Chicago: Distressed Homes Are Rapidly Selling

C H I C A G O : D I S T R E S S E D H O M E SA R E R A P I D L Y S E L L I N G

For some, distressed homes canunfortunately carry a stigma, byoften times representing homesthat owners simply could notmaintain or afford. Sometimesthese kinds of properties can bein poor conditions or they are atrisk of foreclosure. Realisticallyspeaking, in terms of the realestate market within or aroundthe Chicago area, residential realestate distressed properties aredoing better than conventionalhomes.

Even though many people in the past year did notsee price increases in conventional home sales,

banks and other real estate firms selling distressedhomes did. According to Midwest Real Estate Data,

the median sale price of these kind of properties rose6.3% from last year, while the median sale price of

conventional homes only rose 0.4%.

Even though real estate consumers are usually not initiallydrawn to distressed homes, these properties seem to begetting more popular mainly due to two reasons. First,

there seems to be an increased competition in thisdistressed market, where investors and homeowners are

more educated on historical real estate data and arebetter equipped to negotiate better deals. Second, banks

and firms listing these kind of properties are very aware ofthe stigma they represent, hence they are beautifying and

investing on making the properties more attractive inorder to fetch higher prices.

And while the distressedhome market seems to be

scaling up, the conventionalhome market is slowly

drowning. Stagnant job andpopulation growth as well asstagnant investment returnsin Illinois can undoubtedly

hurt the overall Chicagomarket. For example, Chicago-

area home prices only rose2% this year, while homeprices in San Francisco,

Denver, and Portland, Oregonhave risen 11%.

11%

The increasing difference between distressed andconventional home prices in Chicago is very noticeable,especially in the affluent areas. In neighborhoods like

Chicago’s Near North Side, distressed homes are beingsold at 2.8% more than conventional homes. Moreover insuburban neighborhood Buffalo Grove, the median pricefor distressed homes rose to 19%, while the median price

for conventional homes is at a dire 0.1%.

To be fair, some conventional home prices manage to increasein gentrifying Chicago neighborhoods like Lincoln Square andLogan Square. They went from 3.5% last year to 4% this year.

But the reality is that until Chicago’s overall economy improvesthe real estate marketplace may very well continue to find

success just in distressed homes due to the continuous andincreasing levels of foreclosures.

4%