Big job losses and business closings contribute to conditions in Illinois real estate markets as homeowners who have lost their jobs are learning that bankers’ are just around the corner to foreclose. The U.S. foreclosure crisis is devastating Illinois’ economy as mortgage holders flee their homes unable to reach modification agreements with their banks.
The real estate crash has sent home values to nearly half of what they peaked out at in many Chicago neighborhoods, where vacant homes in the city’s poorest communities are left empty for vagrants and drug users to frequent. Monthly home sales dropped in the land of Lincoln state even as sales rose in the majority of the country. Homes that are selling in and around Chicagoland average under the $200,000 mark.
Sales in Chicago of homes are beginning to show an increase in demand pushed by lower home prices and near record low mortgage interest rates. However, foreclosures and bank assisted short sales make up the majority, which are discounted by lenders’ to get the housing inventory off their books.
The sales may be good for the immediate needs of bankers’ and homeowners but pressure surrounding home prices, lowering the value of neighboring properties. Chicago area sales are expected to increase in 2012 but on lower forecast home values that will average a drop of 5.6%.
Home sales have risen in Peoria, but a weak economic outlook and high inventory of foreclosures and homes in the shadow inventory not yet counted by bankers as foreclosed trouble the market. Historically low mortgage interest rates are helping to get home buyers off the fence to purchase homes, but high unemployment in the
region makes it impossible for many to buy homes. Peoria should see another increase in home sales over 2012 but is forecast to see prices decline 4.7%.
Since the beginning of the real estate bust in 2006 in Illinois sales have fallen four of the last five years. However, sales have increased in Springfield, the state’s capital where home prices show some signs of leveling off from their downturn. There’s a sort of Mid-West soundness that exists in the area’s economy that never allowed the market to appreciate at double-digit levels during the boom.
Those sorts of conservative economic fundamentals protected the housing market at least to some degree from devastating deflation.
As a consequence, Springfield homes are forecast to deflate just 2.3% in 2012, and may be one of the first places in the nation to find the bottom of its market.
In the Illinois twin-cities of Bloomington-Normal a rise in home sales is providing evidence that the housing market has a bottom and is starting a recovery of sorts. Lower mortgage rates are driving home buyers who have been reluctant about making a purchase back into the market. The transition will eventually provide a level footing for both of the Bloomington and Normal housing markets, which are forecast to decline a modest 2.5% in home values in 2012.