Chicago Mortgage Crisis: Nearly Half Of Borrowing Homeowners Are Underwater, Says New Report

Newly released statistics show a mortgage crisis that is only deepening in the nation's third-largest city, with staggering numbers of homeowners in dire straits.

Almost half of mortgages in the greater Chicago area are now "underwater," according to the study by Zillow. That means that homeowners owe more than the value of their homes, a product of plummeting housing prices.

The proportion of underwater mortgages in Chicago, 45.7 percent, is eighth-highest among the nation's 25 largest metropolitan areas, and pales in comparison to the devastating 68.4 percent of underwater mortgages in Phoenix, Arizona, the nation's highest among big cities.

But the speed with which underwater mortgages have grown in the area is much more disconcerting. Just last quarter, the figure was only 38.6 percent; a year ago, it was just under 32, reports Chicago Real Estate Daily.

“Home value declines are currently equal to those we experienced during the darkest days of the housing recession,” Zillow Chief Economist Stan Humphries said in a press release accompanying the report. Prices were buoyed temporarily by the federal home-buyer tax credit, but with that credit's expiry, the floor has again fallen out from under the market.

Indeed, the Chicago Tribune reports that both home sales and prices dropped sharply in the first quarter. Sales were down 9.9 percent from a year ago, and the median price of a home was down to $155,000, down 11 percent from the same time a year ago.

Comments

[Realtors Are Liars]

07:33 AM on 05/11/2011

Record High Defaults=CHECK

Record High Foreclosures=CHECK

Record Low Sales=CHECK

Record Price Declines=CHECK

There is no stabilization in housing until we get back to early 1990's prices, possibly even early 1980's.

Let housing prices and rents collapse and don't get in the way.

[Keypinitreel]

09:37 AM on 05/11/2011

It may make it easier for young people to move out of their parents homes.

[Realtors Are Liars]

09:49 AM on 05/11/2011

Are you suggesting that people should make the dumb mistake of buying a rapidly depreciating asset?

[Alex Moschopoulos]

07:28 AM on 05/11/2011

What we need are laws and regulations to happen that will allow homeowners to more easily rent out their properties without taking a jump in insurance.

So it's not a good market. People still need places to rent. The problem is everyone wants to be 100% "owner occupied" and that's part of why things are a mess right now.

[anesthesia84]

01:55 AM on 05/11/2011

the reason home values in chicago continue to drop is because at a time when unemployment is sky high, the governor decided to raise taxes, counties have raised taxes and sales tax is amongst the highest in the nation. who would want to live in such a place?

[mratcheson]

02:06 AM on 05/11/2011

Those of us who love and helped to build this beautiful city? But then, it doesn't sound like you would understand.

[Raymond Rees]

02:39 AM on 05/11/2011

Please offer proof. Post links to back up your claim.

[MyResponsibility]

10:31 PM on 05/10/2011

Why is this even a problem for most people? The only people who would be adversely affected by this are those who 'have to sell.' if the mortgage is higher than the value and your staying put, your payment doesn't change. The minute you drive your brand new car off the lot it's worth less than you owe, too. Owning a home is not for the transient/nomads, it's a long-term commitment that is mostly unaffected by a dip in it's value.

[roxy6934]

10:44 PM on 05/10/2011

You must be sitting on a bunch of cash; that you don't understand whats going on. I saved for my downpayment, and have been in my home for ten years. Yet, it's worth less than I owe, and the taxes keep going up as it's being assessed for an amount more than it's worth.

[Nick9075]

11:21 PM on 05/10/2011

You can deduct your property taxes as well as interest expense. Renters can't do that and are paying substantially higher rents each & every year.

[MyResponsibility]

11:25 PM on 05/10/2011

No, I'm not sitting on a bunch of cash. Unless you had a variable interest mortgage, the reduction in the value of your home has no affect at all your monthly cost of living in the home. As long as you still have your income, am upside down mortgage has no immediate impact on one's life at all. I bought a house in 2002 with a fixed mortgage in Mn. In 2007 I took a better job in GA. I had but 20% down, had put over $15k into it just prior to putting it on the market in March 2007. After I went upside down that year, and paying the mote for almost 3 years (2 house payments), I walked away from it. So I know very well the problems people have. I needed to sell but couldn't. This who don't need to sell are not impacted by an upside down note.

[Nick9075]

11:20 PM on 05/10/2011

I have said this as well. Another factor is never mentioned -- the fact that rents are rising substantially in most parts of the country. I would rather know what my payment is rather than scramble to have to find a new place to live because my landlord decided to raise my rent 15% (the average now) or the property mgmt company decided not to renew lease (lease renewal isn't a g*d given right even if you are the 'perfect tenant')

[judypiano]

10:24 PM on 05/10/2011

I question the ethical practices in Chicago. There is a lot of history and corrupt people and government that goes way back and into today. No, these homes needed to go under. All the homes that people can't afford need to turn around and the people out until they can afford a home. No bailouts for any homeowners. That is the only way the market will truly turn around.

[Raymond Rees]

02:42 AM on 05/11/2011

So I guess you agree that Bu$h was 100% wrong in bailing out the big banks and auto companies.

[ejhickey]

10:22 PM on 05/10/2011

Instead of bailing out the banks and Wall Street, the federal government should have guaranteed the price of every home in the US for the price the owner paid for it. Sort of like an FDIC for home values.

[bokane1]

12:10 AM on 05/11/2011

can i get some of what you've been smoking? how about the gov. guaranteeing stock prices?
how about way less gov.?

[Raymond Rees]

02:44 AM on 05/11/2011

Did the poster say the government should guarantee stock prices?

[ejhickey]

03:41 PM on 05/11/2011

what do you think the government bailout of the banks and QE 1 & 2 has done except to guarantee, support and pump up the stock market? Great if you own stocks. However if all you have is your home , you are out of luck and headed toward negative equity. All I am asking for is a bailout of middle america, not Wall Street.

[Siebenstein]

10:14 PM on 05/10/2011

Chicago Mortgage Crisis: Nearly Half Of Borrowing Homeowners Are Underwater

Los Angeles Mortgage Crisis: Nearly Half Of Borrowing Homeowners Are Underwater

[mratcheson]

01:57 AM on 05/11/2011

I do believe housing prices became astronomical in CA during the boom, not so in Chicago. I've owned my home since 1986, and the value of it is getting frighteningly close to what it was back then. I'm not in danger of losing my house (I can still afford my mortgage), but I didn't benefit at all from the real estate boom over the past ten years or so. I guess I was just st**p*d.

[mratcheson]

01:59 AM on 05/11/2011

Actually, I said I've owned my house since 1986, and that was a mistake. I've owned it since 1996.

[roxy6934]

08:52 PM on 05/10/2011

Unless the banks want physical possession of all the properties they hold paper on; then they need to start one by one doing a new appraisal on every property. There are a lot of us unemployed people out there that might could find a way to keep our homes if the mortgage was realistic with it's current value. Instead it's hard to pay over inflated prices for our homes on unemployment while the state raises the taxes. This causing escrow to be short, and the payment to go still higher.

[judypiano]

10:26 PM on 05/10/2011

You are responsible for you actions. The government had a part in it too by forcing banks to lend to people who couldn't afford homes. The government did it and then you went along.

[bokane1]

12:13 AM on 05/11/2011

amen it started with the Community Re-investment Act (Jimmy Carter) 'they' did it to buy votes
community....organizer hmmmm

[roxy6934]

08:18 PM on 05/14/2011

Excuse me, but I saved a nice down payment. I've been in my home foe 10 yrs. I lost my job, and went from $48,000 to $16,000 on unemployment. I wasn't one of those you had no down payment, bad credit, or low income. So I didn't deserve this.

[bjbold]

06:15 PM on 05/10/2011

Every article I read where some president of some realtors association say that prices will stop declining and turn around soon, makes me just shake my head in wonder. It was a bubble people. It didn't burst for the homeowners, it just developed a slow leak. The middle class has to pay twice. Once to the banksters and once more in lost equity.

[Bob Elkins]

01:22 AM on 05/11/2011

The Realtor association is a group of Realtors trying to sell property. Of course it is in their best interest to always put a rosy spin on future marketing. He won't say that doom and gloom await us or they would never make a sale.

[CPNASH]

06:04 PM on 05/10/2011

a lot of us will eventually go that way, if we don't already own outright. Too bad, because the system broke, no one i know ( other than wealthy friends) is making ends meet, the government don't care because they helped it happen, and it'll only get worst.

[Nick9075]

06:02 PM on 05/10/2011

It's better than renting. Rents in chi town aren't much different than Boston and most of the people suck as much. Not worth it to live in a Midwestern version of new England

[Loneprotester]

05:48 PM on 05/10/2011

Illinois' unemployment is barely budging, our taxes are going up, and Quinn is chasing after large employers to bribe them to stay. Not encouraging. Without an uptick in jobs and pay on the horizon, that 50% of underwater homeowners will begin to jump. We are in big trouble, Chicago.

[bokane1]

12:17 AM on 05/11/2011

who voted for Quinn? 67% increase in income tax almost 100% increase in Corp. tax
i wonder why

[roxy6934]

08:20 PM on 05/14/2011

It's hard to believe that as bad as Quinn is that he was the lesser of two evils

[patches12]

05:47 PM on 05/10/2011

Another Obama promise broken....

http://www.homemortgageloanstoday.com/is-the-obama-mortgage-rescue-plan-a-failure/

[roxy6934]

09:00 PM on 05/10/2011

The man walked into a mine field. It took Bush 8 yrs to create this. Don't you think the man needs ample time to fix. Let's not forget all the other things going on. Obama is being pulled mentally in so many directions. Considering all things; I think he's doing okay. That poor man turned grey since taking office. I don't know of anyone else that could do as well, and be so calm. Trump is a joke.

[judypiano]

10:28 PM on 05/10/2011

And it only took Obama two years to make it tons worse. Obama is doing nothing to curb present spending. He and his cronies don't understand real economics. They understand large government and dependent people.

[bokane1]

12:26 AM on 05/11/2011

let's not forget it was a democratic congress the last two years of Bush's time let's not forget the big problem of real estate was easy money virtually 100% caused by the dems(Barney Frank etc) i think Pres Obama has only one direction not good, in my opinion

[April22]

05:38 PM on 05/10/2011

This does not bode well for a economic recovery, aside from all the hype we are hearing.

I see no recovery for the everyday Americans coming too soon. Unemployment has not recovered, homelessness is still on the rise and many more American families and children are going to bed hungry every night.

I hear little if anything at all on those topics in the news and certainly not from the lips of our caring politicians.

Ah politics, where greed wears the mask of morality.

[blitznstitch]

04:47 PM on 05/10/2011

Not everyone in underwater mortgages leave, because like any investment, it can come back up. Illinois needs to help their people start businesses.

[Leege]

05:37 PM on 05/10/2011

Yeah, everyone will have their own business and be massively successful. There's no way that could go wrong.

[judypiano]

10:30 PM on 05/10/2011

Government needs to get out of the way and let our people rise up and fix our problem. The answer isn't with the government and a bunch of dependent people sucking the life out of our taxes. Lower the taxes and these jump-starters will cruise ahead, spending and hiring more and more.

[Bob Elkins]

01:25 AM on 05/11/2011

Good plan as long as it includes staying out of the bedrooms and leaves big business and agriculture to fend for itself as well.