Post-Pandemic Foreclosures in Chicago

Post-pandemic foreclosures in Chicago are expected to rise throughout the coming months.

Although the majority of the United States is experiencing an unexpected but welcome positive rise in housing prices, the same cannot be said for certain areas of the country. Chicago and the surrounding areas, unfortunately, have not experienced the bright side of the coronavirus housing market, with multiple counties in Illinois negatively affected and currently seriously at risk of detrimental post-pandemic levels of foreclosure.

Recent news shows that seven local counties in the Chicago area are predicted to be the most likely to suffer serious housing-related impacts in the wake of the virus. This prediction encompasses every county in the country. It is estimated that these counties are highly likely to have large numbers of homeowners that are struggling to make their mortgage payments and keep their homes.

Why Are There Post-Pandemic Foreclosures in Chicago When Housing Prices Continue to Rise?

Using data gathered from foreclosure-related moves, the seven counties in the Chicago area that are bracing for a surge in post-pandemic foreclosures are Cook, DeKalb, DuPage, Kendall, Lake, McHenry, and Will. The vast majority of the counties listed are on the East Coast, with the only areas of concern on the West coast being in California.

But why are these particular areas subject to upcoming foreclosures when, elsewhere, the rest of the housing market is relatively booming?

The data is based upon a combination of factors including looking at those who have already moved due to foreclosure, as well as the number of current homeowners who are already struggling to pay their mortgages, and the average annual income required to purchase a home in the county.

Much like other areas of the country, Illinois (and Chicago in particular) took a big unemployment hit following the initial virus outbreak. An estimated 37% of those employed in Illinois were at risk of furlough, unemployment, or serious reductions in hours due to COVID-19. The number of people left without jobs in Illinois was slightly higher than the national average.

Additionally, the more populated counties in Illinois (again, Chicago in particular) harbor more people who work in industries most affected by the virus (such as restaurants, hotels, and tourism). Since Chicago is such a hub for tourism, many of the people living in or around this area were employed by the industries that were severely impacted.

Combine these disastrous unemployment rates with the expensive housing market in the Chicago area and it is easy to see why the Windy City is bracing for a disastrous surge in post-pandemic foreclosures.

Up until now, many of those financially impacted by the pandemic have been able to hold onto their homes only by the skin of their teeth, relying heavily on government aid or mortgage forbearance plans to keep their heads above water.

But with pandemic unemployment assistance and other forms of financial aid coming to an end, but millions still unemployed and unable to find work, it is anticipated that there will be large numbers of people facing foreclosure.

What Housing Look Like with Post-Pandemic Foreclosures in Chicago?

Although most people are not optimistic about the effects that the coronavirus pandemic will have on the future of the Chicago housing market, there is a small amount of good news.

MLS data for the city of Chicago itself showed a massive 60% decline in new listings. While this might sound like bad news, it is actually a silver lining. The limited inventory means that housing prices may stay steady rather than declining, as those in the market looking to buy will be bidding on a sparse inventory of homes.

Essentially, there is currently more demand than there is supply in the Chicago area, which could end up being the saving grace for the local housing market, at least for the time being. Historically low mortgage rates may also positively impact the housing market, encouraging those who are in a position to house hunt to close when they do find a home that they like.

But it is not expected that economic recovery will be quick, especially in densely populated cities such as Chicago. For now, the only thing that can be done is to sit and wait. It is almost impossible to predict exactly what will happen with the housing market in the Chicago area, particularly as the post-pandemic economic climate is such unknown territory.

For legal guidance with a mortgage foreclosure, schedule an appointment with an experienced real estate attorney at Lee Scott Perres, P.C.