CHICAGO HOMEOWNERS – Purchase Your Home Recently with Little Down? Most Likely You’re Upside Down!
CHICAGO HOMEOWNERS – Purchase Your Home Recently with Little Down? Most Likely You’re Upside Down!
OF 2006 HOME BUYERS 37.8% NOW OWE MORE THAN THEIR HOUSE IS CURRENTLY WORTH – ZILLOW.COM STUDY!
We know that Real Estate is local not national in its scope and effect. However recent numbers compiled by Real Estate Homesite Zillow.com should offer concern for Chicago and Chicago Area Homeowners – especially those who have purchased their homes within the last couple of years.
Based on its data Zillow estimates that over one-third of those who puchased homes during 2006 and 2007 owe more on their home mortgages than the likely current market value of their home. Nearly 38% of those who purchased their home in 2006 have "negative equity" while 31.1% of those purchasing last year in 2007 are negative.
By contrast only 3.1% of home buyers from 2003 – five years ago – have negative equity. These numbers studied together point up the radical shift in the Real Estate Market in Chicago in the past two tumultous years as well as the negative impact of mortgage loans rarely available today which offered high-leverage financing with as little as zero down or in some cases less than zero down.
The Zillow data which is often based on computer models and may differ from data generated elsewhere suggests the peak of the Chicago Area Real Estate Market occurred during the Second Quarter 2006. Since that time the company estimates home values across the Chicago Market have fallen 8.8%. (This represents an eight-county area in Northeastern Illinois and Northwestern Indiana).
Year to year between June 2007 and June 2008 the median home value fell 7.3% across the Chicago Metro Area – to a $244353 median for single family homes and condos.
According to Amy Bohutinsky of Zillow Chicago is experiencing a similar rate of equity decline as other market areas across the U.S. – although it is not by far the worst metro area. "One hundred forty of 165 markets reported declines. In none of those has the rate of decline slowed" she said. "That tells us there isn’t a bottom in housing prices yet."
Zillow also tracks the percentage of homes which have sold at a loss versus the current owner’s original purchase price. During the Second Quarter 2008 19.8% of homes in the Chicago Area sold for a loss compared to 13.4% a year ago. Of houses sold during the last five years only 4% sold for a loss according to Zillow data.
Read more in today’s Chicago Sun-Times front-page story by David Roeder and Francine Knowles. A related link maps declines in home equity by Chicago Neighborhood or Suburb.
DEAN MOSS & DEAN’S TEAM CHICAGO
