Chicago Home Foreclosures Made Up 70% of Distressed Sales

Distressed sales comprised 36 percent of all home sales in the suburbs of the Chicago metro area and comprised 31 percent of all home sales in the central areas of Chicago last year. The Chicago metro area includes the counties of Kane, Cook, DuPage, Lake, Kendall, Will and McHenry.

According to regional real estate network director Jim Merrion, the percentage of distressed properties increased over the past three years, prompting many large real estate firms to focus a substantial part of their operations on distressed sales.

In the Chicago metro area, which consists of 248 suburban markets, distressed sales made up 50 percent of all house sales in 66 markets, 44 of which are Cook County markets. In Chicago, which has 77 official neighborhoods, distressed sales made up 50 percent of all home sales in 37 neighborhoods.

While Chicago home foreclosures made up 70 percent of all distressed sales in the metro area, short sales accounted for 28 percent and court-ordered sales made up the rest.

Among all the markets studied in the Chicago metro area, Lincoln Park, Winnetka and Kenilworth posted the lowest percentages of distressed sales, which were all lower than 5 percent. The neighborhoods of North Center and Lake View posted distressed rates lower than 6 percent.

According to Merrion, the number of homes that enter a foreclosures list can be reduced if more lenders are willing to carry out short sales. Merrion has observed that many banks take time in approving short sales even though short sale prices are higher than foreclosure sale prices.

In 2009, the Treasury Department issued guidelines to entice lenders to accelerate short sales, but the response of banks to the guidelines is still to be seen.

Meanwhile, the pace of home foreclosures in Illinois stepped up by almost 2 percent in January this year compared to the previous month and by more than 25 percent compared to January 2009.

More than 18,000 homes in Illinois were notified of delinquency or foreclosure, with nearly 6,000 of these homes already taken back by lenders. Since the Chicago metro area dominates the Illinois residential market, as stated by members of the Illinois Association of Realtors, a huge percentage of these were Chicago home foreclosures.

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