Chicago Foreclosure Activity Returning To Pre-Pandemic Levels

ATTOM Data Solutions came out with their March and Q1 Foreclosure Market Report on Thursday. The headline from that report sounds scarier than it really is. All that it boils down to is that foreclosure activity is gradually returning to pre-pandemic levels now that the foreclosure moratorium has ended. The month over month and year over year percentage increases are rather meaningless, given how artificially depressed activity was. However, it’s still a little more complicated than that because the forbearance programs continue and that may be depressing foreclosures – but more on this later.

US Foreclosure activity
Foreclosure activity is gradually increasing and likely to return to the pre-pandemic trend line

As Rick Sharga, executive vice president of market intelligence for ATTOM, pointed out “even with the large year-over-year increase in foreclosure starts and bank repossessions, foreclosure activity is still only running at about 57% of where it was in Q1 2020, the last quarter before the government enacted consumer protection programs due to the pandemic.”
Of course it’s always entertaining to see just how long it takes to complete a foreclosure – and it’s still a long time – 2 1/2 years! But it varies dramatically by state, depending upon local laws. So it only takes 133 days on average in Montana while it takes 2578 days in Hawaii. So you can basically live free in your house for around 7 years in Hawaii before you get kicked out.
Average days to complete a foreclosure
It still takes about 2 1/2 years to complete a foreclosure

As for Chicago, yeah, foreclosure activity ticked way up again but if you look at the graph below closely you’ll see that the current level is no worse than it was around February 2020 before that nasty Covid hit us. Chicago currently has the 6th highest foreclosure rate among major metro areas while Illinois had the highest rate among states.
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.

So the question that has been floating around is how high will foreclosures go now that the foreclosure moratorium has ended and is no longer keeping a lid on foreclosures? I like to look at delinquencies as some indication of what the future holds for foreclosures. So check out the graph below from Black Knight’s February Mortgage Monitor Report. It shows how the delinquency rate has recovered to almost historically low levels, though it ticked up slightly in February.
US delinquency rate
The nation’s mortgage delinquency rate continues to improve and seems to have recovered from the pandemic

But what about those forbearance programs? Aren’t those just delaying the inevitable for hundreds of thousands of past due homeowners? Well, I checked with Black Knight and they confirmed that, although forbearance is technically not counted as delinquent, it is included in their delinquency numbers which look pretty good. So this is not the ticking time bomb that some suspect.

Chicago Shadow Inventory

The number of Chicago homes that are in some stage of foreclosure has been very modestly ticking up for about 8 months. March had a 91 unit increase but, as you can see in the graph below, it’s not making a dramatic impact.

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 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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