Half-built dreams in still-shaky Southland housing market
By Casey Toner and Mike Nolan | email@example.com, firstname.lastname@example.org December 1, 2012 12:06AM
Through the first 11 months of this year, foreclosures in some Southland communities are running ahead of 2011’s pace, but they are down in some other suburbs.
Chicago Heights — 338 new foreclosures filed through November compared with 323 for all of 2011.
Country Club Hills — 346 foreclosures so far this year, unchanged from last year.
Matteson — 439 foreclosures this year are ahead of the 338 filed in 2011.
Oak Lawn — 495 new foreclosures this year are down slightly from 518 in 2011.
Orland Park — 311 new foreclosures so far this year down from the 2011 total of 337.
Park Forest — 362 foreclosures this year down from 378 last year.
Tinley Park — 420 foreclosures this year up from 372 in 2011.
Source: Record Information Services
Updated: January 3, 2013 10:53AM
The Brookmere subdivision in Matteson offered a life of luxury to its new buyers when construction began in 2005. After all, the brand new development promised 188 townhouses and 146 single-family homes, with some of the properties boasting three-car garages and selling for more than $300,000. Seven years after the project at Vollmer Road and Cicero Avenue began, the dream of high-end living has turned into a nightmare for many of its residents who have seen their home values tank as construction came to a halt. Only 68 homes and 43 townhouses have been built, according to village officials, and the property is now pockmarked with empty lots, surrounded by overgrown fields. A little more than half of the houses that were built in Brookmere have been foreclosed on since 2005.
“It just has a blank, vacant, unfinished look to it,” Re/Max Synergy real estate agent Gay Weaver, who sells homes throughout the south suburbs, said of Brookmere.
Yet-to-be completed subdivisions and plunging home values continue to mar the Southland’s housing market, despite evidence that things are turning around. In some suburbs, homes have barely 30 percent of the value they had before the recession, and a wave of foreclosures that touched every area community still acts as an anchor on prices.
Homeowners trying to move up can’t sell their current home without taking a substantial loss, and those who can’t pay their mortgage and want to attempt a short sale are getting strong resistance from their lenders.
‘Everyone wants a deal’
It’s not that homes aren’t selling, but all the activity has been concentrated at the opposite ends of the price spectrum, area real estate agents said.
“The nice properties are sitting on the sideline waiting for buyers because the investors are moving the market, buying the low-end property,” Flossmoor real estate agent Fred Sosinski said. “Everyone wants a deal. Everyone.”
What the industry describes as “distressed” properties — including foreclosures and short sales — are selling briskly, as are high-end homes, Dale Taylor, a real estate agent in New Lenox, said.
“Before 2006, you hardly ever heard of short sales, and foreclosures were maybe 6 to 9 percent of the marketplace,” he said.
In October, the most recent data available, nearly a quarter of all sales of existing single-family homes in the country were foreclosures and short sales, according to the Chicago-based National Association of Realtors.
Getting short sales accomplished — where the borrower owes more than the home is worth and is trying to convince the lender to take a lesser amount — can be a maddening experience, Taylor said. He said he’s representing sellers who’ve seen buyers walk away because the bank holding the mortgage dragged its feet responding to a purchase offer, or where buyers were scared off because of aggressive counteroffers from the bank.
One client, a woman in Chicago’s Beverly community who’s been attempting a short sale for three years, just last week saw her eighth potential sale collapse because of issues with the bank holding her mortgage. An appraisal of the home made two years ago said it was worth $136,000, but a second made earlier this year showed the value had fallen to $89,000, Taylor said.
‘You have to make sacrifices’
Some people who used to own homes and saw their value fall off the cliff have opted to rent, according to Eric Workman, vice president of sales and marketing at Mack Cos., a Tinley Park firm that buys foreclosed homes, renovates them and rents them.
“We get about 400 applications a month, and we rent about 45 to 60 properties a month,” he said. “We are the largest landlord of single-family homes (in the south suburbs).”
Some renters lost their home to foreclosure, while others simply don’t want to be tied down to an asset that might continue to fall in value, Workman said.
The company has a portfolio of 700 homes spread across communities including Country Club Hills, Frankfort, Homewood, Matteson and Tinley Park. He said Mack Cos. hasn’t encountered any real resistance from municipal officials about renting single-family homes.
“They (community officials) would rather have a quality renter in the property than an abandoned foreclosure,” Workman said. “The longer (foreclosed homes) sit, the more work that needs to be done and the more they deteriorate.”
Taylor said the “most challenged” housing in the Southland are properties priced between $150,000 and $250,000, owned by “hard-working people that are paying their mortgages on time” but, with a sale, face a substantial loss on their investment.
In 2006, as home values were still climbing toward the stratosphere, Anthony Johnson bought a 5,300-square-foot home in Brookmere, paying somewhere in the neighborhood of $360,000. Now, he’s got it listed for sale at $229,000.
“The goal is to sell and you have to make sacrifices to do that,” Johnson said.
Falling home values
Home values in virtually all Southland communities have taken a dramatic hit since the start of the recession, and some suburbs are struggling to make up the lost ground, according to data from real estate website Zillow as well as The Gorman Group, a real estate appraisal firm in East Hazel Crest.
Figures from The Gorman Group show that suburbs that had relatively high pre-recession sale prices, including Orland Park and Tinley Park, had home values drop by less than a third in the subsequent years. In communities with lower median prices, including Chicago Heights and Park Forest, values plunged by 60 percent or more from pre-recession levels.
While home prices have recorded small year-over-year gains in some communities, Zillow figures show that the increases have not been uniform. In October, the most recent figures available, median prices in Chicago Heights and Country Club Hills were down 3.4 percent compared with October 2011, and prices in Oak Lawn were off 5.3 percent year-over-year. Mokena and Orland Park eked out small gains of about 1 percent.
Source: Zillow, The Gorman Group