RealtyTrac just released their April foreclosure market data but they did not release their normal foreclosure market report. Instead they released a Q2 2016 U.S. Residential Property and Zombie Foreclosure Report which I will discuss later.
I used their foreclosure data to update my Chicago foreclosure activity graphs below. Overall activity has pretty much flattened for several months now except for the normal volatility. Yes, overall activity is still down over last year like it has been for 42 out of the previous 43 months and it is down for each of the 3 metrics that RealtyTrac tracks.
However, if you look closely at the graph below you will see that defaults are actually rising recently. April was the third month with an increase over the previous month. Rising defaults is not a good thing because they are the first stage of the foreclosure process and their decline has been a bright spot in the housing recovery. But it’s too soon to hit the panic button. It’s a small increase and it’s over a short time period.
Chicago Shadow Inventory
As for Chicago homes in the foreclosure pipeline – the shadow inventory – it is still pretty flat as you can see in the graph below. However, the level did drop in April but no lower than it has been in recent months.
I mentioned RealtyTrac’s Zombie Foreclosure report earlier. Zombie foreclosures are basically properties in the foreclosure process that are vacant and often neglected by banks. It’s not clear to me why people move out of these properties, unless they become unlivable, since they can essentially stay there for free until someone evicts them. And it can take 2 years for an eviction to come through in Illinois. However, it’s possible that the notion of being evicted is just too troubling for many people.
Anyway, in this report both the state of Illinois and the city of Chicago earn distinctions for having a lot of zombie foreclosures. It’s based on the absolute number so highly populated areas have an advantage in earning this honor. Illinois has 1074 and Chicago has 857 so Chicago is clearly the major contributor to Illinois’ success in the rankings.
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut 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.