In case you needed to hear more bad news about the Chicago real estate market two reports came out yesterday that continue to paint a rather grim picture of area homeowners.
46.2% Of Chicago Area Homes Are Underwater
Zillow issued their 3rd quarter home value report and it showed that nationally 28.6% of homes are worth less than their mortgages. However, for Chicago the number is 46.2%. Now you have to take this with a very large salt pellet because, as I've demonstrated recently, Zillow's Zestimates are horribly inaccurate. Nevertheless, let's assume they are directionally correct and that Chicago is worse than the nation as a whole and it's worse than it was in previous quarters.
Zillow believes that the negative equity percentage is rising as a result of a continuing decline in home values, coupled with a slowing foreclosure rate - i.e. homeowners in negative equity are not being put out of their misery. Zillow goes on to forecast "a housing bottom in 2012, at the earliest, and third quarter data further confirms this forecast."
National Mortgage Delinquencies Continue To Rise
Transunion reported that the rate of mortgage delinquencies (people who are more than 60 days behind in their mortgage payments) increased in the third quarter to 5.88% from 5.82% in the second quarter. Now that's a small increase but it's the first increase in the delinquency rate in two years. The fact that so many homeowners are underwater doesn't help matters. There is little incentive to stay current on your mortgage when you are building no equity.
However, Tim Martin, group VP of U.S. housing in TransUnion’s financial services business unit, believes that this increase may persist in the short term but in the long term delinquencies should decline. He attributes this to tighter lending requirements, an assumed improvement in the labor market, and some evidence of home price stabilization.