Residential: Foreclosures a high portion of Cook sales
(Crain's) — Foreclosure-related sales made up more than a third of the residential transactions in Cook County in the first quarter, a trend pushing home prices lower.
Of almost 8,100 closings of sales of single-family homes, condominiums, and apartment buildings of six units, 35% were foreclosure-related, according to a recent report from the Cook County Assessor's office.
The percentage was smaller compared to first-quarter 2009, when foreclosure-related properties made up 45% of the county's 6,468 residential sales. But the number of foreclosure-related transactions was relatively unchanged, 2,851 in first quarter 2010 vs. 2,952 in first quarter 2009, according to the report.
In the meantime, prices have taken a hit, as foreclosed properties typically sell for less than others.
The median sales price of foreclosure-related properties in Cook County declined 21% in the first quarter to $88,500, compared to same period in 2009, according to the report. The median is the price at which half the homes sold for more and half for less.
The median price of other properties declined nearly 7% to $231,000.
Foreclosures have “a big effect on communities,” says Geoff Smith, a senior vice-president at Woodstock Institute, a Chicago-based advocacy group. “But in order for the market to recover, the properties have to be absorbed. It's a process the market needs to go through.”
The good news, observers say, is that sales of foreclosed properties could help speed up the housing market's recovery by lessening the glut of unsold homes.
“The inventory has to be cleared up,” says Tracy Cross, president of Schaumburg-based residential consulting firm Tracy Cross & Associates Inc. “And as you clear it up, it will facilitate more stability” in the market.
A property was foreclosure-related if the sale occurred after a filing or completed foreclosure, according to the assessor's report. In the first quarter of 2008, the 1,824 foreclosure-related sales accounted for roughly 24% of the 7,681 transactions, according to the assessor's office.
The percentage of foreclosure-related residential sales isn't expected to dip in the next year, says Fran Lefor, a research analyst in the assessor's office who authored the report.
