How are Chicago neighborhoods faring when it comes to housing recovery and distressed homes? It has been a number of years since the housing bubble burst, but distressed homes still line a number of streets. However, according to a recent article in Crain’s Chicago Business, the fact that distressed homes remain on the market is not necessarily a bad thing. The article suggests that these properties are an “improbable bright spot” in “Chicago’s lackluster residential real estate market.”
Finding Value in Distressed Properties
For individuals selling their homes, there is not a lot of opportunity in the Chicago market to make a profit right now. However, as the article notes, “banks and other firms selling foreclosed houses were far luckier.” The median sale price for distressed homes, including foreclosures and short sales, actually rose by 6.3% in 2015. To put that number in perspective, the median sale price increase for conventional home sales was only 0.4% last year. In other words, the price increase on distressed homes was 16 times better than the price increase on standard properties.
This gap between distressed and conventional property sales is not limited to lower socioeconomic brackets. The disparity in sale prices “shows up even in many more-affluent parts of Chicago and its suburbs where the real estate recovery came earlier and stronger than it has for the metropolitan market as a whole,” according to the article. On the Near North Side of Chicago, for instance, lender-mediated sales rose by about 6% by the end of 2015, compared with a 2.8% price increase for conventional properties. In Buffalo Grove, for example, lender-mediated sales climbed nearly 19%.
Need for an Improving Economy in Chicago
While it might seem as though high selling prices on distressed homes is a good thing, it may point to a sluggish Chicago economy. Chicago has seen relatively stagnant job growth and limited investment returns. The decline in conventional home sales may be evidence of the sluggish economy.
In terms of decreasing conventional home prices in Chicagoland, sales showed no growth at all in Evanston last year, and home prices dropped in Oak Park by 4.1%. In other words, the conventional real estate market does not look especially good outside out distressed home sales. But at the same time, the fact that more distressed homes are getting bought is a good thing, no matter what lens you view it through, according to the article.
According to Jonathan Smoke, the chief economist at Realtor.com, this trend is a common one toward the end of real estate recovery periods. While he remarks that Chicago remains behind in its recovery compared to many other urban areas in the U.S., the price gap that we are seeing between distressed and conventional properties simply makes clear that Illinois is “working through [its] foreclosure overhang.”
If you have questions about distressed properties or avoiding foreclosure, an experienced Oak Park foreclosure defense attorney can help. Contact the Emerson Law Firm today to learn more about how we can assist you.
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