In general, sales of foreclosed homes in the Chicago area have fallen this year, according to a recent report from Crain’s Chicago Business. However, sales of foreclosures “at the high end of the market” have remained quite steady. Do trends in high-end real estate and foreclosure sales reflect on the city generally? Or do niche markets looks more like anomalies when we get an image of the big picture of foreclosure sales in Illinois?
More Buyers in the High-Value Marketplace
According to the article, between January 1st and May 1st of this year, 67 properties in the Chicago area sold for more than $500,000. During the same period in 2014, 66 homes sold for $500,000 or more. In other words, houses in foreclosure with price tags of more than half a million dollars are selling at a steady pace. For buyers looking at high-end homes, “they know a foreclosure lets them into the luxury market at a lower cost.”
For example, Crain’s featured one couple’s story about shopping for houses in Highland Park. They planned to spend in the range of $750,000, but they realized that many of the homes they were looking at in the area were selling for around $1.2 million—a price far exceeding their budget. However, they happened upon a 5-bedroom home listed for $732,000. Why was the asking price so much lower than comparable homes? The 5-bedroom house was a foreclosure. The couple ended up paying $700,000—less than they had been approved to spend—and felt like they got “a fantastic deal.”
However, other foreclosures have not sold at the same pace. According to data gathered by the Illinois Association of Realtors, “sales of all foreclosed homes in the area fell by 9.3 percent in February from a year earlier, and 6.6 percent in March.”
Banks Want to Move Pricey Homes Quickly
As you might imagine, there’s more incentive for banks to sell high-priced foreclosures than a house with a $100,000 price tag. Selling these properties is particularly important given that analysts indicate that “the pipeline of foreclosed homes for sale will remain full for the foreseeable future.” To be sure, banks repossessed a number of Illinois homes between January and March of this year—more properties than in the same number of months last year. In other words, the rate of foreclosure hasn’t exactly ceased. And in Cook County, DuPage County, and Lake County alone, around 45 foreclosures currently are for sale for more than $500,000.
Who’s buying these expensive properties that are in foreclosure? In general, three different types of buyers tend to be interested: 1) developers with plans to tear the homes down or rehab them; 2) individual investors who are planning to flip the homes for a profit; and 3) individuals who are planning to make the foreclosures their new primary residences. The last category has expanded greatly in the last year or so as Chicagoans become more open to buying foreclosures. Indeed, consumer analysts believe that the stigma of buying such a property has diminished substantially.
If you have questions about avoiding foreclosure or purchasing a property that has gone into foreclosure, you should be sure to speak with an experienced Oak Park real estate attorney. An advocate at the Emerson Law Firm can answer your questions today.
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