My spouse and I were watching the 10pm NBC Channel 5 news around 12/28 and they run a headline on the Occupy Foreclosure Movement in Chicago about a single mother with 7 kids that is occupying a vacated home. A local church group re-established all utilities and repaired the home to basic livability. The lien holder walked away from the property; this family is now a perpetual squatter. (In Il. you have to evict squatters, who is going to evict them?)
The news caster reported there are 174,000 vacant homes in the Chicago Metro area enough to provide housing for every homeless person/family in the area, and implied maybe this is a good movement since the homes will be occupied and not standing abandoned and deteriorating.
Lien holders are evidently walking away from the properties and not finishing the foreclosure because they don’t want to incur additional costs like utilities, taxes, insurance, repairs, maintenance and housing code violations/fines/liens.
On 12/16/2011 KCM posted a graph on the Months of Shadow Inventory with Chicago ranging between 10-50 months the third highest with NY and DC getting the over 50 month rank. Somewhat validating the $174,000 reported number. I also spoke to one of the leading foreclosure attorneys in Chicago who concurred the trend, especially on Condos. This also explains all the vacant homes we see on a daily basis in just about every market with a Safeguard or LPVS sticker on the door and not for sale. In some neighborhoods it’s close to 1 out 3 per block.
In the Chicago metro area per the MRED MLS for 2011 there were approximately 38,060: REO’s, Pre-foreclosures and Short sales sold. If the 174,000 number reported is accurate that is 4.57 year supply of homes that may never hit the market and be liquidated under traditional methods because the lien holders are walking away and not taking title. If no one is in title how does it get sold, how does the market recover?
So where do these properties end up? Condemnation, Eminent Domain, Delinquent Tax Buyers, Non-Profits, Quit Claim Deed Investors, Home Owner Associations, or do they just sit abandoned deteriorating neighborhoods and providing habitat for gang bangers, prostitution, drug sales and serial murders. Chicago’s longest running prostitute serial murderer was caught in an abandoned foreclosure, as I recall I think it was 5+ years. Hence now Chicago tears abandoned buildings down.
No wonder Chicago passed an ordinance making the lenders responsible for the property even if they don’t own it yet?
What would you do if you had 4.57 years of vacant abandoned homes in your back yard?
It will be interesting to see how all this shakes out over the next few years. Even if the above numbers are overstated with only a 1.14 year supply of vacant abandoned homes; that is still not a good thing for a recovering real estate market.
