New foreclosures drop to lowest levels since start of the housing crisis

Completed foreclosure auctions remain near record-high levels, new data from Woodstock Institute show

CHICAGO—New foreclosure filings in the Chicago six county region dropped by more than a third from the first half of 2012 to the first half of 2013, new data from Woodstock Institute show. Completed foreclosure auctions continue at a persistently high rate, however, contributing to the region’s vacant property inventory.

 

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“While the decline in new foreclosure filings could indicate good news for the Chicago region housing market, it’s  too soon to know for sure,” said Spencer Cowan, vice president of research at Woodstock Institute. “Improvements in the Chicago real estate market, such as increases in home prices in some areas, may have encouraged servicers to pursue short sales or other alternatives to foreclosure. The decline in filings may also be related to compliance reviews for the National Mortgage Foreclosure Settlement.  An Illinois state law requiring increased fees on foreclosure filings that took effect in June may help to keep the number of new filings down in the coming months.”

“The continued high levels of completed foreclosure auctions, however, suggest that the Chicago housing market still has a long way to go towards recovery,” Cowan noted. “These auctions often translate into more vacant properties that pose significant long-term challenges to neighborhoods, especially communities of color and low-wealth communities that have been and still are most negatively affected by the foreclosure crisis.”

 The data on foreclosure filings and auctions in the first half of 2013 show that:

New foreclosure filings in the Chicago area fell to the lowest level since the second half of 2007. Foreclosure filings in the Chicago six county region, which includes Cook, DuPage, Kane, Lake, McHenry, and Will Counties, fell by 36.1 percent from 34,978 filings in the first half of 2012 to 22,342 filings in the first half of 2013.

  • Sub-regions with particularly large declines in the number of new foreclosure filings include West Cook County (down 44.9 percent from the first half of 2012 to the first half of 2013), Cook County (down 40 percent), and Kane County (down 37 percent).  Will County experienced the smallest decline in filings, dropping just 5.1 percent over the same time period last year.
  • Foreclosure filings fell in the City of Chicago by 39.3 percent from 9,922 filings in the first half of 2012 to 6,021 filings in the first half of 2013. Out of 77 community areas, 76 experienced declines in foreclosure filings over the same time period. Community areas with large declines in foreclosure filings include Logan Square (down 58.4 percent), the Near South Side (down 55.9 percent), and Woodlawn (down 30.2 percent).
  • Suburban municipalities with notable decreases in foreclosure filings from the first half of 2012 to the first half of 2013 include Elmwood Park (down 61.5 percent), Downers Grove (down 55 percent), and Skokie (down 51.3 percent).

Completed foreclosure auctions continue at high levels. In the Chicago six county region, completed foreclosure auctions fell by only 6.3 percent from 17,432 in the first half of 2012 to 16,332 in the first half of 2013.

  • Foreclosure auctions remained relatively flat in South Cook County (up 7 percent from the first half of 2012 to the first half of 2013), Southwest Cook County (up 0.1 percent), and Lake County (down 3.7 percent). Sub-regions that experienced the largest declines in completed foreclosure auctions include  Will County (down 22.9 percent), McHenry County (down 19.3 percent) and West Cook County (down 13.5 percent)
  • In the City of Chicago, foreclosure auctions fell by just 2 percent from 4,841 in the first half of 2012 to 4,738 in the first half of 2013. Community areas with significant increases include Roseland (up 31.5 percent  over the same time period) and Norwood Park (up 34.7 percent), while community areas that experienced large declines include Irving Park and Albany Park (both down by 23.9 percent)
  • Suburban municipalities that experienced large increases in completed auctions from the first half of 2012 to the first half of 2013 include Harvey (up 56.3 percent), South Elgin (up 41.2 percent), and Rolling Meadows (up 38.9 percent). Large declines in foreclosure auctions were observed in Joliet (down 38.1 percent), Romeoville (down 35.6 percent), and Bolingbrook (down 19.7 percent).

Foreclosure auctions are often concentrated in areas with high levels of long-term vacant homes. Neighborhoods with a higher rate of foreclosure auctions per 1,000 mortgageable properties in the first half of 2013 frequently have higher percentages of properties that were vacant for two years or more as well (see maps below).

  • Of the residential addresses in Washington Park, 9.8 percent—the second-highest rate in the City of Chicago—have been vacant for two years or more as of the end of 2012. Washington Park also has the highest rate of foreclosure auctions in the City, with more than 24 housing units per 1,000 mortgageable properties going to auction in the first half of 2013.
  • In Woodlawn, 8 percent of residential addresses have been vacant for two years or more as of the end of 2012, the fifth-highest rate in the City of Chicago. Nearly 19 housing units per 1,000 mortgageable properties were sold at auction in Woodlawn in the first half of 2013, which is the third-highest rate in the City.

  
Click the images for full size maps.

The percent of foreclosure auctions that became bank-owned fell slightly. The share of completed auctions that became real-estate-owned, or REO, dropped by 3.7 percentage points from the first half of 2012 (91.3 percent REO) to the first half of 2013 (87.6 percent REO). This decline may be a result of recovering markets in parts of the region that make some foreclosed properties a better investment for third-party buyers.

For more information, please contact Spencer Cowan at scowan@woodstockinst.org or 312-368-0310. 

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