Chicago foreclosure investing is viable because of the availability of low-priced foreclosures and good prospects for recovery in the metro area.
According to a study released by the National People’s Action, more than 23,200 residential units entered Chicago foreclosure listings in 2009, equivalent to one foreclosure for every housing block in the city. In the foreclosure hotspots, more than two foreclosures were posted for every housing block.
Completed foreclosures and pre-foreclosures in Chicago pushed down property values in the metro area, cutting down the average value of a home by $27,000 to $49,000 from housing values in 2004.
The NPA even calculated that one new foreclosure was posted every 22 minutes in 2009 as unemployment and other economic difficulties pushed homeowners into default. The claws of foreclosure spread into all kinds of neighborhoods in Chicago, from the high-end condo complexes in the Near North portion of the city to the moderate-income bungalow neighborhoods in the northwest and southwest areas.
All in all, however, the most affected areas are lower-income and minority neighborhoods, where majority of Latino and black families live. These minority-populated neighborhoods were hit by foreclosures two times more than white-populated communities.
For people focused on Chicago foreclosure investing, they can choose among the neighborhoods their targeted areas for investments. According to the NPA, 53 percent of all foreclosed residential units in Chicago were foreclosed by the five biggest banks in the country.
With the total home equity lost by Chicago homeowners reaching $15 billion over the past 5 years, house prices have plunged by $27,000 on the average, giving opportunities for investors to buy foreclosures at bargain prices, rehabilitate them and resell them at a profit.
In January, the median price for single-family homes in the Chicago metropolitan area decreased by more than five percent to $175,000, compared to the $185,000 price median in January last year. In the city of Chicago, the price median decreased to $195,000, marking a five percent fall from the January median last year.
According to records from the Illinois Association of Realtors, foreclosure sales drove up sales and pushed down prices for both single-family homes and condo units. Downtown condo units sold in January posted a median of $279,900, marking a 9.4-percent drop compared to the January median last year.
To maximize returns, people engaged in Chicago foreclosure investing who have higher levels of capital can choose to rent out their properties while waiting for better home prices.
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