Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Illinois unemployment' Category
Even as the job picture brightens slightly in Illinois, the number of homes facing foreclosure continues to soar. The Illinois unemployment rate is now 10.4% — still one of the worst in the country, but better than the 11% we saw earlier this year. The scarcity of jobs has left thousands of local homeowners in trouble, and they are continuing to default on their mortgages in record numbers.
Nearly 24% more Illinois properties received a foreclosure-related notice in the first six months of 2010 than during the same period last year, according to RealtyTrac Inc., a real estate listing service that tracks distressed properties. This means more than 85,000 properties statewide — most of them residential, and many of them in the Chicago region — got a notice. Illinois had the 9th-highest rate of foreclosure notices in the nation.
Nationwide, the rate rose slightly more than 8%, RealtyTrac reported. More than 1 million homeowners will likely lose their homes to foreclosure this year.
What does this mean for our Chicago housing market? Nothing good, I’m afraid. Are you noticing more “For Sale” signs sprouting in your neighborhood lately? Now that the government’s tax credits for home buyers have expired, the inventory of Chicago homes for sale is starting to rise again. There were 4,259 listings in the Chicago area last week, according to Midwest Real Estate Data LLC, but only 855 closings.
This is an ominous sign. Last year the inventory was roughly the same (it was 5% higher then) but the number of closings during the same week last year was 31% higher.
In other words… there is a lot more pain to come in the Chicago real estate market. I predict more foreclosures, fewer qualified buyers to absorb increasing inventory, and further price drops. Anyone looking to buy will have plenty of homes at attractive prices to choose from, and anyone looking to sell will have an increasingly tough time.
Looking to buy a Chicago home in foreclosure? Your selection keeps getting better and better, as more homeowners continue to default on their loans.
Take a look at the recent first-quarter report from Freddie Mac, the giant government-supported mortgage company. It posted a $6.7 billion loss and asked for an additional $10.6 billion (from taxpayers!) to help stabilize its finances. The federal government has already poured $130 billion into both Freddie Mac and its sister company Fannie Mae to keep the country’s mortgage market breathing.
Unfortunately, all this government largess doesn’t seem to be stopping the tidal wave of foreclosures. Illinois — and its largest housing market, Chicago — are some of the hardest-hit regions in the country. Chicago homeowners lost 3,500 homes to foreclosure and the city had roughly 365,000 underwater borrowers in the first quarter of 2010, the fifth-highest among the nation’s major cities, according to to a recent report by CoreLogic, a firm that analyzes real estate data.
In the meantime, Freddie Mac’s inventory of foreclosed homes has soared from about 29,000 units in March 2009 to almost 54,000 this year, and its non-performing assets have nearly doubled.
This is an ominous sign for Chicago homeowners, many of whom are still struggling to afford their mortgage payments amid 11.5% unemployment in Illinois. Even those homeowners who can pay the bills are indirectly hurt, as local housing prices continue to wilt under pressure from waves of foreclosed properties.
When will it end? No time soon, according to Freddie Mac. The company forecasts rising losses throughout 2010.
If you’re planning to buy a home in the Chicago area next year, you may be in luck. According to a recent forecast from the Illinois Association of Realtors, prices will decline 4.4% in the metro region in 2010.
The realtors’ crystal ball reveals a similar picture statewide, with housing prices expected to slip 5% throughout Illinois. The 2010 Illinois Housing Market Forecast was prepared in conjunction with economists from the University of Illinois Regional Economics Applications Laboratory (REAL).
Perhaps one of these economists best summed up the troubles facing our local market: “The most critical factor for housing in 2010 is what happens to employment,” said Geoff Hewings, director of REAL. “People who have jobs are becoming much more risk-averse to buying a more expensive house. For one, they worry will they keep their job. And two, can they sell the existing home?”
The unemployment rate in Illinois, which stood at 10.9% in November, is one of the nation’s highest. Since the recession began in December 2007, Illinois has posted job losses 22 times, and we have lost 359,000 jobs statewide.
“While we are more optimistic about 2010, we are clearly still suffering the effects of the recession and they are likely to continue well into 2010 and 2011,” Hewings added.
Time for a bit of good news…The unemployment rate dropped to 10% in November from 10.2% in October, according to the U.S. Labor Department. Only 11,ooo jobs were lost last month, which is a MAJOR improvement over the 741,000 jobs cut in January.
So why is this good for housing? The link between jobs and people buying houses is quite strong. Without employment, two bad things happen in the real estate market: More homeowners start to default on their mortgages, leading to more foreclosures; and fewer buyers are able to qualify for a loan, leading to fewer sales. This dreadful combination of too much supply and not enough demand causes home prices to fall, which only accelerates the cycle.
In about two weeks, we’ll hear the latest employment figures from the state of Illinois. Last month they weren’t so hot: the rate was 10.4%, the worst we’ve seen in 26 years. But if the layoffs are decreasing nationwide, let’s hope they are falling here, too.
Uh-oh. There’s more bad news on the job front today — and, by extension, the housing front. Unemployment in Illinois hit 11% in October, the state Department of Employment Security announced today. That’s worse than the national rate and the most dismal figure we’ve seen here in 26 years. At this point, almost all Chicagoans can probably name friends or family members who have been laid off (or had their hours or pay or health insurance benefits cut).
Considering that the unemployment rate in Illinois was only 6.8% a year ago, it’s obvious that the erosion of jobs is a huge weight slung around the housing market’s neck. No job means no income means no loan, which spells more trouble ahead for Chicago home sales and prices.
Unless employment starts to climb, fewer would-be buyers will be able to qualify for home loans. And more homeowners will struggle to pay their existing loans, leading to more short sales and foreclosures. This dastardly combination — lower demand and greater supply — could push prices down further in the Chicago area, just as we are starting to see signs of stability.
Another ominous sign this week: Home construction slowed unexpectedly in October, according to the Commerce Department. The rate of single-family and multi-family home building dropped 10.6% over the previous month, surprising analysts who had expected better.
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