Four years ago in January, 3% of all closed sales in Chicago were lender-owned foreclosures and 1% were short sales.
A short sale, as many of you know, is a sale where the market value of the property is less than the mortgage amount. This type of sale requires lender approval. Short sales and lender-owned foreclosures are often referred to together as “distressed” sales.
The number of distressed sales has risen sharply over the past 4 years. In January of this year, short sales accounted for 15% of closed transactions in Chicago, and lender-owned foreclosures accounted for 28%.
While distressed sales were rising to 43% of all Chicago closings, the overall number of closed sales was falling, contributing to downward price pressure on homes listed for sale.
We are seeing inventory levels – the number of homes listed for sale – increasing lately, along with an increase in buyer activity. We will not, however, see home price appreciation until we settle back to a more “normal” level of distressed property.