Every month around this time RealtyTrac comes out with their Foreclosure Market Report for Chicago and the nation. Yesterday morning they released the August report which basically shows no material change from July. However, the more interesting information is contained in a long term graph they provide for the entire Chicago metro area.
Let's start with my 4 1/2 year chart of foreclosure activity for the city of Chicago shown below. August basically continued the general downward trend we've been seeing for the last year. The decline is being driven mostly by fewer defaults, which makes sense given the improving economy and higher home prices. As people come up from being underwater they are less likely to let their homes go into foreclosure.
Similarly the pipeline of homes in the foreclosure process continues to shrink at a rate of about 1000 units per month.
One of the more interesting comments in this month's foreclosure market report comes not from the Vice President at RealtyTrac but from a managing broker in Ohio, Michael Mahon, who remarked that now that home prices are rising they are seeing the lenders becoming more aggressive in dealing with delinquent mortgages. That makes sense since it's now easier to liquidate their position at more favorable prices. In fact, you might even expect to see the banks pushing their backlog through the pipeline much faster than they have been. So this could temporarily offset the fact that homeowners are less likely to allow themselves to go into foreclosure.
RealtyTrac also provided a very interesting graph of the foreclosure activity for the entire Chicago metro area going back further than I have the data for just the city - January 2006, which was just before the peak of the housing bubble. In this graph below you can see just how high the foreclosure activity rose from the lows at the beginning of the period and how much progress we have already made in reversing that course. We could actually return to those record low levels in just a few months.
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