Distressed homeowners in Illinois will have to wait longer before the housing market returns to good times. The slide in housing prices may hit its peak in 2009, but not until the inventory of homes on the market gets cut.
Many homeowners are stuck paying mortgages they are having trouble affording and others are watching the values of their homes deflate as property in their neighborhoods get leveled by the national foreclosure epidemic. The foreclosure crisis is hitting Illinois markets with vengeance.
The excess inventory of new and resale homes in the Chicago area has slowed sales and seen home prices fall for more than a year. The supply of homes will take at least 18 months to sell and it could take longer if more homes come on the market, which is likely considering more than 3-million adjustable rate mortgages are going to adjust in 2009 nationwide.
The economy is hurting in Illinois. The state is among those states where unemployed workers are eligible for extended unemployment benefits of 20 weeks. The extension became automatic after President George W. Bush agreed to the legislation amid the worst economy since the Great Depression. Unemployment levels are projected to increase in Illinois and so are foreclosures.
 |
| City |
Forecast |
| Chicago |
− 13.7% |
| Peoria |
− 7.1% |
| Springfield |
− 6.8% |
| Bloomington |
− 6.7% |
| Decatur |
− 4.1% |
Stabilizing the housing market is critical to the economy. Home prices are falling at double-digits clips in some areas, including Chicago, which is projected to see a slow year of home sales through 2009. Housing Predictor forecasts average home deflation to be 13.7% for the year. The loss in home values will send many more homeowners into being under water on their mortgages.
However, Decatur housing prices have taken a slight jump and are still some of the cheapest in the state as more homeowners look outside of urban areas to buy affordable homes. But sales are also declining in Decatur, which presents a menacing sign for the marketplace. As Decatur home sales ease so will the selling prices for homes, which are forecast by Housing Predictor to deflate in value a modest 4.1% in 2009.
In central Illinois, Peoria has seen home prices drop marginally, but the tightening economy is likely to have a more pronounced impact on the community in 2009 as employers shed jobs. Foreclosures are also picking up in Peoria to damage the market. The majority of sales in Peoria have been resale homes in the modest $120,000 to $150,000 range, which provides a comfortable market. Peoria is forecast to deflate in average home prices in 2009 at a rate of 7.1%.
Not far from Peoria, in Bloomington the city is home to State Farm Insurance and for a while during the credit crunch it looked liked State Farm might get swept up in the financial crisis. But State Farm insures cars and homeowners and hasn't taken the risks of other insurance companies like AIG buying into mortgage derivatives, according to company management.
But homes are selling slower in Bloomington theses days, and as a result of growing jitters in the market place, Bloomington has turned from being a strong sellers market into a buyers market. Home prices are now forecast to deflate 6.7% in 2009.
Bankruptcies are up in Springfield, the state's capitol as homeowners and business owners battle the credit crunch and attempt to protect their interests. Springfield never saw a meteoric rise in housing prices, but sales have slowed and are projected to remain slower through 2009 on housing deflation forecast to be 6.8% for the market.
