Inventory of Chicago Real Estate Keeps Building

October 13, 2011

New foreclosures filed on metro Chicago real estate fell significantly last month, yet the inventory of foreclosed homes continues to grow.

A total of 5,212 new foreclosures were filed in the Chicago area during September, according to the Illinois Foreclosure Listing Service. That’s a 15.1 percent drop from August and a 34.8 percent decline from September 2010.

house in between a gavel and an auction blockExperts are attributing the drop to the robo-signing controversy that’s still being cleaned up, but there’s another statistic they find more concerning than the foreclosure rate: The lack of completed foreclosures around the seven county metropolitan area.

Completed foreclosures include homes that are sold at auction or reverted back to lenders after they fail to sell, also known as REO or Real Estate Owned.

Last month recorded 1,762 completed foreclosures throughout the Chicago area. Though that is a slight increase compared to the 1,670 posted in August, it’s also a 53.7 percent decline over the 3,803 posted in September of last year.

“Perhaps most troublesome to the Chicago-area housing market in general is the fact that actual sales of foreclosed properties represent only a very small percentage of the total completed foreclosures,” said Peter George, ILFLS Database and Information Manager.

“With well over 90 percent of those properties reverting to lenders, the surplus in housing inventory continues to grow dramatically. That is certain to continue exerting downward pressure on residential prices and sales.”

Later we will discuss the U.S. foreclosure rate and how Illinois ranks among the states. Check back to Chicagoland Real Estate Forum for that story.

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