Although it never shared the notoriety of Miami, Los Angeles and Phoenix during America’s foreclosure crisis, the Chicago area now has the nation’s largest inventory of foreclosed homes because it is harder to unload troubled properties here than in most other metropolitan areas.
The inventory data compiled by RealtyTrac, a California company that tracks housing sales, place Chicago first among the country’s 20 largest metropolitan areas. Real estate experts attribute the high concentration of foreclosures to numerous factors including the strong protections built into Illinois law to protect borrowers, the impact of the “robo-signing” investigation by the Illinois Attorney General, and the reluctance of banks to dump properties at prices far below the value of mortgage loans on their books.
As a result, banks and real estate firms here take longer to dispose of the properties they seize when loans go bad. The Chicago metropolitan area had 118,776 homes in May 2011 that were either owned by banks or were in the process of being taken over by lenders because the owners could no longer afford their monthly mortgage payments, according to RealtyTrac. The Chicago area in the RealtyTrac data includes Cook and DuPage counties as well as parts of Indiana and Wisconsin that are part of the metropolitan areas used in U.S. Census tracts
The article focuses on the systemic reasons for the high levels of unsold foreclosures. You need to read down to the end for the more obvious reasons why Chicago foreclosures have been slow to sell:
Daren Blomquist, the marketing and communications director at RealtyTrac, said he thought there was a big difference between foreclosures in the Midwest and the West, where the real estate boom drove prices sharply higher.
Foreclosures of western properties tended to be in desirable suburbs, but in Chicago they came in older, economically weaker neighborhoods.
“In the West, there were a lot of foreclosures on newer properties in suburbs that might be more desirable to someone trying to get back into the market,” he said. In contrast, Blomquist said foreclosures in the Midwest tended to be in older neighborhoods where the property might not be as desirable or might have been more vulnerable to neglect on vandalism.
Tens of thousands of Chicago-area foreclosures are in neighborhoods and suburbs that have been devastated during the past decade and may take decades more to recover – if they ever do. Chicago’s lagging economic prospects are also a factor.