Chicago Foreclosure Activity Taking Off Again

RealtyTrac released their January Foreclosure Market Report the other day and on a national basis it shows that foreclosure activity is gradually increasing after a long period of hibernation. The report also shows that foreclosure activity in Florida, Illinois, Indiana and Pennsylvania increased on a year over year basis for the first time in a year. Illinois remains a top 10 foreclosure rate state. When you dig into their Chicago data the trend is even more dramatic as shown in the chart below.
Chicago foreclosure activity
While default activity has remained relatively stable over the last 6 months auction activity is on a tear, rising 284%. Meanwhile, bank repossessions are up 53%. Much ado is made of the year over year changes in foreclosure activity but I just don’t think it’s relevant because there is little evidence that there is a seasonal pattern to the activity.
Anyway, the banks are getting busy in clearing the backlog of the shadow inventory. According to Brandon Moore, CEO of RealtyTrac:

We continue to see signs on a local and regional level that the frozen-up foreclosure process is beginning to thaw.
We expect the pattern of increasing foreclosures to continue in the coming months, especially given the finalized mortgage and foreclosure settlement reached in early February between 49 state attorneys general and five of the nation’s largest lenders. The settlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year. Other roadblocks to foreclosure are still in place at the state level, however, including legislation altering the foreclosure process and lawsuits against lenders. We expect to see somewhat uneven trends in local and regional foreclosure numbers going forward as lenders work through these additional legislative and legal roadblocks.

As usual the government continues to stand in the way of market forces trying to resolve market problems.
If you think that this new wave of foreclosures in Chicago is going to spell opportunity for you as a buyer keep in mind that the vast majority of these homes are below $200,000. The only reason I point that out is that some buyers in the $700,000+ range expect to find bargains all over the place and it’s just not happening very often.
If you are interested we maintain a page of  on our Web site that contains this foreclosure data along with numerous other Chicago real estate market data all in one place.

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