The nation’s mortgage delinquency rate continues to improve and seems to have recovered from the pandemic, hitting new lows since the data has been tracked.

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.

Chicago homes in foreclosure
The number of homes in foreclosure in Chicago declined with the moratorium during the pandemic and doesn’t seem to be rising much since.

#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.

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