Chicago Foreclosure Activity Skyrockets – If You Believe The Data

The most recent data from ATTOM Data Solutions’ October 2021 Foreclosure Market Report shows that foreclosure activity for the nation is up only 5% from the previous month but up 76% from last year. Of course, it’s easy to be up 76% from a year when there was a foreclosure moratorium in place that basically stopped foreclosure activity in its tracks.
As Rick Sharga, executive vice president at RealtyTrac, an ATTOM company, says:

As expected, now that the moratorium has been over for three months, foreclosure activity continues to increase. But it’s increasing at a slower rate, and it appears that most of the activity is primarily on vacant and abandoned properties, or loans that were in foreclosure prior to the pandemic.
Most foreclosure activity for the next few months is likely to be foreclosure starts since virtually nothing entered the foreclosure process during the past year. The ratio of foreclosure starts to foreclosure completions will normalize over time as we get back to normal levels of activity.

This report goes on to point out that Illinois has the highest foreclosure rate in the country and the Chicago metro area has one of the 5 highest metro foreclosure rates as well.
What’s really interesting – odd actually – is that there was a huge spike in the October foreclosure activity for Chicago, raising it back to pre-pandemic levels. As reflected in the graph below, the biggest contributor was foreclosures going to auction which hit the highest level in 5 years.
When I see a spike in this data of that magnitude I’m always suspicious of whether or not it’s real. In the past it’s usually been a one time anomaly that disappears without fanfare. So it will be interesting to see if it persists next month.

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.

The good news is that delinquencies continue to fall according to Black Knight’s September 2021 mortgage data. As shown in the graph below we are now below 4.0% and getting close to pre-pandemic levels. This fact, together with the fact that home values are at all time highs, suggests that we won’t see a huge surge in foreclosures for the nation as a whole.
Mortgage delinquency rate
The nation’s mortgage delinquency rate continues to improve, though it remains higher than it was pre-pandemic.

Chicago Shadow Inventory

With the recent uptick in foreclosure activity it should be no surprise that the number of Chicago homes in the foreclosure process has been slowly drifting up lately. A 114 unit increase in October made it the 4th consecutive month with an increase.

Chicago homes in foreclosure
The number of homes in foreclosure in Chicago declined with the moratorium during the pandemic but may be on the rise now.

#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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