Foreclosure activity rises in the 3rd quarter
After 5 straight quarters of declining U.S. foreclosures,
the number of default notices rose in the 3rd quarter of 2011.
This could be a sign that things will be getting worse before they
start to get better.
I believe the foreclosure process slowed down late last year due
to the “robo-signing” scandal. That was the scandal where it was
discovered that banks were foreclosing on homeowners without reading
all of the facts.
Now that banks have a process in place to deal with foreclosures, I would
expect the number of foreclosures to continue to rise in the short term.
Here in Illinois, there was a spike in Bank Owned Properties (aka REO).
The number of REO sales in Illinois was up 27% in the 3rd quarter.
Other states that had increased REO sales included Georgia (42%)
and Massachusetts (62%).
The entire foreclosure process in Illinois still takes about a year to complete.
In some cases, it can take a lot longer.
When will it end?
Well, it appears that this real estate slump or market correction will
continue for several years. The slump is already close to its 5th Birthday.
It looks like this financial malaise will drag on for another few years.
As long as the unemployment rate remains historically high, I think
the real estate market will remain flat until 2015.
Also, it is estimated that 1 out of every 3 homeowners is underwater.
“Underwater” is a nice way of saying that an owner owes more than the
home is worth. For example, an owner might have a $200,000 mortgage,
but the home is only worth $115,000. So in this example, the home is
underwater by $85,000. Unless banks start doing more loan modifications
where they reduce the principal balance, today’s underwater homes will
be tomorrow’s foreclosed homes.
What does this all mean?
So, if you are thinking about selling, now is as good a time as any.
I don’t think the market will get any better any time soon.
If you are thinking about buying, please do your homework.
Look at the neighborhood trends and determine which neighborhoods
have the most stable property values. I would recommend buying a
single family home. Buyers can still get FHA financing for single family
homes. So their selling prices have been relatively stable.
Since mortgage rates are at record lows, it is still a good time to buy.
You just have to do your homework. I would suggest working with a Realtor
that has experience in your neighborhood of choice.
What can I do if I am facing foreclosure?
There is a FREE hotline available to assist owners that are facing foreclosure.
The phone number is 888-995-HOPE. Please visit the HOPE website for more info:
http://www.995hope.org/
Until the next time,
Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!
Visit me online: www.773property.com
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