Chicago Illinois Real Estate Blog

The number of Chicago-area homeowners who received foreclosure notices continued to climb during the third quarter, but at a slower pace than the rest of the nation, according to a report released Thursday.

The number of foreclosure notices in the area rose nearly 42% during the third quarter, to 22,069 homes, compared to the third quarter, 2007, according to foreclosure listing service RealtyTrac Inc.

But nationwide, the number of notices shot up more than 70 percent, to 766,000 homes, during the third quarter, compared to the year-earlier period, the Irvine, Calif.-based company said.

One in 144 Chicago-area homes received foreclosure notices in the third quarter, a rate that ranks the Chicago area 31st in foreclosure rates among metropolitan areas nationwide.

By the end of the year, RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.

That’s bad news for anyone who lives nearby and wants to sell their home. While foreclosure sales are booming in many areas, those properties are commanding deep discounts and pulling down neighboring property values.

"It has a pretty significant impact in terms of pricing," said Rick Sharga, RealtyTrac’s vice-president for marketing.

RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 250,000 properties were repossessed by lenders nationwide in the third quarter, 81,000 of which were taken back last month.

Six states — California, Florida, Arizona, Ohio, Michigan and Nevada — accounted for more than 60 percent of all foreclosure activity in the quarter, with California alone making up more than a quarter of all U.S. foreclosure filings. Detroit and Atlanta were the only cities outside California, Florida, Nevada and Arizona to make RealtyTrac’s list of the 20 hardest-hit metropolitan areas.

The combination of sinking home values, tighter mortgage-lending criteria and an economy that many economists think has already slipped into recession has left hundreds of thousands of homeowners with few options. Many can’t find buyers or owe more than their home is worth and can’t refinance into an affordable loan because the global credit crisis is making loans far less available.

For those who can qualify for a loan, or have cash to invest, there are bargains to be had, especially in ravaged markets like Nevada and California.

Last month, foreclosure resales accounted for more than half of existing home sales in California, as home sales jumped 65 percent from a year ago, while the statewide median home price fell 34 percent to $283,000, according to MDA DataQuick.

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